As filed with the Securities and Exchange Commission on December 21, 1999
REGISTRATION NO. 333-92583
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
PRE-EFFECTIVE
AMENDMENT
NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------------
CHRYSLER FINANCIAL COMPANY L.L.C.
(Exact name of Registrant as specified in its charter)
<PAGE>
MICHIGAN 52-2109803
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
<PAGE>
27777 FRANKLIN ROAD
SOUTHFIELD, MICHIGAN 48034-8286
(248) 948-3062
(Address, including zip code, and telephone number,
including area code, of Registrant's principal
executive offices)
CHRISTOPHER A. TARAVELLA, ESQ.
CHRYSLER FINANCIAL COMPANY L.L.C.
27777 FRANKLIN ROAD
SOUTHFIELD, MICHIGAN 48034-8286
(248) 948-3062
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------------------
WITH A COPY TO:
RENWICK D. MARTIN, ESQ.
BROWN & WOOD LLP
ONE WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(212) 839-5319
------------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after this Registration Statement becomes effective as determined
by market conditions.
------------------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. / /
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. / /
__________________.
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / / _________________.
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. / /
------------------------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
============================== ======================= ================ ======================= =======================
PROPOSED PROPOSED MAXIMUM
MAXIMUM AGGREGATE OFFERING
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PRICE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED (2) PER UNIT (1) REGISTRATION FEE (3)
- ------------------------------ ----------------------- ---------------- ----------------------- -----------------------
<S> <C> <C> <C> <C>
Asset Backed Securities... $10,000,000,000.00 (1) 100% $10,000,000,000.00 (1) $2,640,000
============================== ======================= ================ ======================= =======================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) $1,046,880,210.82 aggregate principal amount of Asset Backed Securities
registered by the Registrant under Registration Statement No. 333-71169
referred to below and not previously sold is carried forward in this
Registration Statement pursuant to Rule 429. A registration fee of
$291,032.70 in connection with such unsold amount of Asset Backed
Securities was paid previously under the foregoing Registration Statement.
(3) Previously paid.
------------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
Pursuant to Rule 429, the prospectus and form of prospectus
supplement contained in this Registration Statement also relate to, and this
Registration Statement constitutes a post-effective amendment to, Registration
Statement No. 333-71169, which was filed on January 26, 1999, by Chrysler
Financial Company L.L.C. and any unsold securities registered thereunder.
<PAGE>
INTRODUCTORY NOTE
This Registration Statement contains (i) a form of Prospectus
relating to the offering of a series of Asset Backed Notes and/or Asset Backed
Certificates by various DaimlerChrysler Auto Trusts created from time to time
by Chrysler Financial Company L.L.C. and (ii) a form of Prospectus Supplement
relating to the offering by DaimlerChrysler Auto Trust ___-_ of the particular
series of Asset Backed Notes described therein. The form of Prospectus
Supplement relates only to the securities described therein and is a form
which may be used, among others, by Chrysler Financial Company L.L.C. to offer
Asset Backed Notes and/or Asset Backed Certificates under this Registration
Statement. The features applicable to any actual series of Asset Backed
Securities may include any features specified in the Prospectus.
<PAGE>
Information contained in this prospectus supplement is not complete and may be
changed. We may not sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This prospectus
supplement is not an offer to sell these securities, and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
SUBJECT TO COMPLETION DATED DECEMBER 21, 1999
DAIMLERCHRYSLER PROSPECTUS SUPPLEMENT
TO PROSPECTUS DATED ______ __, _____
$ -------------
DAIMLERCHRYSLER AUTO TRUST ______
CHRYSLER FINANCIAL COMPANY L.L.C., Seller and Servicer
The trust will issue the following securities that will be backed by
automobile and light duty truck receivables purchased directly from Chrysler
Financial Company L.L.C.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
TOTAL SECURITIES ISSUED
- -------------------------------------------------------------------------------------------------------------------------
ORIGINAL FIXED PRICE PROCEEDS
PRINCIPAL INTEREST TO THE UNDERWRITING TO THE
SECURITY AMOUNT RATE PUBLIC(2) FEES SELLER(2)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
A-1 Notes(1) $ % n/a n/a n/a
A-2 Notes $ % % % %
A-3 Notes $ % % % %
A-4 Notes $ % % % %
Certificates(1)(3) $ n/a n/a n/a n/a
Total Securities $ n/a $ $ $
(1) Not being offered publicly or in this document.
(2) Plus accrued interest from _________.
(3) The certificates are subordinated.
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
INITIAL CREDIT ENHANCEMENT FOR THE NOTES(1)
------------------------- ----------------------- --------------------- ----------------
OVERCOLLATERALIZATION CERTIFICATES (2) RESERVE FUND TOTAL
(SUBORDINATED)
------------------------- ----------------------- --------------------- ----------------
<S> <C> <C> <C> <C>
Amount $ $ $ $
Percentage of Total % % % %
Securities
(1) The expected excess cash flows generated from the difference between the
interest collections on all the receivables and the sum of the servicing
fee, the interest payments on the outstanding securities and required
reserve fund deposits could also provide credit enhancement.
(2) The certificates do not bear interest.
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
BEFORE YOU DECIDE TO INVEST IN ANY OF THE OFFERED SECURITIES, PLEASE READ THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS, ESPECIALLY THE RISK FACTORS BEGINNING
ON PAGE S-5 OF THIS PROSPECTUS SUPPLEMENT AND ON PAGE 9 OF THE PROSPECTUS. The
securities will be obligations of the trust only and neither the securities nor
the assets of the trust will represent interest in or obligations of
DaimlerChrysler AG, Chrysler Financial Company L.L.C. or any of their
affiliates. Neither the SEC nor any state securities commission has approved or
disapproved the securities or determined that this prospectus supplement or the
prospectus is accurate or complete. Any representation to the contrary is a
criminal offense.
- -------------------------------------------------------------------------------
[UNDERWRITERS]
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS
____________, ____.
<PAGE>
READING THE PROSPECTUS AND PROSPECTUS SUPPLEMENT
We provide information on the offered securities in two documents that
offer varying levels of detail:
1. Prospectus - provides general information, some of which may not
apply to the offered securities.
2. Prospectus Supplement - provides a summary of the specific terms of
the offered securities.
We suggest you read this prospectus supplement and the prospectus. The
prospectus supplement pages begin with "S". If the terms of the offered
securities described in this prospectus supplement vary with the accompanying
prospectus, you should rely on the information in this prospectus supplement.
We include cross-references to sections in these documents where you can
find further related discussions. Refer to the table of contents on page S-3 in
this document and on page 4 in the prospectus to locate the referenced sections.
THE INDEX OF PRINCIPAL TERMS ON PAGE 72 IN THE PROSPECTUS LISTS THE PAGES
WHERE CAPITALIZED TERMS USED IN THE PROSPECTUS OR PROSPECTUS SUPPLEMENT ARE
DEFINED.
_______________________________________________________________________________
TABLE OF CONTENTS
_______________________________________________________________________________
- ----------------------------------------------------
SECTION PAGE
- ----------------------------------------------------
- ----------------------------------------------------
Transaction illustration S-4
- ----------------------------------------------------
RISK FACTORS S-5
- ----------------------------------------------------
O YEAR 2000 COMPUTER ISSUE S-5
- ----------------------------------------------------
- Servicer S-5
- ----------------------------------------------------
- Vendors and Customers S-5
- ----------------------------------------------------
- Clearing Agencies S-5
- ----------------------------------------------------
TRANSACTION OVERVIEW S-6
- ----------------------------------------------------
O PARTIES TO THE TRANSACTION S-6
- ----------------------------------------------------
O SECURITIES OFFERED S-7
- ----------------------------------------------------
O RECEIVABLES POOL S-7
- ----------------------------------------------------
- Composition of the
Receivables Pool S-8
- ----------------------------------------------------
- New/Used Distribution S-8
- ----------------------------------------------------
- Distribution by APR S-9
- ----------------------------------------------------
- Geographic Distribution S-10
- ----------------------------------------------------
- Selection Criteria S-11
- ----------------------------------------------------
O NET CREDIT LOSS AND DELINQUENCY
EXPERIENCE S-11
- ----------------------------------------------------
- CFC Net Credit Loss and
Repossession Experience S-12
- ----------------------------------------------------
- CFC Delinquency Experience S-13
- ----------------------------------------------------
- MBCC Net Credit Loss and
Repossession Experience S-13
- ----------------------------------------------------
- MBCC Delinquency Experience S-14
- ----------------------------------------------------
- ----------------------------------------------------
O PAYMENTS ON THE SECURITIES S-14
- ----------------------------------------------------
- Payment Dates S-14
- ----------------------------------------------------
- Interest Payments S-15
- ----------------------------------------------------
- Principal Payments S-16
- ----------------------------------------------------
- Optional Redemption S-16
- ----------------------------------------------------
O FLOW OF FUNDS S-16
- ----------------------------------------------------
- Sources of Funds Available for
Distribution S-17
- ----------------------------------------------------
- Application of Available Funds S-18
- ----------------------------------------------------
O CREDIT ENHANCEMENT S-18
- ----------------------------------------------------
- Overcollateralization S-19
- ----------------------------------------------------
- Excess Interest Collections S-19
- ----------------------------------------------------
- Reserve Fund S-20
- ----------------------------------------------------
- ----------------------------------------------------
- Subordinated Certificates S-20
- ----------------------------------------------------
- ----------------------------------------------------
O SERVICING S-20
- ----------------------------------------------------
- ----------------------------------------------------
- Compensation S-20
- ----------------------------------------------------
- ----------------------------------------------------
O THE TRUST S-20
- ----------------------------------------------------
- ----------------------------------------------------
- Activities S-21
- ----------------------------------------------------
- ----------------------------------------------------
- Capitalization S-21
- ----------------------------------------------------
- ----------------------------------------------------
UNDERWRITING S-22
- ----------------------------------------------------
- ----------------------------------------------------
FEDERAL INCOME TAX CONSEQUENCES S-22
- ----------------------------------------------------
- ----------------------------------------------------
LEGAL OPINIONS SA-1
- ----------------------------------------------------
- ----------------------------------------------------
annex I - Hypothetical Example of the flow
of Funds
- ----------------------------------------------------
<PAGE>
_______________________________________________________________________________
TRANSACTION ILLUSTRATION
_______________________________________________________________________________
- -------------------------------------------------------------------------------
| on or before [closing date] |
| (approximate $ millions) |
| |
| ------------------------------------- |
| | CHRYSLER FINANCIAL COMPANY L.L.C. | |
| | [Seller and Servicer] | |
| ------------------------------------- |
| | | \ |
| | | \ |
| | | \ |
| ------------------------------ | \ |
| | PREMIER RECEIVABLES L.L.C. | | \ |
| | [Special Purpose Entity] | | \ |
| ------------------------------ | \ |
| ^ ^ | $__________ \ $_______ |
| | \ | receivables \ reserve |
| | \ | \ fund |
| | \ | \ |
| | ----------------------- | \ |
| | / \ | \ |
| | | Overcollateralization | | \ |
| | \ $___________ / | \ |
| | ----------------------- | \ |
| | ^ | \ |
| | \ v v |
| ---------------- ----------------------------- ----------- |
| | Certificates | | DAIMLERCHRYSLER AUTO TRUST | | ________ | |
| | (1) |<----------| [Issuer] |-----|[Indenture| |
| | $___________ | | | | Trustee] | |
| -------------- ------------------------------ ----------- |
| / | \ |
| / | \ |
| / | \ |
| / | \ |
| / | \ |
| / v v |
| ------------ ------------ ------------- |
| | ________ | | A-1 | | A-2 Notes | |
| | [Owner | | Notes(1)| | $________ | |
| | Trustee] | | $_______ | | | |
| ------------ ------------ | A-3 Notes | |
| | $________ | |
| | | |
| | A-4 Notes | |
| | $________ | |
| ------------- |
| |
|-----------------------------------------------------------------------------|
| (1) Not being offered publicly or in this document. The certificates are |
| subordinated. |
|-----------------------------------------------------------------------------|
<PAGE>
_______________________________________________________________________________
RISK FACTORS
_______________________________________________________________________________
YEAR 2000 COMPUTER ISSUE MAY AFFECT COLLECTIONS ON THE RECEIVABLES,
PAYMENTS ON THE SECURITIES AND OTHER TRANSACTIONS
SERVICER
Chrysler Financial Company L.L.C. ("CFC") will service the receivables on
behalf of the trust. The trust relies on CFC's computer systems. CFC has
conducted an evaluation of the actions necessary to ensure that its business
critical computer systems will function without disruption due to the
application of dating systems in the Year 2000. CFC has completed the process of
upgrading, replacing and testing certain of its information and other computer
systems. This remediation was essentially completed during the third quarter of
1999. Contingency plans have been developed to address any unforeseen Year 2000
problem. However, there can be no assurance that the remedial actions being
implemented by CFC will be completed in time to avoid dating systems problems or
that the costs will not be material to CFC. If CFC is unable to complete its
remedial actions in the planned timeframe, contingency plans will be developed
to address those business critical computer systems that may not be Year 2000
compliant. The cost of this remediation will not have a material effect to the
consolidated results of operations and financial position. These expenses are
being expensed as they occur. CFC has developed contingency plans to address any
unforeseen Year 2000 related events. We cannot assure that the action taken will
avoid all delays in collections on the receivables and payments on the
securities.
