As filed with the Securities and Exchange Commission on ________ , 1999
Registration No. 333-79799
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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WHOLESALE AUTO RECEIVABLES CORPORATION
(Originator of the Trusts described herein)
Delaware 38-3082709
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification Number
Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
(302-658-7851)
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Agent For Service With a Copy to:
Jerome B. Van Orman Jr., Vice President Robert L. Schwartz, General Counsel
Wholesale Auto Receivables Corporation Wholesale Auto Receivables Corporation
3044 West Grand Boulevard, Detroit, Michigan 48202 (313-556-1508) 3031 West Grand Boulevard, Detroit, Michigan 48202
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Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement as determined in
light of market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [x]
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CALCULATION OF REGISTRATION FEE
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Title of Each Class of Proposed Maximum Proposed Maximum
Securities to Amount to be Offering Price Aggregate Offering Amount of
be Registered Registered Per Unit (2) Price (1) Registration Fee
Asset -Backed
Term Notes......... $4,000,000,000 100% $ 4,000,000,000 $ 1,112,000
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(1) Estimated solely for the purpose of calculating the amount of
registration fee.
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(A) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(A),
may determine.
Pursuant to Rule 429 of the Securities Act of 1933, the Prospectus which is
part of this Registration Statement is a combined Prospectus and includes all
the information currently required in a Prospectus relating to the Securities
covered by Registration Statement No. 33-50323 previously filed by the
Registrant.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
APPLICABLE STATE.
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Prospectus
SUBJECT TO COMPLETION, DATED [DATE], [YEAR]
SUPERIOR WHOLESALE INVENTORY FINANCING TRUSTS
Issuer of the Asset Backed Term Notes
WHOLESALE AUTO RECEIVABLES CORPORATION
Seller
GENERAL MOTORS ACCEPTANCE CORPORATION
Servicer
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You should consider carefully EACH TRUST--
the risk factors beginning on
page ___ in this prospectus.
o will issue one or more series of term notes, which will be described in a prospectus
The notes issued by any trust do supplement;
not represent obligations of or
interests in, and are not o will own a revolving pool of wholesale automotive receivables generated by a portfolio of
guaranteed by Wholesale Auto floor plan financing agreements with retail automotive dealers, and
Receivables Corporation,
General Motors Acceptance o will also issue one or more series of revolving notes and one or more classes of
Corporation or any of their certificates, but these revolving notes and certificates will not be sold under this
affiliates. prospectus.
This prospectus may be used to THE TERM NOTES-
offer and sell term notes only if
accompanied by a prospectus o will represent indebtedness of the related trust;
supplement.
o will be paid only from the assets of the trust and amounts on deposit in the related
reserve funds;
o will represent the right to payments in the amounts and at the times described in the
related prospectus supplement; and
o will benefit from one or more forms of credit enhancement.
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NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED
THESE TERM NOTES OR DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
[date]
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IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT
We provide information to you about the term notes in two separate
documents:
(1) this prospectus, which provides general information and terms
of the term notes, some of which may not apply to a particular
series of term notes, including your series.
(2) the accompanying prospectus supplement, which will provide
information regarding the pool of receivables held by the
trust and will specify the terms of your series of term notes.
IF THE TERMS OF YOUR SERIES OF TERM NOTES VARY BETWEEN THIS PROSPECTUS
AND THE PROSPECTUS SUPPLEMENT, YOU SHOULD RELY ON THE INFORMATION IN THE
PROSPECTUS SUPPLEMENT.
You should rely only on the information provided in this prospectus and
the accompanying prospectus supplement, including the information incorporated
by reference. We have not authorized anyone to provide you with other or
different information. We are not offering the term notes in any state where the
offer is not permitted.
You can find definitions of the capitalized terms used in this prospectus under
the caption "Glossary of Terms" which appears at the end of this prospectus.
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SUMMARY OF TERMS
This Summary of Terms highlights selected information from this document and
does not contain all of the information that you need to consider in making your
investment decision. To understand all of the terms of an offering of the term
notes, read this entire document and the accompanying prospectus supplement
carefully.
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THE PARTIES
ISSUER/TRUST
Each Superior Wholesale Inventory Financing Trust will be a Delaware business
trust formed by the seller and the owner trustee. The trust will issue the term
notes. The trust will operate under a trust sale and servicing agreement.
SELLER
Wholesale Auto Receivables Corporation, a wholly-owned subsidiary of GMAC, will
be the seller for the trust.
SERVICER
GMAC, a wholly-owned subsidiary of General Motors Corporation, will be the
servicer for the trust.
INDENTURE TRUSTEE
The prospectus supplement will specify the indenture trustee.
OWNER TRUSTEE
The prospectus supplement will specify the owner trustee.
SECURITIES ISSUED BY A TRUST
TERM NOTES
Each trust will issue one or more series of asset backed term notes. Each trust
may issue additional term notes from time to time after the initial offering of
term notes. Each series of term notes will have a stated principal amount and
will pay interest at a specified rate or rates. Each series of term notes will
have its own interest rate, which may be fixed, variable, contingent or
adjustable or any combination of these characteristics. The prospectus
supplement will specify the interest rate or the method for determining the
interest rate.
OTHER SECURITIES
Each trust will also issue revolving notes and certificates, but this prospectus
will not offer or sell those securities. We use the term notes to mean the term
notes and the revolving notes issued by a trust. We use the term securities to
mean the notes and the certificates issued by a trust.
SUBORDINATION
The certificates will be subordinated to the term notes and the revolving notes.
Term notes may be either senior or equal in priority to revolving notes.
Each trust may also issue subordinated term notes, which would be subordinated
to all other classes of term notes and revolving notes. The prospectus
supplement will describe the relative priority of the term notes, the revolving
notes and certificates.
PAYMENTS ON THE SECURITIES
INTEREST
The trust will pay interest on the term notes monthly, or with any other
frequency as is specified in the prospectus supplement. The sources of funds
which the trust will use to pay interest will be specified in the prospectus
supplement. Typically, these sources will include:
o interest collections on the receivables
o swap payments that the trust receives
o servicer advances
o available credit enhancement
PRINCIPAL
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Ordinarily, principal payments on term notes will occur on one or more planned
dates specified in the prospectus supplement. The prospectus supplement will
specify the sources of funds which the trust will use to pay principal.
Typically, these sources will include:
o all or a portion of the principal collections on the receivables
o servicer advances
o interest collections remaining after interest payments
o available credit enhancement
The prospectus supplement will also specify the manner in which the trust will
apply available funds toward principal payments on the term notes. Among the
possible ways are the following:
o a single targeted final payment date, on which the trust repays all
principal at once
o a controlled amortization period, in which the trust repays a
predetermined amount of principal on each planned payment date until
all principal has been repaid
o an index amortization period, in which the trust and investor will
refer to an index to determine the amount of principal that the trust
will repay.
However, it is possible that principal payments will begin earlier than the
planned date or dates specified in the prospectus supplement. If an early
amortization event occurs, the trust will apply all available funds to the
repayment of the outstanding principal and interest on the term notes and the
other securities issued by the trust. This type of event will likely result in
repayment of principal on the term notes earlier than the planned date or dates.
You should be aware, however, that the prospectus supplement may provide that
these funds will be set aside or accumulated for the benefit of the term notes
but not paid until a later date.
ASSETS OF THE TRUST
The primary asset of each trust will be a revolving pool of wholesale
receivables. These pools will arise under floor plan financing agreements
between GMAC and a group of retail automotive dealers franchised by General
Motors. These agreements are lines of credit which dealers use to purchase their
inventory of new and used motor vehicles manufactured by General Motors and
others. We refer to the dealers' obligations under these agreements as
receivables.
GMAC will sell the receivables in each trust to the seller, and the seller will
then sell them to the trust. The trust will grant a security interest in the
receivables and the other trust property to the indenture trustee on behalf of
the noteholders. The trust property will also include:
o Security interests in the collateral securing the dealers' obligation
to pay the receivables, which will include vehicles and which may
include parts inventory, equipment, fixtures, service accounts, real
estate and guarantees;
o A basis swap or swaps, currency swap or swaps, interest rate swap or
swaps, or any other swap specified in the prospectus supplement;
o Amounts held on deposit in reserve fund established for the trust or
in other trust accounts maintained for the trust;
o Any recourse GMAC has against dealer under the floor plan
financing agreements;
o Some of the rights of the seller under its purchase agreement with
GMAC; and
o Any additional property, or exclusions of the foregoing types of
property, described in the prospectus supplement.
As new receivables arise, the seller will ordinarily transfer them to the trust
on a daily basis. At the same time, prior to the planned date on which funds
will first be set aside for payments on term notes, the trust will ordinarily
pay principal collections on receivables back to the seller. The trust could
also apply the principal collections to pay down the principal balance on the
revolving notes. The trust could also retain principal collections and invest
them in eligible investments, if sufficient new receivables were not available.
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However, if an event occurs with respect to the term notes that the prospectus
supplement specifies is a cash accumulation event, the trust will retain all or
a substantial portion of principal collections, even though new receivables are
available to the trust. Rather than transfer these principal collections to the
seller or use them to repay the revolving notes or other series of term notes,
the trust will instead invest them in eligible investments in a cash
accumulation account dedicated to the term noteholders. The trust will continue
to invest these funds in eligible investments until the planned date or dates
for repayment of the term notes, or until any sooner repayment following the
occurrence of an early amortization event that requires repayment of the term
notes.
SERVICING FEES
For each series of notes, the trust will pay the servicer a set monthly fee as
compensation for servicing the receivables.
TAX STATUS
In the opinion of Kirkland & Ellis, special tax counsel, the term notes will be
characterized as indebtedness for federal income tax purposes.
Each term noteholder, by the acceptance of a term note, will agree to treat the
term notes as indebtedness for federal, state and local income and franchise tax
purposes.
See "Federal Income Tax Consequences" and "State, Local and Foreign Tax
Consequences" in this prospectus concerning the application of federal, state
and local tax laws.
ERISA CONSIDERATIONS
Subject to the considerations discussed under "ERISA Considerations," an
employee benefit plan regulated by the Employee Retirement Income Security Act
of 1974 may purchase the term notes and any subordinated term notes that a trust
may issue. An employee benefit plan should consult with its counsel before
purchasing the term notes.
RATINGS
At least one nationally recognized rating agency will rate all term notes as
investment grade securities.
The prospectus supplement will describe any further required ratings for the
term notes.
We cannot assure you that a rating agency will maintain its rating if
circumstances change. If a rating agency changes its rating, no one has an
obligation to provide additional credit enhancement.
A note rating is not a recommendation to buy the term notes. The rating
considers only the likelihood that the trust will pay interest on time and will
ultimately pay principal. The rating does not consider either the term notes'
price, their suitability to a particular investor, or the timing of principal
payments.
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RISK FACTORS
You should consider the following risk factors in deciding whether to
purchase the securities.
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SOME RECEIVABLES MAY BECOME GMAC and the seller will file financing statements with respect to each pool
UNCOLLECTIBLE IF OTHER PARTIES of receivables sold to each trust. These financing statements perfect the
THAT ARE SUPERIOR TO THE TRUST'S, security interests that the seller and the trust have in the pool of receivables.
WHICH COULD DELAY PAYMENT ON However, GMAC will serve as the custodian of the receivables and will not
YOUR TERM NOTES. physically segregate or mark the receivables from other GMAC receivables
to indicate that they have been sold to the trust. Instead the receivables
will be held as discussed in the section in this prospectus titled "The Transfer and
Servicing Agreements--Sale and Assignment of Receivables and Collateral Security."
It is possible that another party could acquire an interest in the receivables
superior to the trust's interest. This would happen if the other party purchases
or takes a security interest in the receivables:
o for value
o in the ordinary course of business and
o without actual knowledge of the seller's or the trust's interest.
When a previously secured vehicle is sold or leased, and the proceed of that
sale of lease include chattel paper -- as with most retail installment contracts
-- then a party who buys that chattel paper may have an interest in the
receivable that is senior to the trust's interest. This may result in delay or
reduction of payments on the term notes. This is described further in the
section of this prospectus titled "Legal Aspects--Transfer of Receivables."
SOME RECEIVABLES MAY BECOME A dealer who purchases financed vehicles gives GMAC a security interest in
UNCOLLECTIBLE IF DEALERS MAKE those vehicles. When a financed vehicle is sold or leased, GMAC's security
SALES OUT OF TRUST, WHICH COULD interest in the vehicle will generally terminate. A sale out of trust occurs
DELAY PAYMENT ON OUR TERM when a dealer sells or leases a vehicle but fails to pay GMAC the amount
NOTES. owed on the receivable for that vehicle. If this happens, GMAC will no
longer be able to look to that vehicle as security for the receivable. This may
impair GMAC's ability to collect the receivable, in which case you might
experience reductions or delays in payments on your term notes.
IF GMAC FILES FOR BANKRUPTCY If GMAC files for bankruptcy under the federal bankruptcy code or any state
YOU COULD EXPERIENCE insolvency laws, a court may:
REDUCTIONS AND DELAYS IN
PAYMENTS ON YOUR TERM NOTES. o consolidate the assets and liabilities of GMAC with those of the seller
o decide that the sale of the receivables to the seller was not a "true sale"
o disallow a transfer of receivables prior to the bankruptcy.
The result of this court ruling could be that the receivables become part of
GMAC's bankruptcy estate. However, in the opinion of Kirkland & Ellis,
our special counsel, in a correctly decided case, a court will not take these
actions. Nonetheless, if that were to happen, you might experience
reductions or delays in payments on your term notes. In addition, tax or
other liens might have priority over the trust's interest. For a more detailed
discussion of this risk, see "Legal Aspects--Matters Relating to Bankruptcy"
in this prospectus.
In addition, if GMAC or General Motors files for bankruptcy under the
federal bankruptcy code or any state insolvency laws, the GM-franchised
dealers who are obligated to make payments on the receivables might
respond by delaying or withholding payments on the receivables. They
might do this even though they have no legal or contractual justification to
stop payments. The result might be that you experience reductions or delays
in payments on your term notes.
THE TRUST IS DEPENDENT ON GMAC makes loans to GM-franchised dealers to finance their wholesale
GMAC TO GENERATE NEW automobile purchases, and these loans generate receivables. GMAC has in
RECEIVABLES; WITHOUT NEW the past provided financial assistance to dealers, including capital
RECEIVABLES, THE TRUST MAY BE contributions in the form of minority equity investments. GMAC must be
UNABLE TO MAKE PAYMENTS ON able to generate new receivables in order to meet the trust's obligations to pay
THE TERM NOTES. interest and principal on the securities. GMAC does not guarantee that it will
continue to generate receivables at historical rates, and the following events
could negatively impact GMAC's ability to generate new receivables:
o A decline in the manufacture and sale of GM automobiles and light
trucks due to an economic downturn, a labor disruption, competitive
pressure, or any other factors
o A change in GM's vehicle distribution practices
o A change in dealer inventory management practices
o A change in the interest rates charged by GMAC to dealers
o A change in the amounts of the credit lines offered by GMAC to dealers
o A change in the terms offered by GMAC to dealers
o Defaults on dealers accounts
o Termination of dealer franchises
o Dealers filing for bankruptcy
o A change in other financial support offered by GMAC to dealers
o Seasonal fluctuations in the sale and leasing of vehicles
If GMAC generates new receivables at a lower rate than it has done in the
past, you might experience reductions or delays in payments on your term
notes. The payment reductions or delays may reflect the decrease in
receivables.
If an auto maker terminates a dealer franchise, GM is obligated to repurchase
most new vehicles from that dealer. If GMAC or another creditor forecloses
on a dealer's property, GM has the option, but not the obligation, to
repurchase the dealer's new, current model, undamaged vehicles at invoice
price. If GM exercises this option, then the proceeds of the purchase will
generally be available to pay on the receivables.
COLLECTIONS FROM DEALERS IS The trust's ability to make payments on the term notes generally depends on
GENERALLY THE TRUST'S ONLY collections from dealers on the receivables. The prospectus supplement will
SOURCE OF FUNDS TO MAKE describe past patterns of dealer payments on similar receivables. However,
PAYMENTS ON THE TERM NOTES we do not guarantee that dealers will pay on the receivables at the same rate
they have in the past or in any other pattern.
No one can be certain of when dealers will sell and lease vehicles. The
timing of sales depends on many economic and social factors that are beyond
the control of GMAC, the seller and the trust. Sales incentive programs and
financing incentive programs of General Motors and other vehicle
manufacturers also affect the sale and lease of vehicles.
If the dealers' ability to pay on the receivables declines for whatever reason,
you might experience reductions or delays in payments on your term notes.
GMAC AND THE SELLER DO NOT GMAC, the seller and their respective affiliates are generally not obligated to
GUARANTEE PAYMENTS ON THE make any term note payments to you, and they do not guarantee payments on
RECEIVABLES OR THE TERM NOTES, the receivables or the term notes. However, GMAC will make
BUT IN LIMITED CIRCUMSTANCES representations and warranties about the characteristics of the receivables,
GMAC MAY BE REQUIRED TO and GMAC will then assign those representations and warranties to the trust.
REPURCHASE RECEIVABLES If GMAC receivables breaches the representations and warranties regarding specific
receivables, the trust may require GMAC to repurchase the applicable
receivables from the trust.
If GMAC fails to repurchase those receivables, you might experience
reductions or delays in payments on your term notes.
THE TRUST HAS LIMITED ASSETS: The only significant assets or sources of funds any trust will have will be its
THE RECEIVABLES AND ANY FORMS receivables, its rights in any reserve fund, or other rights or credit
OF CREDIT ENHANCEMENT enhancements that the related prospectus supplement will specify. The term
notes will only represent interests in the trust related to those term notes.
Neither GMAC, the seller, the trustee, any of their affiliates nor any other
person nor entity will insure or guarantee the term notes, except as described
in the related prospectus supplement.
You must rely primarily on payments on the related receivables and on the
reserve fund as the repayment sources of your term notes. In addition, you
may have to look to the proceeds from the repossession and sale of collateral
which secures defaulted receivables and the proceeds from any recourse
against dealers under the financing agreements. If these sources are
insufficient, you might experience reductions or delays in payments on your
term notes. For further detail please see the section in this prospectus titled
"The Transfer and Servicing Agreements--Liquidity and Credit Support" and
"Legal Aspects."
YOU MAY FIND A LIMITED MARKET FOR The underwriters may assist you in reselling the term notes, but they are not
ANY RESALE OF THE TERM required to do so. A secondary market for any term notes may not develop.
NOTES If a secondary market does develop, it might not continue or it might not be
sufficiently liquid to allow you to resell any of your term notes.
THE RATINGS ON THE TERM NOTES The term notes for each trust will be issued only if they receive the required
ARE NOT RECOMMENDATIONS; rating. A security rating is not a recommendation to buy, sell or hold the
THEY MAY CHANGE OR BE term notes. Rating agencies may revise the ratings or withdrawn them at any
WITHDRAWN time. Ratings on the term notes do not address the timing of distributions of
principal on the term notes prior to the date specified in the prospectus
supplement as the rated final maturity date. A withdrawal or lower of rating
of the term notes may impact the value of your term notes and affect their marketability.
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THE SERVICER
GMAC, a wholly-owned subsidiary of General Motors, was incorporated in
1919 under the New York Banking Law relating to investment companies. GMAC
relinquished this status and became a Delaware corporation on January 1, 1998.
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 and mortgage banking and investment services.
The principal business of GMAC and its subsidiaries is to:
o finance the acquisition and resale by franchised General
Motors dealers of various new automotive and nonautomotive
products manufactured by General Motors or some of its
subsidiaries and associates, and
o acquire from these dealers, either directly or indirectly,
instalment obligations covering retail sales and leases of new
General Motors and other manufacturers' products and used
units of any make.
o In addition, GMAC also finances the acquisition of new
products of other manufacturers and leases motor vehicles and
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).
THE SELLER
Wholesale Auto Receivables Corporation, the seller, a wholly-owned
subsidiary of GMAC, was incorporated in the State of Delaware on November 24,
1992. The seller is organized for the limited purposes of purchasing receivables
from GMAC, transferring these receivables to third parties, forming trusts and
engaging in related activities. The principal executive offices of the seller
are located at Corporation Trust Center, 1209 Orange Street, Wilmington,
Delaware 19801 (Tel. No. 302-658-7581).
The seller has taken steps in structuring the transactions contemplated
hereby that are intended to make it unlikely that the voluntary or involuntary
application for relief by GMAC under the United States Bankruptcy Code or
similar applicable state laws will result in consolidation of the seller's
assets and liabilities with GMAC's. These steps include creating the seller as a
separate, limited-purpose subsidiary pursuant to a certificate of incorporation
containing a number of limitations. These limitations include restrictions on
the nature of the seller's business and a restriction on the seller's ability to
commence a voluntary case or proceeding under any insolvency law without the
unanimous affirmative vote of all of its directors. Under some circumstances,
the seller is required to have at least one director who qualifies under its
by-laws as an independent director. In addition, under each trust agreement, the
trust, the owner trustee on the trust's 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
insolvency law.
THE TRUSTS
General; The Trust Estate
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In exchange for the securities to be issued by a trust on the initial
issuance date for those securities, the seller will establish each trust by
selling, transferring and assigning to each trust, without recourse, the
seller's right, title and interest in, to and under:
o the Eligible Receivables existing in each dealer account in
the related pool of accounts ondate on which the trust issues
its first series of term notes and the Eligible Receivables
generated in each dealer account in the pool of accounts from
time to time thereafter during the term of the trust,
o Collections on these receivables and
o the related Collateral Security.
. GMAC will retain the Retained Property, and 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 the related
prospectus supplement states otherwise, each trust's assets will also include
one or more interest rate swaps and funds on deposit in some of the bank
accounts of the trust.
Each dealer account is 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 the vehicles for sale or lease in the ordinary
course of business. The pool of accounts is comprised of all dealer 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.
Pursuant to each trust sale and servicing agreement, the seller will
have the limited right from time to time to designate additional dealer accounts
to be included in the related pool of accounts and from time to time to
designate the dealer accounts to be removed from that pool of accounts. Once a
dealer account is so designated for removal, or if a dealer account ceases to be
an Eligible Account, the receivables originated thereafter in that dealer
account will not be transferred to the trust. See "The Transfer and Servicing
Agreements--Addition and Removal of Accounts" in this prospectus.
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. These 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 the same trust.
The principal offices of each trust will be specified in the related
prospectus supplement.
CAPITALIZATION OF THE TRUST
Prior to each trust's initial issuance date, the trust will have no
assets or liabilities. No trust is expected to engage in any activities other
than
(1) acquiring, managing and holding
(a) the related receivables
(b) other assets contemplated in this document and in the
related prospectus supplement and
(c) the proceeds from the assets in paragraphs (a) and (b);
<PAGE>
(2) issuing securities; and
(3) making payments and distributions on those securities and 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 issuance 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 further
described herein and in the prospectus supplement related to any term notes
offered hereby. See "The Revolving Notes" and "The Certificates" in this
prospectus. 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" in this
prospectus. The related prospectus supplement will set forth the pro forma
capitalization of a trust at the time of the issuance of any term notes. The
certificates will represent the equity in each trust. The related prospectus
supplement will set forth the portion of the certificates issued on the related
initial issuance date. To the extent applicable, the related prospectus
supplement will also set forth the portion of the certificates issued since the
related initial issuance date. The seller or its affiliates may retain all or a
portion of the certificates by or they may be sold to third party investors that
are unaffiliated with the seller, GMAC and the trust.
THE OWNER TRUSTEE
The related prospectus supplement will specify the owner trustee for
each trust. The owner trustee's liability in connection with the issuance and
sale of the securities is limited solely to the express obligations of that
owner trustee set forth in the related trust agreement. An owner trustee may
resign at any time, in which event GMAC as servicer, or a successor 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 these 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.
USE OF PROCEEDS
Unless the related prospectus supplement states otherwise, the net
proceeds to be received by the seller from the sale of the securities will be
applied to purchase receivables from GMAC.
THE DEALER FLOOR PLAN FINANCING BUSINESS
GENERAL
The dealer accounts are individual lines of credit represented by
revolving dealer floor plan financing agreements extended or maintained by GMAC
to United States dealers. The lines of credit for all these dealers constitute
the U.S. portfolio. Dealers use funds loaned under these arrangements, which are
known generally as "wholesale" or "floor plan" financing, primarily to finance
new and used motor vehicles manufactured or distributed by General Motors and
other motor vehicle manufacturers and distributors pending sale or lease to the
ultimate customer. In general, each receivable generated in a dealer account is
secured by all vehicles owned by the related dealer and, in some instances, by
other collateral security owned by that dealer. GMAC services the U.S. portfolio
through its administrative office located in Detroit, Michigan and through a
network of branch offices located throughout the United States.
<PAGE>
General Motors vehicles for which GMAC provides wholesale financing
include vehicles manufactured under the Buick, Cadillac, Chevrolet, Oldsmobile,
Pontiac, GMC and Saturn trademarks. GMAC also extends credit to dealers
affiliated with General Motors dealers that operate franchises for other motor
vehicle manufacturers.
The U.S. portfolio generally includes two types of credit lines or
accounts:
o credit lines or accounts under which advances are made to finance
automobiles and trucks
o credit lines or accounts under which advances may be made to
finance vehicles intended for sale to fleet customers,
generally in lots of more than 10
For purposes of each trust, fleet accounts are not Eligible Accounts and, within
an Eligible Account, an advance must be made against a vehicle and satisfy other
criteria to be an Eligible Receivable.
GMAC categorizes the vehicles it finances as new vehicles, used
vehicles or auction vehicles. Currently, new vehicles consist of vehicles of any
model year that are untitled and generally have been driven less than 200 miles,
excluding any auction vehicles. GMAC classifies auction vehicles as those
vehicles which are purchased at a closed auction conducted by General Motors or
others. In states where demonstration cars must be titled, vehicles are
generally considered new vehicles if driven less than 200 miles. Used vehicles
consist of auction vehicles and vehicles of any model year which have been
previously titled, other than demonstration vehicles described above. The
categorization of new vehicles, used vehicles and auction vehicles may change in
the future based on the GMAC's practices and policies.
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 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. Holdbacks 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 begins accruing on that receivable on or following the estimated
delivery date of the vehicle to the dealer. This date is approximately
concurrent with the receipt of the vehicle by the dealer.
The amount advanced for a used vehicle, other than an auction vehicle,
is generally up to 90% of the wholesale book value for the vehicle as set forth
in a used vehicle wholesale guide book 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. Used vehicle receivables 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 that
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 under the following circumstances:
o the dealer has exceeded the credit guidelines set by GMAC
o the dealer is experiencing financial difficulties
o the dealer is experiencing a general deterioration in its
creditworthiness
See "Dealer Status; Realization on Collateral Security" below.
<PAGE>
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
o reviewing bank references and credit reports,
o if the dealer is an existing dealer, reviewing credit reports from the
dealer's current financing source,
o evaluating marketing capabilities,
o evaluating financing resources,
o evaluating credit requirements, and
o evaluating the dealer's current state of operations and its management.
The local branch office prepares a written recommendation either
approving or disapproving the dealer's request. Depending on the size of the
requested credit line and the financial profile of the dealer, the local branch
office transmits this recommendation with the requisite documentation to the
appropriate office. In some cases, the local branch office may contact 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 other collateral. The vehicles are required to be 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 expected annual sales and the dealer's
net worth. Generally, a credit line for new vehicles is intended to be an amount
sufficient to finance a 60-90 day supply and for used vehicles is generally an
amount sufficient to finance a 30-60 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 that 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 that dealer's account. From time to time, GMAC also
provides some of its dealers with financing in the form of working capital
loans, real estate financing and equipment loans. In these instances, to secure
the 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 its
loans or advances before this 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 this other Collateral Security, there is no
assurance that the trust will realize any proceeds in respect of any other
Collateral Security. See "The Transfer and Servicing Agreements--Intercreditor
Arrangements" in this prospectus.
<PAGE>
DEALER PAYMENT TERMS
GMAC may demand payment of interest and principal on a floor plan loan
at virtually any time. However, unless GMAC terminates the credit line or the
dealer defaults, GMAC generally requires payment of principal in full of the
related loan:
o upon the retail sale or lease of a new vehicle, and
o upon the earlier of (a) an appropriate term established for
each dealership based on risk and exposure of the account or
(b) 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, in most cases,
to the prime rate, as designated by GMAC, plus a designated spread above that
prime rate. The "prime rate" is, on any date in a semi-monthly period, the
interest rate designated by GMAC as the effective prime rate for that
semi-monthly period and is based on the prime rate of selected financial
institutions as of the day preceding that semi-monthly period. 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.
In some circumstances, under a policy known as Delayed Payment
Privilege, or 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 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, that 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 that receivable to the extent of the
principal payment so delayed. This repurchase obligation is described in "The
Transfer and Servicing Agreements--Representations and Warranties" in this
prospectus.
From time to time, dealers maintain funds with GMAC, which are held for
these 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 that 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 operating 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 the dealer's
financial position, may temporarily suspend the granting of additional credit,
increase the dealer's credit line or modify the dealer's credit category. See
"Creation of Receivables" above and "Dealer Status; Realization on Collateral
Security" in this prospectus.
<PAGE>
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 generally 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.
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:
o retail merchandising practices,
o retail and wholesale performance,
o financial outlook, and
o 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. GMAC generally will not make further advances to a
dealer who has been assigned to no credit status.
GMAC frequently attempts to work with dealers to resolve the
circumstances that lead to programmed and no credit status. If, however, those
circumstances are not resolved, any of the following may occur:
o an orderly liquidation in which the dealer voluntarily liquidates
its inventory through normal sales and leases to customers;
o a self-help or court-ordered seizure and sale of the dealer's
inventory by GMAC; or
o a voluntary surrender to GMAC and sale of the dealer's inventory.
