Prospectus supplement to prospectus dated June 16, 2000
Superior Wholesale Inventory Financing Trust VI
Issuer
$1,250,000,000 Floating Rate Asset Backed Term Notes, Series 2000-A
Wholesale Auto Receivables Corporation
Seller
General Motors Acceptance Corporation
Servicer
You should consider carefully the risk factors beginning on page 5 in the
prospectus.
The 2000-A 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 2000-A term notes
only if accompanied by the prospectus.
The trust will issue 2000-A term notes to the public--
Principal amount $1,250,000,000
Interest rate Three-Month LIBOR plus 0.13% annually
Targeted final payment date April 2005 Distribution Date
Price to public 100%
Underwriting discount 0.275%
Proceeds from sale $1,246,562,500
Credit Enhancement
o Reserve fund, with a deposit of $247,500,000.
o Cash accumulation reserve fund, with a deposit of $17,144,000.
o Subordinated certificate class with a certificate balance of $125,000,000.
This prospectus supplement and the accompanying prospectus relate only to the
offering of the 2000-A 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.
Joint Bookrunning Managers
Banc of America Securities LLC Salomon Smith Barney
Co-Managers
Banc One Capital Markets, Inc.
Bear, Stearns & Co. Inc.
Chase Securities Inc.
Credit Suisse First Boston
Deutsche Banc Alex. Brown
Merrill Lynch & Co.
June 16, 2000
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
We provide information to you about the 2000-A 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 2000-A term notes.
(b) this prospectus supplement, which will provide information
regarding the pool of receivables held by the trust and will specify the
terms of the 2000-A term notes.
If the terms of the 2000-A 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 2000- A term notes in
any state where the offer is not permitted.
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TABLE OF CONTENTS
Page
Prospectus Supplement
SUMMARY ...................................................................S-2
THE TRUST..................................................................S-7
THE U.S. PORTFOLIO.........................................................S-9
THE POOL OF ACCOUNTS......................................................S-11
THE 2000-A TERM NOTES.....................................................S-12
THE REVOLVING NOTES.......................................................S-14
THE 2000-A CERTIFICATES...................................................S-16
THE TRANSFER AND SERVICING AGREEMENTS.....................................S-17
ERISA CONSIDERATIONS......................................................S-33
FEDERAL INCOME TAX CONSEQUENCES...........................................S-34
UNDERWRITING..............................................................S-34
LEGAL OPINIONS............................................................S-35
GLOSSARY OF PRINCIPAL TERMS...............................................S-36
Prospectus
SUMMARY OF TERMS.............................................................2
RISK FACTORS.................................................................5
THE SERVICER.................................................................9
THE SELLER...................................................................9
THE TRUSTS..................................................................10
USE OF PROCEEDS.............................................................11
THE DEALER FLOOR PLAN FINANCING BUSINESS....................................12
THE ACCOUNTS................................................................17
MATURITY AND PRINCIPAL CONSIDERATIONS.......................................17
THE TERM NOTES..............................................................18
THE REVOLVING NOTES.........................................................30
THE CERTIFICATES............................................................30
THE TRANSFER AND SERVICING AGREEMENTS.......................................31
LEGAL ASPECTS...............................................................51
FEDERAL INCOME TAX CONSEQUENCES.............................................55
STATE AND LOCAL TAX CONSEQUENCES............................................59
ERISA CONSIDERATIONS........................................................59
PLAN OF DISTRIBUTION........................................................60
LEGAL OPINIONS..............................................................61
WHERE YOU CAN FIND MORE INFORMATION.........................................61
INCORPORATION BY REFERENCE..................................................62
GLOSSARY OF PRINCIPAL TERMS.................................................63
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[GRAPHIC OMITTED]
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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 2000-A term
notes, carefully read this entire document and the accompanying prospectus.
THE PARTIES
Issuer/Trust
Superior Wholesale Inventory Financing Trust VI, 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
The Bank of New York
Owner Trustee
Chase Manhattan Bank USA, N.A.
CAPITALIZATION OF THE TRUST
General
On the initial closing date, June 29, 2000, the trust will issue the following
securities:
o $1,250,000,000 Floating Rate Asset
Backed Term Notes, Series 2000-A,
which we refer to as the 2000-A term
notes. The 2000-A term notes will
bear interest, generally payable
quarterly, at a rate equal to USD three-
month LIBOR plus 13 basis points
(0.13%) annually.
o $125,000,000 Floating Rate Asset
Backed Certificates, Class 2000-A,
which we refer to as the 2000-A certificates.
Only the 2000-A term notes are offered hereby.
The 2000-A term notes will be registered in the name of the nominee for the
Depository Trust Company. You may hold your 2000-A term notes through the
book-entry systems of DTC in the United States or Clearstream or Euroclear in
Europe.
The trust will not issue any revolving notes or any other term notes on the
initial closing date. After the initial closing date, the trust may issue from
time to time revolving notes, additional series of term notes and additional
certificates.
We use the word notes to mean the 2000-A term notes, any additional series of
term notes that may be issued and any revolving notes that may be issued. We use
the word securities to mean the notes, the 2000-A certificates and any
additional certificates that may be issued.
Subordination
The 2000-A certificates will be subordinated to all series of notes. The 2000-A
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
2000-A term notes and each future series of term notes and revolving 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 with respect
to the 2000-A term notes. The basis swap counterparty, GMAC, will pay to the
trust on each distribution date, interest at a per annum rate of USD three-month
LIBOR plus 2.68%. 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
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swap counterparty, as the case may be, will be remitted. The trust
will enter into a similar basis swap with GMAC with respect to the 2000-A
certificates.
PAYMENTS ON THE 2000-A TERM NOTES
Interest
o The trust will generally pay interest
on the 2000-A term notes at a rate
equal to USD three-month LIBOR plus
13 basis points (0.13%) annually.
o Except as described in the next bullet
point, the trust will pay interest on the
2000-A term notes on the 15th day of
each January, April, July and October
or on the next business day, which we
refer to as quarterly distribution dates.
The first quarterly distribution date is
October 16, 2000.
o The trust will pay interest on the 2000-
A term notes on the 15th day of each
month or on the next business day,
which we refer to as monthly
distribution dates, following a rapid
amortization event or if the 2000-A
term notes are not paid by their
targeted final payment date. If interest
on the term notes is paid monthly, the
interest rate will be USD one-month
LIBOR plus 13 basis points (0.13%)
annually.
o The prospectus and this prospectus
supplement describe how the trust
will allocate available funds to
interest payments on the 2000-A term
notes and other securities.
o The trust will pay interest on the 2000-
A 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 distribution date.
Principal Payments
o We expect that the trust will pay the
entire principal balance of the
2000-A term notes on their targeted
final payment date, which is the
quarterly distribution date in April 2005.
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 2000-A 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 2000-
A term notes.
o The trust could make principal payments
on the 2000-A term notes sooner
than the targeted final payment date
if a rapid amortization event occurs.
The rapid amortization events for the 2000-A
term notes are:
o General Motors, GMAC or the
seller becomes insolvent;
o the trust or the seller is
required to register under the
Investment Company Act; and
o the balance in the cash
accumulation reserve fund
declines below $364,584.
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 2000-A term notes.
o It is also possible that the trust will not
repay the entire principal balance of
the 2000-A 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 2000-A
term notes' principal balance. In that
case, allocable principal collections
will be applied to the repayment of
principal on the 2000-A term notes on
subsequent monthly distribution dates.
o All unpaid principal on the 2000-A
term notes will be due on the stated
final payment date, which is the
quarterly distribution date in April
2007. If the trust fails to pay the
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2000-A term notes in full on the stated
final payment date, this will trigger an
event of default.
o The servicer may repurchase all of the
remaining receivables when:
o The daily trust balance is equal
to or less than 10% 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
o either no term notes are
outstanding or the wind down
period is in effect.
CREDIT ENHANCEMENT AND LIQUIDITY
The trust will repay the 2000-A 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 2000-A term notes as
well as other payments which the trust
must make, including:
o the basis swap for the 2000-A term
notes;
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
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
with respect to all securities issued by
the trust;
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 principal payments on the 2000-A
term notes, the trust will ordinarily use principal
collections on the receivables to purchase new
receivables from the seller or, after one or more
revolving notes are issued, 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
are not available.