VENDORS AND CUSTOMERS
Disruptions of computer systems of vendors or customers, which are outside
the control of CFC, could impair the ability of CFC to obtain necessary services
or to provide services to its customers. Disruptions of the computer systems of
CFC's vendors or customers, as well as the cost of avoiding such disruption,
could have a material adverse effect upon the financial condition and results of
operations of CFC. CFC has assessed the Year 2000 readiness of its business
critical vendors and customers. CFC believes that the most likely worst case
scenario is that a small number of vendors will be unable to supply service for
a short time after January 1, 2000. As part of the assessment process, CFC has
developed contingency plans should any critical vendors be unable to provide
services. We cannot assure the effectiveness of such contingency plans.
CLEARING AGENCIES
The Depository Trust Company ("DTC") is one of the clearing agencies which
provides book-entry registration, delivery and settlement services to
securityholders. DTC has developed and is implementing a program to deal with
the Year 2000 computer issue. The program is intended to ensure that DTC's
systems that relate to the following activities continue to function
appropriately after December 31, 1999:
o timely payment of distributions (including principal and interest
payments) to securityholders,
o book-entry deliveries, and
o settlement of trades within DTC.
Failure by DTC to implement its program in a timely manner may cause
delays in the above activities.
Euroclear and Cedelbank face similar issues.
In addition to the risk factors above, consider those on page 9 of the
prospectus.
_______________________________________________________________________________
TRANSACTION OVERVIEW
_______________________________________________________________________________
<TABLE>
<CAPTION>
PARTIES TO THE TRANSACTION
- --------------------------------------- ---------------------------------------------------------------
ENTITY DESCRIPTION
--------------------------------- -----------------------------------------------------------
<S> <C>
DaimlerChrysler Auto o Issuer of the securities
Trust ______ o A Delaware business trust
o Principal office is in [city, state]
--------------------------------- -----------------------------------------------------------
Chrysler Financial Company o Seller of the receivables to the trust
L.L.C. o Servicer of the receivables
o An indirect wholly-owned subsidiary of
DaimlerChrysler AG
o A Michigan limited liability company
o Originator of CFC receivables
--------------------------------- -----------------------------------------------------------
_____________________ (1) o Indenture trustee
o Performs duties for the benefit of the
noteholders
--------------------------------- -----------------------------------------------------------
_____________________ (1) o Owner trustee
o Performs duties on behalf of the trust and
certificateholders
--------------------------------- -----------------------------------------------------------
Premier Receivables L.L.C. o A special-purpose financing entity
o A Michigan limited liability company
o An indirect wholly-owned subsidiary of CFC
o Initial holder of the subordinated certificates
o Initial owner of rights to overcollateralization
distributions and residual cash flows
--------------------------------- -----------------------------------------------------------
(1) The seller and its affiliates may maintain normal commercial banking
relations with the indenture trustee, the owner trustee and their
affiliates.
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SECURITIES OFFERED
The trust will issue $ ___________ of securities, comprised of both notes
and certificates. This prospectus supplement provides information on the
following securities:
- --------------------------------------------------------------------------------
OFFERED SECURITIES (APPROXIMATE $ IN MILLIONS)
- --------------------------------------------------------------------------------
NOTE CLASS PRINCIPAL AMOUNT FIXED PER ANNUM LEGAL FINAL
INTEREST RATE
- ------------------ ---------------------- ------------------- ------------------
- ------------------ ---------------------- ------------------- ------------------
A-2 $___________ %
- ------------------ ---------------------- ------------------- ------------------
- ------------------ ---------------------- ------------------- ------------------
A-3 $___________ %
- ------------------ ---------------------- ------------------- ------------------
- ------------------ ---------------------- ------------------- ------------------
A-4 $___________ %
- ------------------ ---------------------- ------------------- ------------------
- --------------------------------------------------------------------------------
The trust will also issue $_________, Class A-1, ___% asset-backed notes,
due ________, and $________ of subordinated certificates which have no maturity
date. Other points to consider include:
o the outstanding principal of each class of notes is due by
its maturity date (each a "LEGAL FINAL"),
o by [closing date] at least two nationally recognized rating
agencies will rate the offered securities in the highest
investment rating category,
o the offered securities will be issued on or about [closing
date] in book-entry form through the facilities of DTC,
Cedelbank and the Euroclear System,
o an application will be made to list the offered securities on
the Luxembourg Stock Exchange, and
o the offered securities are generally eligible for purchase by
employee benefit plans; refer to the "ERISA Considerations"
section of the prospectus.
RECEIVABLES POOL
On [closing date] the trust will use the proceeds from the issuance of the
securities to purchase a pool of automobile and light duty truck receivables
from the seller. Collections on this pool of receivables will be the trust's
principal source of funds for making payments on the securities. The following
information about the receivables is as of ___________ (the "CUT-OFF DATE").
<PAGE>
The receivables pool had the following characteristics:
- ------------------------------------------------------------------------
COMPOSITION OF THE RECEIVABLES POOL
AS OF [CUT-OFF DATE]
Aggregate Principal Balance $
--------------------------------------------- --------------------
Number of Receivables
--------------------------------------------- --------------------
Average Principal Balance $
--------------------------------------------- --------------------
Weighted Average APR %
--------------------------------------------- --------------------
Weighted Average Original Term months
--------------------------------------------- --------------------
Weighted Average Remaining Term months
--------------------------------------------- --------------------
Weighted Average Seasoning months
--------------------------------------------- --------------------
As a Percentage of the Aggregate
Principal Balance:
--------------------------------------------- --------------------
Receivables with Recourse to Dealers %
--------------------------------------------- --------------------
CFC Gold Key Plus Receivables(1) %
--------------------------------------------- --------------------
(1) The trust only purchased the principal and interest
payments due prior to the final Fixed Value Payment.
- ------------------------------------------------------------------------
The receivables pool had the following new vehicle/used vehicle
distribution:
- -----------------------------------------------------------------------------
NEW/USED DISTRIBUTION OF THE RECEIVABLES POOL
AS OF [CUT-OFF DATE]
NEW USED
Aggregate Principal Balance $ $
Percentage of Aggregate Principal Balance % %
Number of Receivables
Percentage of Receivables % %
- -----------------------------------------------------------------------------
<PAGE>
The receivables pool had the following distribution by APR:
- --------------------------------------------------------------------------------
DISTRIBUTION BY APR OF THE RECEIVABLES POOL
AS OF [CUT-OFF DATE]
- ---------------------- --------------- -------------------- --------------------
APR RANGE NUMBER OF AGGREGATE PRINCIPAL PERCENT OF AGGREGATE
RECEIVABLES BALANCE PRINCIPAL BALANCE(1)
- ---------------------- --------------- -------------------- --------------------
0.00% to 5.00% $___,___,___.__ %
- ---------------------- --------------- -------------------- --------------------
5.01% to 6.00%
- ---------------------- --------------- -------------------- --------------------
6.01% to 7.00%
- ---------------------- --------------- -------------------- --------------------
7.01% to 8.00%
- ---------------------- --------------- -------------------- --------------------
8.01% to 9.00%
- ---------------------- --------------- -------------------- --------------------
9.01% to 10.00%
- ---------------------- --------------- -------------------- --------------------
10.01% to 11.00%
- ---------------------- --------------- -------------------- --------------------
11.01% to 12.00%
- ---------------------- --------------- -------------------- --------------------
12.01% to 13.00%
- ---------------------- --------------- -------------------- --------------------
13.01% to 14.00%
- ---------------------- --------------- -------------------- --------------------
14.01% to 15.00%
- ---------------------- --------------- -------------------- --------------------
15.01% to 16.00%
- ---------------------- --------------- -------------------- --------------------
16.01% to 17.00%
- ---------------------- --------------- -------------------- --------------------
17.01% to 18.00%
- ---------------------- --------------- -------------------- --------------------
18.01% to 19.00%
- ---------------------- --------------- -------------------- --------------------
19.01% to 20.00%
- ---------------------- --------------- -------------------- --------------------
Greater than 20.00%
- ---------------------- --------------- -------------------- --------------------
Totals $_,___,___,___.__ %
- ---------------------- --------------- -------------------- --------------------
(1) Percentages may not add to 100.0% because of rounding.