GMAC may sell these new vehicle inventories to the related motor
vehicle manufacturer, including under 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 this sale will be available to
the creditors of the troubled 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 that 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" in this prospectus.
RELATIONSHIP OF THE DEALER FLOOR PLAN FINANCING BUSINESS TO GENERAL MOTORS
General Motors has historically provided financial assistance to
General Motors-franchised dealers from time to time, but has no obligation to do
so. This assistance may take the form of guarantees and agreements to repurchase
inventory. General Motors through various initiatives may also contribute
capital to some General Motors-franchised dealers in the form of an equity
investment in the dealership.
<PAGE>
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. Under this program, General
Motors provides a subsidy to General Motors-franchised dealers to assist these
dealers in making interest payments to financing sources, including GMAC. This
program encourages the purchase of an adequate supply of vehicles by the dealer
to be held in inventory.
The financial assistance and incentives provided by General Motors are
for the benefit of its dealers and do not relieve these dealers from their
obligations to GMAC. These types of assistance and incentives are provided at
the option of General Motors, which may terminate any of these programs in whole
or in part at any time. If General Motors reduced or was unable, or elected not,
to provide this assistance or incentives, the timing and amounts of payments to
GMAC in respect of the its 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 these vehicles would decrease and it is
likely that payment rates and the loss experience of GMAC's 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 event of this type may result in an Early Amortization Event
with respect to one or more trusts.
Under agreements between General Motors and General Motors-franchised
dealers, General Motors has the obligation to repurchase some of the new
vehicles in a dealer's 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 GMAC or another creditor foreclosures upon the property of a dealer,
General Motors has the option, which it typically exercises, to purchase that
dealer's new General Motors-manufactured vehicles at invoice price.
LOSS AND AGING EXPERIENCE
Some information regarding loss and aging experience for the
receivables in GMAC's U.S. portfolio will be set forth in the related prospectus
supplement. Because the dealer 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 dealer accounts related to any trust may be different from this
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 by GMAC to the related dealers under the dealer accounts included in the
pool of accounts for that trust. The initial pool of accounts related to any
trust will be selected from all of the dealer accounts in the GMAC's U.S.
portfolio that were Eligible Accounts as of the date on which the trust issues
its first series of term notes. Eligible Accounts do not include fleet 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" in this prospectus. Information with respect to the dealer
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 related trust sale and servicing
agreement, the seller will have the limited right to designate from time to time
additional dealer accounts to be included in the pool of accounts. The seller
will have the right to purchase from GMAC the Eligible Receivables then existing
and thereafter arising in those dealer accounts and to sell and assign those
receivables to the trust. See "The Transfer and Servicing Agreements Sale and
Assignment of Receivables and Collateral Security" in this prospectus. In order
to be designated an additional dealer account, among other things, each
additional dealer account must be an Eligible Account. Under the circumstances
specified in the related trust sale and servicing agreement, the seller has the
right to remove dealer accounts from the pool of accounts. If a dealer account
is so designated for removal or ceases to be an Eligible Account, the
receivables originated thereafter in that dealer account will not be transferred
to the trust. See "The Transfer and Servicing Agreements--Addition and Removal
of Accounts" in this prospectus.
<PAGE>
MATURITY AND PRINCIPAL CONSIDERATIONS
Full amortization of any term notes by the applicable Targeted Final
Payment Date, if any, and the applicable Stated Final Payment Date depends on,
among other things, payments by dealers on receivables, and may not occur if
these payments are insufficient. Because the receivables generally are not paid
prior to the ultimate sale or lease of the underlying vehicle, the timing of
these payments is uncertain. In addition, GMAC cannot assure that it will
generate additional receivables under the dealer accounts, that additional
dealer accounts will be available or added to any pool of accounts or that any
particular pattern of dealer payments will occur.
The amount of new receivables generated in any month and monthly
payment rates on the receivables may vary because of any of the following
factors:
o seasonal variations in vehicle sales and inventory levels
o retail incentive programs provided by vehicle manufacturers
o incentive programs provided by financing sources and various other
factors affecting vehicle sales generally
Some historical information concerning the monthly payment rates for
the receivables in the U.S. portfolio will be set forth in each prospectus
supplement. There can be no assurance that the rate of principal collections on
the receivables in any trust will be comparable to prior experience.
Full amortization of any term notes by the applicable Targeted Final
Payment Date, if any, and the applicable Stated Final Payment Date may also be
affected by payment requirements for, and allocations to, other series of term
notes and the related revolving notes and certificates.
THE TERM NOTES
GENERAL
With respect to each trust, one or more series of term notes will be
issued pursuant to the terms of an indenture, a form of which has been filed as
an exhibit to the registration statement of which this prospectus forms a part.
The following summary does not purport to be complete and is 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, along with definitions of terms, are
incorporated by reference as part of this summary.
Unless the related prospectus supplement specifies that the term notes
will be issued in definitive form, each series of term notes will initially be
represented by one or more term notes, which will be registered in the name of
Cede & Co., as the nominee of DTC in the United States, or Cedelbank or
Euroclear in Europe, except as set forth below. Unless the related prospectus
supplement states otherwise, term notes will be available for purchase in
denominations of $1,000 and integral multiples thereof in book-entry form only.
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, or DTC participants. All distributions, notices,
reports and statements to term noteholders will be sent to DTC or Cede & Co. as
the registered holder of the term notes, as the case may be, for distribution to
beneficial owners in accordance with DTC's procedures. See "Book-Entry
Registration" and "Definitive Term Notes" in this prospectus.
<PAGE>
PRINCIPAL AND INTEREST ON THE TERM NOTES
The related prospectus supplement will describe the timing and priority
of payment, seniority, Interest Rate, Targeted Final 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.
The related prospectus supplement will describe whether interest payments on
term notes will be made monthly, quarterly, semi-annually or otherwise. With
respect to each trust, unless the related prospectus supplement states
differently 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 the certificate balance will be made with
respect to the certificates and no amounts will be set aside for that purpose.
During the Payment Period, if any, for a series of term notes, Principal
Collections and other amounts constituting Available Trust Principal, which may
include proceeds from the issuance of additional securities, will be allocated
to principal payments thereon and paid as set forth in the related prospectus
supplement. Any of these principal payments may be due in instalments, 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
that purpose as set forth in the related prospectus supplement. Unless the
related prospectus supplement states otherwise, 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 dealer accounts that are Eligible
Receivables as of the commencement of the Wind Down Period or Early Amortization
Period. Alternatively, if an 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 the Early
Amortization Period as described in the related prospectus supplement. If the
related prospectus supplement so provides, specified Early Amortization Events
may be designated as a Cash Accumulation Event, in which case a Cash
Accumulation Period will commence. During any Cash Accumulation Period,
allocated Principal Collections will be invested in a cash accumulation account
dedicated to the holders of the series of term notes described in the prospectus
supplement until the planned date or dates for repayment of that series of term
notes.
With respect to each trust, unless the related prospectus supplement
states otherwise, 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 or equivalent to the priority of payments on
the related revolving notes, as described in the related prospectus supplement.
However, this would not be the case in circumstances related to the occurrence
of an Event of Default. 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 (1)
principal payments with disproportionate, contingent, nominal or no interest
payment, or (2) interest payments with disproportionate, contingent, nominal or
no principal payments (Strip Notes).
The Interest Rate for each series of term notes issued by a trust may
be
o fixed,
o variable,
o contingent,
<PAGE>
o adjustable,
o for some series of Strip Notes, an interest rate of zero, or
o any combination of Interest Rate types.
Each series of term notes may also have a different Targeted Final
Payment Date, if any, and Stated Final Payment Date.
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 the related prospectus
supplement states differently, 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 the trust's behalf, may, without consent of the
related noteholders, enter into one or more supplemental indentures for any of
the following purposes:
(1) to correct or amplify the description of the collateral
or add additional collateral;
(2) to provide for the assumption of the notes and the
indenture obligations by a permitted successor to the trust;
(3) to add additional covenants for the benefit of the
related noteholders;
(4) to convey, transfer, assign, mortgage or pledge any
property to or with the indenture trustee;
(5) 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;
(6) 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;
(7) to modify, eliminate or add to the provisions of the
indenture in order to comply with the Trust Indenture Act;
(8) to increase the Specified Maximum Revolver Balance in
accordance with the conditions therefor in the related trust sale and
servicing agreement; and
(9) 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 under the indenture; provided that any
action specified in this clause (9) does not adversely affect in any
material respect the interests of any related noteholder unless
noteholder consent is otherwise obtained as described below.
<PAGE>
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:
(1) 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 a way that affects the calculation of
the amount of any payment of interest or principal due on any note on
any Payment Date;
(2) impair the right to institute suit for the enforcement of
some of the provisions of the indenture regarding payment;
(3) reduce the percentage of the aggregate principal amount of
the outstanding notes the consent of the holders of which is required
for the supplemental indenture or the consent of the holders of which
is required to waive compliance with provisions of the indenture or of
defaults thereunder and their consequences as provided for in the
indenture;
(4) 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;
(5) 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 the sale would be insufficient to pay the
principal amount and accrued but unpaid interest on the outstanding
notes;
(6) decrease the percentage of the aggregate outstanding
principal amount of the Notes required to amend the sections of the
indenture which specify the applicable percentage of aggregate
outstanding principal amount of the notes necessary to amend the
indenture; or
(7) 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 of the 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 the related prospectus supplement states differently, EVENTS OF
DEFAULT under the indenture will consist of:
(1) 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;
(2) any failure (a) to make any required payment of principal
on the related notes or (b) 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 this clause (2)(b) materially
and adversely affects the rights of related noteholders, and which
failure in either case continues for 30 days after written notice is
given of the failure (x) to the trust, the seller, or the servicer, as
applicable, by the indenture trustee or (y) to the trust, the seller,
the servicer, as applicable, and the indenture trustee by the holders
of not less than 25% of the principal amount of the related notes;
<PAGE>
(3) failure to pay the unpaid principal balance of any related
series of notes by the respective Stated Final Payment Date for any
series; and
(4) specified 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 the related prospectus supplement states otherwise, 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 the notes then outstanding, voting together as a
single class, may declare the principal of the notes to be immediately due and
payable. That declaration will constitute an Early Amortization Event. Under
some circumstances, the holders of a majority in principal amount of the notes
then outstanding may rescind the declaration. If this happens, the Revolving
Period will recommence in some circumstances. See "THE TRANSFER AND SERVICING
AGREEMENTS--EARLY AMORTIZATION EVENTS" in this prospectus.
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:
(1) collect amounts due or foreclose on trust property,
(2) exercise remedies as a secured party,
(3) sell the related trust estate or
(4) 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. The indenture trustee could make this
election even though the Early Amortization Period commenced by the
declaration will continue unless the declaration is rescinded.
The indenture trustee, however, is prohibited from selling the receivables held
by the trust following an Event of Default, unless:
(1) the holders of all the outstanding notes of the trust
consent to the sale,
(2) the proceeds of the sale are sufficient to pay in full the
principal of and the accrued interest on the outstanding securities at
the date of the sale or
(3) in some 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 payments would have become due if the
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 the related prospectus supplement provides otherwise, 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.
<PAGE>
Although the indenture trustee must comply with its duties under the
related indenture, 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 the 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 that
request. As set forth 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. The
holders of a majority in aggregate principal amount of the notes then
outstanding, voting together as a single class, may, in some 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
the notes.
No holder of a note will have the right to institute any proceeding
with respect to the related indenture, unless:
(1) the holder previously has given to the indenture trustee
written notice of a continuing Event of Default,
(2) 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 the
proceeding in its own name as indenture trustee,
(3) the holder or holders have offered the indenture trustee
reasonable indemnity,
(4) the indenture trustee has for 60 days failed to institute
the proceeding and
(5) no direction inconsistent with the written request has
been given to the indenture trustee during the 60-day period by the
holders of a majority in aggregate principal amount of the 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 the 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 the 90 day period if and so long as it determines in good faith that
withholding the notice is in the interests of the noteholders.
In addition, the indenture trustee and each noteholder and note owner,
by accepting a note, or interest therein, 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.
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.
COVENANTS. Each indenture provides that the related trust may not
consolidate with or merge into any other entity, unless, among other things
(1) the entity formed by or surviving the consolidation or
merger is organized under the laws of the United States, any state or
the District of Columbia,
<PAGE>
(2) the 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,
(3) no Event of Default shall have occurred and be continuing
immediately after the merger or consolidation,
(4) 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 the merger or consolidation and
(5) the trust has received an opinion of counsel to the effect
that the 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 Related Documents:
(1) sell, transfer, exchange or otherwise dispose of any of
the assets of the trust,
(2) other than amounts withheld under the Code or applicable
state law, claim any credit on or make any deduction from the principal
or interest payable in respect of the related notes or assert any claim
against any present or former holder of the notes because of the
payment of taxes levied or assessed upon the trust,
(3) dissolve or liquidate in whole or in part,
(4) 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 the
indenture except as may be expressly permitted thereby or
(5) 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,
(1) a brief report relating to its eligibility and
qualification to continue as indenture trustee under the related
indenture,
(2) any amounts advanced by it under the indenture,
(3) the amount, interest rate and maturity date of some
types of indebtedness owing by the trust to the indenture trustee in
its individual capacity,
(4) the property and funds physically held by the indenture
trustee, and
<PAGE>
(5) 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 of
the notes to the related indenture trustee for cancellation or, with
limitations, upon deposit of funds sufficient for the payment in full of all of
the 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 in that capacity under
the indenture, becomes insolvent, or otherwise becomes incapable of acting. If
the indenture trustee is removed, 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 the Payment Date. To the extent
applicable to each series each statement will include the following information
as to the term notes with respect to the Payment Date or the period since the
previous Payment Date, as applicable:
(1) the amount, if any, of the distribution allocable to
principal on each series of term notes;
(2) the amount, if any, of the distribution allocable to
interest on each series of term notes;
(3) the aggregate outstanding principal balance for each
series of term notes, after giving effect to all payments reported
under (1) above;
(4) the aggregate principal balance of the revolving notes and
the aggregate certificate balance;
(5)if applicable, the amount of outstanding servicer advances;
(6) 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;
(7) the interest rate applicable for the next Payment Date for
any series of term notes with variable or adjustable rates;
(8) the amount, if any, withdrawn from or credited to any
Reserve Fund;
(9) the accumulated interest shortfalls, if any, on each
series or class of securities and the change in that amounts from the
preceding Payment Date;
(10) the Trust Charge-Offs allocated to each series or class
of securities and the change in those amounts from the preceding
Payment Date; and
(11) the balance of the Reserve Fund, if any, on the relevant
date, after giving effect to changes therein on that date.
<PAGE>
Each amount set forth pursuant to subclauses (1), (2) and (9) 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 or entity
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 information for the purpose of
assisting that 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 DTC participants and indirect DTC participants rather than from the
indenture trustee. See "Federal Income Tax Consequences" in this prospectus.
BOOK-ENTRY REGISTRATION
The Depository Trust Company is a limited purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York UCC
and a "clearing agency" registered pursuant to Section 17A of the Exchange Act.
DTC was created to hold securities for its participants and to facilitate the
clearance and settlement of securities transactions between DTC participants
through electronic book-entries, thereby eliminating the need for physical
movement of certificates. DTC participants include securities brokers and
dealers, banks, trust companies and clearing corporations. Indirect access to
the DTC system also is available to banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a DTC participant,
either directly or through indirect DTC participants.
Unless the prospectus supplement provides otherwise, 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 DTC participants and
through indirect DTC participants. In addition, term note owners will receive
all distributions of principal and interest through DTC participants. Under a
book-entry format, term note owners may experience some delay in their receipt
of payments since payments will be forwarded by the indenture trustee to Cede,
as nominee for DTC. DTC will forward the payments to DTC participants, which
thereafter will forward them to indirect DTC 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 that 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 DTC participants.
Under the rules, regulations and procedures creating and affecting DTC
and its operations, DTC is required to make book-entry transfers of term notes
among DTC 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. DTC participants and indirect DTC 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 the payments on behalf of
their respective term note owners. Accordingly, although term note owners will
not possess term notes, the DTC's 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 DTC participants, who in turn act
on behalf of indirect DTC participants and 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 the term notes, may be limited due
to the lack of a physical certificate for the 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 DTC 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 the actions are taken on behalf of DTC
participants whose holdings include the undivided interests.
<PAGE>
In addition to holding term notes through DTC participants or Indirect
DTC participants in the United States as described above, holders of term notes
may hold their term notes through Cedelbank or Euroclear in Europe if they are
participants of those systems, or indirectly through organizations which are
participants in those systems.
Cedelbank and Euroclear will hold omnibus positions on behalf of their
participants through customers' securities accounts in Cedelbank's and
Euroclear's names on the books of their respective depositories which in turn
will hold those positions in customers' securities accounts in the depositories'
names on the books of DTC.
Transfers between Cedelbank participants, as defined below, and
Euroclear participants, as defined below, will occur in accordance with their
respective rules and operating procedures. Cross-market transfers between
persons holding directly or indirectly through DTC, on the one hand, and
directly or indirectly through Cedelbank participants or Euroclear participants,
on the other hand, will be effected in DTC in accordance with DTC rules on
behalf of the relevant European international clearing systems by its
depositary. Cross-market transactions will require delivery of instructions to
the relevant European international clearing system by the counterparty in the
clearing system in accordance with its rules and procedures and within its
established deadlines. These deadlines will be set in European time. The
relevant European international clearing system will, if the transaction meets
its settlement requirements, deliver instructions to its depositary to take
action to effect final settlement on its behalf by delivering or receiving
securities in DTC, and making or receiving payment in accordance with normal
procedures for same-day funds settlement applicable to DTC. Cedelbank
participants and Euroclear participants may not deliver instructions directly to
the depositories.
Because of time-zone differences, credits of securities received in
Cedelbank or Euroclear as a result of a transaction with a DTC participant will
be made during subsequent securities settlement processing and dated the
Business Day following the DTC settlement date. Any credits or any transactions
in securities settled during this processing will be reported to the relevant
Euroclear or Cedelbank participants on that Business Day. Cash received in
Cedelbank or Euroclear as a result of sales of securities by or through a
Cedelbank participant or a Euroclear participant to a DTC participant will be
received with value on the DTC settlement date but will be available in the
relevant Cedelbank or Euroclear cash account only as of the Business Day
following settlement in DTC. For information with respect to tax documentation
procedures, see "FEDERAL INCOME TAX CONSEQUENCES--TAX CHARACTERIZATION AND
TREATMENT OF TERM NOTES--TAX CONSEQUENCES TO FOREIGN NOTEHOLDERS" in this
prospectus.
Cedelbank is incorporated under the laws of Luxembourg as a
professional depository. Cedelbank holds securities for its Cedelbank
participants and facilitates the clearance and settlement of securities
transactions between Cedelbank participants through electronic book-entry
changes in accounts of Cedelbank participants, thereby eliminating the need for
physical movement of certificates. Transactions may be settled in Cedelbank in
any of 28 currencies, including United States dollars. Cedelbank provides to
Cedelbank participants, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. Cedelbank interfaces with domestic markets
in several countries. As a professional depository, Cedelbank is regulated by
the Luxembourg Monetary Institute. Cedelbank participants are recognized
financial institutions around the world, including underwriters, securities
brokers and dealers, banks, trust companies, clearing corporations and other
organizations and may include the underwriters. Indirect access to Cedelbank is
also available to others entities -- i.e., banks, brokers, dealers and trust
companies -- that clear through or maintain a custodial relationship with a
Cedelbank Participant, either directly or indirectly.
<PAGE>
Euroclear was created in 1968 to hold securities for Euroclear
participants and to clear and settle transactions between Euroclear participants
through simultaneous electronic book-entry delivery against payment, thereby
eliminating the need for physical movement of certificates and any risk from
lack of simultaneous transfers of securities and cash. Transactions may now be
settled in any of 34 currencies, including United States dollars. Euroclear
includes various other services, including securities lending and borrowing and
interfaces with domestic markets in several countries generally similar to the
arrangements for cross-market transfers with DTC described above. Euroclear is
operated by the Brussels, Belgium office of Morgan Guaranty Trust Company of New
York under contract with Euro-clear Clearance Systems S.C., a Belgian
cooperative corporation. All operations are conducted by Morgan Guaranty, and
all Euroclear securities clearance accounts and Euroclear cash accounts are
accounts with Morgan Guaranty, not with Euro-clear Clearance Systems. Euro-clear
Clearance Systems establishes policy for Euroclear on behalf of Euroclear
participants. Euroclear participants include banks, central banks, securities
brokers and dealers and other professional financial intermediaries and may
include the Underwriters. Indirect access to Euroclear is also available to
other firms that clear through or maintain a custodial relationship with a
Euroclear participant, either directly or indirectly.
Morgan Guaranty Trust Company of New York is the Belgian branch of a
New York banking corporation which is a member bank of the Federal Reserve
System. It is regulated and examined by the Board of Governors of the Federal
Reserve System and the New York State Banking Department, as well as the Belgian
Banking Commission.
Securities clearance accounts and cash accounts with Morgan Guaranty
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System and the applicable Belgian
law. These laws and procedures govern transfers of securities and cash with
Euroclear, withdrawals of securities and cash from Euroclear, and receipts of
payments with respect to securities in Euroclear. All securities in Euroclear
are held on a fungible basis without attribution of specific certificates to
specific securities clearance accounts. Morgan Guaranty acts under these laws
and procedures only on behalf of Euroclear participants, and has no record of or
relationship with persons holding through Euroclear participants.
Distributions with respect to term notes held through Cedelbank or
Euroclear will be credited to the cash accounts of Cedelbank participants or
Euroclear participants in accordance with the relevant system's rules and
procedures, to the extent received by its depositary. The distributions must be
reported accordance with relevant United States tax laws and regulations. See
"FEDERAL INCOME TAX CONSEQUENCES-- TAX CHARACTERIZATION AND TREATMENT OF TERM
NOTES" in this prospectus. Cedelbank or Morgan Guaranty, as the case may be,
will take any other action permitted to be taken by a term noteholder under the
indenture or other Related Document on behalf of a Cedelbank participant or
Euroclear participant only in accordance with its relevant rules and procedures
and only if its depositary is able to effect that action on its behalf through
DTC.
Although DTC, Cedelbank and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of term notes among participants of
DTC, Cedelbank and Euroclear, they are under no obligation to perform or
continue to perform these procedures and these procedures may be discontinued at
any time.
Except as required by law, neither the administrator, the owner trustee
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
notes or the certificates of any series held by Cede, as nominee for DTC, by
Cedelbank or by Euroclear in Europe, or for maintaining, supervising or
reviewing any records relating to any beneficial ownership interests.
DEFINITIVE TERM NOTES
Unless the related prospectus supplement states otherwise, term notes
will be issued in fully registered, certificated form, or DEFINITIVE TERM NOTES,
to term noteholders or their nominees, rather than to DTC or its nominee, only
if
(1) the administrator advises the indenture trustee in writing
that DTC is no longer willing or able to discharge properly its
responsibilities with respect to the term notes and the trust is unable
to locate a qualified successor,
(2) the administrator, at its option, elects to terminate the
book-entry system through DTC, or
<PAGE>
(3) after the occurrence of an Event of Default or a Servicing
Default, note owners representing beneficial interests aggregating 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 note owners.
Upon the occurrence of any event described in the immediately preceding
paragraph, DTC will notify the note owners and the indenture trustee of that
occurrence and 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. Those payments will be made by check mailed to the
address of the 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 the 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
Each trust will issue one or more series of revolving notes on the
initial issuance date and may issue more series of revolving notes 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, if
any, and Stated 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:
(1) allocated to the seller in payment for receivables
purchased by the trust,
(2) allocated to the Revolver Distribution Account as a
payment of principal on the revolving notes, or
(3) 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 a number of
conditions are satisfied. See "THE TRANSFER AND SERVICING AGREEMENTS--ADDITIONAL
ISSUANCES; CHANGES IN MAXIMUM REVOLVER BALANCE" in this prospectus.
<PAGE>
Unless the related prospectus supplement provides otherwise, 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, if any,
and Stated Final Payment Date or otherwise require principal payments during the
related Revolving Period and may provide for extensions and renewals under some
circumstances. Each revolving note will initially be held by GMAC or the seller,
and the revolving note or an interest therein may be sold by GMAC or the seller
in a private placement to a third-party investor. Thereafter, a revolving note
or an interest therein may be transferred in whole or in part if certain
conditions are satisfied. 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. However,
this allocation will depend on 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
thedate on which the trust isinitial issuance date for a trust and may be issued
from time 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 the distributions, including the Stated Final Payment
Date. Unless the related prospectus supplement provides differently, principal
and interest payments on the notes will be senior to distributions of the
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 some of the material terms of:
(1) 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 dealer accounts,
(2) the trust sale and servicing agreement pursuant to which
the trust will acquire those receivables from the seller and agree to
the servicing of the receivables by the servicer,
(3) the trust agreement pursuant to which the trust will be
created and certificates will be issued and
(4) the administration agreement pursuant to which GMAC, as
administrator, will undertake a number of administrative duties with
respect to the trust. Collectively, these agreements will be 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.
Upon request of a holder of securities described therein. The seller will
provide a copy of the Transfer and Servicing Agreements. This copy will not
include exhibits. This summary does not purport to be complete and is qualified
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 this summary.
SALE AND ASSIGNMENT OF RECEIVABLES AND COLLATERAL SECURITY
GMAC will sell and assign to the seller, without recourse,
o on the initial issuance date for a trust, its entire interest
in the Eligible Receivables under the dealer accounts included
in the related pool of accounts as of the Initial Cut-Off
Date, and
<PAGE>
o on each date on which receivables are originated in a dealer
account in the related pool of accounts, its entire interest
in, all Eligible Receivables created on that date in the
dealer accounts in the related pool of accounts. However, if
GMAC becomes subject to a bankruptcy proceeding, GMAC will not
assign receivables to the seller without approval of the
bankruptcy court.
In each case, GMAC will sell and assign to the seller 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 its initial issuance date and on each Receivables
Purchase Date, the seller will transfer and assign to the applicable trust,
without recourse, the Eligible Receivables and the other assets purchased from
GMAC on that 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
thedate on which the trust isinitial issuance date. Unless the related
prospectus supplement provides otherwise, 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 Eligible 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 that property to the trust. In
addition, GMAC will agree to provide a complete list to the seller showing for
each dealer 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 that dealer
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 dealer accounts or the receivables. To assure uniform
quality in servicing both the receivables related to any trust and the
servicer's own portfolio of receivables, as well as to facilitate servicing and
save administrative costs, the records and agreements relating to the dealer
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 the 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 "LEGAL
ASPECTS--TRANSFER OF RECEIVABLES" in this prospectus. 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. As a result of GMAC's continued
possession, 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 the
receivables could be defeated. See "LEGAL ASPECTS TRANSFER OF RECEIVABLES" in
this prospectus.
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 limited right to designate from time to time additional dealer accounts
to be included in the related pool of accounts. In connection with any
designation of additional dealer accounts, the seller will purchase from GMAC
the Eligible Receivables in the additional dealer accounts and GMAC will follow
the procedures set forth in the preceding paragraph, except that the list will
show information for the additional dealer accounts as of the cut-off date for
additional dealer accounts. The servicer will notify the seller of this cut-off
date in writing.
REPRESENTATIONS AND WARRANTIES
<PAGE>
In each pooling and servicing agreement, GMAC will represent and
warrant to the seller, among other things, that:
(1) as of the initial issuance date, or, in the case of an
additional dealer account, as of the related cut-off date for
additional dealer accounts, each dealer account or additional dealer
account included in the pool of accounts is an Eligible Account; and
(2) as of the initial issuance date, or, in the case of an
additional dealer account, as of the related cut-off date for
additional dealer accounts, and on each Receivables Purchase Date each
receivable conveyed to the seller on that date that is identified as an
Eligible Receivable is actually an Eligible Receivable.
In the case of an additional dealer account, GMAC will make the above
representations and warranties as of the related cut-off date.
In the related trust sale and servicing agreement, the seller will
assign the representations and warranties of GMAC with respect to the dealer
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 the representations
and warranties of GMAC to be false in any material respect as of the initial
issuance date, each cut-off date for additional dealer accounts and each
Receivables Purchase Date, as the case may be.
The seller and the servicer may discover that there has been a breach
of any representation or warranty of the seller or GMAC, and that the breach
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, any receivable affected this way is referred
to as a Warranty Receivable. Unless and to the extent the breach is cured in all
material respects, GMAC or the seller will repurchase a Warranty Receivable as
follows:
(1) if the 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 the receivable or
(2) if the breach or deferral is a breach of a representation
or warranty of the seller, the seller will repurchase the receivable.
Without limiting the generality of the foregoing, a receivable held by
a trust will not be an Eligible Receivable, and thus will be repurchased if and
to the extent (1) the principal amount thereof is adjusted downward because of a
rebate, refund, credit adjustment or billing error to the related dealer, or (2)
the receivable was created in respect of a vehicle that was refused or returned
by a dealer.
The WARRANTY PAYMENT, which is the price for a repurchase of a Warranty
Receivable by GMAC or the seller will be equal to the principal amount of the
receivable. In the case of a breach or deferral affecting less than the entire
principal amount of a receivable, the Warranty Payment will be 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 Trust Principal Collections and the remainder will be included in Interest
Collections. All Warranty Payments will be deposited into the related Collection
Account on the related Distribution Date. The repurchase obligations of the
seller and GMAC constitute the sole remedy available to the securityholders, the
indenture trustee or the owner trustee for any 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:
<PAGE>
(1) GMAC is duly incorporated and in good standing, it has the
authority to consummate the transactions contemplated by the pooling
and servicing agreement, and the related Transfer and Servicing
Agreements constitute legal, valid and binding obligations of GMAC; and
(2) 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 the
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 the property, GMAC will not be obligated to repurchase the 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:
(1) 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
(2) 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 the 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 Collateral Security within 60 days of the notice, or within the
longer period specified in the notice. The seller will be obligated to accept
the reassignment and pay the Reassignment Amount on a Distribution Date
occurring within the applicable period.