Revolving Period
The revolving period for the trust will begin on
the initial cut-off date and will end on the
earlier of (a) the commencement of an early amortization
period and (b) the scheduled
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revolving period termination date. The scheduled
revolving period termination date will initially
be June 30, 2001 and will be automatically
extended to the last day of each succeeding
month unless the Seller elects, at its option,
to terminate the automatic extension. The scheduled
revolving period termination date may not be extended
beyond February 28, 2005. If terminated upon the
commencement of a cash accumulation period, the
revolving period may recommence in certain limited
circumstances.
Cash Accumulation
If a cash accumulation event occurs, the trust will
retain all of the principal collections allocable
to the 2000-A term notes. The trust will then invest them
in eligible investments in a cash accumulation account
dedicated to the 2000-A term notes. The trust will
continue to invest these funds in eligible
investments until the targeted final payment date for
the 2000-A 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
fails to satisfy various performance tests or
measurements. 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.
If the Seller elects to terminate the automatic
extension of the revolving period as described above,
a wind down period will commence which constitutes a
cash accumulation event for the 2000-A Term Notes.
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
On the closing date, the seller will deposit $247,500,000
in cash or eligible investment into the reserve fund.
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 and the certificates.
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.
On the closing date, the seller will deposit
$17,144,000 in cash or eligible investments into
the cash accumulation reserve fund. This account
will supplement the funds available to pay interest
on the 2000-A 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 1% per annum, as compensation for servicing
the receivables.
TAX STATUS
In the opinion of Kirkland & Ellis, special tax counsel,
the 2000-A term notes will be characterized as
indebtedness for federal income tax purposes and the
trust will not be taxable as an association or a publicly
traded partnership taxable as a corporation.
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Each term noteholder, by the acceptance of a 2000-A
term note, will agree to treat the 2000- A 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 2000-A term notes.
An employee benefit plan should consult with its
counsel before purchasing the 2000-A term notes.
RATINGS
o We will not issue the 2000-A 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 2000-A 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 to restore the
original rating.
o A rating is not a recommendation to
buy the 2000-A 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
2000-A term notes' price, their
suitability to a particular investor or
the timing of principal payments.
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You can find definitions of the capitalized terms used in this
prospectus supplement in the "Glossary of Principal Terms" beginning on page
S-36 of the prospectus supplement or in the "Glossary of Terms" beginning on
page 63 in the prospectus.
THE TRUST
The issuer, Superior Wholesale Inventory Financing Trust VI, 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 June
29, 2000, which is the date the trust initially issues securities, or the
initial closing 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 2000-A term notes, the 2000-A
certificates and any additional securities issued by the
trust.
The trust's principal offices are in Wilmington, Delaware, in care of
Chase Manhattan Bank USA, N.A., 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 closing date:
2000-A term notes................................. $1,250,000,000
2000-A certificates............................... 125,000,000
Total...................................... $1,375,000,000
==============
The 2000-A certificates represent the equity of the trust and will be
issued under the trust agreement. The 2000-A certificates are not being offered
hereby.
The Owner Trustee
Chase Manhattan Bank USA, N.A., is the owner trustee under the trust
agreement. Its principal offices are located at 1201 Market Street, Wilmington,
Delaware 19801. Chase Manhattan Bank USA, N.A. is the successor by merger to
Chase Manhattan Bank Delaware.
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 June 27, 2000, which
is the date two days before the trust will initially issue
the 2000-A term notes
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o the Eligible Receivables existing in any additional dealer
accounts added to the pool of 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 on all the Eligible
Receivables
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 basis swaps with respect
to all securities issued by the trust;
o the reserve funds, owned by the seller and pledged to the
indenture trustee, including the Reserve Fund and the Cash
Accumulation Reserve Fund;
o the rights of the trust in relation to following accounts,
including the amounts held therein for the benefit of the 2000-A
term notes:
o the Collection Account, including the Cash Collateral
Amount
o the Cash Accumulation Account
o the distribution accounts for the term 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 closing 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 closing 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 any revolving notes. However, during some
periods, including a Payment Period or Cash Accumulation Period for the 2000-A
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 2000-A 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 2000-A Term Notes" in
this prospectus supplement.
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THE U.S. PORTFOLIO
General
As of March 31, 2000, there were approximately 7,450 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 $23.4 billion. GMAC is the
primary source of floor plan financing for General Motors-franchised dealers in
the United States. In the first quarter of 2000, GMAC provided financing for
approximately 66.8% of new factory sales to General Motors dealers in the United
States.
As of March 31, 2000, receivables with respect to new vehicles represented
approximately 83% of the aggregate principal amount of all receivables in the
U.S. Portfolio. Receivables with respect to Used Vehicles represented
approximately 8% 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 9% of the
aggregate principal amount of all receivables in the U.S. Portfolio. As of March
31, 2000, approximately 60% by value of the used vehicles in GMAC's U.S.
portfolio represented vehicles bought at closed auctions held by General Motors
or others. As of March 31, 2000, the average Account in GMAC's U.S. portfolio
provided for credit lines for new vehicles and used vehicles of approximately
243 units and 52 units, respectively, and the average principal balance of
receivables thereunder was approximately $2.9 million and $0.3 million,
respectively.
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 three
months ended March 31, 2000, the weighted average spread over the Prime Rate
charged to dealers in GMAC's U.S. portfolio was approximately 0.1%. Some dealers
elect not to participate in the net billing program and therefore continue to be
offered rebates under incentive programs. For the three months ended March 31,
2000, the average annual rate of dealer credits on GMAC's U.S. portfolio ranged
between 22 and 30 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 March 31, 2000, the aggregate principal amount financed with
respect to dealers assigned to "no credit" status was approximately $1.2 million
or 0.005% 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
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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.
<TABLE>
<CAPTION>
Loss Experience for the U.S. Portfolio
Three Months
Ended Year Ended December 31
March 31, 2000 1999 1998 1997 1996
-------------- ---------------------------------------------
(Dollars in Millions)
<S> <C> <C> <C> <C> <C>
Average Principal Receivables Balance $23,524.1 $20,317.6 $16,859.6 $18,276.0 $16,991.5
Net Losses (Recoveries).............. $ (1$4) (5.8) $ 11.8 $ (10.5) $ (8.1)
Net Losses (Recoveries) as a % of
Liquidations...................... (0.005)% (0.006)% 0.014% (0.012)% (0.009)%
Net Losses (Recoveries) as a % of Average
Principal Receivables Balance..... (0.024)% (0.029)% 0.070% (0.058)% (0.048)%
----------
</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, and liquidations include all principal
reductions. The ratio of net losses (recoveries) to average principal balance
for the three-month period has been annualized..
Aging Experience
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.
<TABLE>
<CAPTION>
Age Distribution for the U.S. Portfolio
Three Months
Ended Year Ended December 31
March 31, 2000 1999 1998 1997 1996
--------------------- ------------------------------------
<S> <C> <C> <C> <C> <C>
1-120....................... 75.8% 84.2% 90.2% 85.1% 82.2%
121-180..................... 13.9 9.0 4.9 8.0 9.0
181-270..................... 7.7 4.0 2.9 3.5 5.0
Over 270.................... 2.6 2.8 2.0 3.4 3.8
</TABLE>
S-10
<PAGE>
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:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
(principal collections during the period)
Payment Rate % =
--------------------------------------------------------------
(ending principal balance of receivables for that period)
</TABLE>
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 GMAC's entire U.S.
portfolio.
<TABLE>
<CAPTION>
Monthly Payment Rates for the U.S. Portfolio
Three Months
Ended Year Ended December 31
March 31, 2000 1999 1998 1997 1996
------------------ --------------------------------------
<S> <C> <C> <C> <C> <C>
Highest Month......................... 48.1% 53.5% 62.9% 54.2% 56.1%
Lowest Month.......................... 39.7 34.2 33.5 33.3 35.0
Average for the Months in the period.. 43.1 44.5 47.3 43.3 45.1
</TABLE>
THE POOL OF ACCOUNTS
As of the close of business on June 7, 2000, there were 1,592 dealer
accounts in the pool of accounts. As of June 7, 2000, the average principal
balance of receivables in those Accounts was approximately $3.3 million
(approximately 82% of which were Eligible Receivables) and the weighted average
spread over the Prime Rate charged to dealers was approximately 0.1% for the
month of May 2000. 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 June 7, 2000, the aggregate principal balance of
receivables under those Accounts was $5,213,886,953.20 and, of that amount,
$4,274,470,613.38 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.