- --------------------------------------------------------------------------------
<PAGE>
The following table lists the ten states with the largest percentage
concentration of the aggregate principal balance of the receivables pool based
on the physical address of the dealer originating the receivable. No other state
accounts for more than [ ]% of the aggregate principal balance of the
receivables pool as of [Cut-off Date].
<PAGE>
- --------------------------------------------------------------------------------
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES POOL
AS OF [CUT-OFF DATE]
- ---------------------------------- ----------------------------------------
STATE PERCENTAGE OF AGGREGATE
PRINCIPAL BALANCE
- ---------------------------------- ----------------------------------------
Texas %
- ---------------------------------- ----------------------------------------
New York
- ---------------------------------- ----------------------------------------
Illinois
- ---------------------------------- ----------------------------------------
California
- ---------------------------------- ----------------------------------------
Michigan
- ---------------------------------- ----------------------------------------
New Jersey
- ---------------------------------- ----------------------------------------
Massachusetts
- ---------------------------------- ----------------------------------------
Florida
- ---------------------------------- ----------------------------------------
Pennsylvania
- ---------------------------------- ----------------------------------------
Maryland
- ---------------------------------- ----------------------------------------
Total %
- -------------------------------------------------------------------------------
<PAGE>
SELECTION CRITERIA
We used the following criteria to select the receivables pool:
o Each receivable was originally purchased by the seller from
dealers in the ordinary course of its business.
o Interest on each receivable is computed using the simple interest
method.
o As of [Cut-off Date]:
- no receivable was more than 30 days past due (an account is
not considered past due if the amount past due is less than
10% of the scheduled monthly payment);
- no receivable was the subject of a bankruptcy proceeding;
- each receivable had a principal balance of at least $300.00;
and
- each receivable had a scheduled maturity on or before
______, 200_.
The seller believes its selection procedures are not adverse to securityholders.
Refer to the "Receivable Pools" section in the prospectus for additional
selection criteria.
NET CREDIT LOSS AND DELINQUENCY EXPERIENCE
Net credit loss experience is dependent upon general economic conditions,
the number of repossessions, the amount of principal and accrued interest
outstanding on the receivable at the time of repossession, and the resale values
of the repossessed vehicles. [The net credit loss and delinquency experience
information in this section is presented separately for CFC and Mercedes-Benz
Credit Corporation ("MBCC")].
The following tables detail the net credit loss, repossession and
delinquency experience of CFC's United States portfolio of new and used
automobile and light duty truck retail receivables. The information includes:
o an immaterial amount of retail receivables secured by vehicles
other than automobiles and light duty trucks, and
o previously sold contracts which CFC continues to service.
Unless otherwise indicated, all amounts and percentages are based on estimated
gross collections, including principal and interest.
We cannot assure you that the delinquency, repossession and net credit
loss experience on the receivables sold to the trust will be comparable to the
following historical experience.
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
CFC NET CREDIT LOSS AND REPOSSESSION EXPERIENCE
($ MILLIONS)
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
----------------------- -------------------------------------------------------
1999 1998 1998 1997 1996 1995
----------------------- -------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Average Amount
Outstanding During
the Period $ 25,848 $23,214 $23,581 $21,485 $21,062 $19,486
----------------------------------------------- -------------------------------------------------------
Average Number of
Contracts
Outstanding During
the Period 1,821,954 1,736,375 1,747,846 1,688,525 1,671,405 1,572,963
----------------------------------------------- -------------------------------------------------------
Repossessions as a
Percentage of
Average Number of
Contracts
Outstanding 2.16%(1) 2.82%(1) 2.77% 3.40% 3.82% 3.05%
----------------------------------------------- -------------------------------------------------------
Net Credit Losses as
Percentage of
Liquidations (2) (3) 1.90% 2.80% 2.77% 3.36% 3.17% 2.25%
----------------------------------------------- -------------------------------------------------------
Net Credit Losses as a
Percentage of
Average Amount
Outstanding (2) 0.96%(1) 1.41%(1) 1.39% 1.80% 1.68% 1.16%
----------------------------------------------- -------------------------------------------------------
</TABLE>
(1) Percentages have been annualized for the nine months ended September 30,
1999 and 1998 and are not necessarily indicative of the experience for the
full year.
(2) Net credit losses are equal to the aggregate of the balances of all
receivables which are determined to be uncollectible in the period, less any
amounts realized from the sale of repossessed vehicles and any recoveries on
receivables charged off in the current or prior periods, net of any
disposition expenses and any dealer commissions which CFC failed to recover
on receivables that were prepaid or charged off.
(3) Liquidations represent monthly cash payments and charge-offs which reduce
the outstanding balance of a receivable.
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
CFC DELINQUENCY EXPERIENCE
($ MILLIONS)
AT SEPTEMBER 30, AT DECEMBER 31,
----------------------------- -----------------------------------------------------
1999 1998 1998 1997 1996 1995
----------------------------- -----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Portfolio $27,090 $ 24,700 $24,854 $ 21,879 $ 21,197 $ 20,913
--------------------------------------------------------------- -----------------------------------------------------
Delinquencies as a
Percentage of the Portfolio
--------------------------------------------------------------- -----------------------------------------------------
31 - 60 Days 1.58% 1.96% 2.27% 3.23% 3.98% 3.44%
--------------------------------------------------------------- -----------------------------------------------------
61 Days or More 0.16% 0.21% 0.20% 0.47% 0.55% 0.48%
--------------------------------------------------------------- -----------------------------------------------------
Total 1.74% 2.17% 2.47% 3.70% 4.53% 3.92%
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
[The following will be used if any of the receivables in the pool are
originated by Mercedes-Benz Credit Corporation.] The following tables detail the
net credit loss, repossession and delinquency experience of MBCC's new and used
retail automobile receivables, including those previously sold which MBCC
continues to service. We cannot assure you that the delinquency, repossession
and net credit loss experience on the receivables sold to the trust will be
comparable to the following historical experience.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
MBCC NET CREDIT LOSS AND REPOSSESSION EXPERIENCE(1)
($ MILLIONS)
NINE MONTHS YEAR ENDED
ENDED SEPTEMBER 30, DECEMBER 31,
----------------------------- -----------------------------------------------------
1999 1998 1998 1997 1996 1995
----------------------------- -----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Average Principal
Amount Outstanding $ 2,054 $ 1,623 $ 1,683 $ 1,291 $ 1,005 $ 850
--------------------------------------------------------------- -----------------------------------------------------
---------------------------------------------------------------
Average Number of
Contracts Outstanding 86,405 71,545 73,674 59,215 48,275 43,092
---------------------------------------------------------------
---------------------------------------------------------------
Repossessions as a Percentage
of Average Number of
Contracts Outstanding(2) 1.54%(3) 1.96%(3) 2.04% 2.01% 1.43% 1.17%
----------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------
Net Credit Losses as a
Percentage of Average Principal
Amount Outstanding 0.78%(3) 0.86%(3) 0.98% 0.71% 0.68% 0.70%
----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All amounts and percentages except as indicated are based on the
principal balances of the automobile receivables net of unearned finance
and other charges. Averages are computed by taking a simple average of
month-end outstanding principal balances for each period presented.
(2) Percentage of Repossessions means the percentage of repossessed vehicles
in a given period.
(3) Percentages have been annualized for the nine months ended September 30,
1999 and 1998 and are not necessarily indicative of the experience for the
full year.
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
MBCC DELINQUENCY EXPERIENCE(1)
($ MILLIONS)
AT SEPTEMBER 30, AT DECEMBER 31,
------------------------- --------------------------------------------------
1999 1998 1998 1997 1996 1995
------------------------- --------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gross Balance
Outstanding $2,652 $2,244 $2,352 $1,792 $1,403 $1,086
----------------------------------------------------- --------------------------------------------------
Gross Balance Past Due as
a Percentage of Gross Balance
----------------------------------------------------- --------------------------------------------------
31 - 60 Days 1.70% 1.82% 1.96% 2.28% 2.20% 2.05%
----------------------------------------------------- --------------------------------------------------
61 Days or More 0.64% 0.85% 0.75% 1.52% 0.55% 0.47%
----------------------------------------------------- --------------------------------------------------
Total 2.34% 2.67% 2.71% 3.80% 2.75% 2.52%
----------------------------------------------------- --------------------------------------------------
</TABLE>
(1) The period of delinquency is based on the number of days that payments are
contractually past due. Percentages are calculated by dividing the gross
remaining balance past due by the gross balance of the portfolio at the end
of the period.
Refer to the "Net Credit Loss and Delinquency Experience" section in the
prospectus for additional information.
PAYMENTS ON THE SECURITIES
PAYMENT DATES
o Interest and principal will be payable on the 8th of each month.
If the 8th is not a business day, then interest and principal will
be payable on the next business day.
o The first payment will be on ________, ____.
o Payments will be payable to securityholders of record on the
business day before the payment date.
INTEREST PAYMENTS
o The first interest payment will be calculated on the original
principal amount of each class of notes at the applicable per
annum interest rate.
o Subsequent interest payments will be calculated on the outstanding
principal balance of each note class as of the prior payment date
(after giving effect to any payment of principal on that date) at
the applicable per annum interest rate.
o To calculate interest due on the A-1 notes on a payment date, the
per annum interest rates will be converted from an annual rate as
follows:
- ----------------------- ----------------------------- --------------------------
DAYS IN INITIAL DAYS IN SUBSEQUENT DAY COUNT CONVENTION
INTEREST ACCRUAL PERIOD INTEREST ACCRUAL PERIODS
- ----------------------- ----------------------------- --------------------------
FROM TO
(INCLUDING) (EXCLUDING)
- ----------------------- -------------- -------------- --------------------------
- ----------------------- -------------- -------------- --------------------------
__ days prior current actual/360
payment date payment date
- ----------------------- -------------- -------------- --------------------------
o To calculate the interest due on the A-2, A-3 and A-4 notes on a
payment date, the per annum interest rates will be converted from
an annual rate as follows:
- ------------------------ ---------------------------- --------------------------
DAYS IN INITIAL FOR SUBSEQUENT INTEREST DAY COUNT CONVENTION
INTEREST ACCRUAL PERIOD ACCRUAL PERIODS
- ------------------------ ---------------------------- --------------------------
- ------------------------ ---------------------------- --------------------------
__ days 1/12th of per annum 30/360
interest rate
- ------------------------ ---------------------------- --------------------------
o Interest payments on all classes of notes will have the same
priority. If the available amount for interest payments, including
the balance in the reserve fund, is less than the amount due, each
class of notes will receive their pro rata share.