The reassignment will not be required to be made, however, if at or
prior to the end of the applicable period, the representations and warranties
are then true and correct in all material respects and any material adverse
effect caused by the 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 trust, 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,
unless required to by agreements with other persons or entities.
ADDITION AND REMOVAL OF ACCOUNTS
<PAGE>
With respect to each trust, and taking into account the conditions
described below, under the pooling and servicing agreement, GMAC may offer to
designate, and the seller may request the designation of, additional dealer
accounts to be included in the pool of accounts and, under the trust sale and
servicing agreement, the seller has the right to designate from time to time
additional dealer accounts to be included in the related pool of accounts.
Unless the related prospectus supplement provides otherwise, in order to add any
additional dealer account to the related pool of accounts, the following
conditions, among others, must be satisified:
(1)each additional dealer account must be an Eligible Account;
(2) the seller must represent and warrant that the inclusion
of the additional dealer accounts in the related pool of accounts will
not, in the reasonable belief of the seller, cause an Early
Amortization Event to occur; and
(3) unless the related prospectus supplement provides
otherwise, each of the rating agencies rating the notes must have
provided written confirmation that the addition will not result in a
reduction or withdrawal of the rating of any outstanding related
securities.
On the date any additional dealer account is added to the pool of
accounts, all Eligible Receivables then in that dealer 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 dealer account
must be an eligible account, additional dealer accounts may not be of the same
credit quality as the initial dealer accounts because, among other things, those
dealer accounts may not have been part of GMAC's U.S. portfolio on the Initial
Cut-Off Date. Additional dealer accounts may have been originated at a different
time using credit criteria different from those applied to the initial dealer
accounts.
With respect to each trust, upon the satisfaction of the conditions
specified in the trust sale and servicing agreement, the seller will have the
right to remove dealer accounts from the pool of accounts. To so remove dealer
accounts, after proper notice, the seller, or the servicer on its behalf must,
among other things:
(1) furnish to the owner trustee a list of the SELECTED DEALER
ACCOUNTS to be so removed from the pool of accounts specifying for each
selected dealer account to be removed, its account number and the
aggregate balance of Eligible Receivables in that dealer account;
(2) represent and warrant that the removal of the selected
dealer accounts will not, in the reasonable belief of the seller,
result in the occurrence of an Early Amortization Event; and
(3) represent and warrant that the seller and the servicer
have not received notice from any rating agency that the removal will
result in a reduction or withdrawal of the rating of any of the
outstanding related securities.
In addition, if a dealer account in the pool of accounts ceases to be
an eligible account, that dealer account will be deemed a selected account to be
removed on that date. In either case, receivables arising thereafter in the
selected account selected for removal will not be transferred to the trust.
Receivables in any dealer account transferred to the trust prior to that date
and Collections thereon will continue to be assets of the trust. Unless the
related prospectus supplement states otherwise, the servicer will allocate all
Principal Collections on receivables in a Selected Account to the oldest
receivables in that dealer account. A selected account will be deemed removed
from the pool of accounts on the date on which the balance of all receivables in
that dealer account held by the trust becomes zero.
BANK ACCOUNTS
With respect to each trust, the servicer will establish and maintain
several DISTRIBUTION ACCOUNTS: the COLLECTION ACCOUNT, the NOTE DISTRIBUTION
ACCOUNT, the REVOLVER DISTRIBUTION ACCOUNT and the CERTIFICATE DISRTIBRUTION
ACCOUNT. . The prospectus supplement may specify also that the servicer will
establish and maintain a SWAP DISTRIBUTION ACCOUNT."
<PAGE>
For 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 these accounts in the related prospectus supplement
- - collectively, the Designated Accounts- and the Certificate Distribution
Account will be invested as provided in the trust sale and servicing agreement
in eligible investments, which are specified categories of marketable
securities. 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 rating the notes, 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 the term notes. Except as otherwise specified in
the related prospectus supplement, the 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 the 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 other assets specified 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.
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, the servicer need not deposit
Principal Collections and Interest Collections into the Collection Account on a
daily basis but may use all of those Collections for its own benefit until the
Business Day immediately preceding the related Distribution Date if at any time
the following conditions are satisfied:
(1) GMAC is the servicer,
(2) no Servicing Default has occurred and is continuing
and
(3) GMAC either
(a) maintains a short-term debt rating of at least
A-1 by Standard & Poor's and P-1 by Moody's,
(b) 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 the Collection
Account that is acceptable in form and
substance to each rating agency or
<PAGE>
(c) 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.
Notwithstanding the foregoing, 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 second Business Day of
the following Collection Period. The prospectus supplement may describe
additional circumstances under which daily deposits will be required.
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 the Collection Account and pay
to the seller or GMAC, as applicable, the amount of the excess.
APPLICATION OF COLLECTIONS
INTEREST COLLECTIONS. For 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 some of the
losses on defaulted receivables, all as further set forth in the related
prospectus supplement. Unless the related prospectus supplement states
otherwise, 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 the related
prospectus supplement states otherwise, no amount is required to be set aside to
make principal payments on the term notes and distributions of the 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, so long as the servicer is
able to recover advances of principal. This will be the case provided that these
amounts will be held as the Cash Collateral Amount to the extent necessary to
ensure that the Daily Trust Invested Amount for that date equals the Daily Trust
Balance for that date. That 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 that date and all
collections on, and reinvestments in, receivables and all issuances of
securities by the trust on that date. Unless the related prospectus supplement
states otherwise, Principal Collections in excess of Trust Principal Collections
will be paid to GMAC on account of the Retained Property.
PAYMENT PERIODS. The prospectus supplement for a series of term notes
will describe how, during the Payment Period for that series, Available Trust
Principal will be allocated to the series and be available to make principal
payments on the term notes. This allocation will be dependent on the servicer's
ability to recover any advances of principal it may make. Principal payments on
any 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 a
Series Early Payment Event.
<PAGE>
EARLY AMORTIZATION AND WIND DOWN PERIODS. The prospectus supplement for
a series of term notes will also describe how, during an Early Amortization
Period or the Wind Down Period for any trust, the trust will retain Trust
Principal Collections and set them aside as required for the purpose of making
payments of principal on the related notes and distributions with respect to the
certificate balance on the related certificates. The trust will make this
retention, and not pay Trust Principal Collections to the seller, so long as the
servicer is able to recover advances of principal it may make. Unless the
related prospectus supplement states differently, during either of these
periods, 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 these deposits and the amounts required to be so deposited for any
Distribution Date will be set forth in the related prospectus supplement. Unless
the related prospectus supplement states otherwise, 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, that 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
the related prospectus supplement states differently, 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 a SERVICER ADVANCE to each trust to the extent
and for the purposes set forth in the related prospectus supplement. Unless the
prospectus supplement provides otherwise, the servicer will agree to make
advances to the extent that the servicer, in its sole discretion, expects to
recoup those advances from subsequent Collections and other amounts available
for that 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, those 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
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 further described in the related prospectus supplement. These
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 those arrangements of the full amount
of principal or the certificate balance, as the case may be, and interest due
thereon and to decrease the likelihood that the securityholders will experience
losses. Unless the related prospectus supplement provides otherwise, these
arrangements will not provide protection against all risks of loss and will not
guarantee repayment of the entire principal balance or the 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 a series or class will be faced with the risk that the
arrangement will be exhausted by the claims of securityholders of other series
or classes.
<PAGE>
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. The
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 issuance date for a 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 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 the related prospectus
supplement states differently, with respect to each trust, amounts on deposit in
the Reserve Fund will be paid to the seller to the extent the 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, those 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 the
certificate balance and interest on the related certificates will be made from
amounts deposited for that purpose 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 the 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 the related prospectus supplement
states differently, payments of principal and interest on all series of term
notes will have the same priority of payment. This would be other than in
circumstances related to the occurrence of an Event of Default, payments of
principal and interest on term notes may be senior 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 the trust on
that 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 an account, the
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 this situation, 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 that Distribution Date and other Distribution Dates.
DEFAULTS AND CHARGE-OFFS
<PAGE>
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.
EARLY AMORTIZATION EVENTS
Unless the related prospectus supplement provides otherwise, an EARLY
AMORTIZATION EVENT with respect to any trust refers to any of the following
events:
(1) 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 a period of 60 days after written
notice; provided, however, that no Early Amortization Event will be
deemed to exist if the receivables affected by that failure are
repurchased by the seller, GMAC or the servicer, as applicable, in
accordance with the related Transfer and Servicing Agreements;
(2) 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 the representation or warranty are
repurchased by GMAC or the seller, as applicable, in accordance with
the related Transfer and Servicing Agreements;
(3) failure to pay or set aside for payment all amounts
required to be paid as principal on the Notes or distributed with
respect to the certificate balance on the applicable Stated Final
Payment Date;
(4) on any Distribution Date, the average of the Monthly
Payment Rates for the three preceding Collection Periods is less than
25%;
(5) the amount on deposit in the related Reserve Fund is less
than the Reserve Fund Required Amount on three consecutive Distribution
Dates;
(6) 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
the 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 that occurrence
will terminate and the Revolving Period will recommence if a notice
rescinding the declaration is given pursuant to the indenture;
(7) the occurrence of specified events of bankruptcy,
insolvency or receivership relating to any of (a) General Motors, (b)
the servicer, (c) GMAC, if it is not the servicer, or the (d) seller;
(8) 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 20% of the Daily Trust Balance, for purposes of this
clause (8), 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;
<PAGE>
(9) on any Distribution Date, the Reserve Fund Required Amount
for that 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;
(10) 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, the average being determined over the six Collection
Periods immediately preceding the Distribution Date, or, if shorter,
the period from the related initial issuance date through and including
the last day of the immediately preceding Collection Period;
(11) 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 dealer accounts in the related pool
of accounts; and
(12) any other Early Amortization Event set forth in the
related prospectus supplement.
Upon the occurrence of any event described above, except as described
above or in the related prospectus supplement, 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 the 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 that
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 the 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 some 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 (6) 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 issuance date for a trust, additional series of term
notes, additional series of revolving notes and additional classes of
certificates may be issued by the trust from time to time, whether or not
additional revolving notes are issued in connection therewith. The Specified
Maximum Revolver Balance may also be increased or decreased without the consent
of holders of the outstanding notes or certificates, in each case upon the
satisfaction of the conditions specified in the related trust sale and servicing
agreement. These include the conditions that
(1) the seller will have represented and warranted that the
issuance, increase or decrease will not, in the reasonable belief of
the seller, cause an Early Amortization Event to occur, and
(2) 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.
<PAGE>
Any issuance or increase in the Specified Maximum Revolver Balance is
also dependent upon each rating agency providing written confirmation that the
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.
The seller may offer any securities under a Disclosure Document in
transactions either registered under the Act, or exempt from registration
thereunder, directly, through one or more underwriters or placement agents, in
fixed-price offerings or in negotiated transactions or otherwise. Any of these
securities may be issued in fully registered or book-entry form in minimum
denominations determined by the seller.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
With respect to each trust, unless the related prospectus supplement
states differently, as compensation for its servicing activities with respect to
the related receivables, on each Distribution Date, the servicer 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 the 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.
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 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.
These duties include, without limitation,
o collecting and recording payments,
o communicating with dealers,
o investigating payment delinquencies,
o evaluating the increase of credit limits, and
o maintaining records with respect to the dealer 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. These include:
o accounting for collections,
o furnishing monthly and annual statements to the owner trustee and
the indenture trustee with respect to payments and distributions,
o making servicer advances, if any,
o providing assistance in any inspections of the documents and
records relating to the dealer accounts and receivables by the
indenture trustee and the owner trustee pursuant to the
related trust sale and servicing agreement, and
o providing related data processing and reporting services for
securityholders and on behalf of the indenture trustee and
owner trustee.
<PAGE>
The Monthly Servicing Fee will also serve to reimburse the servicer for
additional expenses the servicer incurs in connection with administering the
pool of accounts. These expenses include
o taxes, other than the trust's or the securityholders' federal,
state and local income and franchise taxes, if any,
o the owner trustee's and the indenture trustee's fees,
o accounting fees,
o outside auditor fees,
o data processing costs and other costs.
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 dealer 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 dealer accounts included in the related pool of accounts in general if:
(1) in the servicer's reasonable belief, no Early Amortization
Event will occur as a result of the change,
(2) the change is made applicable to the comparable segment of
any similar portfolio of accounts serviced by the servicer and not only
to those dealer accounts and
(3) 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 the reduction will, after considering amounts
due and amounts payable under any related interest rate swaps or caps
or similar agreements and Shared Investment Proceeds for the related
period, reduce the Net Receivables Rate below the sum of (a) the
weighted average of the rates of interest payable to related
securityholders and (b) 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:
(1) it will maintain in effect all qualifications required in
order to service the dealer 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 the
dealer accounts and receivables, except where the failure to maintain
that qualifications to comply with those requirements would not have a
material adverse effect on the related securityholders of any
outstanding related series;
<PAGE>
(2) 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;
(3) 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 related trust sale and servicing
agreement; and
(4) 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 some of the 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 dealer account and the noncompliance has a material adverse effect on
the interests of related securityholders in or under the receivable or dealer
account, the servicer will purchase the receivable or all receivables
transferred to the trust under the dealer account -- each, an administrative
receivable-- as applicable. The purchase will be made no later than two Business
Days, or during any other period as may be agreed by the applicable trustee,
following the discovery by the servicer of the noncompliance.
With respect to each administrative receivable the servicer will be
obligated to deposit into the related Collection Account on the date on which
the purchase is deemed to occur an amount -- the ADMINISTRATIVE PURCHASE PAYMENT
- -- equal to the principal amount of the receivable plus accrued but unpaid
interest thereon through the date of the purchase. An Administrative Purchase
Payment will be included in (i) Additional Trust Principal, to the extent of the
principal amount of the related receivable, and (ii) Interest Collections, as to
the remainder of the amount. A purchase by the servicer constitutes the sole
remedy available to the securityholders, the seller, the owner trustee, the
indenture trustee or the trust, if the covenant or warranty of the servicer is
not satisfied.
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 those duties is no longer permissible under applicable
law. No 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 of those
persons will be protected against any liability that would otherwise be imposed
by reason of wilful misfeasance, bad faith or negligence -- except errors in
judgment -- in the performance of duties 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 the
trustee's wilful misfeasance, bad faith or negligence -- except errors in
judgment -- in the performance of the trustee's duties under the applicable
Transfer and Servicing Agreements or by reason of reckless disregard of its
obligations and duties thereunder.
<PAGE>
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. The legal
expenses and costs of that 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
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, 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 the 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 delegation will relieve the servicer of its
responsibility with respect to those 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:
(1) the servicer fails at any time 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 the failure by an officer of the servicer;
(2) the servicer fails at any time to duly observe or perform
in any material respect any other covenant or agreement in the 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 the 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 the outstanding notes or Voting Interests or after discovery
of the failure by an officer of the servicer;
(3) any representation, warranty or certification made by the
servicer in the trust sale and servicing agreement or in any
certificate delivered pursuant thereto proves to have been incorrect
when made and the inaccuracy has a material adverse effect on the
rights of the related securityholders and the 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
(4) specified events of bankruptcy, insolvency or receivership
involving the servicer occur.
<PAGE>
Notwithstanding the foregoing, there will be no servicing default where
a servicing default would otherwise exist under clause (1) above for a period of
ten Business Days or under clauses (2) or (3) for a period of 60 days if the
delay or failure giving rise to the servicing default was caused by an act of
God or other similar occurrence. Upon the occurrence of any of these events, 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 with prompt notice of the 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 the
then outstanding notes may terminate all the rights and obligations of the
servicer under the trust sale and servicing agreement and the related pooling
and servicing agreement. 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. Upon termination, the indenture trustee will
succeed to all the responsibilities, duties and liabilities of the servicer
under those 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 the appointment
has occurred, the trustee or official may have the power to prevent the
indenture trustee or the Securityholders from effecting a 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 the trust sale and servicing agreement.
The indenture trustee may make 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, voting as a single
class, may, on behalf of all the 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 waiver of past defaults 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 that 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 owner trustee 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 the trust's
initial issuance date, a statement as to compliance by the servicer during the
preceding twelve months ended June 30 with some of the standards relating to the
servicing of the receivables, the servicer's accounting records and computer
files with respect thereto and a number of other matters. The first of these
statements shall cover the period from the Initial issuance date to June 30 of
that year.
<PAGE>
Each trust sale and servicing agreement will also provide for delivery
to the owner trustee 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 trust's initial issuance 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 certificate, the period from
the trust's initial issuance date to June 30 of that year. If there has been a
default in the fulfillment of this obligation, the certificate shall describe
each 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 these 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
(1) to cure any ambiguity,
(2) to correct or supplement any provision therein that may be
defective or inconsistent with any other provision therein,
(3) to add or supplement any credit, liquidity or other
enhancement arrangement for the benefit of any securityholders,
provided that if any addition affects any series or class of
Securityholders differently than any other series or class of
Securityholders, then the 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,
(4) 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
(5) to add, change or eliminate any other provision of the
agreements 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 agreement may also be amended by the parties thereto with the
consent of the holders of at least a majority in principal amount of then
outstanding notes and the holders of 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 the agreements or of
modifying in any manner the rights of the securityholders, except that no
amendment may
(1) 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,
(2) 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 that series or class, or
(3) reduce the aforesaid percentage required to consent to any
amendment without the consent of the aforesaid percentage of
securityholders.
<PAGE>
INSOLVENCY EVENTS
If pursuant to 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 the proceeding, 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 the involuntary proceeding has not been dismissed within 60
days of its filing, the seller may not thereafter purchase receivables from GMAC
under any pooling and servicing agreement and thus, no additional receivables
will be transferred to any trust. See "Legal Aspects" in this prospectus.
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 certificateholder, including the seller, of a certificate certifying
that each certificateholder reasonably believes that the trust is insolvent.
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
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 the acts or omissions or alleged acts or omissions constitute
wilful 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, wilful 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 the parties
against any taxes that may be asserted against the 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
A trust will terminate on its TRUST TERMINATION DATE. 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
will be conveyed and transferred to the seller. However, 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 not be conveyed and transferred to the
seller at that time.
OPTIONAL PURCHASE BY THE SERVICER
During the Wind Down Period and as otherwise set forth in the related
prospectus supplement, the servicer or 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.
<PAGE>
INTERCREDITOR ARRANGEMENTS
The agreements governing the dealer 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 security
interest in favor of GMAC in the vehicles related to each dealer 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 the vehicles.
In each pooling and servicing agreement, GMAC will agree that any security
interests in the 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 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 the vehicles.
In addition, in connection with any 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 those cases, GMAC, in
its sole discretion, may realize on that other Collateral Security for its own
benefit in respect of those loans or advances before the indenture trustee, on
behalf of any trust, is permitted to realize upon that 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 those
other loans and advances. Because of the subordinate position of any indenture
trustee in respect of the other Collateral Security, there is no assurance that
any indenture trustee will realize any proceeds in respect of any other
Collateral Security.
ADMINISTRATION AGREEMENT
GMAC, in its capacity as administrator will enter into an
administration agreement with each trust and the related indenture trustee
pursuant to which GMAC will agree, to the extent provided in the administration
agreement, to provide the notices and to perform other administrative
obligations required by the related indenture. With respect to each trust, the
related prospectus supplement states otherwise, as compensation for the
performance of its obligations under the administration agreement and as
reimbursement for its expenses related thereto, GMAC will be entitled to a
monthly administration fee in an amount equal to $1,500, which fee will be paid
by the servicer.
LEGAL ASPECTS
TRANSFER OF RECEIVABLES
On the initial issuance date for any trust, on each date on which
dealer accounts are added to the pool of accounts 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 dealer 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 the receivables thereunder constitutes a valid
sale, transfer and assignment of all right, title and interest of GMAC in and to
the 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 the representations and warranties false in any
material respect and that the sale, transfer and assignment of the receivables
thereunder constitutes a valid sale, transfer and assignment of all right, title
and interest of the seller in and to the receivables to the trust.
<PAGE>
Each of GMAC and the seller will also covenant that it will not sell,
pledge, assign, transfer or grant any lien on the 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" in this prospectus. To
secure its payment obligations under the notes, pursuant to the indenture, the
trust will grant a security interest in the 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 the 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 the
receivables, to the extent the filings are required to so perfect and/or protect
those interests). Continuation statements will be filed as required to continue
the perfection of those 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 some limited subsequent transferees of a receivable held by the trust
could have an interest in a receivable with priority over the trust's interest
in that 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 the purchaser's business may, under some 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 the 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 the 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 the vehicle, but will be secured by the proceeds of
the retail sale or lease and, to the extent applicable, other Collateral
Security. If the proceeds of the sale or lease include chattel paper -- as is
the case with most retail instalment contracts -- some limited subsequent
transferees of that chattel paper could have an interest therein with priority
over the trust's interest therein.
MATTERS RELATING TO BANKRUPTCY
The seller's by-laws include a provision that, under some
circumstances, requires the seller to designate at least one director who
qualifies 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, a number of 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.
<PAGE>
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. In 1993, the U.S. Court of Appeals for the Tenth Circuit 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 the debtor or
the debtor itself were to apply this analysis or otherwise take the position
that the transfer of the receivables from the debtor to the seller or a trust,
as the case may be, should be recharacterized as a pledge of the receivables to
secure a borrowing by the debtor, then delays in receipt of Collections on the
receivables to the related trust and payments on the related securities could
result or, should the court rule in favor of any creditor, trustee in bankruptcy
or debtor, reductions in the amount of the 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 the
debtor or the 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 the creditor, trustee
in bankruptcy or debtor, the amount of the payments could be reduced.
If General Motors, GMAC or the seller were to become a debtor in a
bankruptcy case, an Early Amortization Event would occur. If this happened, all
Trust Principal Collections would be applied to principal payments on related
securities and receivables arising in the related dealer accounts thereafter
would no longer be sold to the seller and transferred to the related trust. The
occurrence of specified 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 those agreements, including the party as debtor in possession, may have the
power to assume (i.e., reaffirm) or reject the agreement. A party deciding
whether to assume or reject an agreement would be given a reasonable period of
time to make that 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 some 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 dealer 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 the transfers are made within specified periods prior to the filing of
a bankruptcy case in respect of GMAC or the seller and other conditions are met.
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 the dealer if the enforcement of
those laws result in any receivables conveyed to the trust being written off as
uncollectible by the servicer. Whether or not any receivables are written off as
uncollectible, delays in payments due on the receivables could result.
<PAGE>
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 and/or certificates offered hereunder. This
discussion is based upon current provisions of the Code, existing and proposed
Treasury regulations thereunder, current administrative rulings, judicial
decisions and other applicable authorities. There are no cases or 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 limited discussions of
particular topics, to certain types of noteholders who have special treatment
under the federal income tax laws. These noteholders include, for example,
financial institutions, broker-dealers, life insurance companies and tax-exempt
organization. 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 and/or certificates as "capital
assets" within the meaning of Section 1221 of the Code. PROSPECTIVE INVESTORS
SHOULD CONSULT WITH THEIR 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.
With respect to each trust, one or more series of term notes will be
issued as REGISTERED TERM NOTES. Registered Term Notes may generally may be
acquired by both U.S. PERSONS AND FOREIGN PERSONS. The federal income taxation
of a Registered Term Note will depend upon whether the owner of the Registered
Term Note is a U.S. Person or a Foreign Person.
TAX CHARACTERIZATION AND TREATMENT OF TERM NOTES
Characterization as Debt. With respect to each series of notes, other
than 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, will deliver its opinion to the effect
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 and the transactions set forth
herein, 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
note, will agree to treat the notes as indebtedness for federal, state and local
income and franchise tax purposes. See "Tax Characterization of the Trust--
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 note and certificates for federal
income tax purposes.
TERM NOTES SUBJECT TO CONTINGENCIES. The federal income tax
consequences to a holder of the ownership and disposition of term notes that
provide for one or more contingent payments will vary depending on the exact
terms of the term notes and related factors. The term notes may be subject to
rules that differ from the general rules discussed below. The federal income tax
consequences to a holder of term notes that provide for contingent payments will
be summarized in the applicable prospectus supplement.
TREATMENT OF STATED INTEREST. Based on the foregoing opinion, and
assuming the term notes are not issued with original issue discount, OID, the
stated interest on a term note will be taxable as ordinary income when received
or accrued in accordance with the noteholder's method of tax accounting.
Interest received on a term note may constitute "investment income" for purposes
of limitations of the Code concerning the deductibility of investment interest
expense.
<PAGE>
ORIGINAL ISSUE DISCOUNT. Except to the extent indicated in the related
prospectus supplement, no series of term notes will be issued with OID. In
general, OID is the excess of the "stated redemption price at maturity" of a
debt instrument over its "issue price," unless the excess falls within a
statutorily defined de minimis exception. A term note's "stated redemption price
at maturity" is the aggregate of all payments required to be made under the term
note through maturity except "qualified stated interest." "Qualified stated
interest" is generally interest that is unconditionally payable in cash or
property, other than debt instruments of the issuer, at fixed intervals of one
year or less during the entire term of the instrument at specified rates. The
"issue price" will be the first price at which a substantial amount of the term
notes are sold, excluding sales to bond holders, brokers or similar persons
acting as underwriters, placement agents or wholesalers.
If a term note were treated as being issued with OID, a noteholder
would be required to include OID in income as interest over the term of the term
note under a constant yield method. In general, OID must be included in income
in advance of the receipt of cash representing that income. Thus, each cash
distribution would be treated as an amount already included in income, to the
extent OID has accrued as of the date of the interest 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
that income. Even if a term note has OID falling within the de minimis
exception, the noteholder must include the OID in income proportionately as
principal payments are made on the term note.
A holder of a term note which has a fixed maturity date not more than
one year from the issue date of the term note, which we refer to in this
section as a SHORT-TERM NOTE, will generally not be required to include OID on
the term note in income as it accrues, provided the holder is not an accrual
method taxpayer, a bank, a broker or dealer that holds the term note as
inventory, a regulated investment company or common trust fund, or the
beneficial owner of a number of pass-through entities specified in the Code, or
provided the holder does not hold the instrument as part of a hedging
transaction, or as a stripped bond or stripped coupon. Instead, the holder of a
short-term note would include the OID accrued on the term note in gross income
upon a sale or exchange of the term note or at maturity, or if the term note is
payable in installments, as principal is paid thereon. The holder of a
short-term note would be required to defer deductions for any interest expense
on an obligation incurred to purchase or carry the short-term note to the extent
it exceeds the sum of the interest income, if any, and OID accrued on the term
note. However, a holder may elect to include OID in income as it accrues on all
obligations having a maturity of one year or less held by the holder in that
taxable year or thereafter, in which case the deferral rule of the preceding
sentence will not apply. For purposes of this paragraph, OID accrues on a
short-term note on a ratable, straight-line, basis, unless the holder
irrevocably elects under Treasury Department regulations, with respect to the
obligation to apply a constant interest method, using the holder's yield to
maturity and daily compounding.
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 faced with the "market discount" rules of the Code, and a holder who
purchases a term note at a premium will be under the bond premium amortization
rules of the Code.
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 and market
discount previously included by the noteholder in income with respect to the
term note and decreased by any bond premium previously amortized and any
principal payments previously received by the noteholder with respect to the
term note. Any gain or loss will be a capital gain or loss if the term note was
held as a capital asset, except for gain representing accrued interest or
accrued market discount not previously included in income. Capital gain or loss
will be long-term if the term note 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.
<PAGE>
INFORMATION REPORTING AND BACKUP WITHHOLDING. The trustee will be
required to report annually to the IRS, and to each related noteholder of
record, the amount of interest paid on the term notes, as well as the amount of
interest withheld for federal income taxes, if any, for each calendar year,
except as to exempt holders. Exempt holders are generally, corporations,
tax-exempt organizations, qualified pension and profit-sharing trusts,
individual retirement accounts, or nonresident aliens who provide certification
as to their status. Each holder will be required to provide to the trustee,
under penalties of perjury, a certificate containing the holder's name, address,
correct federal taxpayer identification number and a statement that the holder
is exempt from backup withholding. Should a nonexempt noteholder fail to provide
the required certification, the trustee will be required to withhold, from
interest otherwise payable to the holder, 31% of the interest and remit the
withheld amount to the IRS as a credit against the holder's federal income tax
liability.
The IRS has issued new regulations governing the backup withholding and
information reporting requirements. The new regulations are generally effective
for payments made after December 31, 1999. Noteholders should consult their tax
advisors with respect to the impact, if any, of the new regulations.
Because the seller will, for federal income tax purposes, treat all
term notes as indebtedness issued by a trust characterized as either a
partnership or a division of whichever entity owns all of the certificates, 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. Based on the foregoing opinion
that the term notes will be treated as indebtedness for federal income tax
purposes, if interest paid (or accrued) and/or OID (if any) accrued to a
noteholder who is 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 and/or OID (as the case may be), the interest generally will be
considered "portfolio interest", and generally will not be liable for United
States federal income tax and withholding tax, provided that the foreign person
(1) 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 the trust, or a "controlled foreign corporation" with respect to
which the trust or the seller is a "related person" within the meaning of the
Code or a bank whose receipt of interest is described in Section 871(h)(3) of
the Code and (2) provides to the U.S. person otherwise required to withhold
federal income tax from such interest, 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 indenture trustee within 30 days of the change. If the interest were
not portfolio interest, then it would be required to pay United States federal
income and withholding tax at a rate of 30 percent, unless the tax were reduced
or eliminated pursuant to an applicable tax treaty. The IRS has amended the
transition period relating to new regulations governing withholding, backup
withholding and information reporting requirements. Withholding certificates or
statements that are valid on December 31, 1999, may be treated as valid until
the earlier of its expiration or December 31, 2000. All existing certificates or
statements will cease to be effective after December 31, 2000.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a term note by a noteholder who is a foreign person will
be exempt from United States federal income and withholding tax, provided that
(1) the gain is not effectively connected with the conduct of a trade or
business in the United States by the foreign person, and (2) in the case of a
foreign individual, 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 required to pay 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 required to pay 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 a number of items,
unless it qualifies for a lower rate under an applicable tax treaty.