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<PAGE>
Geographic Distribution
The following table provides, as of June 7, 2000, the geographic
distribution of the dealer accounts in the pool of accounts based on the dealer
addresses. As of the June 7, 2000, no other state accounted for more than 5.0%
of the principal amount of receivables outstanding in the dealer accounts.
<TABLE>
<CAPTION>
Geographic Distribution of Pool Accounts Related to the Trust
Percentage of Number of Percentage of Total
Receivables Total Receivables Dealer Number of Dealer
State Outstanding Outstanding Accounts Accounts
---------------- ------------- ------------------ ------------ -------------------
(thousands of
dollars)
<S> <C> <C> <C> <C>
Texas....................... $422,483 8.1% 90 5.7%
Florida..................... 410,699 7.9 94 5.9
California.................. 366,886 7.0 95 6.0
Michigan.................... 311,844 6.0 70 4.4
New York.................... 285,715 5.5 93 5.8
Pennsylvania................ 271,664 5.2 89 5.6
----------
</TABLE>
THE 2000-A TERM NOTES
General
The 2000-A term notes will be issued pursuant to the terms of an
indenture to be dated as of the initial closing date between the trust and the
indenture trustee. As amended and supplemented from time to time, 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 and revolving notes under the
indenture after the initial closing date. A copy of the indenture will be filed
with the SEC following the issuance of the 2000-A term notes. The following
summary describes some of the terms of the 2000-A 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 2000-A 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 Note Payment Date to the holders
of the 2000-A term notes of record as of the day preceding that Note Payment
Date. If definitive term notes are issued, distributions will be made to the
holders of the 2000-A term notes as of the last day of the preceding month. All
payments will be made by wire transfer while the 2000-A term notes are in global
form and will be made in accordance with the procedures of DTC, Euroclear and
Clearstream. If definitive 2000-A term notes are issued, such payments thereon
will be made by check 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 2000-A term note will
only be made against presentation and surrender of the definitive 2000-A term
note at the place or places specified in the notice of final payment to the
holder thereof.
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<PAGE>
Payments of Interest
Interest on the outstanding principal balance of the 2000-A term notes
will accrue from the initial closing date until the 2000-A term notes are paid
in full at a rate equal to USD Three-Month LIBOR plus 0.13% per annum, except as
described below. Interest will be payable on the 15th day of each January,
April, July and October, or if such day is not a business day, then on the next
business day. We refer to each quarterly date on which interest is paid as a
Quarterly Distribution Date. The initial Quarterly Distribution Date is October
16, 2000.
There are two circumstances under which interest payments will be made
monthly rather than quarterly. First, if a Rapid Amortization Period is in
effect for the 2000-A term notes, then from the first Monthly Distribution Date
following the end of the calendar month in which the Rapid Amortization Event
occurs until the date on which they are paid in full, the 2000-A term notes will
bear interest at a rate equal to USD One-Month LIBOR plus 0.13% per annum.
Second, if the full amount of principal on 2000-A term notes is not paid on or
before the 2000-A Term Note Targeted Final Payment Date, then from the 2000-A
term note Targeted Final Payment Date until the Monthly Distribution Date on
which the 2000-A term notes are paid in full, the 2000-A term notes will also
bear interest at a rate equal to USD One-Month LIBOR plus 0.13% per annum. In
either case, interest will be payable on each Monthly Distribution Date
following the date on which the interest rate has changed. We refer to times
when monthly payments are made as Monthly Payment Periods.
We use the term Note Payment Date to mean each Quarterly Distribution
Date or Monthly Distribution Date, as applicable, on which interest is payable
as described above or principal is payable as described below.
Interest will accrue from and including the initial closing date, or
from and including the most recent Note Payment Date on which interest has been
paid to but excluding the current Note Payment Date. Interest on the 2000-A 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 Note
Payment Date will be a Payment Date as defined in the prospectus. Interest
accrued as of any Note Payment Date, but not paid on that Note Payment Date,
will be due on the next Note Payment Date.
Payments of interest on the 2000-A term notes will have equal priority
with interest payments on other series of term notes and any series of revolving
notes, and will be senior to distributions of interest on the 2000-A
certificates and any additional classes of certificates. Interest Collections
will be applied to make interest payments on the 2000-A term notes as described
under "The Transfer and Servicing Agreements--Application of Interest
Collections" in this prospectus supplement.
Payments of Principal
We expect that the trust will pay the entire principal balance of the
2000-A term notes on the 2000-A Term Note Targeted Final Payment Date, which is
the Note Payment Date in April 2005. However, the trust could make principal
payments sooner than the 2000-A Term Note 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 2000-A term notes and any funds held
in the Cash Accumulation Account and Note Distribution Subaccount to repay
principal on the 2000-A term notes.
It is also possible that the trust will not repay the entire principal
balance of the 2000-A term notes on or before the 2000-A Term Note Targeted
Final Payment Date. Starting on the November 2004 Determination Date, the
servicer will calculate the Required Payment Period Length to
S-13
<PAGE>
determine the date on which the trust will begin to accumulate principal
collections for the purpose of repaying principal on the 2000-A term notes on
the 2000-A Term Note Targeted Final Payment Date. If insufficient funds are
accumulated during this period, then the payment of principal on the 2000-A Term
Note Targeted Final Payment Date will be insufficient to repay all of the 2000-A
term note principal balance.
All unpaid principal on the 2000-A term notes will be due on the Stated
Final Payment Date for the 2000-A term notes, which is the Distribution Date in
April 2007. Failure to pay any securities in full on their Stated Final Payment
Date will result in an event of default in the case of a note and an Early
Amortization Event for the trust.
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 2000-A 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 have a
Payment Period prior to the commencement of the Wind Down Period and may have a
Payment Period prior to or together with the Payment Period for the 2000-A term
notes.
Delivery of Notes
The 2000-A term notes will be issued on or about the initial closing
date in book entry form through the facilities of DTC, Clearstream and Euroclear
against payment in immediately available funds.
THE REVOLVING NOTES
No revolving notes will be issued on the initial closing date. However,
the trust expects to issue revolving notes under the indenture after the initial
closing date. The following summary describes some of the terms that will apply
to any revolving notes that are so issued. 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. References in this document to the revolving notes include
all extensions and renewals thereof.
Payments of Interest
The trust will pay interest on each series of revolving notes at a
floating rate, which we refer to herein as the Revolver Interest Rate for that
series. This floating rate is likely to be based on USD One-Month LIBOR or USD
Three-Month LIBOR plus a spread, although it is possible that another index will
be used. Interest on each series will likely be paid on monthly or quarterly
Distribution Dates, commencing with the first applicable Distribution Date after
the issuance of the revolving notes. On each applicable Distribution Date,
interest will be calculated based on the average daily Net Revolver Balance
during the related Collection Period. Interest on any series of revolving notes
accrued as of any applicable Distribution Date but not paid on that Distribution
Date will be due on the next applicable Distribution Date.
S-14
<PAGE>
Payments of interest on the revolving notes will have equal priority to
payments of interest on the term notes, including the 2000-A 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 notes during the
Revolving Period up to the trust's specified Maximum Revolver Balance. The
holder of the revolving notes is under no obligation, however, to make advances
thereunder to the trust. The Specified Maximum Revolver Balance for the trust
will initially be $2,750,000,000 and may increase or decrease from time to time
after the initial closing date as described in the prospectus under "The
Transfer and Servicing Agreements--Additional Issuances; Changes in Specified
Maximum Revolver Balance." The trust must stay within the Specified Maximum
Revolver Balance. In connection with the issuance of any 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
2000-A 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 2000-A term notes and any
other applicable limitations during the Payment Period for any additional series
of term notes. During the Payment Period for the 2000-A 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 2000-A 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. Each revolving note may be extended or renewed, and its Revolving Note
Targeted Final Payment Date adjusted accordingly, at any time prior to the last
day of the applicable month preceding the 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 for any
revolving note may not occur during the Payment Period for any series of term
notes, or within two months thereafter, unless the holder of such revolving note
establishes its 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 applicable Revolving
Note Stated Final Payment Date. Principal on the revolving note will be due, to
the extent of funds available for that purpose, in such amounts and at such
times as are specified for each such revolving note.
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 Cash Accumulation Period for the 2000-A term notes will commence if,
among other things, any revolving note is not paid in full on its Stated Final
Payment Date.
S-15
<PAGE>
THE 2000-A CERTIFICATES
General
On the initial closing date, the trust will issue the 2000-A
certificates in a principal amount equal to approximately $125,000,000.