Refer to the "Flow of Funds" section for information on how the amount
available for interest payments is determined. Also refer to the "Credit
Enhancement - Reserve Fund" section for information on how the reserve fund may
be used to make interest payments.
PRINCIPAL PAYMENTS
o The amount of principal payments on the securities on each payment
date will generally equal the amount of principal that was
collected on the receivables during the prior calendar month plus
Excess Interest Collections.
o Principal of each class of notes will generally be repaid over a
span of several consecutive months.
o The trust will pay principal sequentially to the earliest maturing
class of notes then outstanding until such class is paid in full.
o The certificates will not receive any principal payments until all
notes are paid in full.
o The trust is required to pay the outstanding principal of each
class of notes by the applicable Legal Final.
o The final principal payment on any class of notes could occur
significantly earlier than its Legal Final.
o The rate of principal payment on the notes will increase to the
extent Excess Interest Collections are applied to pay note
principal.
Refer to the "Flow of Funds" section for information on how the amount
available for principal payments is determined. Refer to the "Credit
Enhancement" section for information on Excess Interest Collections. Refer to
the "Payments on the Securities-Principal Payments-Weighted Average Life of the
Securities" section in the prospectus for information regarding certain maturity
and prepayment considerations for the securities.
OPTIONAL REDEMPTION
The servicer will have the option to purchase all of the remaining
receivables from the trust when their aggregate principal balance declines to an
amount that is less than or equal to 10% of the initial aggregate principal
balance of the receivables, or $__________ or less. If the servicer decides to
exercise this option, then the outstanding principal amounts of the A-4 notes
and the certificates, together with any accrued and unpaid interest, will be
repaid in a lump sum payment. The lump sum payment under this optional
redemption will shorten the maturity of the A-4 notes and certificates.
FLOW OF FUNDS
SOURCES OF FUNDS AVAILABLE FOR DISTRIBUTION
Funds from the following sources may be available to make payments on the
securities on each payment date:
o collections received on the receivables during the prior calendar
month,
o net recoveries received during the prior calendar month on
receivables that were charged off as losses in prior months,
o investment earnings on the reserve fund received during the prior
calendar month,
o administrative and/or warranty repurchases, and
o the reserve fund.
<PAGE>
APPLICATION OF AVAILABLE FUNDS
On each monthly payment date the total funds available (except for the
reserve fund) will be distributed in the following order of priority:
- -------------------------------------------------------
MONTHLY FLOW OF FUNDS
----------------------------------------------------
| pay servicing fee |
----------------------------------------------------
|
v
----------------------------------------------------
| pay accrued interest on the notes |
----------------------------------------------------
|
v
----------------------------------------------------
| replenish reserve fund, |
| if necessary, up to the initial amount |
----------------------------------------------------
|
v
----------------------------------------------------
| pay up to the outstanding principal |
| amount of the A-1 notes |
----------------------------------------------------
|
v
----------------------------------------------------
| pay the overcollateralization |
| distribution amount , if any, |
| to Premier Receivables L.L.C. |
----------------------------------------------------
|
v
----------------------------------------------------
| pay up to the outstanding principal |
| amount of the A-2 notes |
----------------------------------------------------
|
v
----------------------------------------------------
| pay up to the outstanding principal |
| amount of the A-3 notes |
----------------------------------------------------
|
v
----------------------------------------------------
| pay up to the outstanding principal |
| amount of the A-4 notes |
----------------------------------------------------
|
v
----------------------------------------------------
| pay up to the outstanding principal |
| amount of the certificates |
----------------------------------------------------
|
v
----------------------------------------------------
| distribute remaining balance, if any, |
| to Premier Receivables L.L.C. |
----------------------------------------------------
Refer to "Annex I" for a hypothetical example of the above flow of funds.
<PAGE>
CREDIT ENHANCEMENT
The following forms of credit enhancement are intended to enhance the
likelihood of full payment of principal and interest due to the noteholders and
to decrease the likelihood that the noteholders will experience losses of
principal or interest on their notes.
OVERCOLLATERALIZATION
Overcollateralization is represented by the principal balance of
receivables in excess of the principal balance of the securities. The initial
overcollateralization amount of $_______________ is equal to the initial
receivables balance of $_______________ minus the initial principal amount of
the securities of $_______________. This excess collateral is intended to
protect noteholders from losses on the receivables. It is expected that
overcollateralization will absorb all losses, and that overcollateralization may
even increase over time.
For any month, overcollateralization will increase if principal payments
on the securities are greater than collections of principal payments on the
receivables. This occurs when Excess Interest Collections are used to make
principal payments on the securities.
Refer to the "Excess Interest Collections" section below for additional
information on Excess Interest Collections.
Distribution of Initial Overcollateralization
The trust will distribute the initial overcollateralization amount to
Premier Receivables L.L.C. As illustrated in the "Application of Available
Funds" section, the trust may begin to distribute the initial
overcollateralization amount on the same payment date on which the A-1 notes are
paid in full. The trust will continue to make distributions until the initial
overcollateralization amount is fully distributed. No overcollateralization
distribution will be made in any month the balance of the reserve fund is below
$ [initial amount]. The amount to be distributed on each payment date will be
the greater of:
(i) $0.00
or
(ii) the lesser of (a) D - [S - (P x [ ]%)] or (b) D minus the A-1 notes
principal payment for the current payment date
where:
<TABLE>
<CAPTION>
total funds available accrued
<S> <C> <C> <C> <C> <C>
D = for distribution (except minus servicing + interest on + reserve fund
for the reserve fund) fee the notes deposit
</TABLE>
S = the outstanding principal amount of the securities as of the prior
payment date, after giving effect to payments made on that date
P = the outstanding principal balance of the receivables as of the
prior calendar month end.
The purpose of the above calculation is to maintain the
overcollateralization amount at least at [ ]% of the outstanding principal
balance of the receivables as of the prior calendar month end on any payment
date in the distribution period. The sum of the monthly overcollateralization
distributions over the life of the transaction will not exceed the initial
overcollateralization amount.
EXCESS INTEREST COLLECTIONS
"EXCESS INTEREST COLLECTIONS" are equal to (A) the sum of (i) interest
collections received on the receivables during the prior calendar month and (ii)
investment earnings on the reserve fund received during the prior calendar month
minus (B) the sum of (i) the servicing fee for the prior calendar month, (ii)
accrued interest on the notes, (iii) the amount, if any, required to replenish
the reserve fund to $ [initial amount] , and (iv) the overcollateralization
distribution made to Premier Receivables L.L.C., if any.
Excess Interest Collections provide an additional form of credit
enhancement when used to make principal payments on the securities. As described
in the "Overcollateralization" section above, the use of Excess Interest
Collections to pay principal on the securities will cause the outstanding
principal amount of the securities to decrease faster than the principal balance
of the receivables, thereby increasing the amount of overcollateralization.
As losses on receivables and delinquent receivables decrease the amount of
interest collections received on the receivables in a month, Excess Interest
Collections will be reduced or eliminated for such month. In addition, during
the overcollateralization distribution period, Excess Interest Collections will
be reduced or eliminated.
RESERVE FUND
o On [closing date] the seller will provide funds from the proceeds
of its sale of receivables to establish a $____________ reserve
fund.
o The indenture trustee will hold the reserve fund for the benefit
of the noteholders.
o The reserve fund will be invested in high quality, short term
investments which mature on or prior to each monthly payment date.
o If the total funds available for distribution minus the servicing
fee is less than accrued interest on the notes, the reserve fund
will be available to make interest payments.
o If a class of notes has not been paid in full on its Legal Final,
the reserve fund will be applied to the payment of principal for
that class of notes.
o If the aggregate outstanding principal amount of the notes exceeds
the outstanding principal balance of the receivables as of the
prior calendar month end, the reserve fund will be applied to the
payment of principal of the notes.
o As illustrated in the "Flow of Funds" section above, on each
payment date the reserve fund will be reinstated up to the initial
balance to the extent funds are available.
o After full payment of all accrued interest on the notes and the
outstanding principal balance of the securities, the reserve fund
will be distributed to Premier Receivables L.L.C.
SUBORDINATED CERTIFICATES
As additional credit enhancement, the certificates do not bear interest
and will not receive any principal payments until the notes are paid in full.
The payments on the certificates are subordinated to payments on the notes to
decrease the likelihood that the trust will default in making payments due on
the notes.
SERVICING
COMPENSATION
o The servicer will be compensated on a monthly basis.
o The first servicing fee will be calculated on the original
principal amount of the receivables at 1.00% per annum.
o For the first servicing fee calculation, the per annum servicing
fee rate will be converted from an annual rate using the number of
days from and including [Cut-off Date] to but excluding [first
payment date] on a 30/360 basis, or __ days over 360.
o Subsequent servicing fees will be calculated on the principal
balance of the receivables as of the first day of the prior
calendar month at 1/12th of 1.00%.
o As illustrated in the "Flow of Funds" section above, the servicing
fee will be paid out of the total funds available for distribution
each month.
Refer to the "Servicing -- Servicing Compensation" section in the
prospectus for additional information on servicer compensation. Refer to the
"Servicing -- Servicer" section in the prospectus for additional information
regarding the servicer.
THE TRUST
ACTIVITIES
The trust will only engage in the following activities:
o acquiring, holding and managing the receivables, their proceeds,
the reserve fund and other assets of the trust;
o issuing the securities;
o making payments on the securities; and
o other activities that are necessary, suitable or, incidental to
the above activities.