<PAGE>
A Registered Term Note beneficially owned by an individual who at the
time of the individual's death is a Foreign Person will not be subject to
federal estate tax as a result of such individual's death, provided that such
individual does not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of the seller entitled to vote
within the meaning of Section 871(h)(3) of the Code and provided that the
holding of such Registered Term Note was not effectively connected with the
conduct of a trade or business within the United States.
Under current Treasury regulations, backup withholding (imposed at a
rate of 31%) will not apply to payments made in respect of a term note if the
certifications described above are received, provided in each case that the
Trust or the Paying Agent, as the case may be, does not have actual knowledge
that the payee is a U.S. Person. The IRS has issued new regulations governing
the backup withholding and information reporting requirements. The new
regulations are generally effective for payments made after December 31, 2000.
Foreign persons should consult their tax advisors with respect to the impact, if
any, of the new regulations.
Because the seller will, for federal income tax purposes, treat all
term notes as indebtedness issued by a Trust characterized as either a
partnership or a division of whichever entity owns all of the Certificates, the
seller will not comply with the tax reporting requirements that would apply
under any alternative characterization of a Trust described below.
TAX CHARACTERIZATION OF THE TRUST
Depending upon whether certificates are owned by one or more persons,
the trust will be treated as a partnership or a division of seller for federal
income tax purposes. The relevant prospectus supplement will specify the
treatment of the trust for federal income tax purposes.
If the trust issues certificates only to the seller, the equity of the
trust will be wholly-owned by the seller. In this case, under the
"check-the-box" Treasury regulations, the trust will be treated as a division of
the seller, and hence a disregarded entity for federal income tax purposes. In
other words, for federal income tax purposes, the seller will be treated as the
owner of all the assets of the trust and the obligor of all the liabilities of
the trust. Accordingly, the trust would not be liable for any federal income
taxes as it would be deemed not to exist for federal income tax purposes. Under
the "check-the-box" Treasury regulations, unless it is treated as a trust for
federal income tax purposes, an unincorporated domestic entity with more than
one equity owner is automatically classified as a partnership for federal income
tax purposes. Because it is a business trust, the trust will not qualify as a
trust for federal income tax purposes, and accordingly, if certificates are sold
or issued in any manner which results in there being more than one
certificateholder, the trust will be treated as a partnership.
If certificates are issued to more than one person, 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 the
partnership being the certificateholders, including the seller, and the term
notes and the revolving notes being debt of the 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.
RISK OF ALTERNATIVE CHARACTERIZATION. If a trust were an association
taxable as a corporation for federal income tax purposes, it would have to pay
corporate income tax. Any corporate income tax could materially reduce or
eliminate cash that would otherwise be distributable with respect to the
applicable notes and certificates. Certificateholders could also be liable for
any corporate income tax that is unpaid by the trust. However, upon the issuance
of each series of certificates, tax counsel will deliver its opinion that the
trust will not be classified as an association taxable as a corporation.
<PAGE>
Under the Code and the relevant PTP REGULATIONS promulgated by the
Treasury, a partnership may be classified as a publicly traded partnership, or
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 safe harbors available under the PTP
regulations to avoid PTP characterization. Furthermore, the trust, even if it
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.
STATE, LOCAL AND FOREIGN TAX CONSEQUENCES
The above discussion does not address the tax treatment of any series
of term notes or the holders thereof under any state, local or foreign 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 tax advisors
regarding the state, local and foreign tax treatment of the applicable trust as
well as any state, local or foreign tax consequences to them of purchasing,
holding and disposing of term notes.
ERISA CONSIDERATIONS
Section 406 of ERISA and Section 4975 of the Code prohibit a pension,
profit-sharing or other employee benefit plan, as well as individual retirement
accounts and some types of Keogh Plans, each a BENEFIT PLAN, from engaging in
some types of transactions with persons that are "parties in interest" under
ERISA or "disqualified persons" under the Code with respect to a 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 those persons.
Some 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 the related prospectus
supplement states otherwise, 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 those 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 a Benefit Plan. Some of the 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 the notes. Included among these exemptions are:
Prohibited Transaction Class Exemption, 90-1, regarding investments by
insurance company pooled separate accounts; PTCE 91-38, regarding investments by
bank collective investment funds; PTCE 84-14, regarding transactions effected by
qualified professional asset managers; PTCE 95-60, regarding transactions by
life insurance company general accounts; and PTCE 96-23, regarding transactions
affected by in-house asset managers.
Employee benefit plans that are governmental plans, as defined in
Section 3(32) of ERISA, and some church plans, as defined in Section 3(33) of
ERISA, are not governed by ERISA.
<PAGE>
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,
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 the 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 underwriters will agree, based on
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 the term notes are purchased. In the event of a default by
any underwriter, each underwriting agreement will provide that, in some
circumstances, purchase commitments of the nondefaulting underwriters may be
increased or the underwriting agreement may be terminated.
Each prospectus supplement will either:
(1) 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 dealers participating in the offering of the
term notes or
(2) specify that the term notes are to be resold by the
underwriters in negotiated transactions at varying prices to be
determined at the time of the sale. After the initial public offering
of any term notes, the public offering price and the 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 a number of 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
Some legal matters relating to the term notes will be passed upon for
each trust, the seller and GMAC by Robert L. Schwartz, Esq., General Counsel of
the seller and Assistant General Counsel of GMAC, and by Kirkland & Ellis,
special counsel to each trust, the seller and GMAC. Mr. Schwartz 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. Federal income tax
matters will be passed upon for each trust, the seller and the servicer by
Kirkland & Ellis.
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
As required by the Securities Act, we filed a registration statement
relating to the securities with the SEC. This prospectus is part of the
registration statement, but the registration statement includes additional
information.
The servicer will file with the SEC all required annual, monthly and
special SEC reports and other information about the trust.
You may read and copy any reports, statements or other information we
file at the SEC's public reference room in Washington, D.C. You can request
copies of these documents, upon payment of a duplicating fee, by writing to the
SEC. Please call the SEC at (800) SEC-0330 for further information on the
operation of the public reference rooms. Our SEC filings are also available to
the public on the SEC Internet site (http://www.sec.gov).
INCORPORATION BY REFERENCE
The SEC allows us to "incorporate by reference" information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus. Information that we file later with
the SEC will automatically update the information in this prospectus. In all
cases, you should rely on the later information over different information
included in this prospectus or the accompanying prospectus supplement. We
incorporate by reference any future SEC reports and materials filed by or on
behalf of the trust until we terminate our offering of the certificates.
As a recipient of this prospectus, you may request a copy of any document
we incorporate by reference, except exhibits to the documents, unless the
exhibits are specifically incorporated by reference, at no cost, by writing us
at: General Motors Acceptance Corporation, 3044 West Grand Boulevard, Detroit,
Michigan 48202.
<PAGE>
GLOSSARY OF TERMS
THIS GLOSSARY OF TERMS DOES NOT PURPORT TO BE COMPLETE AND IS 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. SOME OF THE 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.
"ADDITIONAL TRUST PRINCIPAL" means, for any date, the sum of amounts
applied to cover the Trust Defaulted Amount and other amounts, all as more fully
described in the related prospectus supplement.
"ADMINISTRATIVE PURCHASE PAYMENT" has the meaning set forth in "The
Transfer and Servicing Agreements--Servicer Covenants."
"AVAILABLE RECEIVABLE" means, with respect to each trust, unless the
related prospectus supplement states otherwise, a receivable that is identified
by GMAC as satisfying the criteria set forth in clauses (1) through (16) of the
definition of Eligible Receivable.
"AVAILABLE TRUST INTEREST" means, with respect to each trust, for any
Distribution Date, the sum of (1) Trust Interest Collections, (2) Shared
Investment Proceeds and (3) 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 (1) Trust Principal Collections for the related
Collection Period, (2) Additional Trust Principal and (3) 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 the
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.
"BENEFIT PLAN" has the meaning set forth in "ERISA Considerations."
"Business Day" means, unless the related prospectus supplement states
differently, 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 ACCUMULATION EVENT" has the meaning set forth in "The Term Notes
- --Principal and Interest on the Term Notes."
"CASH ACCUMULATION PERIOD" has the meaning set forth in "The Term Notes
- --Principal and Interest on the Term Notes."
"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 the trust in
order to ensure that the Daily Trust Balance at least equals the Daily Trust
Invested Amount as described under "The Transfer and Servicing
Agreements--Application of Collections--Principal Collections."
<PAGE>
"CERTIFICATE DISTRIBUTION ACCOUNT" means, for each trust, on or more
accounts established by the servicer at and maintained with the related owner
trustee, in the name of the owner trustee on behalf of the related
certificateholders, in which amounts to be applied for distribution to the
certificateholders will be deposited and from which all distributions to the
certificateholders will be made.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations promulgated thereunder.
"COLLATERAL SECURITY" means, with respect to a dealer account included
in the pool of accounts and receivables arising in the dealer 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" means, with respect to each trust, one or more
bank accounts, established by the servicer at and maintained with the indenture
trustee, 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 dealer accounts related to that trust will be
deposited.
"COLLECTION PERIOD," including "related Collection Period," means, with
respect to any Distribution Date, the calendar month preceding the month in
which that Distribution Date occurs.
"COLLECTIONS" means Interest Collections and Principal Collections.
"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 the certificate balance or be set aside for
that purpose.
"DAILY PORTION" has the meaning set forth in "Federal Income Tax
Consequences--Tax Characterization and Treatment of Term Notes."
"DAILY TRUST BALANCE" means, with respect to each trust, for any date,
the aggregate principal balance of all receivables held by the trust on that
date.
"DAILY TRUST INVESTED AMOUNT" means, with respect to each trust, for
any date during a Collection Period, an amount equal to, without duplication:
(1) the outstanding aggregate principal amount of the
related term notes on that date plus
(2) the outstanding certificate balance on that date plus
(3) the Net Revolver Balance for that date minus
(4) the Cash Collateral Amount for that date minus
(5) any amounts held on that date in a related Distribution
Account, Cash Accumulation Account or other account for payment of
principal on the notes or distribution of the certificate balance on
the certificates, minus,
(6) the amount of unreimbursed trust Charge-Offs as of that
date.
"DEALER OVERCONCENTRATION RECEIVABLES" means, for any date, with
respect to any dealer or group of affiliated dealers, the outstanding Available
receivables with respect to that dealer or group of affiliated dealers to the
extent, if any, of the excess of:
<PAGE>
(1) the aggregate principal balance of all the Available
Receivables on that date over
(2) 1.0% (or a different percentage as may be set forth in the
related prospectus supplement) of the sum of (a) the Specified Maximum
Revolver Balance and (b) the aggregate principal balance of all
outstanding term notes as of that 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 trust sale and servicing agreement.
Dealer Overconcentration Receivables are determined in accordance with
the servicer's standard procedures for identifying and tracking
accounts of affiliated dealers.
"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 receivables
that may be repurchased by the seller or GMAC or purchased by the servicer on
that Distribution Date unless specified 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 the otherwise excluded receivables.
"DESIGNATED ACCOUNTS" has the meaning set forth in "The Transfer and
Servicing Agreements--Bank Accounts."
"DISCLOSURE DOCUMENT" has the meaning set forth in "prospectus Summary
- --The Term Notes."
"DISTRIBUTION ACCOUNTS" means the Securities Distribution Accounts and
the Swap Distribution Account, collectively.
"Distribution Date" means, with respect to each trust, the fifteenth
day of each calendar month or, if that 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."
"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 the trust is deemed to have occurred, and ending on the first to occur of:
(1) the payment in full of all outstanding securities issued
by the trust,
(2) the recommencement of the Revolving Period if and to the
extent described herein or in the related prospectus supplement; and
(3) the Trust Termination Date.
A Distribution Date is said to occur 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, a dealer account
which, as of the date of determination thereof:
<PAGE>
(1) is in favor of an entity or person that is not faced with
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;
(2) has been established by GMAC or General Motors;
(3) is maintained and serviced by GMAC;
(4) is not a fleet account; and
(5) satisfies the other criteria, if any, set forth in the
related prospectus supplement.
"ELIGIBLE DEPOSIT ACCOUNT" means either
(1) a segregated account with an Eligible Institution, or
(2) 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. This
corporate trust department having corporate trust powers and acting as
trustee for funds deposited in that account, so long as any of the
securities of the depository institution has a credit rating from each
rating agency then rating the securities in one of its generic rating
categories which signifies investment grade.
"ELIGIBLE INSTITUTION" means, with respect to a trust, either
(1) the corporate trust department of the related
indenture trustee or owner trustee, as applicable, or
(2) 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,
(a) which has either (i) a long-term
unsecured debt rating acceptable to the rating
agencies rating the notes or (ii) a short-term
unsecured debt rating or certificate of deposit
rating acceptable to the Rating Agencies and (b)
whose deposits are insured by the Federal Deposit
Insurance Corporation or any successor thereto.
"ELIGIBLE RECEIVABLE" means, with respect to any date, a receivable,
except as otherwise provided in the related prospectus supplement:
(1) 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;
(2) which arose under a dealer account that was an Eligible
Account, and not a Selected Account, at the time of the transfer of the
receivable from GMAC to the seller;
(3) which is payable in United States dollars;
(4) 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;
<PAGE>
(5) which is advanced against a vehicle;
(6) 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;
(7) 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;
(8) which was created in compliance in all material respects
with all requirements of law applicable thereto;
(9) as to which, at all times following the transfer of the
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 the
related trust sale and servicing agreement;
(10) 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;
(11) which is the legal, valid, binding and assignable payment
obligation of the dealer relating thereto, enforceable against the
dealer in accordance with its terms, except where enforceability may be
limited by the insolvency laws;
(12) which, at the time of transfer thereof by GMAC to the
seller, is not faced with any valid right of rescission, setoff or any
other defense, including defenses arising out of violations of usury
laws, of the related dealer;
(13) 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 the Receivable required to
be satisfied at that time;
(14) 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;
(15) which constitutes "chattel paper," an "account" or
a "general intangible" as defined in Article 9 of the UCC as in effect
in the State of Michigan;
(16) with respect to which the related dealer has not
postponed principal payment pursuant to DPP, any similar arrangement,
or any instalment payment program;
(17) which does not constitute a Dealer Overconcentration
Receivable; and
(18) 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 that receivable is thereafter determined not to
satisfy the eligibility criteria set forth above and is reassigned by
the related trust to GMAC or the seller pursuant to the related
Transfer and Servicing Agreements.
"EVENT OF DEFAULT" has the meaning set forth in "The Term Notes--The
Indenture-- Events of Default; Rights upon Events of Default."
<PAGE>
"EXCESS AVAILABLE RECEIVABLES" means, with respect to each trust, for
any date, Available Receivables to the extent, if any, of the excess of:
(1) the aggregate principal balance of Available Receivables
less the aggregate principal balance of Dealer Overconcentration
receivables over
(2) the Maximum Pool Balance.
If, on any date, there exist Excess Available receivables, those
receivables constituting Excess Available receivables shall be identified
pursuant to the related trust sale and servicing agreement.
"FOREIGN PERSON" means a any noteholder other than a U.S. person.
"INITIAL CUT-OFF DATE" means, with respect to each trust, the date so
specified in the prospectus supplement relating to the first series of term
notes issued by the trust.
"INSOLVENCY EVENT" means, with respect to a specified entity:
(1) 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 the
entity, in any insolvency, readjustment of debt, marshaling of assets
and liabilities or similar proceedings, or for the winding-up or
liquidation of the entity's affairs, and the continuance of that decree
or order unstayed and in effect for a period of 90 consecutive days,
(2) the consent by the entity to the appointment of a
conservator, receiver or liquidator in any insolvency, bankruptcy,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings of or relating to the entity or of or relating to
substantially all of the entity's property, or
(3) the 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.
"INTEREST COLLECTIONS" means, with respect to any trust, for any
Collection Period, collections received during the Collection Period on the
receivables existing under the dealer 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 the 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 ACCOUNTS" means credit lines or accounts pursuant to which
advances are made to finance new and used boats and related items.
"MAXIMUM POOL BALANCE" means, with respect to each trust, the sum of
(1) the Maximum Revolver Balance,
<PAGE>
(2) 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
(3) 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 the
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 that 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.
"MONTHLY PAYMENT RATE" means, for any Collection Period, the percentage
obtained by dividing Principal Collections for the Collection Period by the
average daily aggregate principal balance of all receivables included in the
Accounts in the pool of accounts during that Collection Period.
"MONTHLY SERVICING FEE" means, with respect to each trust, unless the
related prospectus supplement states differently, for any Distribution Date, the
product of (1) the average daily balance of Daily Trust Invested Amount for the
related Collection Period and (2) one-twelfth of the Servicing Fee Rate.
"NET RECEIVABLES RATE" means, with respect to each trust, unless the
related prospectus supplement states differently, with respect to any Collection
Period, a rate equal to the product of
(1) the quotient obtained by dividing (a) 360 by (b) the
actual number of days elapsed in that Collection Period and
(2) 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 the immediately
preceding Collection Period, and the denominator of which is the
average Daily Trust Balance for the 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 the date for
the payment of principal.
"NOTE DISTRIBUTION ACCOUNT" means, with respect to each trust, one or
more accounts, established by the servicer at and maintained with the related
indenture trustee, in the name of the indenture trustee, on behalf of the
holders of the related term notes, in which amounts to be applied for payment to
the term noteholders will be deposited and from which all payments to the term
noteholders will be made.
"OID" has the meaning set forth in "Federal Income Tax Consequences
- --Tax Characterization and Treatment of Term Notes."
"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 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 the notes prior to the Wind Down
Period or an Early Amortization Period.
<PAGE>
"PRINCIPAL COLLECTIONS" means, with respect to any trust, for any date
or any period, collections received on that date or during that period, as
applicable, on the receivables existing under the dealer accounts in the related
pool of accounts that the servicer attributes to principal pursuant to its
servicing guidelines, including the principal portion of warranty payments and
Administrative Purchase Payments.
"PTP" means, under the Code and Treasury Department regulations,
publicly traded partnership.
"REASSIGNMENT AMOUNT" means, for any Distribution Date, after giving
effect to any allocations, withdrawals and deposits otherwise to be made on that
Distribution Date, the sum of the Daily Trust Invested Amount, which, for that
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.
"RECEIVABLES PURCHASE DATE" means, with respect to each trust, unless
the related prospectus supplement states differently, each Business Day during
the related Revolving Period on which Eligible Receivables are created in any
dealer account then included in the related pool of accounts, except as
described under "The Transfer and Servicing Agreements--Insolvency Events."
"REGISTERED TERM NOTES" means a term note issued by the trust in
registered form.
"RELATED DOCUMENTS" means the indenture, the transfer and servicing
agreement, and other related documents for the trust.
"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" means (i) receivables in the dealer accounts
included in the related pool of accounts that GMAC does not transfer to the
seller and collections thereon and (ii) any receivables and collections thereon
repurchased by GMAC from the seller or the trust as described herein.
"REVOLVER DISTRIBUTION ACCOUNT" means, with respect to each trust, one
or more accounts, established by the servicer at and maintained with the related
indenture trustee, in the name of the indenture trustee, on behalf of the
holders of the related revolving notes, in which amounts to be applied for
payment to the revolving noteholders will be deposited and from which all
payments to the revolving noteholders will be made.
"REVOLVER INTEREST RATE" means for any Distribution Date and for any
series of revolving notes, the rate or rates of interest on those revolving
notes.
"Revolving Period" means, with respect to each trust, the period
commencing on thedate on which the trust issues its first series of term notes
and continuing until the earlier of (1) the commencement of an Early
Amortization Period and (2) the Scheduled Revolving Period Termination Date. The
Revolving Period for a trust may recommence in limited circumstances described
herein or in the related prospectus supplement.
"SCHEDULE OF ACCOUNTS" means the list of the dealer accounts included
in the pool of accounts, which may be amended and supplemented from time to
time.
<PAGE>
"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 so specified in the
related prospectus supplement.
"SECURITIES DISTRIBUTION ACCOUNTS" means the Note Distribution Account,
the Revolver Distribution Account, and the Certificate Distribution Account,
collectively.
"SELECTED ACCOUNTS" has the meaning set forth in the "The Transfer and
Servicing Agreements--Addition and Removal of Accounts."
"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.
"SERVICING FEE RATE" means, with respect to each trust, 1% unless any
related prospectus supplement states otherwise.
"SHORT TERM NOTE" has the meaning set forth in "Federal Income Tax
Consequences--Tax Characterization and Treatment of Term Notes."
"STATED FINAL PAYMENT DATE" means, with respect to any series of notes
or certificates, the date so set forth in the related prospectus supplement, on
which date the final payment on the notes or final distribution on the
certificates is due.
"STRIP NOTES" has the meaning set forth in "The Term Notes--Principal
and Interest on the Term Notes."
"SWAP DISTRIBUTION ACCOUNT" means, f so specified in the prospectus
supplement, one or more established by the servicer at and maintained with the
indenture trustee, in the name of the indenture trustee on behalf of the
counterparty to an applicable currency swap, interest rate swap or other swap,
together with the holders of the term notes of the relevant series, in which
amounts to be applied for distribution to such counterparty will be deposited
and from which distributions to such counterparty will be made.
"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 that series of notes, to
the extent not previously paid.
"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 CHARGE-OFFS" means, with respect to each trust, for any
Distribution Date, the amount of the trust Defaulted Amount for that
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 the 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.
"TRUST INTEREST COLLECTIONS" means, with respect to each trust,
Interest Collections for the related Collection Period attributable to the
receivables held by the trust, as more fully described herein and in the related
prospectus supplement.
<PAGE>
"TRUST PRINCIPAL COLLECTIONS" means, with respect to each trust,
Principal Collections for the related Collection Period attributable to the
receivables held by the trust, as more fully described herein and in the related
prospectus supplement.
"TRUST TERMINATION DATE" is the date each trust will terminate and will
be on the earlier to occur of
(1) 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 have
been 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 that time, and
(2) the specified Trust Termination Date as set forth in the
related prospectus supplement.
"UCC" means the Uniform Commercial Code as in effect in Delaware,
Michigan or New York, and as may be amended from time to time.
"U.S PERSON" means (i) a citizen or resident of the United States, (ii)
a corporation or partnership created or organized in the United States or under
the laws of the United States or of any state, (iii) an estate the income of
which is subject to federal income taxation regardless of its source, or (iv) a
trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United States
fiduciaries have the authority to control all substantial decisions of the
trust.
"VEHICLE COLLATERAL SECURITY" means, with respect to an Account and the
receivables arising under that dealer account, the security interest in the
vehicles of the related dealer granted to secure the obligations of that dealer
in connection therewith and any proceeds therefrom.
"VOTING INTERESTS" means, as of any date, the aggregate outstanding
certificate balance of all certificates; provided, however, that if GMAC and its
affiliates own less than 100% of the certificates, then certificates owned by
GMAC, the trust or any affiliate of GMAC or the trust, other than the seller,
shall be disregarded and deemed not to be outstanding. However, in determining
whether the owner trustee shall be protected in relying upon any request,
demand, authorization, direction, notice, consent or waiver, only certificates
that the owner trustee knows to be so owned shall 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
the pledgor's right so to act with respect to the certificates and that the
pledgee is not GMAC or the Trust or any affiliate of GMAC or the trust, 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 (1) the commencement of an
Early Amortization Period and (2) 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 the Wind Down Period.
<PAGE>
SUBJECT TO COMPLETION, DATED [date], [year]
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED [date], [year]
SUPERIOR WHOLESALE INVENTORY FINANCING TRUST [ ]
Issuer of the [$ ] Floating Rate Asset Backed Term Notes,
Series [ ]
WHOLESALE AUTO RECEIVABLES CORPORATION
Seller
GENERAL MOTORS ACCEPTANCE CORPORATION
Servicer
<PAGE>
You should consider carefully the risk factors beginning on page ____ in this
prospectus supplement and page __ in the prospectus.
The [ ] term notes represent obligations of the trust only and do not represent
obligations of or interests in, and are not guaranteed by, Wholesale Auto
Receivables Corporation, General Motors Acceptance Corporation or any of their
affiliates.
This prospectus supplement may be used to offer and sell the [ ] term notes only
if accompanied by the prospectus.
The trust will issue [ ] term notes to the public--
Principal amount $
Interest rate
Targeted final payment date
Price to public _____%
Underwriting discount _____%
Proceeds from sale $----------
CREDIT ENHANCEMENT
o Reserve fund, with a deposit of __________.
o Cash accumulation reserve fund, with a deposit of ___________.
o A subordinated certificate class.
<PAGE>
This prospectus supplement and the accompanying prospectus relate only to the
offering of the [ ] term notes.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED
THESE SECURITIES OR DETERMINED THAT THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS
IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
Underwriter
[NAME OF UNDERWRITER]
[Date], [Year]
<PAGE>
THE [ ] TERM NOTES REPRESENT OBLIGATIONS OF THE TRUST ONLY AND DO NOT
REPRESENT OBLIGATIONS OF OR INTERESTS IN, AND ARE NOT GUARANTEED BY,
WHOLESALE AUTO RECEIVABLES CORPORATION, GENERAL MOTORS ACCEPTANCE
CORPORATION OR ANY OF THEIR AFFILIATES
THIS PROSPECTUS SUPPLEMENT MAY BE USED TO OFFER AND SELL THE TERM
NOTES ONLY IF ACCOMPANIED BY THE PROSPECTUS.
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
We provide information to you about the [ ] term notes in two separate
documents:
(a) the prospectus, which provides general information and
terms of the term notes, some of which may not apply to a particular
series of term notes, including the [ ] term notes.
(b) this prospectus supplement, which will provide information
regarding the pool of contracts held by the trust and will specify the
terms of the [ ] term notes.
IF THE TERMS OF THE [ ] TERM NOTES VARY BETWEEN THE PROSPECTUS AND THIS
PROSPECTUS SUPPLEMENT, YOU SHOULD RELY ON THE INFORMATION IN THIS PROSPECTUS
SUPPLEMENT.
You should rely only on the information provided in the accompanying
prospectus and this prospectus supplement, including the information
incorporated by reference. We have not authorized anyone to provide you with
other or different information. We are not offering the [ ] term notes in any
state where the offer is not permitted.
<PAGE>
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT PAGE
SUMMARY........................................... S-__
RISK FACTORS...................................... S-__
THE TRUST......................................... S-__
THE U.S. PORTFOLIO................................ S-__
THE POOL OF ACCOUNTS.............................. S-__
THE [ ] TERM NOTES........................ S-__
THE REVOLVING NOTES............................... S-__
THE [ ] CERTIFICATES...................... S-__
THE TRANSFER AND SERVICING AGREEMENTS............. S-__
ERISA CONSIDERATIONS.............................. S-__
FEDERAL INCOME TAX CONSEQUENCES................... S-__
UNDERWRITING...................................... S-__
LEGAL OPINIONS.................................... S-__
GLOSSARY.......................................... S-__
PROSPECTUS
SUMMARY OF TERMS..................................
RISK FACTORS......................................
THE SERVICER......................................
THE SELLER........................................
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.............
LEGAL ASPECTS.....................................
FEDERAL INCOME TAX CONSEQUENCES...................
STATE AND LOCAL TAX CONSEQUENCES..................
ERISA CONSIDERATIONS..............................
PLAN OF DISTRIBUTION..............................
LEGAL OPINIONS....................................
WHERE YOU CAN FIND MORE INFORMATION...............
INCORPORATION BY REFERENCE........................
GLOSSARY OF TERMS.................................
<PAGE>
S-41
[OBJECT OMITTED]
<PAGE>
SUMMARY
This summary highlights selected information from this document and does not
contain all of the information that you need to consider in making your
investment decision. To understand the terms of this offering of the [ ] term
notes, carefully read this entire document and the accompanying prospectus.
<PAGE>
THE PARTIES
ISSUER/TRUST
Superior Wholesale Inventory Financing Trust [ ], a Delaware business trust
formed by Wholesale Auto Receivables Corporation.
SELLER
Wholesale Auto Receivables Corporation, a wholly-owned subsidiary of GMAC.
SERVICER
GMAC, a wholly-owned subsidiary of General Motors Corporation.
INDENTURE TRUSTEE
[ ]
OWNER TRUSTEE
[ ]
CAPITALIZATION OF THE TRUST
GENERAL
On the initial closing date, [Date], the trust will issue the following
securities:
o [$ floating rate asset backed term notes, series ], which we refer to
as the [ ] term notes The [ ] term notes will bear interest, payable
monthly, at a rate equal to [one-month U.S. dollar LIBOR] plus [ ]
basis points annually.
o floating rate asset backed revolving note, series [ ] with a maximum
revolver balance of [$ ], which we refer to as the [ ]
revolving note.
o [$ ]floating rate asset backed certificates, class [ ], which
we refer to as the [ ] certificates.
Only the [ ] term notes are offered hereby. The [ ] revolving note and
the [ ] certificates will initially be retained by the seller and are not
offered in this prospectus supplement. An interest in the [ ] revolving note
will be sold in a private placement.
The [ ] term notes will be registered in the name of the nominee for
the Depository Trust Company. You may hold your [ ] term notes through the
book-entry systems of DTC in the United States or Cedelbank or Euroclear in
Europe.
After the initial closing date, the trust may issue from time to time
additional series of term notes and revolving notes and additional certificates.
We use the term notes to mean the [ ] term notes, the [ ] revolving
note issued on the initial closing date and any additional series of term notes
or revolving notes. We use the term securities to mean the notes, the [ ]
certificates and any additional certificates.