Initially, the seller will retain 1% of the 2000-A certificates. It is expected
that the seller will privately place the remaining 2000-A certificates on the
initial closing date.
The trust will issue the 2000-A 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 2000-A 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 2000-A certificates, the trust
agreement and the prospectus. Where particular provisions or terms used in the
2000-A 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
The 2000-A certificates will bear interest on the outstanding
certificate balance (without reduction for unreimbursed Trust Charge-Offs),
payable on each Quarterly Distribution Date commencing on October 16, 2000, at a
rate equal to USD Three-Month LIBOR plus 0.43% per annum. If the 2000-A
certificates are not paid in full on their Targeted Final Distribution Date or
if the Fully Funded Date occurs for all outstanding series of notes under any
circumstance other than the payments and set-asides that will occur during the
Payment Period for the 2000-A term notes, then interest will be payable on each
Monthly Distribution Date thereafter at a rate equal to USD One-Month LIBOR plus
0.43% per annum. We refer to each of the days on which interest is payable on
the 2000-A certificates as a Certificate Payment Date. Interest on the 2000-A
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 2000-A certificates.
Certificate Balance
The certificate balance as of any Monthly Distribution Date or a related
Certificate Payment Date with respect to the 2000-A certificates is (a)
$125,000,000, plus (b) the principal amount of 2000-A certificates issued after
the initial closing date, minus (c) all distributions in respect of the
certificate balance of the 2000-A 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 2000-A certificates, up to the certificate
balance of the 2000-A 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, without reduction for any unreimbursed Trust Charge-Offs.
S-16
<PAGE>
We expect that the trust will pay the entire certificate balance of the
2000-A certificates on the Quarterly Distribution Date in April 2005, which is
the Targeted Final Distribution Date for the 2000-A certificates. The trust will
seek to set aside funds for this purpose during the Payment Period for the
2000-A term notes. Following the respective Fully Funded Dates for the 2000-A
term notes and each other series of outstanding notes, all Available Trust
Principal, up to an amount equal to the outstanding certificate balance of the
2000-A certificates, will be set aside by the trust in a certificate
distribution account for payment to the 2000-A certificates on the Targeted
Final Distribution Date for the 2000-A certificates.
Distributions will be made with respect to the certificate balance on
the 2000-A certificates after the trust has paid each series of term notes and
revolving notes in full or, with respect to each series of term notes for which
principal is being accumulated or otherwise provided, after the Fully Funded
Date has occurred. If all notes have been paid or provided for by their
respective Targeted Final Payment Dates, then distributions with respect to the
certificate balance of the 2000-A certificates will commence on the Targeted
Final Payment Date for the 2000-A certificates, to the extent of funds available
for such purpose.
The Stated Final Payment Date for the 2000-A certificates will be on the
Certificate Payment Date in April 2007. If the 2000-A 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 closing 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 closing date may be
different than the Certificate Rate for the 2000-A certificates.
THE TRANSFER AND SERVICING AGREEMENTS
The parties will enter into the Transfer and Servicing Agreements as of
the initial closing 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 closing 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.
S-17
<PAGE>
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 2000-A term notes:
(i) the trust will make the following funds available:
(A) the 2000-A term notes' Trust Interest Allocation;
(B) the net amount, if any, received by the trust under the
2000-A term notes basis swap;
(C) all net investment earnings on funds deposited in the Note
Distribution Subaccount for the 2000-A term notes;
(D) all Cash Accumulation Account Earnings; and
(E) if the 2000-A 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 2000-A Term Notes Monthly Carrying Costs
for that Monthly Distribution Date, then the lowest of
(x) such 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 2000-A Term Notes Monthly Available
Amount.
(ii) Next, the trust will aggregate and apply the 2000-A Term Notes
Monthly Available Amount on the Monthly Distribution Date as follows:
(A) first, the lesser of
(x) the 2000-A Term Notes Monthly Available Amount and
(y) the net payment, if any, due from the trust under the
2000-A term notes basis swap
will be paid in accordance with the terms of the 2000-A term notes basis
swap; and
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<PAGE>
(B) second, the lesser of
(x) the 2000-A Term Notes Monthly Available Amount
remaining after the application in subclause (A) and
(y) an amount equal to the 2000-A Term Notes Monthly
Interest Payable Amount for the related Monthly Distribution Date
will be transferred to the Note Distribution Account for payment
of interest on the 2000-A term notes on the related Note Payment
Date.
The amounts required to be paid pursuant to the foregoing clauses
(2)(a)(ii)(A)(y) and (B)(y) are the 2000-A Term Notes Monthly Carrying Costs.
Any shortfall of the 2000-A Term Notes Monthly Available Amount below the 2000-A
Term Notes Monthly Carrying Costs will be treated as a Series Shortfall for the
2000-A term notes. Any excess of the 2000-A Term Notes Monthly Available Amount
over the 2000-A Term Notes Monthly Carrying Costs will be treated as Remaining
Interest Amounts.
(b) for each revolving note:
(i) on each Monthly Distribution Date, the trust will make the following
funds available:
(A) that revolving note's Trust Interest Allocation; and
(B) the net amount, if any, received by the trust under the basis
swap with respect to that revolving note.
The amounts made available pursuant to the foregoing clauses (2)(b)(i)(A)
and (B) will be the Revolving Note Monthly Available Amount for that revolving
note.
(ii) Next, the trust will aggregate and apply the Revolving Note Monthly
Available Amount for that revolving note as follows:
(A) first, the lesser of (x) the Revolving Note Monthly Available
Amount for that revolving note and (y) the net payment, if any, due from
the trust under the revolving note basis swap with respect to that
revolving note will be paid in accordance with the terms of the
revolving note basis swap with respect to that revolving note; 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 that revolving note's Noteholders' Interest
for the related Monthly Distribution Date will be transferred to the
Note Distribution Account for payment of interest on that 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 for that revolving note. Any shortfall of
the Revolving Note Monthly Available Amount below the Revolving
Note Monthly Carrying Costs will be treated as a Series Shortfall
for that 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 term 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) net investment earnings, if any, on funds
deposited in that series' Note Distribution Subaccount to pay the
monthly carrying costs for the series of term notes, which will include
the Noteholders' Interest for such series. Shortfalls in these
applications will be treated as a Series Shortfall for each series and
excess amounts will be treated as Remaining Interest Amounts.
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<PAGE>
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:
(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 2000- A 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 the Aggregate Certificateholders' Interest
for that Monthly Distribution Date will be transferred to the
Certificate Distribution Account;
(d) an amount equal to any servicer advances not previously
reimbursed will be paid to the Servicer, except as otherwise provided in
the Transfer and Servicing Agreements;
(e) an amount equal to any Reserve Fund Deposit Amount for that
Monthly Distribution Date will be deposited into the Reserve Fund;
(f) 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;
(g) an amount equal to any Trust Defaulted Amount will be treated
as Additional Trust Principal on that Monthly Distribution Date; and
(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.
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 amounts specified in clauses (3)(a), (b),
(c) and (d) 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), (d), (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)(e) or (f).
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<PAGE>
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 and the Cash Accumulation Reserve Fund.
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 2000-A term notes.
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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 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 2000-A Term Notes" below for a description of the time periods which
specifically apply to the 2000-A 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 to set aside principal for later
payment 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," revolving notes, additional series of term 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 initially
be June 30, 2001, and it 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 beyond February 28, 2005, which is
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.
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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
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 2000-A term notes and any revolving notes as described in "The
2000-A 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 2000-A term notes,
see "The Transfer and Servicing Agreements--Application of Principal Collections
to the 2000-A 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)
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under "The Transfer and Servicing Agreements--Early Amortization Events" in the
prospectus, will equal $20,000,000.
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 2000-A 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 2000-A certificates over (B) the
Maximum Pool Balance equals or exceeds the specified certificate
percentage, which is 3.0%.
The Reserve Fund Funding Condition 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;
and
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.
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 2000-A Term Notes
Overview
There are three basic and mutually exclusive time periods with respect
to the 2000-A term notes which determine how Trust Principal Collections and
principal payments on the 2000-A 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 2000-A 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 2000-A 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 2000-A term notes. If the Wind Down Period commences for the trust
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prior to the Payment Period for the 2000-A term notes, a Cash Accumulation
Period for the 2000-A term notes will commence. If the trust remains in its
Revolving Period, then the 2000-A 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 2000-A
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 2000-A term notes are set aside
in accounts to repay principal on the 2000-A 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 2000-A 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 2000-A term notes.