The trust's office is at the owner trustee's principal office, located at
______, Delaware.
CAPITALIZATION
The following balance sheet illustrates the capitalization of the trust as
of [closing date]. It is assumed that the notes have been issued and sold on
[closing date]. Premier Receivables L.L.C holds the equity interests and may
transfer or sell such interests.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
BALANCE SHEET
AS OF [CLOSING DATE]
<S> <C>
------------------------------------------------- -------------------------------------------------
ASSETS LIABILITIES
------------------------------------------------- -------------------------------------------------
Receivables $ A-1 Notes $
------------------------------------------------- -------------------------------------------------
Reserve Fund A-2 Notes
------------------------------------------------- -------------------------------------------------
A-3 Notes
-------------------------------------------------
A-4 Notes
-------------------------------------------------
Total $ Total $
------------------------------------------------- -------------------------------------------------
-------------------------------------------------
EQUITY
-------------------------------------------------
Certificates $
-------------------------------------------------
Overcollateralization
-------------------------------------------------
Reserve Fund
-------------------------------------------------
Total $
-------------------------------------------------
TOTAL LIABILITIES AND
TOTAL ASSETS $ EQUITY $
------------------------------------------------- -------------------------------------------------
</TABLE>
________________________________________________________________________________
UNDERWRITING
________________________________________________________________________________
The trust will sell the following amounts of the offered securities to the
underwriters named below. The underwriters have agreed to purchase these
amounts:
<TABLE>
<CAPTION>
---------------------- -------------------- -------------------- -------------------- --------------------
UNDERWRITER A-2 A-3 A-4 TOTAL
---------------------- -------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
$ $ $ $
---------------------- -------------------- -------------------- -------------------- --------------------
---------------------- -------------------- -------------------- -------------------- --------------------
---------------------- -------------------- -------------------- -------------------- --------------------
Total $ $ $ $
---------------------- -------------------- -------------------- -------------------- --------------------
</TABLE>
The underwriters propose to sell the offered securities to the public at
the initial offering prices listed on the cover page and to certain dealers at
the same prices less an initial selling concession. These selling concessions
will not be greater than the selling concessions listed in the table below. The
underwriters may allow and those certain dealers may reallow another concession.
These reallowances will not be greater than the reallowances listed in the table
below. After the initial public offering, the price to the public, the
concessions and the reallowances may change.
<TABLE>
<CAPTION>
------------------------------------------------------- -------------------------- --------------------------
CLASS SELLING
CONCESSION REALLOWANCE
<S> <C> <C>
------------------------------------------------------- -------------------------- --------------------------
A-2 Notes ______% ______%
------------------------------------------------------- -------------------------- --------------------------
A-3 Notes ______% ______%
------------------------------------------------------- -------------------------- --------------------------
A-4 Notes ______% ______%
------------------------------------------------------- -------------------------- --------------------------
</TABLE>
Refer to the "Plan of Distribution" section in the prospectus for
additional information about the distribution of the offered securities.
________________________________________________________________________________
FEDERAL INCOME TAX CONSEQUENCES
________________________________________________________________________________
In the opinion of Brown & Wood LLP, counsel for the underwriters and
special tax counsel for the trust, for federal income tax purposes the offered
securities will be characterized as debt and the trust will not be characterized
as an association (or a publicly traded partnership) taxable as a corporation.
For additional information refer to the "Certain Federal Income Tax
Consequences" section in the prospectus.
________________________________________________________________________________
LEGAL OPINIONS
________________________________________________________________________________
In addition to the legal opinions described in the prospectus, Brown &
Wood LLP, New York, New York will review or opine on certain legal matters
relating to the offered securities for the underwriters and certain federal
income tax and other matters for the trust. Also, Brown & Wood LLP from time to
time renders legal services to CFC and its affiliates.
<PAGE>
ANNEX I
________________________________________________________________________________
HYPOTHETICAL EXAMPLE OF
THE FLOW OF FUNDS
________________________________________________________________________________
The following hypothetical example of the monthly flow of funds is for
illustrative purposes only. There can be no assurance that the actual cash flows
to the securityholders will be comparable to the example below.
Transaction Overview:
--------------------
o Initial principal balance of the receivables pool was
$1,560,000,000 and the initial securities balance was
$1,500,000,000.
o Therefore, the initial overcollateralization amount was
$60,000,000, or 4.00% of the initial securities balance.
Current Situation on Sixth Payment Date - Beginning Balances:
------------------------------------------------------------
o Paying off A-1 notes and making first overcollateralization
distribution.
o Outstanding securities beginning balance is $1,250,000,000,
of which A-1 notes represent $30,000,000.
o The receivable balance as of the beginning of the prior
calendar month was $1,320,000,000.
o Total funds available for distribution, not including the
amount in the reserve fund, are $48,000,000 and are
distributed in the following order of priority:
---------------------------
pay servicing fee | $1,100,000 |
---------------------------
|
v
---------------------------
pay accrued interest | $6,000,000 |
on notes ---------------------------
|
v
---------------------------
reserve is fully funded; | $0.00 |
no need to replenish ---------------------------
|
v
---------------------------
pay up to the outstanding principal | $30,000,000 |
amount of the A-1 notes ---------------------------
|
v
---------------------------
overcollateralization distribution to Premier | |
Receivables L.L.C. for the month | $10,900,000 |
| |
---------------------------
|
v
------
funds completely distributed / \
| STOP |
\ /
------
<PAGE>
________________________________________________________________________________
Current Situation on Sixth Payment Date - Ending Balances:
---------------------------------------------------------
o Outstanding securities ending balance is now $1,220,000,000
and the receivable balance as of the end of the prior
calendar month was $1,280,000,000.
o Therefore, the overcollateralization amount is $60,000,000,
or 4.69% of the receivable balance as of the end of the
prior calendar month.
o $49,100,000 of the initial overcollateralization amount
remains to be distributed to Premier Receivables L.L.C.
________________________________________________________________________________
<PAGE>
================================================================================
No dealer, salesperson or other person has been authorized to give any
information or to make any representations, other than those contained in the
prospectus or prospectus supplement. Any such information or any such
representations are not authorized by the seller or by the underwriters. Do not
rely on any such information or any such representations.
We only intend the prospectus supplement to be an offer to sell or a
solicitation of an offer to buy the offered securities if:
o used in a jurisdiction in which such offer or solicitation is
authorized,
o the person making such offer or solicitation is qualified to do so,
x and
o such offer or solicitation is made to anyone to whom it is lawful to
make such offer or solicitation.
The information in the prospectus or prospectus supplement is only
accurate as of the date of this prospectus supplement.
All dealers effecting transactions in the offered securities within 90
days after the date of this prospectus supplement may be required to deliver the
prospectus and prospectus supplement, regardless of their participation in this
distribution. This is in addition to the obligation of dealers to deliver the
prospectus and prospectus supplement when acting as underwriters or when selling
their unsold allotments or subscriptions.
================================================================================
================================================================================
$ -------------
DAIMLERCHRYSLER
AUTO TRUST ______
$-------------
A-2, ____% Asset-Backed Notes
$-------------
A-3, ____% Asset-Backed Notes
$-------------
A-4, ____% Asset-Backed Notes
CHRYSLER FINANCIAL COMPANY L.L.C.
Seller and Servicer
PROSPECTUS SUPPLEMENT
DATED_____________
[UNDERWRITERS]
================================================================================
================================================================================
<PAGE>
Information contained in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities, and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
PROSPECTUS
DAIMLERCHRYSLER
DAIMLERCHRYSLER AUTO TRUSTS
Asset Backed Notes
Asset Backed Certificates
CHRYSLER FINANCIAL COMPANY L.L.C.
Seller and Servicer
MERCEDES-BENZ CREDIT CORPORATION
Subservicer
Chrysler Financial Company L.L.C. may form trusts at various times. A
trust may purchase automobile and light duty truck retail installment sales
contracts directly from Chrysler Financial Company L.L.C. or indirectly from
Mercedes-Benz Credit Corporation. A trust will issue securities to fund its
purchase. Securities issued by a trust
o may consist of one or more classes of notes and/or certificates;
o will be payable only from the assets of that trust;
o will be entitled to receive payments that will vary by class as to
timing, amount and priority, as described in the related
prospectus supplement; and
o may have the benefit of some form of credit or other enhancement.
The main source of funds for making payments on the trust's securities
will be collections on the purchased receivables.
________________________________________________________________________________
BEFORE YOU DECIDE TO INVEST IN ANY OF THE SECURITIES, PLEASE READ THIS
PROSPECTUS AND THE RELATED PROSPECTUS SUPPLEMENT, ESPECIALLY THE RISK FACTORS
BEGINNING ON PAGE 9 OF THE PROSPECTUS. The securities will be interests in or
obligations of a trust only and neither the securities nor the assets of the
trust will represent interest in or obligations of DaimlerChrysler AG, Chrysler
Financial Company L.L.C., or any of their affiliates. Neither the SEC nor any
state securities commission has approved or disapproved the securities or
determined that this prospectus or any prospectus supplement is accurate or
complete. Any representation to the contrary is a criminal offense.
________________________________________________________________________________
The date of this Prospectus is December 21, 1999.
<PAGE>
READING THIS PROSPECTUS AND THE
ACCOMPANYING PROSPECTUS SUPPLEMENT
We provide information on your securities in two separate documents that
offer varying levels of detail:
o this prospectus provides general information, some of which may
not apply to a particular series of securities, including your
securities, and
o the accompanying prospectus supplement is a summary of the
specific terms of your securities.
If the terms of the securities described in this prospectus vary with the
accompanying prospectus supplement, you should rely on the information in the
prospectus supplement.
We include cross-references to sections in these documents where you can
find further related discussions. Refer to the table of contents in the front of
each document to locate the referenced sections.
The Index of Principal Terms on page 72 in this prospectus lists the pages
where capitalized terms used in this prospectus are defined.
You should rely only on the information contained in this prospectus and
the accompanying prospectus supplement, including any information incorporated
by reference. We have not authorized anyone to provide you with different
information. The information in this prospectus or the accompanying prospectus
supplement is only accurate as of the dates on their respective covers.
AVAILABLE INFORMATION
Chrysler Financial Company L.L.C., as the originator of each trust, has
filed a Registration Statement (together with all amendments and exhibits
thereto, referred to herein as the "REGISTRATION STATEMENT") with the Securities
and Exchange Commission ("SEC") under the Securities Act of 1933, as amended.
The Registration Statement relates to any notes and certificates offered in this
prospectus.