SUBORDINATION
The [ ] certificates will be subordinated to all series of notes. The [
] certificates will receive no principal until the notes are fully paid or an
allocation of principal sufficient to fully pay the notes has been made. The [ ]
revolving note and the [ ] term notes will generally have equal priority in
payments, although the timing of payments may vary.
BASIS SWAPS
On the initial closing date, the trust will enter into a basis swap for
the benefit of the [ ] term notes. The basis swap counterparty, GMAC, will pay
to the trust on each distribution date, interest at a per annum rate of U.S.
dollar [ ] month LIBOR plus _______%. The trust will pay the basis swap
counterparty interest at a per annum rate equal to the prime rate. Only the net
amount due by the trust or by the basis swap counterparty, as the case may be,
will be remitted. The trust will enter into similar basis swaps with GMAC for
the benefit of the [ ] revolving note and the [ ] certificates.
PAYMENTS ON THE [ ] TERM NOTES
INTEREST
o The trust will pay interest on the [ ] term notes monthly, on the
[15th] day of each month or on the next business day, which we refer to
as the monthly distribution date. The first monthly distribution date
is [date].
o The prospectus and this prospectus supplement describe how the trust
will allocate available funds to interest payments on the [ ] term
notes and other securities.
<PAGE>
o The trust will pay interest on the [ ] term notes based on the [actual
number of days] elapsed and a [360-day year]. Interest will accrue from
and including the initial closing date, or from and including the most
recent distribution date on which the trust has paid interest to but
excluding the current monthly distribution date.
PRINCIPAL PAYMENTS
o We expect that the trust will pay the entire principal balance of the [
] term notes on their targeted final payment date, which is the monthly
distribution date in [ ] 200[ ].
o Starting approximately five months before this targeted final payment
date, the servicer will calculate the number of months in which the
trust will allocate principal collections to the repayment of the [ ]
term notes on the targeted final payment date. We refer to this period
as the payment period. The trust will accumulate the allocated
principal collections during the payment period in a distribution
account for the [ ] term notes.
o The trust could make principal payments on the [ ] term notes sooner
than the targeted final payment date if a rapid amortization event
occurs. The rapid amortization events for the [ ] term notes are:
0 General Motors, GMAC or the seller becomes insolvent;
0 the trust does not pay the [ ] term notes in full by their stated
final payment date;
0 the trust or the seller is required to register under the Investment
Company Act; and
0 the balance in the cash accumulation reserve fund declines below $____.
On each monthly distribution date after the occurrence of a rapid
amortization event, the trust will apply allocated principal collections and
other available funds to repay principal on the [ ] term notes.
o It is also possible that the trust will not repay the entire principal
balance of the [ ] term notes on or before the targeted final payment
date. If principal collections are slower than anticipated during the
payment period, then the payment of principal on the targeted final
payment date could be insufficient to repay all of the [ ] term notes'
principal balance. In that case, allocable principal collections will
be applied to the repayment of principal on the [ ] term notes on
monthly subsequent distribution dates.
o All unpaid principal on the [ ] term notes will be due on the stated
final payment date, which is the monthly distribution date in [ ] 200 [
]. If the trust fails to pay the [ ] term notes in full on the stated
final payment date, this will trigger an event of default and a rapid
amortization event.
o The servicer may repurchase all of the remaining receivables when:
0 The daily trust balance is equal to or less than ____% of the
highest sum, at any time since the initial closing date, of
the daily trust balance plus cash held by the trust plus
deposits in the cash accumulation account and the note
distribution account, and
0 either no term notes are outstanding or the wind down period
is in effect.
CREDIT ENHANCEMENT AND LIQUIDITY
The trust will repay [ ] term notes primarily from principal and interest
collections on the receivables. In addition, there are several additional
sources from which funds will be available to pay principal and interest on the
[ ] term notes as well as other payments which the trust must make, including:
o the basis swap for the [ ] term notes;
o excess interest, which is equal to interest collected on the
receivables, minus interest the trust pays on securities, minus the
trust's expense of entering into the basis swap;
o advances the servicer makes to the trust in some circumstances;
o subordination of payments on the certificates to payments on the notes;
o monies in the reserve fund; and
o in some circumstances, monies in the cash accumulation reserve fund.
ASSETS OF THE TRUST
<PAGE>
The primary asset of the trust will be a revolving pool of receivables.
This pool arises under floor plan financing agreements between GMAC and a group
of retail automotive dealers franchised by General Motors. These agreements are
lines of credit which dealers use to purchase new and used motor vehicles
manufactured or distributed by General Motors and other motor vehicle
manufacturers and distributors. We refer to the dealers' obligations under these
agreements as receivables.
The receivables will be sold by GMAC to the seller, and then by the
seller to the trust. The trust will grant a security interest in the receivables
and other trust property to the indenture trustee on behalf of the noteholders.
The trust property will also include:
o basis swaps for the [ ] term notes, the [ ] revolving note and the
[ ] certificates;
o security interests in the collateral securing the dealers' obligation
to pay the receivables, which will include vehicles and may include
parts inventory, equipment, fixtures, service accounts, real estate and
guarantees;
o amounts held on deposit in trust accounts maintained for the trust;
o any recourse GMAC has against the dealers under the floor plan
financing agreements;
o some of the rights the seller has under its purchase agreement with
GMAC; and
o all rights the trust has under its sale and servicing agreement with
the seller.
REVOLVING POOL
As new receivables arise, the seller will ordinarily transfer them to
the trust on a daily basis. At the same time, prior to the date on which funds
will first be set aside for payments on the [ ] term notes, the trust will
ordinarily use principal collections on the receivables to purchase new
receivables from the seller or to pay down the principal balance on the [ ]
revolving note. The trust could also retain principal collections and invest
them in eligible investments, if sufficient new receivables were not available.
CASH ACCUMULATION
If a cash accumulation event occurs, the trust will retain all of the
principal collections allocable to the [ ] term notes. The trust will then
invest them in eligible investments in a cash accumulation account dedicated to
the [ ] term notes. The trust will continue to invest these funds in eligible
investments until the targeted final payment date for the [ ] term notes, or
until the occurrence of a rapid amortization event. Cash accumulation events
generally occur upon defaults under the underlying transaction agreements and
when the pool of receivables to satisfy various performance tests or
measurements on the pool of receivables. These tests may include
o the payment rate on the receivables,
o the composition of the receivables pool,
o the characteristics of the receivables, and
o the amount on deposit in the reserve fund.
Each of the early amortization events identified in the prospectus
under "The Transfer and Servicing Agreements-- Early Amortization Events" is a
cash accumulation event, other than those which are rapid amortization events.
In addition, the termination of any basis swap identified in this
prospectus supplement is generally a cash accumulation event.
RESERVE FUNDS
o On the closing date, the seller will deposit $__________ in cash or
eligible investments into the reserve fund. If available, amounts will
be added or released on each distribution date to maintain the balance
at a specified reserve amount.
o To the extent that funds from principal and interest collections on the
receivables and net receipts on the basis swaps are not sufficient to
pay the monthly servicing fee, net amounts under the basis swaps and to
make required distributions on the notes or any other series or class
of securities, the trust will withdraw cash from the reserve fund for
that purpose.
The trust may experience shortfalls in principal and interest
collections on the receivables and net receipts on the basis swaps. The trust
will withdraw cash from the reserve fund when these shortfalls cause the trust
to have insufficient amounts to
o pay the monthly servicing fee,
o pay net amounts under the basis swaps, and
o to make required distributions on the notes.
On any monthly distribution date, after the trust pays the monthly
servicing fee and makes all deposits or payments due on the securities and any
related basis swaps, the amount in the reserve fund may exceed the specified
reserve amount. If so, the trust will pay the excess to the seller.
<PAGE>
On the closing date, the seller will deposit $__________ in cash or
eligible investments into the cash accumulation reserve fund. This account will
supplement the funds available to pay interest on the [ ] term notes if a cash
accumulation event occurs. Amounts will be added or released on each
distribution date to maintain the balance at a specified reserve amount.
SERVICING FEES
Each month the trust will pay the servicer a servicing fee, based on
_____% per annum, as compensation for servicing the receivables.
TAX STATUS
In the opinion of Kirkland & Ellis, special tax counsel, the [ ] term
notes will be characterized as indebtedness for federal income tax purposes.
Each term noteholder, by the acceptance of a [ ] term note, will agree
to treat the [ ] term notes as indebtedness for federal, state and local income
and franchise tax purposes.
ERISA CONSIDERATIONS
Although it must consider the factors discussed under "ERISA
Considerations" an employee benefit plan governed by the Employee Retirement
Income Security Act of 1974 may generally purchase the [ ] term notes. An
employee benefit plan should consult with its counsel before purchasing the [ ]
term notes.
RATINGS
o We will not issue the [ ] term notes unless they are rated in the
highest rating category for long-term obligations (i.e., "AAA") by at
least one nationally recognized rating agency.
o The rating of the [ ] term notes is partially based on the expected
performance of the receivables.
o We cannot assure you that a rating agency will maintain its rating if
circumstances change. If a rating agency changes its rating, no one has
an obligation to provide additional credit enhancement or restore the
original rating.
o A rating is not a recommendation to buy the [ ] term notes. The rating
considers only the likelihood that the trust will pay interest on time
and will ultimately pay principal. The rating does not consider either
the [ ] term notes' price, their suitability to a particular investor
or the timing of principal payments.
<PAGE>
RISK FACTORS
In addition to the risk factors on pages _____of the prospectus, you
should consider the following risk factor in deciding whether to purchase the [
] term notes.
<PAGE>
The year 2000 problem may affect collections and distributions on the
receivables.
We are aware of issues associated with the programming code in existing computer
systems as the year 2000 approaches. The year 2000 problem is pervasive and
complex; virtually every computer operation will be affected in some way by the
rollover of the two digit year value to 00. The central question in the year
2000 problem is whether computer systems will properly recognize date-sensitive
information when the year changes to 2000. Systems that do not properly
recognize this information could generate erroneous data or could fail.
Both the servicer and the indenture trustee to the extent applicable to its
services under the agreements to which each is a party, have advised us that
they are each committed to either
(1) implement modifications to their respective existing systems to the extent
required to cause them to be year 2000 ready or
(2) acquire computer systems that are year 2000 ready in each case prior to
January 1, 2000.
However, we have not independently investigated the computer systems of the
servicer or the indenture trustee. In the event that computer problems arise
because these efforts are not completed on time, or in the event that the
computer systems of the servicer or the indenture trustee are not fully year
2000 ready, the resulting disruptions in the collection or distribution of
receipts on the receivables could materially and adversely affect your
investment.
<PAGE>
Some capitalized terms used in this prospectus supplement have the
meanings given below in the "Glossary of Principal Terms" on page S-____ of the
prospectus supplement or in the "Glossary of Terms" in the prospectus.
THE TRUST
The issuer, Superior Wholesale Inventory Financing Trust [ ], is a
business trust formed under the laws of the State of Delaware. The trust will be
established and operated pursuant to a trust agreement dated on or before [DATE]
which is the date the trust initially issues securities, or the INITIAL ISSUANCE
DATE.
The trust will engage in only the following activities:
o acquire, hold and manage the receivables and other
assets of the trust;
o issue securities;
o make payments on the securities; and
o take any action necessary to fulfill the role of the
trust in connection with the [ ] term notes, the [ ]
revolving note, the [ ] certificates and any
additional securities issued by the trust.
The trust's principal offices are in Wilmington, Delaware, in care of [
], as owner trustee, at the address listed under "--The Owner Trustee" below.
CAPITALIZATION OF THE TRUST
The following table illustrates the capitalization of the trust as of
the initial issuance date, as if the issuance of the [ ] term notes, [ ]
revolving note and [ ] certificates had taken place on that date and assuming
the Specified Maximum Revolver Balance was borrowed on that date under the [ ]
revolving note:
[ ] term notes.......................... $[ ]
[ ] revolving note...................... [ ]
[ ] certificates........................ [___________]
Total................................ $[ ]
The [ ] certificates represent the equity of the trust and will be
issued under the trust agreement. The [ ] certificates will initially be held by
the seller and are not being offered hereby.
THE OWNER TRUSTEE
[ ], a [ ] corporation, is the owner trustee under the trust agreement.
Its principal offices are located at [ ].
THE TRUST ESTATE
The property of the trust - the trust estate - will include:
o the seller's right, title and interest in, to and under
o the Eligible Receivables existing in the dealer
accounts included in the pool of accounts on [date],
which is generally the date two days before the trust
will initially issue term notes
o the Eligible Receivables existing in any additional
dealer accounts added to the pool of dealer accounts
on the related cut-off date for additional accounts
o the Eligible Receivables generated under each of the
foregoing dealer accounts from time to time
thereafter so long as the dealer account is included
in the pool of accounts
o principal and interest collections, together
collections on all the Eligible Receivables
<PAGE>
o the related collateral security for the Eligible
Receivables
o the seller's rights and remedies under the pooling and
servicing agreement associated with the receivables
transferred to the trust;
o the rights of the trust in relation to initial basis swaps;
o the reserve funds, owned by the seller and pledged to the
indenture trustee, including the Reserve Fund, the Cash
Accumulation Reserve Fund and the Certificate Reserve Fund, if
any;
o the rights of the trust in relation to following accounts,
including the amounts held therein for the benefit of the [ ]
term notes:
o the Collection Account, including the Cash Collateral
Amount
o the Cash Accumulation Account
o the distribution accounts for the term notes,
revolving notes and certificates
o any other account hereafter established for the
benefit of all holders of securities or for the
benefit of a specific series
o the rights of the trust in relation to any other Specified
Support Arrangement, or any other assets transferred to the
trust after the initial issuance date; and
o the rights of the trust in relation to each swap and account
established on or after the date the trust initially issues
securities, or the initial issuance date for the benefit of
any other series or class of securities or for the benefit of
all other series and classes of securities.
REINVESTMENT OF TRUST PRINCIPAL COLLECTIONS
Typically, the trust will use all Trust Principal Collections to
purchase new receivables, make payments that are due in respect of a series of
term notes or pay down the balance on the revolving notes. However, during some
periods, including a Payment Period or Cash Accumulation Period for the [ ] term
notes, the trust will accumulate the portion of trust Principal Collections and
other available amounts which are allocated to notes which have accumulation
provisions. Generally, the trust will invest the accumulated amounts in Eligible
Investments to provide for repayment of principal on those notes with the
accumulation provisions, including the [ ] term notes, at the Targeted Final
Payment Dates for such notes. For a description of the application of principal
collections by the trust in each of these periods, see "Transfer and Servicing
Agreements--Application of Principal Collections to the [ ] Term Notes" in this
prospectus supplement.
THE U.S. PORTFOLIO
GENERAL
As of [date], there were approximately [ ] dealers with active credit
lines in GMAC's U.S. portfolio. The total U.S. portfolio, which includes both
owned receivables and serviced receivables, consisted of receivables with an
aggregate principal balance of approximately $ _______ billion. GMAC is the
primary source of floor plan financing for General Motors-franchised dealers in
the United States. In the [__________], GMAC provided financing for
approximately _____% of new factory sales to General Motors dealers in the
United States.
As of [date], receivables with respect to new vehicles represented
approximately __% of the aggregate principal amount of all receivables in the
U.S. Portfolio. receivables with respect to Used Vehicles represented
approximately [9%] of the aggregate principal amount of all receivables in the
U.S. Portfolio. Other receivables, including receivables for heavy-duty trucks,
off-highway vehicles and marine units represented approximately __% of the
aggregate principal amount of all receivables in the U.S. Portfolio. As of
[date], approximately __% of the used vehicles in GMAC's U.S. portfolio
represented vehicles bought at closed auctions held by General Motors or others.
As of [date], the average Account in GMAC's U.S. portfolio provided for credit
lines for new vehicles and used vehicles of approximately _____ dealer units and
_____ units, respectively, and the average principal balance of receivables
thereunder was approximately $_____ million and $_____ million, respectively.
<PAGE>
In 1998, GMAC streamlined the billing process on its dealer incentive
programs. Rather than charge a spread over the prime rate and separately
distribute dealer incentives, GMAC charges dealers participating in the "net
billing" program a spread that is reduced by any dealer incentives. As more
dealers participate in the net billing program, the spread over the prime rate
charged on the receivables is lower than it was in prior years. For the [ ]
months ended [date], the weighted average spread over the Prime Rate charged to
dealers in GMAC's U.S. portfolio was approximately __%. Some dealers elect not
to participate in the net billing program and therefore continue to be offered
rebates under incentive programs. For the [ ] months ended [date], the average
annual rate of dealer credits on GMAC's U.S. portfolio ranged between ____ and
____ basis points. The amount of any credit is applied to a participating
dealer's interest charges on floor plan and other loans, if any. We cannot
assure you that the spread over the prime rate in the future will be similar to
historical experience.
As of [date], the aggregate principal amount financed with respect to
dealers assigned to "no credit" status was approximately $_____ million or ____%
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 GMAC's U.S. portfolio as a whole in each of
the periods shown. GMAC's U.S. portfolio includes fleet accounts and other
accounts that are not Eligible Accounts as well as dealer accounts that meet the
eligibility criteria for inclusion in the trust but were not selected. Thus, the
dealer accounts related to the trust represent only a portion of GMAC's entire
U.S. portfolio and, accordingly, actual loss experience with respect to those
dealer accounts may be different than that of GMAC's 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 assistance or incentives, the loss experience of GMAC's
U.S. portfolio, including the dealer accounts, might 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
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
<S> <C> <C> <C> <C> <C>
[Date] 1998 1997 1996 1995
(DOLLARS IN MILLIONS)
Average
Receivables
Balance............................... $_____ $ 16,859.6 $ 18,276.0 $ 16,991.5 $17,559.4
Net Losses
(Recoveries).......................... $_____ $ 11.8 $ (10.5) $ (8.1) $ 6.2
Net Losses -----------
(Recoveries)
Liquidations
(includes all principal reductions)... ____% 0.014% (0.012)% (0.009)% 0.007%
Net Losses
(Recoveries)/Average
Principal
Receivables
Balance............................... ____% 0.070% (0.058)% (0.048)% 0.035%
</TABLE>
In the above table, AVERAGE RECEIVABLES BALANCE is the average of the
month-end principal balances of receivables, plus accrued interest, for each of
the months during that period. NET LOSSES in any period are gross losses less
recoveries for that period. Recoveries include recoveries from collateral
security in addition to vehicles.
AGING EXPERIENCE
<PAGE>
The following table provides the age distribution of the receivables for
all dealers in GMAC's 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, the interest commencement
date will generally be the date of the reclassification. An example of a reason
for reclassification is a dealer's decision to designate a new vehicle for use
as a demonstration unit. The actual age distribution with respect to the
receivables related to any trust may be different because those receivables will
arise in dealer accounts representing only a portion of GMAC's 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
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
<S> <C> <C> <C> <C> <C>
Days [Date] 1998 1997 1996 1995
1-120........................... ___% 90.2% 85.1% 82.2% 83.4%
121-180......................... ___ 4.9 8.0 9.0 7.0
181-270......................... ___ 2.9 3.5 5.0 5.0
Over 270........................ ___ 2.0 3.4 3.8 4.6
</TABLE>
MONTHLY PAYMENT RATES
The following table sets forth the highest and lowest monthly payment
rates for GMAC's 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.
The payment rates used below were calculated as set forth in the following
equation:
(principal collections during the period)
Payment Rate % =
(ending principal balance of receivables for that period)
There can be no assurance that the rate of principal collections for
the dealer 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 those dealer accounts may be different because, among other reasons,
those dealer accounts will represent only a portion of the GMAC's entire U.S.
portfolio.
MONTHLY PAYMENT RATES FOR THE U.S. PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
<S> <C> <C> <C> <C> <C>
[Date] 1998 1997 1996 1995
Highest Month.............. _____ 62.9% 54.2% 56.1% 51.4%
Lowest Month............... _____ 33.5 33.3 35.0 33.5
Average for the Months in the
Period..................... _____ 47.3 43.3 45.1 42.1
</TABLE>
THE POOL OF ACCOUNTS
As of the close of business on [ date ], there were [______] dealer
accounts in the pool of accounts. As of [ date ], the average principal balance
of receivables in those Accounts was approximately $______ million
(approximately ___% of which were Eligible Receivables) and the weighted average
spread over the Prime Rate charged to dealers was approximately ___% for the
month of [ ] This spread over the Prime Rate does not include rebates earned by
dealers under GMAC incentive programs that entitle them to a credit based on
interest charges. These credits do not affect the spread over the Prime Rate
earned by the trust. As of [date], the aggregate principal balance of
receivables under those Accounts was $_______ and, of that amount, $________
would qualify as Eligible Receivables (except for the limit imposed by the
Maximum Pool Balance). In addition to the criteria specified in the definition
of "Eligible Accounts" in the "Glossary of Terms" in the prospectus, a dealer
account will not be an Eligible Account if (1) during the preceding twelve
months, GMAC has charged off, without recovering, any amount in excess of
$25,000 or (2) the obligor on such dealer account has materially breached its
obligation to pay for a receivable upon sale of the related vehicle.
GEOGRAPHIC DISTRIBUTION
<PAGE>
The following table provides, as of [date], the geographic distribution
of the dealer accounts in the pool of accounts based on the dealer addresses. As
of the [date], no other state accounted for more than ____% of the principal
amount of receivables outstanding in the dealer accounts.
GEOGRAPHIC DISTRIBUTION OF POOL ACCOUNTS RELATED TO THE TRUST
<TABLE>
Percentage of
<CAPTION>
<S> <C> <C> <C> <C>
Percentage of
Percentage Total
of Total Number of Number of
Receivables Receivables Dealer Dealer
Outstanding Outstanding Accounts Accounts
----------- ----------- --------- -------------
(thousands
of dollars)
[Illinois........................
Texas............................
Florida..........................
Michigan.........................
New York.........................
Georgia].........................
</TABLE>
THE [ ] TERM NOTES
GENERAL
The [ ] term notes will be issued pursuant to the terms of an indenture
to be dated as of the initial issuance date between the trust and the indenture
trustee. As amended and supplemented from time to time, this is known as the
indenture, a form of which has been filed as an exhibit to the registration
statement of which this prospectus supplement forms a part. The trust may issue
additional series of term notes after the initial issuance date. A copy of the
indenture will be filed with the SEC following the issuance of the [ ] term
notes. The following summary describes some of the terms of the [ ] term notes
and the indenture. The summary does not purport to be complete and is qualified
in its entirety by reference to all of the provisions of the [ ] 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 the summary. The Bank of New York, a New York banking corporation,
will be the indenture trustee.
All distributions will be made on each Distribution Date to the holders
of the [ ] term notes of record as of the day preceding that Monthly
Distribution Date. If definitive term notes are issued, distributions will be
made to the holders of the [ ] term notes as of the last day of the preceding
month. All payments will be made by wire transfer while the [ ] term notes are
in global form and will be made in accordance with the procedures of DTC,
Euroclear and Cedelbank. If definitive [ ] term notes are issued, such payments
thereon will be made by check or euro cheque and will be mailed to the address
on the register kept by the indenture trustee unless a holder gives wire
transfer instructions before the relevant record date. Final payment of any
definitive [ ] term note will only be made against presentation and surrender of
the definitive [ ] term note at the place or places specified in the notice of
final payment to the holder thereof.
PAYMENTS OF INTEREST
Interest on the outstanding principal balance of the [ ] term notes
will accrue at the [ ] Term Note Interest Rate and will be payable on each
Monthly Distribution Date commencing [date], which is the initial Monthly
Distribution Date, until the [ ] term notes are paid in full. The [ ] TERM NOTE
INTEREST RATE will equal USD One-Month LIBOR plus ___% per annum for each
Monthly Distribution Date.
<PAGE>
Interest will accrue from and including the initial issuance date, or
from and including the most recent Monthly Distribution Date on which interest
has been paid to but excluding the current Monthly Distribution Date. Interest
on the [ ] term notes will be calculated on the basis of a year of 360 days and
the actual number of days occurring in the period for which interest is payable.
Each Monthly Distribution Date will be a Payment Date defined in the prospectus
for the [ ] term notes. Interest accrued as of any Monthly Distribution Date,
but not paid on that Monthly Distribution Date, will be due on the next Monthly
Distribution Date.
Payments of interest on the [ ] term notes will have equal priority
with interest payments on other series of term notes, the [ ] revolving note and
other series of revolving notes and will be senior to distributions of interest
on the [ ] certificates. Interest Collections will be applied to make interest
payments on the [ ] term notes as described under "THE TRANSFER AND SERVICING
AGREEMENT--APPLICATION OF INTEREST COLLECTIONS" IN THIS PROSPECTUS SUPPLEMENT.
PAYMENTS OF PRINCIPAL
We expect that the trust will pay the entire principal balance of the [
] term notes on the [ ] TERM NOTE TARGETED FINAL PAYMENT DATE, which is the
Monthly Distribution Date in [ ] 200[ ]. However, the trust could make principal
payments sooner than the Targeted Final Payment Date if a Rapid Amortization
Event occurs. On each Monthly Distribution Date after the commencement of a
Rapid Amortization Period, the trust will apply the portion of Available Trust
Principal allocated to the [ ] term notes and any funds held in the Cash
Accumulation Account and Note Distribution Subaccount to repay principal on the
[ ] term notes.
It is also possible that the trust will not repay the entire principal
balance of the [ ] term notes on or before the Targeted Final Payment Date.
Starting on the [ ] 200[ ] Monthly Determination Date, the servicer will
calculate the Required Payment Period Length to determine the date on which the
trust will begin to accumulate principal collections for the purpose of repaying
principal of the [ ] term notes on their Targeted Final Payment Date. If
insufficient funds are accumulated during this period, then the payment of
principal on the Targeted Final Payment Date will be insufficient to repay all
of the [ ] term note principal balance. If the [ ] term notes are not paid in
full on the Targeted Final Payment Date, on each Monthly Distribution Date
thereafter they will receive principal payments until paid in full or until
available funds are exhausted.
All unpaid principal on the [ ] term notes will be due on the [ ] TERM
NOTE STATED FINAL PAYMENT DATE for the [ ] term notes, which is the Monthly
Distribution Date in [ ] 200[ ]. Failure to pay the [ ] term notes in full on
their Stated Final Payment Date will result in an event of default and an Early
Amortization Event for the trust and a Rapid Amortization Event for the [ ] term
notes.
If the Servicer exercises its optional right to repurchase receivables
as described in "The Transfer and Servicing Agreements--Optional Purchase by the
Servicer," then the proceeds of the repurchase will be treated as Trust
Principal Collections and Trust Interest Collections.
PRIORITY AMONG TERM NOTES
Payments of principal on the [ ] 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. 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 [ ]
term notes.
DELIVERY OF NOTES
The [ ] term notes will be issued on or about the initial issuance date
in book entry form through the facilities of DTC, Cedelbank and the Euroclear
System against payment in immediately available funds. DTC has informed its
participants and other members of the financial community that it has developed
and is implementing a program to deal with the year 2000 problem so that its
systems, as the same relate to the timely payment of distributions, including
principal and income payments, to securityholders, book-entry deliveries, and
settlement of trades with DTC, continue to function appropriately.
THE REVOLVING NOTES
The trust will issue the revolving notes under the indenture. The
following summary describes some of the terms of the revolving notes. The
summary does not purport to be complete and is 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 indenture are
referred to, the actual provisions, including definitions of terms, are
incorporated by reference as part of the summary.
<PAGE>
On the initial issuance date, the trust will issue the Floating Rate
Asset Backed Revolving Note, Series [ ]. References in this document to the [ ]
revolving note include all extensions and renewals thereof. Initially, the
seller will retain the [ ] revolving note. It is expected that the seller will
privately place an interest in the [ ] revolving note on the initial issuance
date.
PAYMENTS OF INTEREST
The trust will pay interest on the [ ] revolving note at the Revolver
Interest Rate on each Monthly Distribution Date, commencing with the first
Monthly Distribution Date after the issuance of the [ ] revolving note. Other
series of revolving notes issued after the initial issuance date will be paid
interest in accordance with their terms, which may differ from the terms of the
[ ] revolving note. On each Monthly Distribution Date, interest will be
calculated based on the average daily net revolver Balance during the related
Collection Period. Interest on the [ ] revolving note accrued as of any Monthly
Distribution Date but not paid on that Monthly Distribution Date will be due on
the next Monthly Distribution Date.
Payments of interest on the [ ] revolving note will have equal priority
to payments of interest on the term notes, including the [ ] term notes, and
will be senior in right of payment to distributions of interest on the
certificates.
PAYMENTS OF PRINCIPAL AND ADDITIONAL BORROWINGS
The trust may borrow funds under the [ ] revolving note during the
Revolving Period up to the trust's specified Maximum Revolver Balance. The
holder of the [ ] revolving note is under no obligation, however, to make
advances thereunder to the trust. The specified Maximum Revolver Balance for the
trust will initially be [$ ] and may increase or decrease from time to time
after the initial issuance date as described in the prospectus under "THE
TRANSFER AND SERVICING AGREEMENTS--ADDITIONAL ISSUANCES; CHANGES IN SPECIFIED
MAXIMUM REVOLVER BALANCE." The trust may issue additional series of revolving
notes with different Revolver Interest Rates, Targeted Final Payment Dates, if
any, and Stated Final Payment Dates, although it must stay within the specified
Maximum Revolver Balance. In connection with the issuance of any additional
series, the revolving notes outstanding on that date may be paid in full. The
trust will not borrow additional funds under the revolving notes during the Wind
Down Period or any Early Amortization Period but may borrow funds during the
Payment Period for the [ ] term notes.
The trust may pay principal on the revolving notes on a daily basis
during the Revolving Period, so long as it complies with the limitations
described herein during the Payment Period for the [ ] term notes and any other
applicable limitations during the Payment Period for any additional series of
term notes. During the Payment Period for the [ ] term notes, except for any
series of revolving notes then in a Payment Period, payments of principal on the
revolving notes may be made only after the [ ] term notes' Fully Funded Date.