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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 or set aside for repayment of the Certificate Balance 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 2000-A term notes will commence no earlier
than December 1, 2004 and no later than March 1, 2005. On the Determination Date
in November 2004 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 2000-A term notes and the 2000-A certificates on the 2000-A Term Note
Targeted Final Payment Date, which is also the Targeted Final Distribution Date
for the 2000-A certificates. 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 2000-A Term
Note Targeted Final Payment Date.
On each day during the 2000-A term notes' Payment Period, the 2000-A
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 2000-A term notes until the Fully Funded Date for the 2000-A
term notes has occurred and will be invested in Eligible Investments. The trust
will use amounts in the 2000-A term notes' Note Distribution Subaccount, other
than Investment Proceeds thereon, only to make principal payments on the 2000-A
term notes. During a Payment Period for the 2000-A 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 2000-A term notes, the trust will pay the outstanding
principal balance of the 2000-A term notes, or any lesser amount that 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 closing
date with a Payment Period occurring, in whole or in part, during the Payment
Period for the 2000-A term notes may provide for the Required Payment on those
term notes to be payable during the Payment Period for the 2000-A term notes or
after the Fully Funded Date for the 2000-A term notes.
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
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basis. However, during a Payment Period, Cash Accumulation Period or Rapid
Amortization Period for the 2000-A 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 2000-A term notes and the 2000-A
certificates have been fully provided for.
Cash Accumulation Period
On each day during a Cash Accumulation Period for the 2000-A term notes,
the 2000-A 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 2000-A term notes until the amount on deposit
therein equals the outstanding principal balance of the 2000-A term notes. The
trust will use amounts in the Cash Accumulation Account only to make principal
payments on the 2000-A term notes or as described under "--Application of
Principal Collections by the Trust - Wind Down Period and Early Amortization
Period - Recommencement of the Revolving Period" in this prospectus supplement.
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 2000-A term notes, the trust will pay
the outstanding principal balance of the 2000-A 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.
If the 2000-A 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 will commence. This
event will constitute a Cash Accumulation Period for the 2000-A term notes. If
the Targeted Final Payment Date for the 2000-A term notes has previously
occurred, the effect of this Early Amortization Event - or any other Early
Amortization Event which occurs after the 2000-A Term Note Targeted Final
Payment Date and which causes a Cash Accumulation Period to occur for the 2000-A
term notes - will be that the trust will continue to pay allocable funds to the
2000-A term notes on each subsequent Monthly Distribution Date.
Rapid Amortization Period
On each day during a Rapid Amortization Period for the 2000-A term
notes, the 2000-A 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 2000-A term notes. All amounts so allocated
during a Rapid Amortization Period will be paid to the holders of the 2000-A
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 2000-A term notes will be paid to the holders of
the 2000-A 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 closing date, the Reserve Fund will be funded with the Reserve
Fund Initial Deposit from the seller in an amount equal to $247,500,000. The
Reserve Fund is of the type contemplated by the prospectus. See "The Transfer
and Servicing Agreements--Liquidity and Credit Support--Reserve Fund" in the
prospectus.
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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 trust'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 assure you 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 application
will occur 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
$17,144,000 on the initial closing date. The 2000-A 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.
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.
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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 2000-A term notes
approach their Targeted Final Payment Date. On repayment of the entire
outstanding principal balance of the 2000-A term notes, any funds remaining on
deposit in the Cash Accumulation Reserve Fund will be paid to the seller.
Basis Swaps
On the initial closing date, the trust will enter into a basis swap with
GMAC, as the basis swap counterparty, with respect to each of the following:
o the 2000-A term notes, and we refer to this basis swap as the
2000-A term notes basis swap
o the 2000-A certificates, and we refer to this basis swap as the
2000-A 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
Three-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 USD Three-Month 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 2000-A Term Notional Amount or the 2000-A
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>
Amount due from Amount due
Basis Swap Notional Amount Swap Counterparty from the trust
---------- --------------- ----------------- --------------
<S> <C>
2000-A term notes basis swap 2000-A Term Notional USD Three-Month Prime Rate
Amount LIBOR + 2.68%
2000-A certificate basis swap 2000-A Certificate Notional USD Three-Month Prime Rate
Amount LIBOR + 2.68%
</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.
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
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2000-A 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 and the Cash
Accumulation 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 2000-A term notes. 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 the 2000-A 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. 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
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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 2000-A term notes the portion of the excess that is allocable
to the 2000-A 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.
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 closing 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 2000-A term notes would be treated as
indebtedness without substantial equity features for purposes of the Plan Assets
Regulation. The debt treatment of the 2000-A term notes could change, subsequent
to their issuance, if the trust incurred losses. However, without regard to
whether 2000-A term notes are treated as an equity interest for those purposes,
the acquisition or holding of 2000-A 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 2000-A term notes by a benefit plan depending on the
type and circumstances of the plan fiduciary making the decision to acquire the
2000-A 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 2000-A term
notes under ERISA, see "ERISA Considerations" in the prospectus.
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FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Kirkland & Ellis, special tax counsel to the seller,
for U.S. federal income tax purposes, the 2000-A term notes will constitute
indebtedness. Each term noteholder, by the acceptance of a 2000-A term note,
will agree to treat the 2000-A term notes as indebtedness for federal, state and
local income and franchise tax purposes.
The class-A certificates will be sold to more than one person.
Accordingly, the trust will be characterized as a partnership for U.S. federal
income tax purposes. See "Federal Income Tax Consequences--Tax Characterization
of the Trust" in the prospectus.
See "Federal Income Tax Consequences" and "State, Local and Foreign 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 2000-A term notes set forth opposite its name
below:
Aggregate Principal Amount to be Purchased
Underwriter 2000-A term notes
----------- -----------------
Banc of America Securities LLC $475,000,000
Salomon Smith Barney Inc. $475,000,000
Banc One Capital Markets, Inc. $50,000,000
Bear, Stearns & Co. Inc. $50,000,000
Chase Securities Inc. $50,000,000
Credit Suisse First Boston Corporation $50,000,000
Deutsche Banc Securities Inc. $50,000,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated $50,000,000
--------------
Total $1,250,000,000
==============
The seller has been advised by the underwriters that the several
underwriters propose initially to offer the 2000-A 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 2000-A term notes. The Underwriters may allow, and the dealers may re-allow
to other dealers, a subsequent concession not in excess of the percentage set
forth below for the 2000-A term notes. After the initial public offering, the
public offering price and these concessions may be changed.
Selling
Concession Re-allowance
2000-A term notes 0.165% 0.100%
The underwriters may engage in over-allotment transactions, stabilizing
transactions, syndicate covering transactions and penalty bids with respect to
the 2000-A 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 2000-A term notes so long
as the stabilizing bids do not exceed a specified maximum. Syndicate covering
transactions involve purchases of the 2000-A term
S-34
<PAGE>
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 2000-A 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
2000-A 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 $1,246,562,500 from the sale
of the 2000-A term notes, representing 99.725% of the principal amount of the
2000-A term notes, after paying the underwriting discount of $3,437,500,
representing 0.275% of the principal amount of the 2000-A term notes. Additional
offering expenses are estimated to be $800,000.
LEGAL OPINIONS
In addition to the legal opinions described in the prospectus, some of
the legal matters relating to the 2000-A 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.
S-35
<PAGE>
GLOSSARY OF PRINCIPAL TERMS
The following are given the meanings shown below to help describe the
payments and cash flows on the notes and the certificates.
2000-A Term Note Interest Rate means, for any Note Payment Date, (a) if
such Note Payment Date is a Quarterly Distribution Date, an interest rate equal
to USD Three-Month LIBOR plus 0.13% per annum, and (b) if such Note Payment Date
is a Monthly Distribution Date because a Rapid Amortization Event has occurred
or because the entire principal balance of the 2000-A term notes was not paid on
or before the Targeted Final Payment Date, an interest rate equal to USD One-
Month LIBOR plus 0.13% per annum.
2000-A Term Notes Monthly Available Amount has the meaning set forth on
page S-18.
2000-A Term Notes Monthly Carrying Costs has the meaning set forth on
page S-18.