The Registration Statement may be inspected and copied at:
o the public reference facilities maintained by the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549 (telephone 1-800-732-0330),
o at the SEC's regional office at Citicorp Center, 500 West Madison
Street, 14th Floor, Chicago, Illinois 60661, and
o at the SEC's regional office at Seven World Trade Center, New
York, New York 10048.
Also, the SEC maintains a Web site at http://www.sec.gov containing reports,
proxy and information statements and other information regarding registrants,
including Chrysler Financial Company L.L.C., that file electronically with the
SEC.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed by Chrysler Financial Company L.L.C., as originator of
the trust referred to in the accompanying prospectus supplement, pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended, subsequent to the date of this prospectus and prior to the termination
of the offering of the securities offered by such trust shall be deemed to be
incorporated by reference in this prospectus.
For purposes of this prospectus, any statement in this prospectus, an
incorporated document or a document incorporated by reference may be modified or
superseded. Such statements may be modified or superseded by any other statement
in this prospectus, an incorporated document or a document incorporated by
reference. The statement may only be modified or superseded to a limited extent.
The original form of any such statement will no longer be a part of this
prospectus. Only the modified form of any such statement will constitute a part
of this prospectus.
COPIES OF THE DOCUMENTS
You will receive a free copy of any or all of the documents incorporated
in this prospectus or incorporated by reference into the accompanying prospectus
supplement if:
o you received this prospectus and
o you request such copies from Assistant Secretary, Chrysler
Financial Company L.L.C., 27777 Franklin Road, Southfield,
Michigan 48034-8286 (Telephone: 248-948-3067).
This offer only includes the exhibits to such documents, if such exhibits are
specifically incorporated by reference in such documents. You may also read and
copy these materials at the public reference facilities of the SEC in
Washington, D.C., referred to previously.
<PAGE>
________________________________________________________________________________
TABLE OF CONTENTS
________________________________________________________________________________
- --------------------------------------------------------
SECTION PAGE
- --------------------------------------------------------
SUMMARY 6
- --------------------------------------------------------
O PARTIES 6
- --------------------------------------------------------
O SECURITIES ISSUED 6
- --------------------------------------------------------
O TRUST PROPERTY 7
- --------------------------------------------------------
O ENHANCEMENT 7
- --------------------------------------------------------
O TAX STATUS 8
- --------------------------------------------------------
O ERISA CONSIDERATIONS 8
- --------------------------------------------------------
O FORM AND DENOMINATION 8
- --------------------------------------------------------
RISK FACTORS 9
- --------------------------------------------------------
O SOURCE OF FUNDS 9
- --------------------------------------------------------
O PREPAYMENTS 9
- --------------------------------------------------------
O RATINGS OF THE OFFERED SECURITIES 10
- --------------------------------------------------------
O LIMITED ABILITY TO RESELL SECURITIES 10
- --------------------------------------------------------
O BOOK-ENTRY REGISTRATION 10
- --------------------------------------------------------
O CHANGE IN SERVICER 10
- --------------------------------------------------------
O COMMINGLING OF MONIES 10
- --------------------------------------------------------
O CERTIFICATEHOLDERS' RIGHTS ARE LIMITED 11
- --------------------------------------------------------
O INSOLVENCY OF THE SELLER 11
- --------------------------------------------------------
O PERFECTED SECURITY INTERESTS 12
- --------------------------------------------------------
O REPRESENTATIONS AND WARRANTIES BY THE
SELLER 12
- --------------------------------------------------------
O CONSUMER PROTECTION LAW REQUIREMENTS 12
- --------------------------------------------------------
O SUBORDINATION OF CERTAIN SECURITIES 13
- --------------------------------------------------------
O ISSUANCE OF A SUBSEQUENT SERIES OF
SECURITIES 13
- --------------------------------------------------------
PRINCIPAL DOCUMENTS 14
- --------------------------------------------------------
THE TRUSTS 15
- --------------------------------------------------------
O SECURITIES ISSUANCE 15
- --------------------------------------------------------
O TRUST PROPERTY 15
- --------------------------------------------------------
USE OF PROCEEDS 16
- --------------------------------------------------------
0 RECEIVABLE POOLS 16
- --------------------------------------------------------
O UNDERWRITING 17
- --------------------------------------------------------
O SIMPLE INTEREST RECEIVABLES 17
- --------------------------------------------------------
O PRECOMPUTED RECEIVABLES 18
- --------------------------------------------------------
O CFC GOLD KEY PLUS RECEIVABLES 18
- --------------------------------------------------------
O SELECTION CRITERIA 19
- --------------------------------------------------------
O RECOURSE TO CFC DEALERS 20
- --------------------------------------------------------
O RECOURSE TO MBCC DEALERS 20
- --------------------------------------------------------
NET CREDIT LOSS AND DELINQUENCY EXPERIENCE 20
- --------------------------------------------------------
FLOW OF FUNDS 21
- --------------------------------------------------------
O SOURCES OF FUNDS 21
- --------------------------------------------------------
O APPLICATION OF AVAILABLE FUNDS 21
- --------------------------------------------------------
O NET DEPOSITS 21
- --------------------------------------------------------
CREDIT ENHANCEMENT 21
- --------------------------------------------------------
O RESERVE FUND 22
- --------------------------------------------------------
PAYMENTS ON THE SECURITIES 23
- --------------------------------------------------------
O PRINCIPAL PAYMENTS 23
- --------------------------------------------------------
- Weighted Average Life of the Securities 23
- --------------------------------------------------------
- Indexed Securities 24
- --------------------------------------------------------
- Optional Redemption 25
- --------------------------------------------------------
O INTEREST PAYMENTS 25
- --------------------------------------------------------
- Fixed Rate Securities 25
- --------------------------------------------------------
- Floating Rate Securities 25
- --------------------------------------------------------
FORM OF SECURITIES AND TRANSFERS 28
- --------------------------------------------------------
O BOOK-ENTRY REGISTRATION 28
- --------------------------------------------------------
O DEFINITIVE SECURITIES 31
- --------------------------------------------------------
- List of Securityholders 32
- --------------------------------------------------------
SALE PROVISIONS 33
- --------------------------------------------------------
SERVICING 34
- --------------------------------------------------------
O SERVICER 34
- --------------------------------------------------------
O SUBSERVICER 35
- --------------------------------------------------------
O ACCOUNTS 35
- --------------------------------------------------------
O SERVICING PROCEDURES 36
- --------------------------------------------------------
O COLLECTIONS 36
- --------------------------------------------------------
o CFC SERVICING AND COLLECTIONS 37
- --------------------------------------------------------
o MBCC SERVICING AND COLLECTION 37
- --------------------------------------------------------
O SERVICING COMPENSATION AND PAYMENT OF
EXPENSES 37
- --------------------------------------------------------
O REPORTS TO SECURITYHOLDERS 38
- --------------------------------------------------------
O STATEMENTS TO TRUSTEES AND TRUST 39
- --------------------------------------------------------
O EVIDENCE AS TO COMPLIANCE 39
- --------------------------------------------------------
O CERTAIN MATTERS REGARDING THE SERVICER 40
- --------------------------------------------------------
O SERVICER DEFAULT 40
- --------------------------------------------------------
O RIGHTS UPON SERVICER DEFAULT 41
- --------------------------------------------------------
O WAIVER OF PAST DEFAULTS 41
- --------------------------------------------------------
THE INDENTURE 42
- --------------------------------------------------------
O INDENTURE; MASTER INDENTURE 42
- --------------------------------------------------------
O ANNUAL COMPLIANCE STATEMENT 46
- --------------------------------------------------------
O INDENTURE TRUSTEE'S ANNUAL REPORT 46
- --------------------------------------------------------
O SATISFACTION AND DISCHARGE OF INDENTURE 47
- --------------------------------------------------------
O THE INDENTURE TRUSTEE 47
- --------------------------------------------------------
MISCELLANEOUS PROVISIONS 47
- --------------------------------------------------------
O AMENDMENT 47
- --------------------------------------------------------
O THE OWNER TRUSTEE 48
- --------------------------------------------------------
O INSOLVENCY EVENT 48
- --------------------------------------------------------
O PAYMENT OF NOTES 48
- --------------------------------------------------------
O TERMINATION 48
- --------------------------------------------------------
O ADMINISTRATION AGREEMENT 49
- --------------------------------------------------------
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES 49
- --------------------------------------------------------
O SECURITY INTEREST 49
- --------------------------------------------------------
O REPOSSESSION 51
- --------------------------------------------------------
O NOTICE OF SALE; REDEMPTION RIGHTS 51
- --------------------------------------------------------
O DEFICIENCY JUDGMENTS AND EXCESS
PROCEEDS 52
- --------------------------------------------------------
O CONSUMER PROTECTION LAWS 52
- --------------------------------------------------------
O OTHER LIMITATIONS 53
- --------------------------------------------------------
CERTAIN FEDERAL INCOME TAX CONSEQUENCES 53
- --------------------------------------------------------
O TRUSTS FOR WHICH A PARTNERSHIP
ELECTION IS MADE 54
- --------------------------------------------------------
O TRUSTS IN WHICH ALL CERTIFICATES ARE
RETAINED BY THE SELLER OR AN AFFILIATE
OF THE SELLER 62
- --------------------------------------------------------
O FASITS 63
- --------------------------------------------------------
O CERTAIN STATE TAX CONSEQUENCES 64
- --------------------------------------------------------
ERISA CONSIDERATIONS 64
- --------------------------------------------------------
O SENIOR CERTIFICATES 66
- --------------------------------------------------------
PLAN OF DISTRIBUTION 69
- --------------------------------------------------------
LEGAL OPINIONS 71
- --------------------------------------------------------
INDEX OF PRINCIPAL TERMS 72
- --------------------------------------------------------
GLOBAL CLEARANCE
ANNEX I A-1
- --------------------------------------------------------
O OVERVIEW A-1
- --------------------------------------------------------
O INITIAL SETTLEMENT A-1
- --------------------------------------------------------
O SECONDARY MARKET TRADING A-2
- --------------------------------------------------------
O CERTAIN U.S. FEDERAL INCOME TAX
DOCUMENTATION REQUIREMENTS A-4
- --------------------------------------------------------
<PAGE>
________________________________________________________________________________
SUMMARY
________________________________________________________________________________
The following summary is a short, concise description of the main
structural features that a class of securities may have. For this reason, this
summary does not contain all the information that may be important to you or
that describes all of the terms of a security. You will find a detailed
description of the possible terms of a security following this summary.