During the Revolving Period, payments of principal on the revolving
notes will be required to the extent set forth in the terms of the revolving
notes. The [ ] revolving note may be extended or renewed, and the [ ] Revolving
Note Targeted Final Payment Date adjusted accordingly, at any time prior to the
last day of the month related to the Payment Date that is the third Payment Date
preceding the then applicable [ ] Revolving Note Targeted Final Payment Date by
written notice from the affected holder thereof to the indenture trustee and the
seller setting forth the new [ ] Revolving Note Targeted Final Payment Date;
provided, that the Targeted Final Payment Date may not occur during the Payment
Period for any series of term notes, or within two months thereafter, unless the
holder of the [ ] revolving note establishes the [ ] Revolving Note Targeted
Final Payment Date by notice to the servicer delivered prior to the initial
determination of the payment period length for that series of term notes. The
new [ ] Revolving Note Targeted Final Payment Date must be a Payment Date on or
prior to the then [ ] Revolving Note Stated Final Payment Date for the [ ]
revolving note. Principal on the [ ] revolving note will be due, to the extent
of funds available for that purpose, in three equal installments on the three
consecutive Monthly Distribution Dates ending on the then-applicable Targeted
Final Payment Date, which may be prior to the Scheduled Revolving Period
Termination Date, unless the [ ] Revolving NoteTargeted Final Payment Date has
been extended to a date after the commencement of the Wind Down Period. These
installments will be based on the outstanding balance as of the last day of the
Collection Period preceding the Collection Period related to the first Monthly
Distribution Date.
During the Wind Down Period or an Early Amortization Period for the
trust, Available Trust Principal for any Collection Period and the related
Distribution Date will be allocated to each series of revolving notes in
accordance with their respective Principal Allocation Percentages up to their
respective outstanding principal balances, and will be paid on the Distribution
Date related to that Collection Period. An Early Amortization Period for the
trust and a Rapid Amortization Period for the [ ] term notes will commence if,
among other things, any revolving note is not paid in full on its Stated Final
Payment Date.
<PAGE>
THE [ ] CERTIFICATES
GENERAL
The trust will issue the [ ] certificates under the trust agreement, a
form of which the seller has filed as an exhibit to the registration statement
of which this prospectus supplement forms a part. The following summary
describes some of the terms of the [ ] certificates and the trust agreement. The
summary does not purport to be complete and is 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,
including definitions of terms, are incorporated by reference as part of the
summary.
INTEREST
Interest with respect to the [ ] certificates will accrue at the
applicable Certificate Rate and will be payable on each Certificate Payment
Date, commencing with the first Certificate Payment Date after the issuance of
the [ ] certificates. Interest on the [ ] certificates accrued as of any
Certificate Payment Date but not distributed on a Certificate Payment Date will
be due on the next Certificate Payment Date.
Payments of interest on the notes will be senior to distributions of
interest on the [ ] certificates.
CERTIFICATE BALANCE
The CERTIFICATE BALANCE is as of any Monthly Distribution Date or a
related Certificate Payment Date, with respect to the [ ] certificates (a)
$____, PLUS (b) the principal amount of [ ] certificates issued after the
initial issuance date, minus (c) all distributions in respect of Certificate
Balance of the [ ] certificates actually made on or prior to that date, minus
(d) unreimbursed Trust Charge-Offs on that Monthly Distribution Date (determined
after giving effect to the application of Available Trust Interest and other
amounts available to reimburse Trust Charge-Offs on that date as described
below) allocated to the [ ] certificates, up to the certificate balance of the [
] certificates on that Monthly Distribution Date calculated without regard to
this clause (d). With respect to any other class of certificates, certificate
balance means the amount set forth in the terms of that class of certificates.
Any unreimbursed Trust Charge-Offs applied to reduce the certificate balance
will be applied against each class of certificates on that Certificate Payment
Date, pro rata on the basis of the certificate balance of the certificates of
that class outstanding on the preceding Certificate Payment Date. This will be
calculated without reduction for any unreimbursed Trust Charge-Offs.
Distributions will be made with respect to the certificate balance on
the [ ] certificates after the trust has paid each series of term notes and
revolving notes, including notes issued after the initial issuance date, in full
or, with respect to each series of term notes for which principal is being
accumulated or otherwise provided, the Fully Funded Date has occurred. The
Stated Final Payment Date for the [ ] certificates will be on the Monthly
Distribution Date in [ ] 200[ ]. If the [ ] certificates have not been paid in
full on or prior to that date, an Early Amortization Period for the trust will
commence.
ADDITIONAL ISSUANCES
From time to time after the initial issuance date, so long as it
satisfies specified 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 issuance date may be
different than the Certificate Rate for the [ ] certificates.
OPTION TO SUBORDINATE
The seller, which will be the initial holder of the [ ] certificates,
has the option to split the [ ] certificates into two or more classes and to
designate that the different classes have different priority levels in the
application of Remaining Interest Amounts.
CERTIFICATE RESERVE FUND
As of the initial issuance date, no Certificate Reserve Fund will have
been established. On repayment of the entire outstanding principal balance of
the certificates, any funds remaining on deposit in the Certificate Reserve Fund
would be paid to the seller.
<PAGE>
THE TRANSFER AND SERVICING AGREEMENTS
The parties will enter into the Transfer and Servicing Agreements as of
the initial issuance date. The following summary describes the material terms of
the Transfer and Servicing Agreements. The seller has filed forms of the
Transfer and Servicing Agreements as exhibits to the registration statement of
which this prospectus supplement is a part. The Transfer and Servicing
Agreements will be filed with the SEC following the initial issuance date. The
summary does not purport to be complete and is 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, including
definitions of terms, are incorporated by reference as part of the summary.
APPLICATION OF INTEREST COLLECTIONS
For each Collection Period, the trust will apply funds to pay interest
and other amounts on the related Monthly Distribution Date in the order and in
the priority of clauses (1), (2) and (3) below:
CLAUSE (1) For each Collection Period, the trust will apply Trust
Interest Collections together with the other amounts comprising Available Trust
Interest for the related Monthly Distribution Date in the following order of
priority:
(a) an amount equal to the Monthly Servicing Fee for
that Monthly Distribution Date will be paid to the servicer; and
(b) an amount equal to the Trust Interest Allocation for each
series of notes will be made available to that series and applied in
clause (2) below.
CLAUSE (2) On each Monthly Distribution Date, the trust will apply the
amounts from clause (1)(b), together with the funds specified below, to each
series of notes as follows:
(a) FOR THE [ ] TERM NOTES:
(i) the trust will make the following funds available:
(A) the [ ] term notes' Trust Interest Allocation;
(B) the net amount, if any, received by the trust under the [
] term notes basis swap;
(C) all Note Distribution Subaccount Earnings in respect of
the [ ] term notes;
(D) all Cash Accumulation Account Earnings; and
(E) if the [ ] term notes are then in a Cash Accumulation
Period and if the amounts specified in the foregoing subclauses (A)
through (D) are less than the [ ] term notes Monthly Carrying Costs for
that Monthly Distribution Date, then the lesser of
(x) the shortfall,
(y) the Cash Accumulation Reserve Fund Release Amount
and
(z) the amount of funds on deposit in the Cash
Accumulation Reserve Fund will be made available.
The amounts made available pursuant to the foregoing clauses
(2)(a)(i)(A) through (E) will be the [ ] TERM NOTES MONTHLY AVAILABLE
AMOUNT.
(ii) Next, the trust will aggregate and apply the [ ] Term Notes
Monthly Available Amount on the Monthly Distribution Date as follows:
(A) first, the lesser of
<PAGE>
(x) the [ ] Term Notes Monthly Available Amount and
(y) the net payment, if any, due from the trust under
the [ ] term notes basis swap
will be paid in accordance with the terms of the [ ] term
notes basis swap; and
(B) second, the lesser of
(x) the [ ] Term Notes Monthly Available Amount
remaining after the application in subclause (A) and
(y) an amount equal to the [ ] term notes'
Noteholders' Interest for the related Monthly Distribution
Date will be transferred to the Note Distribution Account for
payment of interest on the [ ] term notes.
The amounts required to be paid pursuant to the foregoing clauses
(2)(a)(ii)(A)(y) and (B)(y) are the [ ] TERM NOTES MONTHLY CARRYING
COSTS. Any shortfall of the [ ] Term Notes Monthly Available Amount
below the [ ] Term Notes Monthly Carrying Costs will be treated as a
Series Shortfall for the [ ] term notes. Any excess of the [ ] Term
Notes Monthly Available Amount over the [ ] Term Notes Monthly Carrying
Costs will be treated as Remaining Interest Amounts.
(b) for the [ ] revolving note:
(i) on each Monthly Distribution Date, the trust will make the
following funds available:
(A) the [ ] revolving note's Trust Interest Allocation; and
(B) the net amount, if any, received by the trust under the [
] revolving note basis swap.
The amounts made available pursuant to the foregoing clauses (2)(b)
(i)(A) and (B) will be the [ ] REVOLVING NOTE MONTHLY AVAILABLE AMOUNT.
(ii) Next, the trust will aggregate and apply the [ ] Revolving Note
Monthly Available Amount as follows:
(A) first, the lesser of (x) the [ ] Revolving Note Monthly
Available Amount and (y) the net payment, if any, due from the trust
under the [ ] revolving note basis swap will be paid in accordance with
the terms of the [ ] revolving note basis swap; and
(B) second, the lesser of (x) the [ ] Revolving Note Monthly
Available Amount remaining after the application in subclause (A) and
(y) an amount not to exceed the [ ] revolving note's Noteholders'
Interest for the related Monthly Distribution Date will be transferred
to the Note Distribution Account for payment of interest on the [ ]
revolving note.
The amounts required to be paid pursuant to the foregoing
clauses (2)(b)(ii)(A)(y) and (B)(y) are the [ ] Revolving Note
Monthly Carrying Costs. Any shortfall of the [ ] Revolving
Note Monthly Available Amount below the [ ] Revolving Note
Monthly Carrying Costs will be treated as a Series Shortfall
for the [ ] revolving note. Any excess of the [ ] Revolving
Note Monthly Available Amount over the [ ] REVOLVING NOTE
MONTHLY CARRYING COSTS will be treated as Remaining Interest
Amounts.
(c) FOR EACH OTHER SERIES OF NOTES, in accordance with the
terms of each series, the trust will apply (x) the Trust Interest
Allocation for that series, (y) any amounts received from or owing
under Specified Support Arrangements in accordance with the terms of
the series of notes and (z) if the series is a series of term notes,
Note Distribution Subaccount Earnings, if any, for that series to pay
the monthly carrying costs for the series of term notes. Shortfalls in
these applications will be treated as a Series Shortfall for each
series and excess amounts will be treated as Remaining Interest
Amounts.
CLAUSE (3) On each Monthly Distribution Date, the trust will aggregate
the Remaining Interest Amounts from all series of notes and apply these funds in
the following order of priority:
<PAGE>
(a) with respect to any series of notes which has a Series
Shortfall, pro rata on the basis of the respective Series Shortfalls,
an amount equal to the Series Shortfall for that series of notes for
that Monthly Distribution Date, will be transferred to the Note
Distribution Account in respect of that series or other applicable
account for the payment of amounts owing under the basis swap or in
respect of interest on those notes or payments on an interest rate swap
for any other series of notes;
(b) an amount equal to the net payment, if any, due from the
trust under the [ ] certificates basis swap and under any basis swap
with respect to any other class of certificates will be paid in
accordance with each basis swap;
(c) 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;
(d) an amount equal to any Reserve Fund Deposit Amount for
that Monthly Distribution Date will be deposited into the Reserve Fund;
(e) pro rata among the following amounts specified in (A) and
(B) for that Monthly Distribution Date, (A) an amount equal to the Cash
Accumulation Reserve Fund Deposit Amount will be deposited into the
Cash Accumulation Reserve Fund and (B) an amount equal to any deposit
required under the terms of any other Specified Support Arrangements
will be deposited into the account designated by the terms of the
Specified Support Arrangement;
(f) an amount equal to the Aggregate Certificateholders'
Interest for that Monthly Distribution Date will be transferred to the
Certificate Distribution Account;
(g) an amount equal to any Trust Defaulted Amount will be
treated as Additional Trust Principal on that Monthly Distribution
Date;
(h) an amount equal to the aggregate amount of unreimbursed
Trust Charge-Offs will be treated as Additional Trust Principal on that
Monthly Distribution Date; and
(i) an amount equal to the Certificate Reserve Fund Deposit
Amount for that Monthly Distribution Date will be deposited into the
Certificate Reserve Fund, if any.
If Monthly Available Amounts are not sufficient to make all
payments required by clauses (1), (2) and (3), then the funds described
below will be applied in the following order:
FIRST, if any Monthly Carrying Costs or any amounts
specified in clauses (3)(a),(b) and (c) above remain unpaid,
then a DEFICIENCY AMOUNT will exist, and the servicer will be
obligated to make a servicer advance of this amount to the
trust, but only to the extent that the Servicer, in its sole
discretion, expects to recover the advance from Remaining
Interest Amounts applied as described above on subsequent
Distribution Dates and from releases from the Cash
Accumulation Reserve Fund as provided in "CASH ACCUMULATION
RESERVE FUND" in this prospectus supplement, and the servicer
advances will be applied to reduce the Deficiency Amount in
the order set forth in clauses (2) and (3); and
SECOND, if any Monthly Carrying Costs or any amounts
specified in clauses (3)(a), (b), (c), (g) and (h) remain
unpaid after the application described in the preceding clause
first, then an UNSATISFIED DEFICIENCY AMOUNT will exist, and
funds on deposit in the Reserve Fund will be applied to reduce
the unsatisfied deficiency amount in the order set forth in
clauses (2) and (3), except that no application of amounts
from the Reserve Fund will be made for the priorities in
clauses (3)(d), (e), (f) or (i).
Remaining Interest Amounts for a Monthly 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, the Cash Accumulation Reserve Fund and the Certificate Reserve
Fund, if any.
To the extent that the full amount of the Trust Defaulted Amount has
not been treated as Additional Trust Principal pursuant to clause (3)(g) above,
the amount of the deficiency will be added to unreimbursed Trust Charge-Offs.
The following chart summarizes the way in which interest collections
are allocated to the [ ] term notes.
<PAGE>
[OBJECT OMITTED]
<PAGE>
APPLICATION OF PRINCIPAL COLLECTIONS BY THE TRUST
There are three mutually exclusive time periods with respect to the
trust. These time periods are the Revolving Period, the Wind Down Period and the
Early Amortization Period. The way in which each of these trust level time
periods is relevant to and impacts on each series or class of securities depends
in part upon the specific terms of that series or class. In addition, each
series or class of securities may have, by their terms, additional time periods
specific to that series or class which occur within or across the time periods
applicable to the trust as a whole. See "APPLICATION OF PRINCIPAL COLLECTIONS TO
THE [ ] TERM NOTES" below for a description of the time periods which
specifically apply to the [ ] term notes.
REVOLVING PERIOD
During the Revolving Period, the trust may, on a daily basis, use Trust
Principal Collections:
o to make payments of principal on the revolving notes;
o to purchase additional Eligible Receivables from the seller;
o to the extent required to maintain the Daily Trust Balance equal
to the Daily Trust Invested Amount, to add to the Cash
Collateral Amount; and
o to make principal payments or set asides on any series of term
notes which then requires Available Trust Principal to be
retained or set aside. No distributions of the certificate
balance will be made during the Revolving Period.
During the Revolving Period, the trust may also use the Cash Collateral
Amount for the purposes described in the first, second and fourth points above.
During the Revolving Period, the trust may issue from time to time, so
long as it satisfies 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 and revolving notes
and additional classes of certificates.
The Revolving Period will terminate on the Scheduled Revolving Period
Termination Date. The SCHEDULED REVOLVING PERIOD TERMINATION DATE will
automatically be extended to the last day of each succeeding month unless the
seller, prior to the then Scheduled Revolving Period Termination Date, makes a
NON-EXTENSION ELECTION, causing the extension not to occur. Unless a
non-extension election is made as described below, each extension will become
effective as of the Business Day prior to the then Scheduled Revolving Period
Termination Date. The seller cannot extend the Scheduled Revolving Period
Termination Date, the FINAL REVOLVING PERIOD TERMINATION DATE.
In addition to a non-extension election, the seller may, at any time
prior to the then Scheduled Revolving Period Termination Date, affirmatively
cause an AFFIRMATIVE EXTENSION of the Scheduled Revolving Period Termination
Date to the last day of any specified month (but not beyond the Final Revolving
Period Termination Date), subject thereafter to further automatic extensions,
non-extension elections and affirmative extensions. Any non-extension election
or affirmative extension will be made by providing written notice of the
extension to the Servicer, the owner trustee (who will be obligated to provide
notice to the certificateholders), the indenture trustee (who will be obligated
to provide notice to the noteholders) and the rating agencies. Assuming no Early
Amortization Event has occurred, the Revolving Period will terminate and the
Wind Down Period will commence on the day immediately following a non-extension
election.
If the seller makes a non-extension election, as a result of which the
Revolving Period terminates and the Wind Down Period commences prior to the
Final Revolving Period Termination Date, the seller may elect to recommence the
Revolving Period on any date prior to the date that is the earlier of (1) the
one year anniversary of the termination of the Revolving Period and (2) the
Final Revolving Period Termination Date, so long as no Early Amortization Event
has occurred and is continuing. If an Early Amortization Event described in
subparagraphs (6), (8) or (10) under "THE TRANSFER AND SERVICING
AGREEMENTS--EARLY AMORTIZATION EVENTS" in the prospectus has occurred the seller
may nonetheless elect to so recommence the Revolving Period if the conditions
specified under "--WIND DOWN PERIOD AND EARLY AMORTIZATION
PERIOD--RECOMMENCEMENT OF REVOLVING PERIOD" in this prospectus supplement are
satisfied.
WIND DOWN PERIOD AND EARLY AMORTIZATION PERIOD
<PAGE>
The Revolving Period will be followed by either the Wind Down Period or
an Early Amortization Period. These periods commence as follows:
o The Wind Down Period for the trust will begin on the day
following the Scheduled Revolving Period Termination Date and
will continue until the earlier of (a) the commencement of an
Early Amortization Period, (b) the date on which all
outstanding securities are paid in full and (c) under the
limited circumstances described above under "THE TRANSFER AND
SERVICING AGREEMENTS--APPLICATION OF PRINCIPAL COLLECTIONS BY
THE TRUST--REVOLVING PERIOD," the recommencement of the
Revolving Period.
o The Early Amortization Period will commence upon the
occurrence of an Early Amortization Event, whether it occurs
during the Revolving Period or the Wind Down Period. The Early
Amortization Events are set out in the prospectus under "The
Transfer and Servicing Agreements--Early Amortization Events"
and below under "--EARLY AMORTIZATION EVENTS."
During the Wind Down Period and during any Early Amortization Period,
the trust will no longer reinvest Trust Principal Collections in new
receivables, nor will it make additional borrowings under any revolving notes or
issue any additional securities. Instead, on each Monthly Distribution Date,
Trust Principal Collections during the related Collection Period, together with
other amounts comprising Available Trust Principal, will be treated as follows:
FIRST, the amounts will be allocated to each series of notes in
accordance with the series' Principal Allocation Percentage, and the
Available Trust Principal will be paid or set aside until the Fully
Funded Date for that series, and
SECOND, following the Fully Funded Date for all series of notes, any
remaining Available Trust Principal will be available for the payment
of the outstanding certificate balance on the certificates or for any
other applications permitted by holders of certificates.
Principal payments will be made on the term notes of each series,
including the [ ] term notes and the revolving notes of each series as described
in "THE [ ] TERM NOTES--PAYMENT OF PRINCIPAL" and "THE REVOLVING NOTES--PAYMENTS
OF PRINCIPAL AND ADDITIONAL BORROWINGS" above. For additional information on the
application of Available Trust Principal in respect of the [ ] term notes, see
"THE TRANSFER AND SERVICING AGREEMENTS--APPLICATION OF PRINCIPAL COLLECTIONS TO
THE [ ] TERM NOTES--CASH ACCUMULATION PERIOD" and "--RAPID AMORTIZATION PERIOD"
below.
EARLY AMORTIZATION EVENTS. In addition to the Early Amortization Events
set forth in the prospectus, an Early Amortization Event will occur if any of
the basis swaps terminate, except if the termination is for the limited reasons
set forth in "Basis Swaps" below. The TRIGGER AMOUNT for the Reserve Fund, which
is a component of the Early Amortization Event described in sub-paragraph (9)
under "THE TRANSFER AND SERVICING AGREEMENTS--EARLY AMORTIZATION EVENTS" in the
prospectus, will equal ___% of the Reserve Fund Required Amount.
RECOMMENCEMENT OF REVOLVING PERIOD. In limited circumstances the seller
may elect to terminate an Early Amortization Period and recommence the Revolving
Period and any Payment Period prior to the Final Revolving Period Termination
Date. If an Early Amortization Event described in sub-paragraphs (6), (8) or
(10) under "THE TRANSFER AND SERVICING AGREEMENTS--EARLY AMORTIZATION EVENTS" in
the prospectus - each of which is a Cash Accumulation Event for the [ ] term
notes - has occurred, the seller may elect to end the Cash Accumulation Period
and Early Amortization Period and recommence the Revolving Period within the
one-year anniversary of the commencement of the Early Amortization Period and
the Cash Accumulation Period if:
o none of those Early Amortization Events has existed for three
consecutive months;
o the Final Revolving Period Termination Date has not occurred;
o the long-term debt obligations of GMAC are rated at least
"Baa3" by Moody's;
o the Reserve Fund Funding Condition is satisfied; and
o after giving effect to any securities issued and any changes
in the trust's specified Maximum Revolver Balance on the date
of the recommencement, the quotient of (A) the outstanding
certificate balance of all the outstanding [ ] certificates
over (B) the Maximum Pool Balance equals or exceeds the
SPECIFIED CERTIFICATE PERCENTAGE, which is ___%.
<PAGE>
The FUNDING CONDITION for the Reserve Fund will be satisfied on the
date of recommencement of the Revolving Period only if:
o the amount on deposit in the Reserve Fund equals or exceeds
the Reserve Fund Required Amount as of the date of
recommencement;
o the amount on deposit in the Cash Accumulation Reserve Fund
for each series of notes equals or exceeds the related Cash
Accumulation Reserve Fund Required Amount as of the date of
recommencement; and
o the amount on deposit in the Certificate Reserve Fund equals
or exceeds the amount required to be on deposit in the
Certificate Reserve Fund, if any.
Upon any recommencement, funds in the Cash Accumulation Account may be
used to purchase additional receivables, so long as the Daily Trust Balance is
equal to the Daily Trust Invested Amount.
APPLICATION OF PRINCIPAL COLLECTIONS TO THE [ ] TERM NOTES
OVERVIEW
There are three basic and mutually exclusive time periods with respect
to the [ ] term notes which determine how Trust Principal Collections and
principal payments on the [ ] term notes are handled by the trust. These periods
are the Payment Period, the Cash Accumulation Period and the Rapid Amortization
Period. The Payment Period will begin one to four months prior to the Targeted
Final Payment Date on the [ ] term notes. The Cash Accumulation Period will
begin upon the occurrence of a Cash Accumulation Event. The Rapid Amortization
Period will begin upon the occurrence of a Rapid Amortization Event.
The time periods with respect to the [ ] term notes co-exist with the
trust time periods described above in "--APPLICATION OF PRINCIPAL COLLECTIONS BY
THE TRUST." If an Early Amortization Period occurs for the trust, then it will
give rise to either a Cash Accumulation Period or Rapid Amortization Period for
the [ ] term notes. If the Wind Down Period commences for the trust prior to the
Payment Period for the [ ] term notes, a Cash Accumulation Period for the [ ]
term notes will commence. If the trust remains in its Revolving Period, then the
[ ] term notes will not have any separate time period until the commencement of
their Payment Period. However, if a Rapid Amortization Event which is not an
Early Amortization Event occurs, the [ ] term notes will be in a Rapid
Amortization Period at the same time that the trust is in the Revolving Period.
During the Payment Period and the Cash Accumulation Period, principal
collections on the receivables allocated to the [ ] term notes are set aside in
accounts to repay principal on the [ ] term notes on the Targeted Final Payment
Date. In contrast, during a Rapid Amortization Period, the trust will pay out
principal collections allocated to the [ ] term notes on each Monthly
Distribution Date occurring after the start of the Rapid Amortization Period
instead of retaining these collections for distribution on the Targeted Final
Payment Date.
The following chart summarizes the manner in which principal
collections are allocated to the [ ] term notes.
<PAGE>
[OBJECT OMITTED]
<PAGE>
PAYMENT PERIOD
A Payment Period for a series of notes occurs during the Revolving
Period for the trust. If so specified with respect to a series of notes,
Available Trust Principal will be used or set aside during the Payment Period
for the purpose of repaying the outstanding principal balance of those notes. If
the series of notes is subject to a currency swap, interest rate swap or another
type of swap or derivative instrument in respect of principal, then principal
will be set aside for the purpose of making payments under the swap or
instrument. Each series of notes which is in a Payment Period will be allocated
Available Trust Principal equal to its Principal Allocation Percentage thereof.
If Trust Principal Collections will not be set aside during the Payment Period
to repay the outstanding principal balance, then alternate sources of repayment
will be specified. Available Trust Principal which is not applied for this
purpose will be used for the other purposes specified above under "--APPLICATION
OF PRINCIPAL COLLECTIONS BY THE TRUST--REVOLVING PERIOD". Upon the commencement
of a Payment Period for a series of term notes, the servicer will establish a
NOTE DISTRIBUTION SUBACCOUNT. Any Investment Proceeds or earnings in respect of
funds in the Note Distribution Subaccount, will be applied as provided in the
clause (2) under "APPLICATION OF INTEREST COLLECTIONS" above.
The Payment Period for the [ ] term notes will commence no earlier than
[ ], 200[ ] and no later than [ ], 200[ ]. On the Determination Date in [ ] 200[
] and on each Determination Date thereafter before the commencement of the
Payment Period, the Servicer will determine the appropriate date by calculating
the Required Payment Period Length, which is an estimation of the number of
Collection Periods needed to set aside funds for the repayment of the [ ] term
notes on the Targeted Final Payment Date. The Payment Period will commence with
the first day of the Collection Period which follows the first Determination
Date on which the Required Payment Period Length is equal to or greater than the
number of full Collection Periods remaining between that Determination Date and
the Targeted Final Payment Date.
On each day during the [ ] term notes' Payment Period, the [ ] term
notes will be allocated their Principal Allocation Percentage of Available Trust
Principal. These amounts will be deposited in the Note Distribution Subaccount
for the [ ] term notes until the Fully Funded Date for the [ ] term notes has
occurred and will be invested in Eligible Investments. The trust will use
amounts in the [ ] term notes' Note Distribution Subaccount, other than
Investment Proceeds thereon, only to make principal payments on the [ ] term
notes. During a Payment Period for the [ ] term notes, unless the revolving
notes are then in a Payment Period, the trust will not repay principal under the
revolving notes until the Fully Funded Date has occurred for the series of Notes
in that Payment Period, but the trust may purchase additional receivables by
borrowing under the revolving notes. On the Targeted Final Payment Date for the
[ ] term notes, the trust will pay the outstanding principal balance of the [ ]
term notes, or any lesser amount as has been set aside for that purpose, and, to
the extent not paid in full on the Targeted Final Payment Date, on each Monthly
Distribution Date thereafter until so paid in full.
The terms of any series of term notes issued after the initial issuance
date with a Payment Period occurring, in whole or in part, during the Payment
Period for the [ ] term notes may provide for the Required Payment on those term
notes to be payable during the Payment Period for the [ ] term notes or after
the Fully Funded Date for the [ ] term notes.
If the [ ] 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 for the trust and a Rapid Amortization Period
for the [ ] term notes will commence. If the unpaid notes are the [ ] term
notes, a Rapid Amortization Period for the [ ] term notes will also commence.
As described under "THE TRANSFER AND SERVICING AGREEMENTS--COLLECTIONS"
in the prospectus, in some circumstances the servicer is permitted to make
deposits of Principal Collections and Interest Collections into the Collection
Account on each Monthly Distribution Date rather than on a daily basis. However,
during a Payment Period, Cash Accumulation Period or Rapid Amortization Period
for the [ ] term notes, the Servicer will be required to deposit Collections
into the Collection Account on a daily basis until the Fully Funded Date has
occurred with respect to the [ ] term notes.
CASH ACCUMULATION PERIOD
<PAGE>
On each day during a Cash Accumulation Period for the [ ] term notes,
the [ ] term notes will be allocated their Principal Allocation Percentage of
Available Trust Principal and that amount will be deposited in the Cash
Accumulation Account for the [ ] term notes until the amount on deposit therein
equals the outstanding principal balance of the [ ] term notes. The trust will
use amounts in the Cash Accumulation Account only to make principal payments on
the [ ] term notes. The trust will retain any funds in the Cash Accumulation
Account, other than Cash Accumulation Account Earnings, in excess of the total
outstanding principal balance on the [ ] term notes in the Cash Accumulation
Account to make principal payments on subsequent Monthly Distribution Dates.
During a Cash Accumulation Period, the trust will not borrow additional funds
under the revolving notes, nor will the trust purchase additional receivables.
On the Targeted Final Payment Date for the [ ] term notes, the trust will pay
the outstanding principal balance of the [ ] term notes, or any lesser amount as
has been set aside for this purpose, and, to the extent not paid in full on the
Targeted Final Payment Date, on each Monthly Distribution Date thereafter until
so paid in full.