2000-A Term Notes Monthly Interest Payable Amount means, for any Monthly
Distribution Date, the sum of:
(a) the product of
(1) the outstanding principal balance of the 2000-A 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 closing date),
(2) the 2000-A Term Note Interest Rate for the related Note
Payment Date, and
(3) 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 closing date) to but excluding such Monthly Distribution
Date and the denominator of which is 360, and
(b) the excess of the 2000-A Term Notes Monthly Interest Payable Amount
for the prior Monthly Distribution Date over the amount of funds that were
deposited in the 2000-A Note Distribution Account on the preceding Monthly
Distribution Date.
2000-A Term Note Targeted Final Payment Date has the meaning set forth
on page S-13.
2000-A Term Notional Amount for any day during a Collection Period
equals the Unaccumulated Principal Balance of the 2000-A 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.
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.
S-36
<PAGE>
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
2000-A 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 or
to the Payment Period for the 2000-A term notes, 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 2000-A 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.
Cash Accumulation Event means, for the 2000-A 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 2000- A term notes. The Cash Accumulation
Reserve Fund is available for the payment of interest on the 2000-A term notes
to the extent described under "The Transfer and Servicing
Agreements--Application of Interest Collections" in this prospectus supplement.
S-37
<PAGE>
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 2000-A 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 2000-A term notes are paid in full,
(2) the occurrence of a Rapid Amortization Event for the 2000-A
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> <C>
Cash Accumulation Reserve ( (CAB) x (2000-A Term Note Interest 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 2000-A 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.
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 2.5% 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 2000-A Targeted Final Payment
Date for the 2000-A term notes and (2) $364,584.
Class A Certificate Notional Amount for any day during a Collection
Period equals the outstanding Certificate Balance of the 2000-A 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.
Certificate Payment Date shall have the meaning set forth on page S-16.
Certificate Rate means for the 2000-A certificates issued on the
initial closing 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
closing date) to but
S-38
<PAGE>
excluding that Certificate Payment Date and the denominator of which is 360 and
(2) USD Three- Month LIBOR plus 0.43% or, if the 2000-A certificates have not
been paid in full on their Targeted Final Payment Date or the Fully Funded Date
occurs for all outstanding series of notes, then USD One-Month LIBOR plus 0.43%.
Certificateholders' Interest means, for any Monthly Distribution Date,
for any class of certificates, the product of (a) the Certificate Balance
(without reduction for unreimbursed Trust Charge-Offs) 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 (without reduction
for unreimbursed Trust Charge-Offs) 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.
Deficiency Amount has the meaning specified on page S-20.
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 2000-A 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;
S-39
<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.
As used in this definition, a rating is in the "highest investment
category" without regard to relative gradations within that category so that,
for example, commercial paper with a rating of either A-1 or A-1+ is considered
to be in the "highest investment category."
Final Revolving Period Termination Date has the meaning set forth on
page S-23.
Fully Funded Date means, with respect to a series of notes, the day on
which:
(a) for the 2000-A 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 2000-A term notes for the payment
of principal equals the outstanding principal balance of the
2000-A term notes or
(2) the 2000-A 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 2000-A term notes Monthly Available Amount, any 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 2000-A term notes Monthly Carrying Costs, any Revolving Note
Monthly Carrying Costs and the comparable monthly carrying costs for each other
series of term notes and revolving notes, if any.
Monthly Distribution Date means the 15th day of each month, or if such
day is not a business day, then the next succeeding day which is a business day,
commencing August 15, 2000. Each Monthly Distribution Date is a "Distribution
Date" as defined in the prospectus.
S-40
<PAGE>
<TABLE>
<CAPTION>
The Monthly Mismatch Amount for a Monthly Distribution Date is calculated as follows:
<S> <C> <C> <C> <C> <C> <C>
Monthly Mismatch Amount = (Term Note Balance) x (Mismatch Rate)
-------------
</TABLE>
12
where:
Term Note Balance is the outstanding principal balance on the
2000-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 0.30 %.
Monthly Payment Period has the meaning set forth on page S-13.
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.
Note Payment Date has the meaning set forth on page S-13.
Noteholders' Interest means, for any Monthly Distribution Date,
(a) with respect to any series of term notes other than the
2000-A 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
(b) 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.
One Month Reference Bank Rate means, for a Monthly Distribution Date, a
rate determined on the basis of the rates at which deposits in U.S. dollars are
offered by the reference banks (which will be four major banks that are engaged
in transactions in the London interbank market, selected by the indenture
trustee after consultation with the seller) as of 11:00 a.m., London time, on
the day that is two LIBOR Business Days prior to the immediately preceding
Monthly Distribution Date to prime banks in the London interbank market for a
period of one month commencing on such preceding Monthly Distribution Date in
amounts approximately equal to the principal balance of the 2000-A term notes
then outstanding. The indenture trustee will request the principal London office
of each of the reference banks to provide a quotation of its rate. If at least
two such quotations are provided, the rate will be the arithmetic mean of the
quotations, rounded upwards to the nearest one-sixteenth of one percent. If on
any such date fewer than two quotations are provided as requested, the rate will
be the arithmetic mean, rounded upwards to the nearest one- sixteenth of one
percent, of the rates quoted by one or more major banks in New York, selected by
the indenture trustee after consultation with the seller, as of 11:00 a..m., New
York time, on such date to leading European banks for U.S. dollar deposits for a
period of one month commencing on such applicable date in amounts approximately
equal to the then outstanding principal balance of the 2000-A term notes. If no
such quotation can be obtained, the rate will be USD One-Month LIBOR for the
prior Monthly Distribution Date.
S-41
<PAGE>
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> <C> <C> <C> <C>
(Aggregate Principal Balance of Referent Series)
Principal Allocation Percentage= ------------------------------------------------
for a Referent Series (Sum of Aggregate Principal Balance for all
Referent Series)
</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.
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:
(Aggregate Principal Balance of Referent
Series)
Principal Allocation Percentage = ---------------------------------------------
for a Referent Series (Sum of Aggregate Principal Balance for each
Series of Notes)
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.
Quarterly Distribution Date means with respect to the 2000-A term notes
and the 2000-A certificates, the 15th day of each January, April, July and
October, or if such day is not a Business Day, the next succeeding Business Day,
beginning on October 16, 2000.
A Rapid Amortization Event for the 2000-A term notes will be:
(1) specified insolvency events relating to General Motors, the
Servicer, GMAC, or the seller,
(2) 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
S-42
<PAGE>
(3) on any Monthly Distribution Date, the balance in the Cash
Accumulation Reserve Fund would be less than $364,584 after giving
effect to all withdrawals and additions on that Monthly Distribution
Date.
Items (2) and (3) above are not Early Amortization Events for the trust.
Rapid Amortization Period for the 2000-A term notes means a period
commencing upon the occurrence of a Rapid Amortization Event and ending on the
earliest of (a) the date on which the 2000-A term notes are paid in full and (b)
the Trust Termination 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
"The Transfer and Servicing Agreements - Application of Interest Collections".
Required Payment means, for any series of term notes other than the
2000-A 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
2000-A 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> <C> <C> <C> <C>
Required Payment (Outstanding Note Principal Balance) + (Certificate 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 2000-A term notes and all other notes
with scheduled Payment Periods during the Payment Period for the
2000-A term notes;
Recent Minimum Daily Trust Balance is the minimum expected
Daily Trust Balance during the period between that Determination
Date and February 28, 2005 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 Funding Condition has the meaning set forth on page S-25.
Reserve Fund Required Amount means,
(a) for any Monthly Distribution Date during the Revolving Period
or Wind Down Period, 6.0% of the Maximum Pool Balance as of that Monthly
Distribution Date, or 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 7.0 %.
(b) for any Monthly Distribution Date during any Early
Amortization Period occurring prior to the Fully Funded Date for all
series of notes, 6.0% of the Maximum Pool Balance as of the last day of
the Revolving Period, or if, as of the last day of the Revolving
Period the
S-43
<PAGE>
long-term debt obligations of GMAC are rated less than
"BBB--" by Standard & Poor's Ratings Services, then 7.0%; 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 any revolving note to be issued has the
meaning set forth on page S-18.
Revolving Note Monthly Available Amount has the meaning set forth on
page S-19.
Revolving Note Monthly Carrying Costs has the meaning set forth on page
S-19.
Scheduled Revolving Period Termination Date has the meaning set forth on
page S-23.
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 in clause (2) under "The Transfer and Servicing
Agreements -- 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
2000-A 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 2000-A 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.
Specified Maximum Revolver Balance has the meaning set forth on page
S-15.