PARTIES
PARTY DESCRIPTION
------------------- -----------------------------------
Issuer and Trust o Generally, each series of
securities will be issued by a
separate trust
o Some trusts may issue more
than one series of securities
------------------- -----------------------------------
Chrysler o Seller of receivables to a
Financial Company trust
L.L.C. ("CFC") o Servicer of receivables
o CFC's address is 27777
Franklin Road, Southfield,
Michigan 48034-8286 (telephone:
248-948-3000)
o Indirect wholly-owned
subsidiary of DaimlerChrysler AG
o Originator of CFC receivables
------------------- -----------------------------------
Mercedes-Benz o Seller of MBCC receivables to
Credit Corporation CFC
("MBCC") o Subservicer of the MBCC
receivables, if any
o Indirect wholly-owned
subsidiary of DaimlerChrysler AG
o Originator of MBCC receivables
------------------- -----------------------------------
Indenture Trustee o Specified in the related
prospectus supplement
o Performs duties for the
benefit of noteholders
------------------- -----------------------------------
Owner Trustee o Specified in the related
prospectus supplement
o Performs duties on behalf of a
trust and certificateholders
------------------- -----------------------------------
Premier o A special-purpose financing
Receivables L.L.C. entity
o An indirect wholly-owned
subsidiary of CFC
o Generally, owner of the equity
in a trust
------------------- -----------------------------------
SECURITIES ISSUED
A series of securities may include one or more classes of notes and/or
certificates. You will find the following information about each class of
securities in the prospectus supplement:
o its principal amount;
o its interest rate, which may be fixed or floating or a combination;
o the timing, amount and priority or subordination of payments of
principal and interest;
o the method for calculating the amount of principal payments;
o its final payment date;
o whether it may be redeemed prior to its final payment date; and
o other relevant factors.
Some classes of securities may be entitled to:
o principal payments with disproportionate, nominal or no interest
payments or
o interest payments with disproportionate, nominal or no principal
payments.
TRUST PROPERTY
The property of each trust will include a pool of motor vehicle retail
installment sale contracts secured by new or used automobiles or light duty
trucks. These receivables include:
o rights to receive certain payments made on the receivables;
o security interests in the underlying financed vehicles;
o certain accounts and the related proceeds, and
o any proceeds from claims on certain related insurance policies.
In addition, the property of a trust may include:
o notes and/or certificates that were issued by a prior trust but were
not then offered and/or
o distributions from one or more prior trusts that would otherwise be
made to Premier Receivables L.L.C.
In a trust that issues more than one series of securities, the trust will
allocate a group of its assets to a single series. This allocated series trust
property will support only the single series of securities to which it has been
allocated. This series trust property will not benefit or result in any payments
on any other series of securities issued by that trust or any other trust.
You will find a description of the receivables in the prospectus
supplement.
CFC will have purchased the receivables from the originating automobile
and light duty truck dealers or from its affiliate, MBCC, which purchased them
from the originating dealers. CFC may sell these MBCC receivables to the trust.
If a trust has not purchased all of its receivables at the time you
purchase your securities, it will purchase the remainder of its receivables from
CFC over a period specified in the prospectus supplement. Some trusts may,
during a specified period, use principal collections on its receivables to
purchase additional receivables.
ENHANCEMENT
Some classes of securities may have the benefit of any of the following
enhancements which are intended to increase the likelihood of payments on those
securities:
o subordination of one or more classes of securities;
o overcollateralization (i.e., the amount by which the principal amount
of the receivables exceeds the principal amount of all of the trust's
securities);
o excess interest collections (i.e., the excess of interest collections
on the receivables over servicing fees, interest on the trust's
securities and any amounts required to be deposited in a reserve fund,
if any);
o reserve funds that will be applied to cover payments on the securities
not covered by collections on the receivables;
o letter of credit or other credit facility;
o surety bond;
o liquidity arrangements;
o swaps (including currency swaps) and other derivative instruments and
interest rate protection agreements;
o repurchase or put obligations;
o yield supplement agreements; and
o other arrangements similar to those described above.
The prospectus supplement will describe the limitation of any enhancement
that applies to the securities. Enhancements cannot guarantee that losses will
not be incurred on the securities.
TAX STATUS
If the trust issues notes, federal tax counsel to the trust will deliver
an opinion at the time of initial issuance that for federal income tax purposes:
o the notes will be characterized as debt unless otherwise stated in the
prospectus supplement and
o the trust will not be characterized as an association (or a publicly
traded partnership) taxable as a corporation.
If the trust issues certificates, you will find a discussion of the
federal income tax characterization of the certificates and the related trust in
this prospectus and the related prospectus supplement.
See "Certain Federal Income Tax Consequences" for additional information
concerning the application of federal and state tax laws to the securities.
ERISA CONSIDERATIONS
If you are an employee benefit plan, you should review the considerations
discussed under "ERISA Considerations" in this prospectus before investing in
the securities. In general, subject to those considerations and to conditions
described in that section, and unless otherwise specified in the prospectus
supplement, you may purchase the notes of any series.
FORM, DENOMINATION AND RECORD DATE
You may purchase securities only in book-entry form. You may purchase
securities in $1,000 increments. The "RECORD DATE" will be the business day
immediately preceding the payment date or, if Definitive Securities are issued,
the 15th day of the preceding calendar month.
<PAGE>
________________________________________________________________________________
RISK FACTORS
________________________________________________________________________________
A TRUST'S ONLY SOURCES OF FUNDS FOR MAKING PAYMENTS ON ITS
SECURITIES ARE COLLECTIONS ON ITS RECEIVABLES
AND ANY ENHANCEMENT THE SECURITIES MAY HAVE
Receivables and enhancement, if any, will be the only significant assets
of a trust. Collections on the receivables and the enhancement are the only
possible sources of funds to make payments on the securities. You must rely upon
these sources for repayment of your securities.
The securities of any series will represent obligations of or interests in
the related trust only. The securities of any series will not be insured or
guaranteed by DaimlerChrysler AG, CFC or any of their affiliates, the applicable
owner trustee, any indenture trustee or any other person or entity.
The following applies in the case of a trust that issues more than one
series of securities. The securities of a multi-series trust will be supported
solely by the trust property allocated to its series and will not have any
rights in or claims on, or receive any payments from, the trust property
allocated to any other series of securities issued by that trust. Consequently,
investors must rely solely upon collections on the receivables allocated to
their series and, to the extent available, any enhancement for such series.
PREPAYMENTS MAY ADVERSELY AFFECT AVERAGE LIFE AND YIELDS OF THE SECURITIES
Prepayments include all of the following:
o an obligor on a receivable makes payments, in whole or in part, earlier
than scheduled
o the servicer liquidates a defaulted receivable
o the servicer or seller is required to purchase or repurchase,
respectively, a receivable from the trust
As a result of any of the above instances, the principal amount of a receivable
is repaid (or charged off) in advance of its payment schedule.
Most investors use an assumed prepayment rate on the receivables to price
their securities. The actual prepayment rate may be faster or slower than the
prepayment rate used to price the securities. The prepayment rate on the
receivables may be influenced by a variety of economic, social and other
factors.
Any reinvestment risks resulting from a faster or slower incidence of
prepayment of receivables will be borne entirely by the securityholders of the
related series.
Refer to the "Payments on the Securities -- Principal Payments -- Optional
Redemption" section for information on the servicer's option to purchase the
receivables of a trust.
RATINGS OF THE OFFERED SECURITIES
At the initial issuance of a series, at least two nationally recognized
rating agencies will rate the offered securities in the highest investment
rating category or in the categories otherwise specified in the prospectus
supplement. A rating is not a recommendation to purchase, hold or sell
securities, and it does not comment as to market price or suitability for a
particular investor. The ratings of the offered securities address the
likelihood of the payment of principal and interest on the offered securities
according to their terms. We cannot assure you that a rating will remain for any
given period of time or that a rating agency will not lower or withdraw its
rating if, in its judgment, circumstances in the future so warrant.
LIMITED ABILITY TO RESELL SECURITIES
There may be no secondary market for the securities. Underwriters may
participate in making a secondary market in the securities, but are under no
obligation to do so. We cannot assure you that a secondary market will develop.
If a secondary market does develop, we cannot assure you that it will continue
or that you will be able to resell your securities.
BOOK-ENTRY REGISTRATION MAY LIMIT YOUR ABILITY TO RESELL YOUR SECURITIES
The securities will be delivered to you in book-entry form through the
facilities of The Depository Trust Company ("DTC") or Cedelbank or Euroclear.
Consequently, your securities will not be registered in your name. As a result,
you will not be recognized as a securityholder by the owner trustee or any
applicable indenture trustee. Consequently, you will only be able to exercise
the rights of a securityholder indirectly through DTC and its participating
organizations. Specifically, you may be limited by your ability to resell the
securities to a person or entity that does not participate in the DTC system or
Cedelbank or Euroclear.
The above does not apply if Definitive Securities are issued. Refer to the
"Form of Securities and Transfers -- Definitive Securities" section for
additional information.
CHANGE IN SERVICER MAY RESULT IN LATE PAYMENTS ON SECURITIES
If CFC were to cease acting as servicer, or if MBCC were to cease acting
as subservicer of the MBCC receivables, there may be delays in processing
o payments on the receivables and
o information on the receivables.
These processing delays may result in late payments on the securities.
COMMINGLING OF MONIES BY THE SERVICER MAY RESULT IN A LOSS FOR SECURITYHOLDERS
The servicer will be required to remit all collections on and proceeds
from the receivables to each trust on a monthly or daily basis. For a monthly
basis, the servicer will remit on or before the monthly payment date. For a
daily basis, the servicer will remit within two business days of receipt of
collections and proceeds. Prior to remittance, the funds
o may be invested by the servicer at its own risk and for its own benefit
and
o will not be segregated from funds of the servicer.
If the servicer were unable to remit those funds, the applicable securityholders
might incur a loss.
The prospectus supplement may require the servicer to obtain a letter of
credit or other security for the benefit of the trust to secure timely
remittances of collections on and proceeds from the receivables. Refer to the
"Servicing--Collections" section for additional information.
CERTIFICATEHOLDERS DO NOT HAVE RIGHTS TO ACT UPON SERVICER DEFAULT
The following generally applies to a series that includes notes and
certificates. If the notes are still outstanding and a Servicer Default occurs
o removal of the servicer may occur without the consent of the
certificateholders or the owner trustee and
o the certificateholders or owner trustee will not have the ability to
remove the servicer.