RAPID AMORTIZATION PERIOD
On each day during a Rapid Amortization Period for the [ ] term notes,
the [ ] term notes will be allocated their Principal Allocation Percentage of
Available Trust Principal and that amount will be deposited in the Note
Distribution Account for the [ ] term notes. All amounts so allocated during a
Rapid Amortization Period will be paid to the holders of the [ ] term notes on
the related Monthly Distribution Date. In addition, on the first Monthly
Distribution Date during the Rapid Amortization Period, any amounts in respect
of principal held in the Cash Accumulation Account or the Note Distribution
Account for the [ ] term notes will be paid to the holders of the [ ] term
notes.
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 notes, the holders of Certificates, and, as applicable, a swap counterparty.
On the initial issuance date, the Reserve Fund will be funded with the Reserve
Fund Initial Deposit from the seller in an amount equal to $________. The
Reserve Fund is of the type as contemplated by the prospectus. See "THE TRANSFER
AND SERVICING AGREEMENTS--LIQUIDITY AND CREDIT SUPPORT--RESERVE FUND" in the
prospectus.
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 trusts's 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 additional
deposits into the Reserve Fund, and we cannot assurance that any additional
deposits will be made.
If the amount in the Reserve Fund is less than the Reserve Fund
Required Amount for any Monthly Distribution Date, the amount of the deficiency,
to the extent funds are available as described above under "APPLICATION OF
INTEREST COLLECTIONS," will be deposited into the Reserve Fund.
Amounts on deposit in the Reserve Fund will be available to cover the
unsatisfied deficiency amount on each Monthly Distribution Date as described
above under "APPLICATION OF 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 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. This would be
after giving effect to all other required applications of the Reserve Fund on
that Monthly Distribution Date and all other amounts to be applied as Available
Trust Principal on that Monthly Distribution Date and after giving effect to the
payment and distribution of all amounts otherwise on deposit, or to be
deposited, in the Distribution Accounts on that Monthly Distribution Date.
If the amount in the Reserve Fund is more than the Reserve Fund
Required Amount for any Monthly Distribution Date, the amount of the 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 will be included in Available Trust Interest.
CASH ACCUMULATION RESERVE FUND
The Cash Accumulation Reserve Fund will be fully funded in the amount
of [$ ] on the initial issuance date. The [ ] term notes will not have any
rights to amounts on deposit in the cash accumulation reserve fund or interest
income thereon, except as described herein.
<PAGE>
The seller, in its sole discretion, may at any time make additional
deposits into the Cash Accumulation Reserve Fund. The seller is not obligated to
make any additional deposits into the Cash Accumulation Reserve Fund and there
can be no assurance that any additional deposits will be made.
If the amount in the cash accumulation reserve fund on any Monthly
Distribution Date is less than the Cash Accumulation Reserve Fund Required
Amount for that Monthly Distribution Date, the amount of the deficiency, to the
extent available as described above under "Application of Interest Collections,"
will be deposited into the Cash Accumulation Reserve Fund.
On each Monthly Distribution Date, if the funds in the Cash
Accumulation Reserve Fund after giving effect to all other distributions or
allocations on that Monthly Distribution Date exceed the Cash Accumulation
Reserve Fund Required Amount, that excess will be distributed first to reimburse
servicer advances and second to the seller. The Cash Accumulation Reserve Fund
Required Amount will decline on each Monthly Distribution Date as the [ ] term
notes approach their Targeted Final Payment Date. On repayment of the entire
outstanding principal balance of the [ ] term notes, any funds remaining on
deposit in the Cash Accumulation Reserve Fund will be paid to the seller.
BASIS SWAPS
On the initial issuance date, the trust will enter into a BASIS SWAP
with GMAC, as the BASIS SWAP COUNTERPARTY, for each of the following:
o the [ ] term notes, the [ ] TERM NOTES BASIS SWAP
o the [ ] revolving note, the [ ] REVOLVING NOTE BASIS SWAP
o the [ ] certificates, 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 or amounts payable under any
related Specified Support Arrangement 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 USD
One-Month LIBOR, as described herein.
As set forth in the table below, for each basis swap, on each Monthly
Distribution Date, the basis swap counterparty will be obligated to pay to the
trust an amount equal to interest accrued during the related Collection Period
preceding that Monthly Distribution Date, on the applicable Notional Amount
shown in the following table, at a rate equal to LIBOR, with respect to that
Monthly Distribution Date, plus a specified percentage for each day during the
related Collection Period divided by [360]. In exchange, on each Monthly
Distribution Date, the trust will be obligated to pay to the basis swap
counterparty an amount equal to interest accrued during the related Collection
Period, on either the daily Term Notional Amount, the [ ] Revolving Notional
Amount or the [ ] Certificate Notional Amount at a per annum rate equal to the
prime rate for each day during that Collection Period divided by [360.]
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AMOUNT DUE FROM AMOUNT DUE
BASIS SWAP NOTIONAL AMOUNT SWAP COUNTERPARTY FROM THE TRUST
[ } term notes basis swap Term Notional Amount USD One-Month Prime Rate
LIBOR + [%]
[ ] revolving note basis swap [ } Revolving Notional USD One-Month Prime Rate
Amount LIBOR +[%]
[ } certificate basis swap [ ] Certificate Notional USD One-Month Prime Rate
Amount LIBOR+[%]
</TABLE>
Under the basis swaps, on each Monthly Distribution Date the amount the
trust is obligated to pay will be netted against the amount the basis swap
counterparty is obligated to pay so that only the net amount will be due from
the trust or the basis swap counterparty, as the case may be. This amount will
be payable out of Available Trust Interest as described above in clauses (2) and
(3) of "APPLICATION OF INTEREST COLLECTIONS" or will be included in "Available
Trust Interest," as defined above in "APPLICATION OF INTEREST
COLLECTIONS--DEFINED TERMS."
<PAGE>
Each basis swap will terminate if, among other things, either party
defaults in the payment of any amount due thereunder and if the basis swap
counterparty becomes insolvent. The termination of any basis swap upon these
events will be an Early Amortization Event for the trust and either a Cash
Accumulation Event or, in the case of an insolvency event, a Rapid Amortization
Event, for the [ ] term notes. The termination of a basis swap will not result
in any make-whole amount being payable by either party.
In some limited situations, 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 without the consent of holders
of the outstanding notes or certificates. These limited situations include:
(1) in connection with the issuance of additional term notes,
revolving notes or certificates;
(2) a change in the trust's specified Maximum Revolver Balance
or the specified Maximum Revolver Balance for any series of revolving
notes; or
(3) the payment in full of any series of term notes.
The trust must satisfy the conditions set forth in the trust sale and
servicing agreement for the issuance or change, including, in the case of any
issuance or increase in the trust's specified Maximum Revolver Balance,
confirmation from each rating agency that the 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.
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 funds on deposit in the Reserve Fund, the Cash Accumulation
Reserve Fund and the Certificate Reserve Fund. The servicer may also make
Servicer Liquidity Advances with respect to additional series of term notes
issued hereafter if the terms of the additional term notes so provide. The
servicer will also make servicer advances as described above. The Servicer will
not make Servicer Liquidity Advances for the [ ] term notes. [Initially, no
Certificate Reserve Fund will be established for the [ ] certificates.] Other
credit, liquidity and other enhancement arrangements may be established in
connection with the issuance of additional securities or increases in the
trust's specified Maximum Revolver Balance. There can be no assurance that any
of these arrangements will be for the benefit of the holders of [ ] term notes.
DEFAULTS AND CHARGE-OFFS
For any Monthly Distribution Date, Available Trust Interest will be
available to cover the trust Defaulted Amount as described in clause (3) under
"APPLICATION OF INTEREST COLLECTIONS" above. To the extent that, for any Monthly
Distribution Date, the allocated Available Trust Interest does not cover the
full amount of the trust Defaulted Amount through treatment of that Available
Trust Interest as Additional trust Principal, that deficiency will constitute an
unreimbursed Trust Charge-Off. 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 and the Certificate
Reserve Fund, if any. For any date, unreimbursed Trust Charge-Offs will, unless
reduced as described below, equal the aggregate trust Charge-Offs for all prior
Monthly Distribution Dates unless and to the extent the 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 of the certificates
and then to reduce the outstanding principal balance of the notes. Interest
payments on securities will be reduced to the extent unreimbursed Trust
Charge-Offs are applied against these securities as of any Monthly Distribution
Date.
If unreimbursed Trust Charge-Offs exceed the certificate balance on the
Stated Final Payment Date for a series of notes, then the trust will not owe to
the holders of the [ ] term notes the portion of the excess that is allocable to
the [ ] term notes, and the amount of unreimbursed Trust Charge-Offs will be
permanently reduced by that allocation. Unreimbursed Trust Charge-Offs in excess
of the Certificate Balance will be applied to the notes on the basis of the
Trust Interest Allocation Percentage of the notes then outstanding. For purposes
of this application, the certificate balance and Trust Interest Allocation will
be calculated without reduction for Trust Charge-Offs.
<PAGE>
OPTIONAL PURCHASE BY THE SERVICER
Notwithstanding anything in the prospectus to the contrary, at any time
from and after the time that:
o the Daily Trust Balance is equal to or less than [10%] of the
highest sum, at any time since the initial issuance date, of
the Daily Trust Balance plus the Cash Collateral Amount plus
amounts on deposit in the Cash Accumulation Account and the
Note Distribution Account; and
o either no term notes are outstanding or the Wind Down Period
is in effect,
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 those receivables plus the appraised value of the other assets which price
will not be less than the outstanding principal balance and unpaid interest on
all notes. That amount will be treated as Trust Principal Collections received
during that Collection Period to the extent of the principal portion of the
aggregate Administrative Purchase Payments so paid, with the remainder being
Trust Interest Collections.
ERISA CONSIDERATIONS
Although there is little guidance on the subject, the seller believes
that, at the time of their issuance, the [ ] term notes would be treated as
indebtedness without substantial equity features for purposes of the Plan Assets
Regulation. The debt treatment of the [ ] term notes could change, subsequent to
their issuance, if the trust incurred losses. However, without regard to whether
[ ] term notes are treated as an equity interest for those 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 trust
or any of their respective affiliates is or becomes a party in interest or a
disqualified person with respect to a benefit plan. Some of the 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 the [ ] term notes. Included
among these exemptions are: Prohibited Transaction Class Exemption 96-23,
regarding transactions affected by in-house asset managers; PTCE 95-60,
regarding investments by insurance company general accounts; PTCE 90-1,
regarding investments by insurance company pooled separate accounts; PTCE 91-38
regarding investments by bank collective investment funds; and PTCE 84-14,
regarding transactions effected by "qualified professional asset managers." For
additional information regarding treatment of the [ ] term notes under ERISA,
see "ERISA CONSIDERATIONS" in the prospectus.
FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Kirkland & Ellis, special tax counsel to the seller,
for U.S. federal income tax purposes, the [ ] term notes will constitute
indebtedness. Each term noteholder, by the acceptance of [ ] term note, will
agree to treat the [ ] term notes as indebtedness for federal, state and local
income and franchise tax purposes.
All the [ ] certificates issued on the initial issuance date will be
issued to the seller. Accordingly, the trust will be characterized as a division
of the seller for U.S. federal income tax purposes. See "FEDERAL INCOME TAX
CONSEQUENCES--TAX CHARACTERIZATION OF THE TRUST" in the prospectus. If the
seller sells any of the [ ] certificates or if the trust issues additional
certificates, this characterization may change. See "FEDERAL INCOME TAX
CONSEQUENCES--TAX CHARACTERIZATION AND TREATMENT OF CERTIFICATES" in the
prospectus.
See "FEDERAL INCOME TAX CONSEQUENCES" and "STATE AND LOCAL TAX
CONSEQUENCES" in the prospectus.
UNDERWRITING
Based on 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 has severally agreed to purchase from the
seller, the principal amount of [ ] term notes set forth opposite its name
below:
AGGREGATE PRINCIPAL AMOUNT TO BE PURCHASED
<PAGE>
UNDERWRITER [ ] TERM NOTES
$
Total $
The seller has been advised by the underwriters that the several
underwriters propose initially to offer the [ ] term notes to the public at the
prices set forth on the cover page hereof, and to dealers at these prices less a
selling concession not in excess of the percentage set forth below for the [ ]
term notes. The Underwriters may allow, and the dealers may reallow to other
dealers, a subsequent concession not in excess of the percentage set forth below
for the [ ] term notes. After the initial public offering, the public offering
price and these concessions may be changed.
SELLING REALLOWANCE
CONCESSION
[ ] term notes [%] [%]
The underwriters may engage in over-allotment transactions, stabilizing
transactions, syndicate covering transactions and penalty bids with respect to
the [ ] term notes in accordance with Regulation M under the Securities Exchange
Act of 1934. Over-allotment transactions involve syndicate sales in excess of
the offering size, which creates a syndicate short position. Stabilizing
transactions permit bids to purchase the [ ] term notes so long as the
stabilizing bids do not exceed a specified maximum. Syndicate covering
transactions involve purchases of the [ ] term notes in the open market after
the distribution has been completed in order to cover syndicate short positions.
Penalty bids permit the underwriters to reclaim a selling concession from a
syndicate member when the [ ] term notes originally sold by that syndicate
member are purchased in a syndicate covering transaction. These over-allotment
transactions, stabilizing transactions, syndicate covering transactions and
penalty bids may cause the prices of the [ ] term notes to be higher than they
would otherwise be in the absence of those transactions. Neither the seller nor
any of the underwriters represent that the underwriters will engage in these
transactions or that these transactions, if commenced, will not be discontinued
without notice at any time.
We will receive proceeds of approximately [$ ] from the sale of the [ ]
term notes, representing [ %] of the principal amount of the [ ] term notes,
after paying the underwriting discount of [$ ], representing [%] of the
principal amount of the [ ] term notes. Additional offering expenses are
estimated to be [$ ].
LEGAL OPINIONS
In addition to the legal opinions described in the prospectus, some of
the legal matters relating to the [ ] 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 Corporation and a
number of its affiliates.
<PAGE>
GLOSSARY OF PRINCIPAL TERMS
The following are given the meanings shown below to help describe the
cash flow on the notes and the certificates.
ADDITIONAL TRUST PRINCIPAL means, for any Monthly 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 that Monthly Distribution Date.
AGGREGATE CERTIFICATEHOLDERS' INTEREST means, for any Monthly
Distribution Date, an amount equal to the sum of (a) the Certificateholders'
Interest for all classes of certificates for that Distribution Date and (b) the
Certificateholders' Interest Carryover Shortfall for the preceding Monthly
Distribution Date.
AGGREGATE REVOLVER INTEREST means, for any Monthly Distribution Date,
the sum of (a) the Revolver Interest for all series of revolving notes for that
Monthly Distribution Date and (b) the Revolver Interest Carryover Shortfall for
the preceding Monthly Distribution Date.
AVAILABLE TRUST INTEREST means, for any Distribution Date, the sum of
(1) Trust Interest Collections;
(2) Shared Investment Proceeds;
(3) the net amounts, if any, paid to the trust under the
[ ] certificates basis swap; and
(4) the portion of the purchase price to be included in
Available Trust Interest if the Servicer exercises its option to
purchase the assets of the trust as described below under "Optional
Purchase by the Servicer."
AVAILABLE TRUST PRINCIPAL means
(a) for any day during a Collection Period, Trust Principal
Collections for that day minus any amounts paid on that day to the
Servicer as reimbursement for outstanding Servicer Liquidity Advances
and
(b) on the Monthly Distribution Date related to that
Collection Period, the sum of
(1) Additional Trust Principal, if any, for that
Monthly Distribution Date,
(2) the Cash Collateral Amount on that Monthly
Distribution Date and
(3) if that Monthly Distribution Date is related to
the Wind Down Period or an Early Amortization Period for the
trust, and if the amount on deposit in the Reserve Fund on
that Distribution Date exceeds zero, the Supplemental
Principal Allocation for that current Monthly Distribution
Date.
BUSINESS DAY means 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, be closed.
CASH ACCUMULATION ACCOUNT means an Eligible Deposit Account established
and maintained by the Servicer with the indenture trustee, in the name of the
indenture trustee, on behalf of the holders of the [ ] term notes. Funds in the
Cash Accumulation Account will be invested in Eligible Investments. The Cash
Accumulation Account will constitute a Designated Account, but the Cash
Accumulation Account Earnings will not constitute Shared Investment Proceeds for
purposes of the definition of Available Trust Interest. Cash Accumulation
Account Earnings will be maintained in the Cash Accumulation Account.
CASH ACCUMULATION ACCOUNT EARNINGS for a Monthly Distribution Date
means investment earnings during the related Collection Period on funds
deposited in the Cash Accumulation Account, net of losses and investment
expenses with respect to these funds.
<PAGE>
CASH ACCUMULATION EVENT means, for the [ ] term notes, each of the
Early Amortization Events, except for Early Amortization Events which are also
Rapid Amortization Events, and the commencement of a Wind Down Period for the
trust.
CASH ACCUMULATION RESERVE FUND means an Eligible Deposit Account
established and maintained by the trust in the name of the indenture trustee for
the benefit of the holders of the [ ]term notes. The Cash Accumulation Reserve
Fund is available for the payment of interest on the [ ] term notes to the
extent described under "The Transfer and Servicing Agreements--Application of
Interest Collections" in this prospectus supplement.
CASH ACCUMULATION RESERVE FUND DEPOSIT AMOUNT means, for any Monthly
Distribution Date, the excess, if any, of the Cash Accumulation Reserve Fund
Required Amount over the amount on deposit in the Cash Accumulation Reserve
Fund.
CASH ACCUMULATION PERIOD means, for the [ ] term notes, a period
beginning on the occurrence of a Cash Accumulation Event and ending on the
earliest of:
(1) the date on which the [ ] term notes are paid
in full,
(2 the occurrence of a Rapid Amortization Event for the
[ ] term notes,
(3) the trust Termination Date and
(4) under the limited circumstances described above under
"--Application of Principal Collections by the Trust--Revolving
Period," the recommencement of the Revolving Period for the trust.
CASH ACCUMULATION RESERVE FUND RELEASE AMOUNT for a Monthly
Distribution Date can never be less than zero and is always equal to zero except
during a Cash Accumulation Period or a Rapid Amortization Period when it is
calculated as follows:
<TABLE>
<CAPTION>
<S> <C>
Cash Accumulation Reserve ( (CAB) x (LIBOR Rate) X (Actual Days) ) --- Interest Earned)
Fund Release Amount = 360
</TABLE>
where:
"CAB" is the sum of (a) the daily average balance in the Cash
Accumulation Account and (b) the daily average balance in the
Note Distribution Subaccount in respect of the [ ] term notes
prior to any deposits or withdrawals in respect of principal
into those accounts on that Monthly Distribution Date;
provided that earnings on those accounts during the related
Collection Period will be excluded from those balances.
"LIBOR Rate" is the [ ] Term Note Interest Rate in effect for
that Monthly Distribution Date.
"Actual Days" is the actual numbers of days elapsed from and
including the prior Monthly Distribution Date to but excluding
that Monthly Distribution Date.
"Interest Earned" is the sum of the Cash Accumulation Account
Earnings and the Note Distribution Subaccount Earnings during
the related Collection Period.
CASH ACCUMULATION RESERVE FUND REQUIRED AMOUNT means, with respect to
any Determination Date, the sum of (1) the present value, discounted at [ %] per
annum, of the Monthly Mismatch Amounts for each Monthly Distribution Date
following the Monthly Distribution Date for which the calculation is being made
to the Monthly Distribution Date preceding the Targeted Final Payment Date for
the [ ] term notes and (2) [$ ].
[ ] CERTIFICATE NOTIONAL AMOUNT for any day during a Collection Period
equals the outstanding Certificate Balance of the [ ] certificates as of the
last day of that Collection Period, including after giving effect to
unreimbursed trust Charge-Offs as of the close of business on the Monthly
Distribution Date during that Collection Period.
<PAGE>
CERTIFICATE PAYMENT DATE for the [ ] certificates means the 15th day of
each month, or if such day is not a Business Day, the next Business Day.
CERTIFICATE RATE means for the [ ] certificates issued on the initial
issuance date a rate equal to, with respect to any Certificate Payment Date, the
product of (1) a fraction, the numerator of which is the [number of days
elapsed] from and including the prior Certificate Payment Date (or, in the case
of the first Certificate Payment Date, from and including the initial issuance
date) to but excluding that Certificate Payment Date and the denominator of
which is [360] and (2) USD One-Month LIBOR plus [ %].
CERTIFICATE RESERVE FUND means an account the trust may establish if,
after the initial issuance date, certificates are issued to a non-affiliate of
the seller. The Certificate Reserve Fund, if established, will be an Eligible
Deposit Account established and maintained in the name of the owner trustee, for
the benefit of the holders of those certificates.
CERTIFICATEHOLDERS' INTEREST means, for any Monthly Distribution Date,
for any class of certificates, the product of (a) the Certificate Balance for
that class on the prior Monthly Distribution Date (or, in the case of the first
Monthly Distribution Date following the issuance of that class of certificates,
on the related closing date) plus the initial Certificate Balance of any
certificates of that class issued since that prior Monthly Distribution Date and
(b) the certificate rate for that class for that Monthly Distribution Date.
CERTIFICATEHOLDERS' INTEREST CARRYOVER SHORTFALL means, for any Monthly
Distribution Date, the excess of (a) the Aggregate Certificateholders' Interest
for that Monthly Distribution Date over (b) the amount that was actually
deposited in the Certificate Distribution Account on that Monthly Distribution
Date in respect of Aggregate Certificateholders' Interest.
DETERMINATION DATE means the tenth day of each calendar month, or if
the tenth day is not a Business Day, the next succeeding Business Day.
ELIGIBLE INVESTMENTS means book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which, at the time made, evidence:
(a) direct obligations of and which are fully guaranteed as to
timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit
of any depository institution or trust company incorporated under the
laws of the United States of America or any state thereof, or any U.S.
branch of a foreign bank; the depository institution or trust company
shall be supervised and examined by federal or state banking or
depository institution authorities; provided, however, that at any time
of the investment or contractual commitment to invest therein, the
commercial paper or other short-term unsecured debt obligations, other
than those obligations the rating of which is based on the credit of a
person or entity other than that depository institution or trust
company, thereof shall have a credit rating from each of the rating
agencies then rating the obligations in the highest investment category
granted thereby;
(c) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from each of the
rating agencies then rating that commercial paper in the highest
investment category granted thereby;
(d) investments in money market or common trust funds having a
rating from each of the rating agencies then rating those funds in the
highest investment category granted thereby for money market funds,
including funds for which the indenture trustee or the owner trustee or
any of their respective affiliates is an investment manager or advisor,
so long as those fund shall have that rating, provided, however, that
no funds in the Cash Accumulation Account or the Note Distribution
Subaccount for the [ ] term notes shall be invested in Eligible
Investments described in this clause (d);
(e) bankers' acceptances issued by any depository institution
or trust company referred to in clause (b) above;
<PAGE>
(f) repurchase obligations with respect to any security that
is a direct obligation of, or fully guaranteed by, the United States of
America or any agency or instrumentality thereof the obligations of
which are backed by the full faith and credit of the United States of
America, in either case entered into with a person or entity with the
required deposit rating or otherwise approved by the rating agencies;
and
(g) any other investment permitted by each of the rating
agencies,
in each case, other than as permitted by the rating agencies, maturing
not later than the Business Day immediately preceding the next Monthly
Distribution Date.
The FINAL REVOLVING PERIOD TERMINATION DATE is [date].
FULLY FUNDED DATE means, with respect to a series of notes, the day on
which:
(a) for the [ ] term notes,
(1) the sum of the amounts on deposit in the Cash
Accumulation Account plus the amount on deposit in the Note
Distribution Subaccount for the [ ] term notes for the payment
of principal equals the outstanding principal balance of the [
] term notes or
(2) the [ ] term notes have been paid in full;
(b) for each other outstanding series of term notes,
(1) the outstanding principal balance of that series
has been reduced to zero,
(2) an amount equal to the principal balance has been
set aside in a segregated account for the benefit of the notes
or
(3) some other arrangement with respect to the
repayment of principal of the Notes has been made which is
satisfactory to the rating agencies; or
(c) for the revolving notes, the principal balance has been
reduced to zero and the Specified Maximum Revolver Balance has been
reduced to zero.
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.
MONTHLY AVAILABLE AMOUNT means, for any Monthly Distribution Date, the
aggregate of the [ ] term notes Monthly Available Amount, the [ ] revolving note
Monthly Available Amount and the comparable monthly available amounts for each
other series of term notes and revolving notes, if any.
MONTHLY CARRYING COSTS means, for any Monthly Distribution Date, the
aggregate of the [ ] term notes Monthly Carrying Costs, the [ ] revolving note
Monthly Carrying Costs and the comparable monthly carrying costs for each other
series of term notes and revolving notes, if any.
The MONTHLY MISMATCH AMOUNT for a Monthly Distribution Date is
calculated as follows:
(Mismatch Rate)
Monthly Mismatch Amount = (Term Note Balance) x 12
where:
Term Note Balance is the outstanding principal balance on the
[ ]-A term notes on the Monthly Distribution Date on which the
Cash Accumulation Reserve Fund Required Amount is being
calculated after distribution of principal on that Monthly
Distribution Date, and
Mismatch Rate is [ %].
<PAGE>
NOTE DISTRIBUTION SUBACCOUNT means an account in which the Servicer
will maintain all the funds deposited in the Note Distribution Account in
respect of principal for the series of term notes beginning its Payment Period.
This account may only be kept on the trust's books.
NOTEHOLDERS' INTEREST means, for any Monthly Distribution Date,
(a) with respect to the [ ] term notes, the sum of
(1) the product of
(i) the outstanding principal balance of the
[ ] term notes on the last day of the related
Collection Period, or, in the case of the Initial
Monthly Distribution Date, the outstanding principal
balance on the initial issuance date,
(ii) the [ ] Term Note Interest Rate
for that Monthly Distribution Date and
(iii) a fraction the numerator of which is
the [number of days elapsed] from and including the
prior Monthly Distribution Date, or, in the case of
the initial Monthly Distribution Date, from and
including the initial issuance date, to but excluding
that Monthly Distribution Date and the denominator of
which is [360] and
(2) the excess of the Noteholders' Interest for the [
] term notes for the preceding Monthly Distribution Date over
the amount that was actually deposited in the Note
Distribution Account on the preceding Monthly Distribution
Date for the payment of interest on the [ ] term notes,
(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 that
series of term notes on the Monthly Distribution Date under its terms,
including any interest payable as a result of shortfalls from prior
Monthly Distribution Dates, and
(c) with respect to any series of revolving notes, the sum
of
(1) the Revolver Interest and
(2) the Revolver Interest Carryover Shortfall, in
each case, for that series of revolving notes for that
Distribution Period.
PRINCIPAL ALLOCATION PERCENTAGE for a referent series of notes, which
requires Available Trust Principal to be retained or set aside during any period
to fund principal payments with respect to the referent series on any date, is
calculated as follows:
(1) if that date does not relate to a Wind Down Period or an
Early Amortization Period for the trust:
<TABLE>
<CAPTION>
<S> <C> <C>
(Aggregate Principal Balance of Referent Series)
Principal Allocation Percentage ----------------------------------------
for a Referent Series = (Sum of Aggregate Principal Balance for all
</TABLE>
where:
Aggregate Principal Balance of Referent Series is
(A) with respect to any referent series of
term notes, the aggregate initial principal balance
with respect to that Referent Series or
(B) with respect to any referent series of
revolving notes, the outstanding principal balance of
that referent series as of the close of business on
the day preceding the first day of the Payment Period
with respect to that series.
<PAGE>
Sum of Aggregate Principal Balance for all referent
series is the sum of the Aggregate Principal Balance of
referent series for each series of notes which is on that date
a referent series
(2) if that date relates to a Wind Down Period or an Early
Amortization Period for the trust:
<TABLE>
<CAPTION>
<S> <C> <C>
(Aggregate Principal Balance of Referent Series)
Principal Allocation Percentage ----------------------------------------
for a Referent Series = (Sum of Aggregate Principal Balance for each
Series of Notes)
</TABLE>
where:
Aggregate Principal Balance of Referent Series is the
aggregate outstanding principal balance of the referent series
then outstanding on the last day of the Revolving Period
Sum of Aggregate Principal Balance for each Series of
Notes is the sum of the Aggregate Principal Balance of
Referent Series for all series then outstanding on the last
day of the Revolving Period, except for any series the
principal balance of which has been fully paid or provided
for, calculated for this purpose as though each outstanding
series is a Referent Series on that date.
A RAPID AMORTIZATION EVENT for the [ ] term notes will be:
(1) specified insolvency events relating to General Motors,
the Servicer, GMAC, or the seller,
(2) failure to pay the outstanding principal balance of the
notes and any certificates by their Stated Final Payment Date,
(3) either the trust or the seller becomes required to
register as an "investment company" within the meaning of the
Investment Company Act of 1940 and
(4) on any Monthly Distribution Date, the balance in the Cash
Accumulation Reserve Fund would be less than [ ] after giving effect to
all withdrawals and additions on that Monthly Distribution Date.
Items (3) and (4) above are not Early Amortization Events for the trust.
RAPID AMORTIZATION PERIOD for the [ ] term notes means a period
commencing upon the occurrence of a Rapid Amortization Event and will end on the
earliest of (a) the date on which the [ ] term notes are paid in full and (b)
the trust Termination Date.
REFERENCE BANK RATE will be determined on the following basis.
(1) At 11:00 A.M., London time on the day that is two LIBOR
Business Days
(a) prior to the immediately preceding Monthly Distribution
Date, or
(b) prior to the first day of the related Collection Period,
(2) the applicable of
(a) the principal balance of the [ ] term notes outstanding,
(b) the Certificate Balance of the [ ] certificates then
outstanding, or (c) the aggregate principal amount of the [ ]
revolving note then outstanding, will be computed.