S-44
<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 closing 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 closing date, may not inure to the benefit of other securities,
including the 2000-A 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 or related to the Payment Period for the 2000-A term notes, 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 Ordinary 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
Ordinary Revolving Period and
(b) an amount equal to
(1) the Daily Trust Balance as of the termination of
the Ordinary Revolving Period plus
(2) the Cash Collateral Amount on the last day of the
Ordinary 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.
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For purposes of this definition, Ordinary Revolving Period means the
period ending on the business day preceding the commencement of the Wind Down
Period or the Early Amortization Period for the trust or the Payment Period for
the 2000-A term notes.
Targeted Final Distribution Date for the 2000-A certificates has the
meaning specified on page S-16.
Three Month Reference Bank Rate means, for a Quarterly Distribution
Date, a rate determined on the basis of the rates at which deposits in U.S.
dollars are offered by the reference banks (which will be four major banks that
are engaged in transactions in the London interbank market, selected by the
indenture trustee after consultation with the seller) as of 11:00 a.m., London
time, on the day that is two LIBOR Business Days prior to the immediately
preceding Quarterly Distribution Date to prime banks in the London interbank
market for a period of three months commencing on such preceding Quarterly
Distribution Date in amounts approximately equal to the principal balance of the
2000-A term notes then outstanding. The indenture trustee will request the
principal London office of each of the reference banks to provide a quotation of
its rate. If at least two such quotations are provided, the rate will be the
arithmetic mean of the quotations, rounded upwards to the nearest one-sixteenth
of one percent. If on any such date fewer than two quotations are provided as
requested, the rate will be the arithmetic mean, rounded upwards to the nearest
one- sixteenth of one percent, of the rates quoted by one or more major banks in
New York, selected by the indenture trustee after consultation with the seller,
as of 11:00 a..m., New York time, on such date to leading European banks for
U.S. dollar deposits for a period of three months commencing on such
applicable date in amounts approximately equal to the then outstanding
principal balance of the 2000-A term notes. If no such quotation can be
obtained, the rate will be USD Three-Month LIBOR for the prior
Quarterly Distribution Date.
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 "The
Transfer and Servicing Agreements -- Application of Interest Collections" 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:
Trust Interest = (UPB of Note Series)
Allocation Percentage
--------------------------------------------------------
(UPB of all Term Notes) + (UPB of all Revolving
Notes)
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.
S-46
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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 2000-A 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 2000-A 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.
Unsatisfied Deficiency Amount has the meaning specified on page S-20.
USD One-Month LIBOR (a) with respect to the 2000-A term notes on each
Monthly Distribution Date, means the rate for deposits in U.S. Dollars for a
period of one month which appears on the Bridge Information Systems Telerate
Service Page 3750 as of 11:00 a.m., London time, 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 closing date. If the rate does not appear on
that page or any other page that may replace page 3750 on the Telerate service,
or if the Telerate service is no longer offered, then the indenture trustee will
select the appropriate rate from another service for displaying LIBOR or
comparable rates after consultation with the seller. If no other service is
available, then the rate will be the Three Month Reference Bank Rate; and
(b) with respect to the 2000-A certificates, has a
correlative meaning to the definition in clause (a), except that
references therein and in the definition of One- Month Reference
Bank Rate to the 2000-A term notes should be read to mean the
2000-A certificates.
S-47
<PAGE>
USD Three-Month LIBOR (a) with respect to the 2000-A term notes on each
Quarterly Distribution Date, the rate for deposits in U.S. Dollars for a period
of three months which appears on the Bridge Information Systems Telerate
Service Page 3750 as of 11:00 a.m., London time, on the day that is two LIBOR
Business Days prior to the Quarterly Distribution Date preceding that
Quarterly Distribution Date, or, for the initial Quarterly Distribution
Date, two LIBOR Business Days prior to the initial closing date. If the rate
does not appear on that page or any other page that may replace page 3750 on the
Telerate service, or if the Telerate service is no longer offered, then the
indenture trustee will select the appropriate rate from another service for
displaying LIBOR or comparable rates after consultation with the seller. If
no service is available, then the rate will be the Three Month Reference Bank
Rate; and
(b) with respect to the 2000-A certificates, has a
correlative meaning to the definition in clause (a), except that
references therein and in the definition of Three-Month Reference
Bank Rate to the 2000-A term notes should be read to mean the
2000-A certificates.
S-48
<PAGE>
Prospectus
Superior Wholesale Inventory Financing Trusts
Issuer of the Asset Backed Term Notes
Wholesale Auto Receivables Corporation
Seller
General Motors Acceptance Corporation
Servicer
You should consider carefully the risk factors beginning on page 5 in this
prospectus.
The notes issued by any trust 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 may be used to offer and sell term notes only if accompanied by
a prospectus supplement.
Each trust--
o will issue one or more series of term notes, which will be
described in a prospectus supplement;
o will own a revolving pool of wholesale automotive receivables generated
under by a portfolio of floor plan financing agreements with retail
automotive dealers; and
o may also issue one or more series of revolving notes and one or more
classes of certificates, but these revolving notes and certificates will
not be sold under this prospectus.
The term notes--
o will represent indebtedness of the related trust;
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.
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.
June 16, 2000
<PAGE>
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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<PAGE>
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.
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 may also issue revolving notes and certificates, but this prospectus
will not offer or sell those securities. We use the word 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
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<PAGE>
Principal
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, interest
rate caps or other derivative
products specified in the prospectus
supplement;
o Amounts held on deposit in any
reserve fund established for the trust
or in other 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 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 principal payments on term notes, the trust will
ordinarily pay principal collections on receivables back to the seller. The
trust could also apply the
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<PAGE>
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 are not available.
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.
4
<PAGE>
RISK FACTORS
You should consider the following risk factors in deciding whether to
purchase the securities.
Some receivables may GMAC and the seller will file financing statements
with respect to each pool of receivables sold to
become uncollectible if each trust. These financing statements perfect
other parties establish the security interests that the seller and the
liens on receivables that trust have in the pool of receivables. However,
are superior to the GMAC will serve as the custodian of the
trust's, which could delay receivables and will not physically segregate or
payment on your term mark the receivables from other GMAC receivables
notes. 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 proceeds of that sale or lease
include chattel paper -- as with most retail
instalment 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
uncollectible if dealers GMAC a security interest in those vehicles. When
make sales out of trust, a financed vehicles is sold or leased, GMAC's
which could delay payment security interest in the vehicle will generally
on your term notes. terminate. A sale out of trust occurs when a
dealer sells or leases a vehicle but fails to pay
GMAC the amount 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 If GMAC files for bankruptcy under the federal
bankruptcy you could bankruptcy code or any state insolvency laws, a
experience reductions court may:
and delays in payments
on your term notes. o consolidate the assets and liabilities of
GMAC with those of the seller
5
<PAGE>
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
GMAC to generate new finance their wholesale automobile purchaes, and
receivables; without new these loans generate receivables. GMAC has in the
receivables, the trust may past provided financial assistance to dealers,
be unable to make payment including capital contributions in the form of
on the term notes. minority equity investments. GMAC must be able to
generate new receivables in order to meet the
trust's obligations to pay interest and principal
on the securities. GMAC deos 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
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<PAGE>
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 The trust's ability to make payments on the term
is generally the trust's notes generally depends on collections from
only source of funds to dealers on the receivables. The prospectus
make payments on the supplement will describe past patterns of dealer
term notes payments on similar receivables. However, 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 GMAC, the seller and their respective affiliates
not guarantee payments on are generally not obligated to make any term note
the receivables or the payments to you, and they do not guarantee
term notes, but in limited payments to you, and they do not guarantee
circumstances GMAC may be payments on the receivables or your term notes.
required to repurchase However, GMAC will make representations and
receivables. warranties about the characteristics of the
receivables, and GMAC will then assign those
representations and warranties to the trust. If
GMAC 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.
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<PAGE>
The trust has limited The only significant assets or sources of funds
assets; the receivbles any trust will have be its receivables, its rights
and any forms of credit in any reserve fund, or other rights or credit
enchancement 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
turstee, 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 The underwriters may assist you in reselling the
market for any resale of term notes, but they are not required to do so. A
the term notes secondary market for any term notes may not
develop. If a secondary market does not 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 The term notes for each trust will be issued only
notes are not if they receive the required rating. A security
recommentations; they may rating is not a recommendation to buy, sell or
change or be withdrawn hold the term notes. Rating agencies may revise
the ratings or withdrawn them at any 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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<PAGE>
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.
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THE TRUSTS
General; The Trust Estate
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 on the date 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.
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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);
(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.
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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.
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 in varying amounts as a percentage of
the invoice price. This price rebate is known as a holdback. 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.
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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.
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
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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.
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
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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.
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.
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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.
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
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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.
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.
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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 Clearstream 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.
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
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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 or 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,
o adjustable,
o for some series of Strip Notes, an interest rate of zero, or
o any combination of Interest Rate types.
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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 change the Specified Maximum Revolver Balance in
accordance with the conditions therefor in the related trust sale and
servicing agreement;
(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; and
(10) add provisions to or delete or modify the provisions of any
Transfer and Servicing Agreements as appropriate to allow the trust to
issue foreign currency -- denominated notes, including without
limitation, adding provisions granting rights under any Transfer and
Servicing Agreements to counterparties of the currency swaps that may
be entered into in connection with the issuance of such foreign
currency -- denominated notes.
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
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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;
(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
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(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.
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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.
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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,
(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,
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(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
(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;
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(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.
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
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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.
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 Clearstream or Euroclear in Europe if they are
participants of those systems, or indirectly through organizations which are
participants in those systems.
Clearstream and Euroclear will hold omnibus positions on behalf of their
participants through customers' securities accounts in Clearstream 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 Clearstream 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 Clearstream 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. Clearstream
participants and Euroclear participants may not deliver instructions directly to
the depositories.
Because of time-zone differences, credits of securities received in
Clearstream 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 Clearstream participants on that Business Day. Cash received in
Clearstream or Euroclear as a result of sales of securities by or through a
Clearstream 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 Clearstream 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.
Clearstream is incorporated under the laws of Luxembourg as a
professional depository. Clearstream holds securities for its Clearstream
participants and facilitates the clearance and
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settlement of securities transactions between Clearstream participants through
electronic book-entry changes in accounts of Clearstream participants, thereby
eliminating the need for physical movement of certificates. Transactions may be
settled in Clearstream in any of 36 currencies, including United States dollars.
Clearstream provides to Clearstream participants, among other things, services
for safekeeping, administration, clearance and settlement of internationally
traded securities and securities lending and borrowing. Clearstream interfaces
with domestic markets in several countries. As a professional depository,
Clearstream is regulated by the Luxembourg Monetary Institute. Clearstream
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 Clearstream is also available to others entities -- i.e., banks,
brokers, dealers and trust companies -- that clear through or maintain a
custodial relationship with a Clearstream Participant, either directly or
indirectly.
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. This
eliminated 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 Clearstream or
Euroclear will be credited to the cash accounts of Clearstream 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. Clearstream 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
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Clearstream 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, Clearstream and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of term notes among participants of
DTC, Clearstream 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
Clearstream 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
(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.
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THE REVOLVING NOTES
Each trust may 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.
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
the initial 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.
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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
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
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issued on the initial 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. 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. This helps 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. 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
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
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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
a representation or warranty of the seller or GMAC that materially and adversely
affects the trust's interest in a deferred payment receivable. This is a
receivable for which payment has been deferred pursuant to DPP, an instalment
sales program or a similar arrangement. 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:
(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
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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 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. An exception to this covenant will be
made 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 by the pooling and servicing agreement.
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Addition and Removal of Accounts
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 satisfied:
(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
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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 Distribution
Account. The prospectus supplement may specify also that the servicer will
establish and maintain a Swap Distribution Account."
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
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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
(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, the trust will apply
o Trust Interest Collections,
o receipts under credit, liquidity and other enhancement
arrangements,
o servicer advances,
o Investment Proceeds and
o amounts in the Reserve Fund
and will use these amounts to
o make interest payments on the related securities,
o pay related Monthly Servicing Fees,
o make payments under credit, liquidity and other enhancement
arrangements,
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o reimburse servicer advances and
o cover some of the losses on defaulted receivables.
The related prospectus supplement will further set forth these applications.
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.
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
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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 that the
securityholders or certificateholders, who are to benefit from those
arrangements will receive the full amount of principal or the certificate
balance, as the case may be, plus interest due. These forms of liquidity and
credit support are also intended 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.
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
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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
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determining other amounts required to be distributed, deposited or otherwise
remitted on that Distribution Date and other Distribution Dates.
Defaults and Charge-offs
With respect to each trust, the extent to which Trust Interest
Collections, funds in the related Reserve Fund and other amounts are available
to cover the Trust Defaulted Amount will be described in the related prospectus
supplement. Any Trust Defaulted Amount not so covered will constitute Trust
Charge-Offs. Trust Charge-Offs may be covered in subsequent periods, but only to
the extent described in the related prospectus supplement. Amounts not so
covered will reduce the principal amount of the notes or the certificate
balance, as the case may be, which will reduce the Daily Trust Invested Amount,
and will be allocated among the securities as set forth in the related
prospectus supplement.
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;
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(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;
(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."
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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.
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
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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.
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.
The servicer will conduct these activities 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
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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;
(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, the seller or the servicer
may from time to time discover or receive 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. If this occurs, 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.
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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.
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 which succeeds the servicer will be treated as the
successor of the servicer under the trust sale and servicing agreement and the
pooling and servicing agreement. This successor entity will assume the
obligations of the servicer under those agreements. A successor entity of the
servicer includes 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.
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.
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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.
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
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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.
However, a servicing default in making any required distributions, payments,
transfers or deposits in accordance with the trust sale and servicing agreement
may not be waived. 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 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.
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.
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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 provisions to or delete or modify the provisions of
any Transfer and Servicing Agreements as appropriate to allow the trust
to issue foreign currency -- denominated notes, including without
limitation, adding provisions granting rights under any Transfer and
Servicing Agreements to counterparties of the currency swaps that may be
entered into in connection with the issuance of such foreign currency --
denominated notes, or
(6) or 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.
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
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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. However, this
indemnification will be limited by the proviso 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.
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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
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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.
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.
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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.
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, a creditor or trustee in bankruptcy of the debtor or the
debtor itself may 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. If this were to occur, 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
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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.
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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
organizations. This information is directed to prospective purchasers who
purchase term notes in the initial distribution thereof, who are citizens or
residents of the United States, including domestic corporations and
partnerships, and who hold the term notes 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. Kirkland & Ellis, special tax counsel to the
seller, will deliver its opinion 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. This opinion
will be 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
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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.
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. Additionally, the holder
may 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
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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.
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, 2000. 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
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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. The new regulations are generally effective for payments made
after December 31, 2000 Foreign Person's should consult their tax advisers with
respect to the impact, if any, of the new regulations.
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.
A Registered Term Note beneficially owned by an individual who at the
time of the individual's death is not a citizen or resident of the United
States, generally 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. Additionally, the holding of such Registered Term Note must not be
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
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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, the
servicer and the certificateholders will agree to treat each trust as a
partnership for federal, state and local income and franchise tax purposes.
Under this scenario the certificateholders would be the partners of the
partnership, and the term notes and the revolving notes would be debt of the
partnership. However, the proper characterization of this arrangement as it
involves 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.
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
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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.
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
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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.
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).
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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.
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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."
"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.
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"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 Percentage": 1.0% or such higher percentage
not to exceed 2.0% as the seller shall select upon approval by the rating
agencies.
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"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:
(1) the aggregate principal balance of all the Available
Receivables on that date over
(2) the Dealer Overconcentration Percentage (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.
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"Eligible Account" means, with respect to any trust, a dealer account
which, as of the date of determination thereof:
(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;
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(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."
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"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 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,
(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
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(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. However, if at
any time 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.
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"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 the date 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.
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"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, if so specified in the prospectus
supplement, one or more accounts 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.
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"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.
"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.
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No dealer, salesman or other person has been authorized to give any
information or to make any representations not contained in this prospectus
supplement and the prospectus and, if given or made, 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.
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Until September 14, 2000 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.
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Superior Wholesale
Inventory Financing
Trust VI
$1,250,000,000
Floating Rate Asset Backed
Term Notes,
Series 2000-A
Wholesale Auto
Receivables Corporation
Seller
General Motors
Acceptance Corporation
Servicer
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PROSPECTUS SUPPLEMENT
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Underwriters
Joint Bookrunning Managers
Banc of America Securities LLC
Salomon Smith Barney
Co-Managers
Banc One Capital Markets, Inc.
Bear, Stearns & Co. Inc.
Chase Securities Inc.
Credit Suisse First Boston
Deutsche Banc Alex. Brown
Merrill Lynch & Co.
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