(3) The offered rate on an amount approximately equal to that
determined in paragraph (2) will be determined. The offered
rate will be fixed on the basis of the rates at which deposits
in U.S. Dollars are offered by the reference banks, and the
reference banks shall be four major banks that are engaged in
transactions in the London interbank market. The indenture
trustee will select these four banks after consultation with
the seller.
<PAGE>
(4) The indenture trustee will request the principal London office
of each of the reference banks to provide a quotation of its
offered interest rate:
(5) If at least two of the quotations in paragraph (4) are
provided, the Reference Bank Rate will be the arithmetic mean
of the quotations, rounded upwards to the nearest
one-sixteenth of one percent.
(6) However, if on that date fewer than two quotations are
provided as requested, the Reference Bank Rate will be the
arithmetic mean, rounded upwards to the nearest one-sixteenth
of one percent, of the New York offered rate.
(a) The New York offered rate will be the interest rate
quoted by
(i) one or more major banks in New York City,
selected by the indenture trustee after
consultation with the seller,
(ii) as of 11:00 a.m., New York City time, on
that date, to leading European banks for
United States dollar deposits for a period
of one month in amounts approximately equal
to that determined in paragraph (2).
(7) If, after all the steps described in paragraphs (1)-(6) have
been completed, no Eurodollar offered rate or New York offered
rate quotation can be obtained, the Reference Bank Rate will
be LIBOR for the prior Monthly Distribution Date.
REMAINING INTEREST AMOUNTS means, with respect to a series of notes,
each of the amounts designated as Remaining Interest Amounts under clause (2) of
"Application of Interest Collections" above.
REQUIRED PAYMENT means, for any series of term notes other than the [ ]
term notes, the amount of principal, if any, required by the terms of the term
notes to be due and payable, or to be set aside in anticipation of a future
payment of principal, on any specified date or dates. The term Required Payment
is not used herein to describe amounts owing or required to be set aside for the
[ ] term notes.
The REQUIRED PAYMENT PERIOD LENGTH, as of a Determination Date, is
calculated as follows, with figures rounded up to the nearest whole integer:
<TABLE>
<CAPTION>
<S> <C> <C>
Required Payment (Outstanding Note Principal Balance)
Period Length = (Recent Minimum Daily Trust Balance) x (Minimum Monthly Payment Rate)
</TABLE>
where:
Outstanding Note Principal Balance is the outstanding
principal balance of all [ ] term notes and all other notes
with scheduled Payment Periods during the Payment Period for
the [ ] term notes;
Recent Minimum Daily Trust Balance is the minimum
expected Daily Trust Balance during the period between that
Determination Date and ], 200[ ] as determined by the
Servicer; and
Minimum Monthly Payment Rate is the minimum Monthly
Payment Rate during the twelve Collection Periods preceding
that Determination Date.
RESERVE FUND DEPOSIT AMOUNT means, for any Monthly Distribution Date,
the excess, if any, of the Reserve Fund Required Amount over the amount on
deposit in the Reserve Fund after taking into account any withdrawals from the
Reserve Fund on that Monthly Distribution Date.
RESERVE FUND REQUIRED AMOUNT means,
(a) for any Monthly Distribution Date during the Revolving
Period or Wind Down Period, [ %] of the Maximum Pool Balance as of that
Monthly Distribution Date, or
(i) if, as of that Monthly Distribution
Date, the long-term debt obligations of GMAC are
rated less than "BBB-" by Standard & Poor's Ratings
Services, then [ %];
<PAGE>
(b) for any Monthly Distribution Date during any Early
Amortization Period occurring prior to the Fully Funded Date for all
series of notes, [ %] of the Maximum Pool Balance as of the last day of
the Revolving Period, or
(i) if, as of the last day of the Revolving
Period the long-term debt obligations of GMAC are
rated less than "BBB--" by Standard & Poor's Ratings
Services, then [ %];
and
(c) for any Monthly Distribution Date falling on or after the
Fully Funded Date for all series of notes, zero.
REVOLVER INTEREST means, for any Monthly Distribution Date, for any
series of revolving notes, the product of (a) the average daily Series Net
Revolver Balance for the series of revolving notes during the related Collection
Period and (b) the Revolver Interest Rate for the series of revolving notes for
the Monthly Distribution Date.
REVOLVER INTEREST CARRYOVER SHORTFALL means, for any Monthly
Distribution Date, the excess of (a) the Aggregate Revolver Interest for the
Monthly Distribution Date over (b) the amount that was actually deposited in the
Revolver Distribution Account on the Monthly Distribution Date in respect of
Aggregate Revolver Interest.
REVOLVER INTEREST RATE for the [ ] revolving note issued on the initial
issuance date will be equal to, with respect to any Monthly Distribution Date,
the product of (1) a fraction, the numerator of which is the [number of days
elapsed] during the related Collection Period, or, in the case of the initial
Monthly Distribution Date, from and including the initial issuance date of the
related Collection Period, and the denominator of which is [360] and (2) USD
One-Month LIBOR plus [ %].
[ ] REVOLVING NOTE TARGETED FINAL PAYMENT DATE for the [ ] revolving
note to be issued on the initial issuance date will be the Monthly Distribution
Date in [ ]200.
[ ] REVOLVING NOTE STATED FINAL PAYMENT DATE will be the Monthly
Distribution Date in [ ] 200[ ].
[ ] REVOLVING NOTIONAL AMOUNT for any day during a Collection Period
equals the outstanding principal balance of the [ ] revolving note as of that
day, including after giving effect to unreimbursed trust Charge-Offs as of the
close of business on the Monthly Distribution Date during that Collection
Period.
SERIES NET REVOLVER BALANCE means, with respect to any series of
revolving notes, for any date, the aggregate outstanding principal balance under
the series of revolving notes minus any amounts on deposit in the Revolver
Distribution Account on that date for the payment of principal on that series of
revolving notes.
SERIES SHORTFALL means, for a series of notes, each of the amounts
designated as a Series Shortfall above in clause (2) under "Application of
Interest Collections."
SERVICER LIQUIDITY ADVANCE means, for any series of term notes the
terms of which provide for a Servicer Liquidity Advance, an advance by the
Servicer to the trust made to the extent a required principal payment for any
series of Notes for any Monthly Distribution Date cannot otherwise be made,
after giving effect to all issuances of securities and additional borrowings
under the revolving notes on that Monthly Distribution Date, as they are
available. However, the Servicer can only make Servicer Liquidity Advances to
the extent that the Servicer, in its sole discretion, expects to recover those
advances from subsequent trust Principal Collections. Servicer Liquidity
Advances with respect to a series of term notes will be reimbursed (a) if
Available Trust Principal is being set aside for that series of term notes, out
of that series' share of Available Trust Principal and (b) if Available Trust
Principal is not being set aside for term notes, out of a portion of Trust
Principal Collections not to exceed a fraction, the numerator of which is the
outstanding principal balance of that series of term notes and the denominator
of which is the outstanding balance of all series of notes as of that date. The
terms of the [ ] term notes do not provide for the Servicer to make Servicer
Liquidity Advances.
SHARED INVESTMENT PROCEEDS means all Investment Proceeds other than (A)
Cash Accumulation Account Earnings, (B) Note Distribution Subaccount earnings
for the [ ] term notes, (C) Investment Proceeds from the Cash Accumulation
Reserve Fund and (D) Investment Proceeds from any other account established for
other series of term notes in which funds are accumulated to pay principal on
the notes at designated times.
<PAGE>
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 that arrangement is an asset of the trust and is so designated.
As of the initial issuance date, the Specified Support Arrangements will consist
of the basis swaps and the Cash Accumulation Reserve Fund. 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
initial issuance date, may not inure to the benefit of other securities,
including the [ ] term notes, issued by the trust.
SUPPLEMENTAL PRINCIPAL ALLOCATION means, for any Monthly Distribution
Date related to the Wind Down Period or an Early Amortization Period for the
trust, an amount not less than zero and equal to the lesser of:
(a) the excess, if any, of
(1) 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 dealer
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 dealer accounts in the pool of
accounts for each day during the related Collection
Period over
(2) 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
(1)(B) or (2) for any day in that Collection Period that
occurred during the Revolving Period) and
(b) an amount equal to
(1) the Daily Trust Balance as of the termination
of the Revolving Period plus
(2) the Cash Collateral Amount on the last day of
the Revolving Period minus
(3) the Available Trust Principal for each Monthly
Distribution Date from and after the final Monthly
Distribution Date for the Revolving Period through but
excluding that current Monthly Distribution Date minus
(4) the amount added to unreimbursed Trust
Charge-Offs on each Monthly Distribution Date from and after
the final Monthly Distribution Date for the Revolving Period
through and including that current Monthly Distribution Date
minus
(5) Available Trust Principal for that current
Monthly Distribution Date, assuming the Supplemental Principal
Allocation for that Monthly Distribution Date was zero.
TERM NOTIONAL AMOUNT for any day during a Collection Period equals the
Unaccumulated Principal Balance of the [ ] term notes as of that day, including
after giving effect to unreimbursed Trust Charge-Offs as of the close of
business on the Monthly Distribution Date during that Collection Period.
TRUST INTEREST ALLOCATION means, for any series of notes, for any
Monthly Distribution Date, an amount equal to the product of (1) Available Trust
Interest less the amounts paid to the Servicer under clause 1(a) under the
"Application of Interest Collections above and (2) the Trust Interest Allocation
Percentage for that series.
TRUST INTEREST ALLOCATION PERCENTAGE means, for any series of notes,
for any Monthly Distribution Date, a fraction calculated as set forth in the
following equation:
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
(UPB of Note Series)
Trust Interest Allocation Percentage = (UPB of all term notes) + (UPB of all revolving notes)
</TABLE>
where:
UPB of Note Series is
(1) for a series of term notes, the Unaccumulated
Principal Balance for that series of term notes and
(2) for a series of revolving notes, the daily
average outstanding principal balance for that series of
revolving notes during the related Collection Period;
UPB of all term notes is the Unaccumulated Principal Balances
of all series of term notes then outstanding; and
UPB of all revolving notes is the daily average of the
outstanding principal balance of all revolving notes during the related
Collection Period.
TRUST INTEREST COLLECTIONS means, for any Monthly Distribution Date, an
amount equal to the sum of (1) the product of (a) the Trust Percentage and (b)
Interest Collections for the related Collection Period and (2) recoveries during
the related Collection Period on Eligible Receivables that have previously
become Defaulted receivables. If, on any Monthly Distribution Date, the Servicer
does not make a servicer advance in the amount of the full deficiency amount,
Trust Interest Collections for the Monthly Distribution Date will be adjusted to
give effect to the actual percentage of Eligible Receivables in those dealer
accounts in the pool of accounts in which the full amount of interest due for
the related Collection Period was not collected. The adjustment will not affect
the amount of interest allocated to the trust with respect to the other dealer
accounts in the pool of accounts.
TRUST PERCENTAGE means, for any Monthly Distribution Date, the
percentage equivalent of a fraction never to 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 dealer accounts
included in the pool of accounts during the related Collection Period.
TRUST PRINCIPAL COLLECTIONS means, for any date, the sum of (a) the
amount of Principal Collections on receivables held by the trust and (b) the
principal portion of all Warranty Payments and Administrative Purchase Payments,
if any, on that date.
UNACCUMULATED PRINCIPAL BALANCE means, with respect to any series of
term notes as of a Monthly Distribution Date,
(1) the daily average of the outstanding principal balance of
the term notes during the related Collection Period minus
(2) with respect to the [ ] term notes, the daily average
during the related Collection Period of the sum of
(a) the amount of funds on deposit in the Cash
Accumulation Account and
(b) the amount of funds on deposit in the Note
Distribution Account in respect of the outstanding principal
balance of the [ ] term notes or, with respect to other series
of term notes, the daily average of the amount of funds on
deposit in any account during the related Collection Period
for which funds are accumulated to pay principal on that
series as specified under the terms of that series of term
notes.
USD ONE-MONTH LIBOR means, with respect to each Monthly Distribution
Date, the rate for deposits in U.S. Dollars for a period of one month which
appears on the Dow Jones Telerate Service Page 3750 as of 11:00 a.m., London
time,
<PAGE>
(x) for the [ ] term notes and the [ ] certificates, on the
day that is two LIBOR Business Days prior to the Monthly Distribution
Date preceding that Monthly Distribution Date, or, for the Initial
Monthly Distribution Date, two LIBOR Business Days prior to the initial
issuance date, and
(y) for the [ ] revolving note, on the day that is two LIBOR
Business Days prior to the first day of the related Collection Period,
or, for the Initial Monthly Distribution Date, two LIBOR Business Days
prior to the initial issuance date.
If the rate does not appear on that page, or any other page as may
replace that page on that service, or if that service is no longer offered, that
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.
<PAGE>
II - 6
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, that 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 the offer or solicitation is not qualified to do so or to anyone to whom
it is unlawful to make any 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.
---------------
Until [ ], [ ], all dealers effecting transactions in the 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.
SUPERIOR WHOLESALE
INVENTORY FINANCING TRUST [ ]
[$ ]
FLOATING RATE ASSET BACKED TERM NOTES,
SERIES [ ]
WHOLESALE AUTO RECEIVABLES CORPORATION
SELLER
GENERAL MOTORS
ACCEPTANCE CORPORATION
SERVICER
PROSPECTUS SUPPLEMENT
UNDERWRITERS
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses to be incurred in
connection with the offering of the term notes, other than underwriting
discounts and commissions, described in this Registration Statement:
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission registration fee ............................$ 1,112,000
Fees and expenses of trustee; Printing Registration
Statement, prospectus and other documents; Accountants'
fees.......................................................................... 1,360,000
Rating Agencies' fees........................................................... 2,000,000
Miscellaneous expenses.......................................................... 1,028,000
Total.........................................................................$ 5,500,000
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Wholesale Auto Receivables Corporation is incorporated under the laws
of Delaware. Section 145 of the Delaware General Corporation Law provides that
a Delaware corporation may indemnify any persons, including officers and
directors, who are, or are threatened to be made, parties to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, other than an action by or in the right of such
corporation, by reason of the fact that such person was an officer, director,
employee or agent of such corporation, or is or was serving at the request of
such corporation as a director, officer, employee or agent of another
corporation or enterprise. The indemnity may include expenses, including
attorneys' fees, judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding, provided such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the corporation's best interests
and, for criminal proceedings, had no reasonable cause to believe that his
conduct was illegal. A Delaware corporation may indemnify officers and directors
in an action by or in the right of the corporation under the same conditions,
except that no indemnification is permitted without judicial approval if the
officer or director is adjudged to be liable to the corporation. Where an
officer or director is successful on the merits or otherwise in the defense of
any action referred to above, the corporation must indemnify him against the
expenses which such officer or director actually and reasonably incurred.
Wholesale Auto Receivables Corporation's Certificate of Incorporation
provides, in effect, that, except for limited exceptions, such corporation will
indemnify its officers and directors to the extent permitted by Delaware General
Corporation Law.
Certain controlling persons of the Registrant may also be entitled to
indemnification from General Motors Acceptance Corporation, the direct parent of
the Registrant. Under Section 145, General Motors Acceptance Corporation may or
shall, subject to various exceptions and limitations, indemnify its directors or
officers and may purchase and maintain insurance as follows:
(a) The Certificate of Incorporation, as amended, of General
Motors Acceptance Corporation provides that no director shall be personally
liable to General Motors Acceptance Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (i) for
any breach of the director's duty of loyalty to General Motors Acceptance
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174, or any successor provision thereto, of the Delaware Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit.
<PAGE>
(b) Under Article VI of its By-Laws, General Motors Acceptance
Corporation shall indemnify and advance expenses to every director and officer,
and to such person's heirs, executors, administrators or other legal
representatives, in the manner and to the full extent permitted by applicable
law as it presently exists, or may hereafter be amended, against any and all
amounts, including judgments, fines, payments in settlement, attorneys' fees and
other expenses, reasonably incurred by or on behalf of such person in connection
with any "proceeding". A proceeding may be a threatened, pending or completed
action, suit or proceeding, whether civil, criminal administrative or
investigative, in which such director or officer was or is made or is threatened
to be made a party or is otherwise involved by reason of the fact that such
person is or was a director or officer of General Motors Acceptance Corporation,
or is or was serving at the request of General Motors Acceptance Corporation as
a director, officer, employee, fiduciary or member of any other corporation,
partnership, joint venture, trust, organization or other enterprise. General
Motors Acceptance Corporation shall not be required to indemnify a person in
connection with a proceeding initiated by such person if the proceeding was not
authorized by the Board of Directors of General Motors Acceptance Corporation.
General Motors Acceptance Corporation shall make an advancement of expenses,
whereby it will pay the expenses of directors and officers incurred in defending
any proceeding in advance of its final disposition; provided, however, that the
payment of expenses incurred by a director or officer in advance of the final
disposition of the proceeding shall be made only upon receipt of an undertaking
by the director or officer to repay full amounts advanced if it should be
ultimately determined that the director or officer is not entitled to be
indemnified under Article VI of the By-Laws or otherwise. If a claim for
indemnification or advancement of expenses by an officer or director under
Article VI of the By-Laws is not paid in full within ninety days after a written
claim therefor has been received by General Motors Acceptance Corporation, the
claimant may file suit to recover the unpaid amount of such claim, and if
successful in whole or in part, shall be entitled to the requested
indemnification or advancement of expenses under applicable law. The rights
conferred on any person by Article VI of the By-Laws shall not be exclusive of
any other rights which such person may have or hereafter acquire under any
statute, provision of the Certificate of Incorporation, By-Laws, agreement, vote
of stockholders or disinterested directors of General Motors Acceptance
Corporation or otherwise. The obligation, if any, of General Motors Acceptance
Corporation to indemnify any person who was or is serving at its request as a
director, officer or employee of another corporation, partnership, joint
venture, trust, organization or other enterprise shall be reduced by any amount
such person may collect as indemnification from such other corporation,
partnership, join venture, trust, organization or other enterprise.
As a subsidiary of General Motors Corporation, General Motors
Acceptance Corporation is insured against liabilities which it may incur by
reason of the foregoing provisions of the Delaware General Corporation Law and
directors and officers of General Motors Acceptance Corporation are insured
against some liabilities which might arise out of their employment and not be
subject to indemnification under said General Corporation Law.
Pursuant to resolutions adopted by the Board of Directors of
General Motors Corporation, General Motors Corporation, to the fullest extent
permissible under law, will indemnify, and has purchased insurance on behalf of,
directors or officers of the Company, or any of them, who incur or are
threatened with personal liability, including expenses, under Employee
Retirement Income Security Act of 1974 or any amendatory or comparable
legislation or regulation thereunder.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
**1.1 Form of underwriting agreement for the term notes
**4.1 Form of Indenture between the trust and the indenture
trustee
**5.1 Opinion of Kirkland & Ellis with respect to
legality
**8.1 Opinion of Kirkland & Ellis with respect to
legality
**23.1 Consent of Kirkland & Ellis (included as part of
Exhibit 5.1)
**25.1 Statement of eligibility of the trustee
**99.1 Form of pooling and servicing agreement between
General Motors Acceptance Corporation and the seller
**99.2 Form of trust sale and servicing agreement among
the trust, the seller and the servicer
**99.3 Form of trust agreement between the seller and the
owner trustee
**99.4 Form of administration agreement among the servicer,
the owner trustee and the indenture trustee
**99.5 Form of custodian agreement between the seller and
the custodian
**99.6 Certificate of incorporation of the seller
**99.7 By-laws of the seller
- ----------
<PAGE>
* To be filed by amendment.
** Previously filed under registration no. 33-50323
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in this registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this
registration statement or any material change to such
information in the registration statement;
(2) That, for the purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against these liabilities, other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding, is asserted by an
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether this indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
the issue.
The undersigned registrant hereby undertakes:
(1) For the purpose of determining any liability under the Securities
Act of 1993, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the time it was
declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of those securities
at that time shall be deemed to be the initial bona fide offering
thereof.
The undersigned registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the indenture trustee to act under
subsection (a) of section 310 of the Trust Indenture Act ("Act") in accordance
with the rules and regulations prescribed by the Commission under section
305(b)(2) of the Act.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Detroit, State of Michigan, on the ___ day of ___,
1999.
WHOLESALE AUTO RECEIVABLES CORPORATION
a
/s/ WILLIAM F. MUIR
(William F. Muir, Chairman of the Board)
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below on _____, 1999 by the following persons in the
capacities indicated.
Signature Title
/s/ WILLIAM F. MUIR Chairman of the Board and Director
(William F. Muir) (Principal Executive Officer)
/s/ JOHN D. FINNEGAN President and Director (Principal
(John D. Finnegan) Operating Officer)
/s/ PAUL D. BULL Vice President and Director
(Paul D. Bull)
/s/ JOHN E. GIBSON Vice President and Director
(John E. Gibson)
/s/ DAVID C. WALKER Vice President and Director
(David C. Walker)
/s/ JEROME B. VAN ORMAN JR. Vice President and Director
(Jerome B. Van Orman Jr.)
/s/ DAVID J. BROPHY Director
(David J. Brophy)
/s/ ROBERT D. KEMP JR. Director
(Robert D. Kemp Jr.)
/s/ GERALD E. GROSS Comptroller
(Gerald E. Gross) (Principal Accounting Officer)
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
<S> <C>
EXHIBIT
NUMBER DESCRIPTION
**1.1 Form of underwriting agreement for the term notes
**4.1 Form of indenture between the trust and the indenture trustee
* 5.1 Opinion of Kirkland & Ellis with respect to legality
* 8.1 Opinion of Kirkland & Ellis with respect to tax matters
*23.1 Consent of Kirkland & Ellis (included as part of Exhibit 5.1)
**99.1 Form of pooling and servicing agreement between General Motors Acceptance Corporation and the seller
**99.2 Form of trust sale and servicing agreement among the trust, the seller and the servicer
**99.3 Form of trust agreement between the seller and the owner trustee
**99.4 Form of administration agreement among the servicer, the owner trustee and the indenture trustee
**99.5 Form of custodian agreement between the seller and the custodian
**99.6 Certificate of incorporation of the seller
**99.7 By-laws of the seller
- ----------
* To be filed by amendment.
** Previously filed under registration no. 33-50323
</TABLE>
November 19, 1999
By Courier and Via Edgar
Mark W. Green
Assistant Director
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Wholesale Auto Receivables Corporation
Registration Statement on Form S-3
Filed June 2, 1999
Registration No. 333-79799
Dear Mr. Green:
Wholesale Auto Receivables Corporation has today filed Amendment No.1
to its Registration Statement on Form S-3, Registration No. 333-79799 (as
amended, the "Registration Statement"). This letter responds to your letter
dated July 21, 1999 relating to comments of the staff of the Securities and
Exchange Commission in connection with the above-referenced submission.
The responses to the staff's comments are numbered to relate to the
corresponding comments in your letter (which are reproduced herein in italics).
Where applicable, the revised pages or sections of the Registration Statement
have been referenced. Unless otherwise indicated, all page references contained
herein are to pages of the Registration Statement. Two copies of the
Registration Statement are enclosed, one of which has been marked to show the
changes from the Registration Statement as originally filed on June 2, 1999.
<PAGE>
Securities and Exchange Commission
November 19, 1999
Page 2
General
Comment No. 1 Our comments apply to the base prospectus and
prospectus supplement. If comments issued for one
apply to the other, make conforming revisions as
appropriate. Reflect these comments in any other
prospectus supplement connected with this registration
statement. Confirm to us in your response that you
will conform the relevant documents.
Response: Conforming changes have been made in the base prospectus
and prospectus supplement in response to the staff's
comments.
Comment No. 2 Send a printed version of the registration statement
with the next pre-effective amendment to enable us to
evaluate its appearance for conformity with plain
English requirements.
Response: A printed version of the Registration Statement is
enclosed with this letter.
Comment No. 3 Remove all defined terms from the cover pages and
summary and risk factor sections.
Response: All defined terms have been removed from the cover pages
and summary and risk factor sections.
Comment No. 4 Don't capitalize terms that you use for their common
meanings or whose meanings are clear from the context.
As examples, you capitalize the words:
notes trust
indenture trustee securities
certificates receivables
Response: We have eliminated unnecessary capitalization of terms,
including the terms referenced by the staff.
Comment No. 5 Don't define terms whose meanings are already clear. For
example, you define "DTC," "ERISA" and "IRS."
<PAGE>
Securities and Exchange Commission
November 19, 1999
Page 3
Response: The terms you reference (as well as others whose meanings
are already clear) are no longer defined.
Comment No. 6 Delete the index of terms in the prospectus supplement.
If you must define some terms outside the cover, summary
and risk factors in order to write a clear document, put
those terms in a glossary only and provide a page
reference to the glossary following the risk factors.
Response: The index of terms in the prospectus supplement has been
deleted.
Comment No. 7 Sentences must be concise and clear on the first reading.
Use short understandable sentences. Your disclosure
contains long confusing sentences. See, for example, on
page 19 the first sentence of the second last paragraph
and the second last sentence of the last paragraph.
Response: The referenced sentences have been revised (see page 19)
and we have revised the document to use shorter and more
understandable sentences.
Comment No. 8 Revise vague and legalistic words and phrases like
"such," "certain," "unless other specified" and "subject
to."
Response: The words and phrases referenced by the staff have been
revised.
Comment No. 9 Minimize the use of footnotes to charts and tables. For
example, see the table on page S-11. If potential
investors need the information in the footnotes, present
that information in a narrative discussion before or
after the table.
Response: The footnotes to the table have been deleted. See page
S-9.
Comment No. 10 Avoid embedded lists in paragraph form. For example, see
the first and third risk factors on page 6. Rather than
include these lists in paragraph form, break them out
into bullet points with one bullet point for each item.
Use bullet points for regular numbers instead of small
roman numerals. See Rule 421(b) of Regulation C.
<PAGE>
Securities and Exchange Commission
November 19, 1999
Page 4
Response: As requested by the staff, we have eliminated the
embedded lists referenced by the staff and have made
conforming changes throughout the document. See pages 7
and 8.
Comment No.11 Delete parentheticals in your document. See, for
example, the second paragraph under "Accounts" on
page 18. Parentheticals disrupt the flow of
information and tend to make sentences long and
confusing. If the information in the parenthetical is
important enough to include, replace the parentheses
with commas or dashes, or include the parenthetical
information in its own sentence.
Response: As requested by the staff, we have eliminated the use of
parenthetical phrases wherever possible throughout the
document.
Comment No. 12 Eliminate passive voice from your document wherever
possible. Rewrite the disclosure to indicate the actor
in each circumstance. For example, in the second
paragraph under "Assets of the Trust" on page 4, you
could change "will be sold by GMAC" to "GMAC will sell."
Response: As requested by the staff, we have eliminated the use of
the passive voice wherever possible throughout the
document.
Cover Pages
Comment No. 13 Limit the information presented on the cover to what Item
501 requires. Move any information that Item 501 does not
require to a more appropriate place. Surround the
remaining text with ample white space and use wide left
and right margins. See Rule 421(d) of Regulation C.
Even when additional space is available, include
additional information only when that information is
unique to the offering and indispensable to an investment
decision. On the base cover, for example, you could
eliminate one of the references to the fact that payments
only will come from the trust. Consider whether the
securities not offered under the prospectus are important
enough to mention on the covers.
Response: We have revised the cover pages to the base prospectus
and prospectus supplement in accordance with the staff's
comments.
<PAGE>
Securities and Exchange Commission
November 19, 1999
Page 5
Comment No. 14 Revise to label prominently the securities' issuer.
Response: As requested by the staff, we have revised the cover
pages to more prominently label the securities' issuer,
including increasing the font size of the issuer's
name to differentiate it from the other parties and
specifically identifying the issuer.
Base Prospectus
Risk Factors . . . page 6
Comment No. 15 The heading for each risk factor must adequately describe
the risk it addresses, including the effect on investors.
Generic headings like "Risk of Uncollectible Receivables
Due to Sales out of Trust" do not clearly communicate the
risk and effect. Revise the risk factor headings to
communicate the nature and extent of the risk and how it
affects investors.
Response: As requested by the staff, we have revised the headings
of most of the risk factors. See pages 6 through 10.
Comment No. 16 Explain how the risks apply to this offering and how
securityholders participating in this offering are
affected by those risks. Convey the risk immediately and
succinctly. Include just enough detail to put the risk in
context and place the remaining detailed information in
a more appropriate location. For example, under "The
Market May be Limited for Any Resale of the Term Notes,"
explain what consequence may flow if an investor is
unable to sell readily the securities.
Response: As requested by the staff, the risk factors have been
revised to eliminate unnecessary information and to
describe the risks as quickly as possible.
Prospectus Supplement
Comment No. 17 Move the prospectus supplement into Part I of the
registration statement.
<PAGE>
Securities and Exchange Commission
November 19, 1999
Page 6
Response: The prospectus supplement has been moved into Part 1 of
the Registration Statement.
Important Notice About Information Presented . . . page 1
Comment No. 18 Delete the reference to the index.
Response: As requested by the staff, the reference to the index has
been deleted.
Comment No. 19 Delete the last sentence of the second last paragraph
that states the prospectus and prospectus supplement
disclosure may not be accurate after the dates on their
covers. They must be accurate when used.
Response: The sentence referenced by the staff has been deleted.
Closing Comments To the extent that you state you are including
forward-looking statements within the meaning of Section
27A of the Securities Act and Section 21E of the
Exchange Act, or otherwise refer to those sections or
the Private Securities Litigation Reform Act generally,
note that we are not making any determination as to
whether the disclosure, including, e.g., cautionary
language or the placement of disclosure, satisfies
their requirements.
Response: The staff's comment is duly noted.
* * * * *
Please call the undersigned at 312-861-2347 or Richard V. Kent at
313-974-1680 with any questions or comments regarding the foregoing.
Sincerely,
Kenneth P. Morrison
<PAGE>
cc: Richard V. Kent