In addition, the noteholders may have the ability to waive defaults by the
servicer, including defaults that could materially adversely affect the
certificateholders. Refer to the "Servicing -- Rights Upon Servicer Default" and
"-- Waiver of Past Defaults" sections for additional information.
INSOLVENCY OF THE SELLER MAY RESULT IN DELAYS, REDUCTIONS OR
LOSS OF PAYMENTS TO SECURITYHOLDERS
The seller will warrant to each trust that the sale of the receivables to
the trust is a valid sale. However, if the seller were to become a debtor in a
bankruptcy case, delays in payments of collections of receivables to the related
securityholders could result if it is argued that the transfer of the
receivables to the trust is a pledge of the receivables to secure a borrowing
rather than a sale. If the court rules that the transfer is a pledge rather than
a sale, reductions in the amount of payments to the securityholders could
result.
Also, if the transfer of receivables to a trust is treated as a pledge,
then a tax or government lien on the property of the seller arising before the
transfer may have priority over the trust's interest in the receivables.
A case decided by the United States Court of Appeals for the Tenth Circuit
contains language to the effect that accounts sold by an entity that
subsequently became bankrupt remained property of the debtor's bankruptcy estate
because the sale of accounts is treated as a "security interest" that must be
perfected under the Uniform Commercial Code ("UCC"). Although the contracts
representing the receivables constitute chattel paper rather than accounts under
the UCC, sale of chattel paper, like sales of accounts, must be perfected under
Article 9 of the UCC. If CFC were to become a debtor under any insolvency law
and a court were to follow the reasoning of the Tenth Circuit Court of Appeals
and apply such reasoning to chattel paper, then the trust could experience a
delay in or reduction of collections on the receivables, and you could incur a
loss on your investment as a result.
TRUSTS MAY NOT HAVE A PERFECTED SECURITY INTEREST
IN CERTAIN FINANCED VEHICLES
In connection with the sale of receivables to a trust, the seller will
assign the security interests in the financed automobiles or light duty trucks
securing those receivables to the trust at the time of sale. Due to
administrative burden and expense, the certificates of title to the financed
automobiles or light duty trucks will not be amended to reflect the assignment
to the trust. In the absence of such an amendment, the trust may not have a
perfected security interest in the financed vehicles securing its receivables in
some states. If a trust does not have a perfected security interest in a
financed automobile or light duty truck, its ability to repossess the financed
automobile or light duty truck securing a defaulted receivable may be adversely
affected.
Generally, the seller will be obligated to repurchase any receivable that
does not have a perfected security interest in the name of the seller (or MBCC,
as applicable) as of the date the receivable is transferred to the trust. The
seller will only be obligated to repurchase the receivable if
o the lack of perfection will materially adversely affect the trust and
o the lack of perfection will not be cured within a specified period.
To the extent the security interest is perfected, a trust will have a
prior claim over subsequent purchasers of the financed automobile or light duty
truck and holders of subsequently perfected security interests. However, a trust
may not have a prior security interest against liens for repairs of financed
automobiles or light duty trucks or for taxes unpaid by an obligor. Also, a
trust could lose its security interest (or its priority) through fraud or
negligence. If a trust loses its security interest or the priority of its
security interest due to any of these occurrences, neither the seller nor the
servicer will be obligated to repurchase the related receivable if the
occurrence transpired after the trust purchased the receivable.
RELIANCE ON REPRESENTATIONS AND WARRANTIES BY THE SELLER OR THE SERVICER
WHICH PROVES TO BE INADEQUATE MAY RESULT IN LOSSES TO SECURITYHOLDERS
In connection with the sale of receivables by the seller to a trust, the
seller will make representations and warranties on the characteristics of the
receivables. In some circumstances, the seller may be required to repurchase
receivables that do not conform to the representations and warranties. In
addition, under some circumstances the servicer may be required to purchase
receivables from a trust.
Refer to the "Sale Provisions" and "Servicing -- Servicing Procedures"
sections for additional information.
FAILURE TO COMPLY WITH CONSUMER PROTECTION
LAW REQUIREMENTS MAY MAKE A TRUST LIABLE
Federal and state consumer protection laws impose requirements upon
creditors in connection with extensions of credit and collections of retail
installment loans. Some of these laws make an assignee of a loan (such as a
trust) liable to the obligor for any violation by the lender. Generally, the
seller will be obligated to repurchase any receivable which fails to comply with
such laws.
SUBORDINATION OF CERTAIN SECURITIES MAY RESULT
IN REDUCED PAYMENTS TO THOSE SECURITIES
Payments of interest and principal on one or more classes of securities of
a series may be subordinated in priority of payment to payments of interest and
principal due on one or more other classes of securities of the same series.
Subordination of a class of securities has the effect of increasing the
likelihood of payment on the senior classes of securities in that series and
decreasing the likelihood of payment on that subordinated class of securities.
ISSUANCE OF A SUBSEQUENT SERIES OF SECURITIES MAY
ADVERSELY AFFECT ANY PRIOR SERIES OF SECURITIES
A single trust may issue more than one series of securities. The
provisions of the governing documents for a subsequent series of securities
issued by a trust will not be subject to the consent of or prior review by the
holders of a prior series of securities. If a trust issues a subsequent series
of securities, each rating agency that rated a prior series of securities must
indicate that the subsequent series will not cause them to reduce or withdraw
its rating of a prior series. We cannot assure you that the issuance of a
subsequent series will not have some effect on a prior series of securities.
<PAGE>
________________________________________________________________________________
PRINCIPAL DOCUMENTS
________________________________________________________________________________
In general, the operations of a trust will be governed by the following
documents:
<TABLE>
<CAPTION>
------------------------- -------------------------------------- ---------------------------------------------
Document Parties Primary Purposes
------------------------- -------------------------------------- ---------------------------------------------
<S> <C> <C>
Trust Agreement Owner trustee and CFC, as depositor o creates the trust
o provides for issuance of
certificates and payments to
certificateholders
o establishes rights and duties of
owner trustee
o establishes rights of
certificateholders
------------------------- -------------------------------------- ---------------------------------------------
Indenture Trust, as issuer of the notes, and o provides for issuance of the notes
indenture trustee and the terms of the notes
o establishes rights and duties of
indenture trustee
o establishes rights of noteholders
------------------------- -------------------------------------- ---------------------------------------------
Sale and Servicing CFC, as seller and servicer, and a o effects sale of receivables to the
Agreement trust as purchaser trust
o contains representations and
warranties of seller
concerning the receivables
o contains servicing obligations of
servicer
o provides for compensation to
servicer
o directs how cash flow will be
applied to expenses of the
trust and payments on its
securities
------------------------- -------------------------------------- ---------------------------------------------
</TABLE>
Various provisions of these documents are described throughout this
prospectus and in the related prospectus supplement. The prospectus supplement
for a series will describe any material provisions of these documents that
differ in a material way for that series from the provisions described in this
prospectus.
A form of each of these principal documents has been filed as an exhibit
to the Registration Statement of which this prospectus forms a part. The
summaries of the principal documents in this prospectus do not purport to be
complete and are subject to, and are qualified in their entirety by reference
to, all the provisions of those principal documents.
________________________________________________________________________________
THE TRUSTS
________________________________________________________________________________
Chrysler Financial Company L.L.C. may form trusts at various times
pursuant to a separate "TRUST AGREEMENT" for each trust. The principal offices
of each trust and the related owner trustee will be specified in the applicable
prospectus supplement.
SECURITIES ISSUANCE
A trust will issue securities and use the net proceeds from the sale of
the securities to purchase receivables and all payments received on such
receivables on and after the applicable cut-off date (as specified in the
prospectus supplement, a "CUT-OFF DATE"). If the purchased receivable is a CFC
Gold Key Plus Receivable, generally, only the right to receive certain payments
will be purchased by a trust. The primary sources for repayment of the
securities issued by a trust are collections on its receivables, liquidation
proceeds on its defaulted receivables and its reserve funds, if any.
TRUST PROPERTY
If a trust issues more than one series of securities, the securities of a
series will be supported solely by the property allocated to such series
("SERIES TRUST PROPERTY") and will not have any rights in or receive any
payments from the Series Trust Property allocated to any other series of
securities issued by that trust. The Series Trust Property of a trust will
include:
o the receivables pool allocated to such series and payments on such
receivables;
o such amounts as from time to time may be held in separate trust
accounts established for the trust and the proceeds of such
accounts, as described in this prospectus and in the accompanying
prospectus supplement;
o security interests in the financed vehicles and any other interest of
the seller in such financed vehicles;
o the rights to proceeds from claims on certain physical damage,
credit life and disability insurance policies covering the
financed vehicles or the obligors;
o the seller's interest in proceeds from recourse to dealers on
defaulted receivables or the underlying financed vehicles of
defaulted receivables;
o any property that secured a receivable and has been acquired by the
trust; and
o any and all proceeds of the above as allocated to such series of
securities.
In accordance with a "SALE AND SERVICING AGREEMENT", the seller will sell
a pool of receivables to the trust on the day the trust issues a series of
securities. After an initial sale, the seller may sell subsequent receivables
("SUBSEQUENT RECEIVABLES") to the trust as frequently as daily during a
specified funding period (a "FUNDING PERIOD"). The trust will purchase its
Subsequent Receivables from the proceeds of the sale of its securities that were
not used to purchase its initial pool of receivables. Prior to the purchase of
Subsequent Receivables, the trust will maintain those proceeds in its
pre-funding account (the "PRE-FUNDING ACCOUNT").
Also, a trust may use its principal collections on receivables to purchase
additional receivables ("ADDITIONAL RECEIVABLES") from the seller over a
specified period (a "REVOLVING PERIOD"). Any Subsequent Receivables or
Additional Receivables so conveyed will also be assets of the applicable trust
allocated solely to such series of securities.
A trust will purchase Subsequent Receivables or Additional Receivables
only if the prospectus supplement so specifies.
The servicer will continue to service the receivables held by each trust
and will receive fees for such services. To facilitate the servicing of the
receivables, the servicer will retain physical possession of the retail
installment sale contracts owned by each trust and other related documents as
custodian for the trust. To avoid undue administrative burden and expense, the
certificates of title to the financed vehicles will not be amended to reflect
the sale and assignment of the security interest in the financed vehicles to
each trust. In the absence of such an amendment, a trust may not have a
perfected security interest in the financed vehicles in all states.
A trust may have reserve funds or other forms of credit enhancement.
Also, a trust may own securities that were issued by another trust but were not
then sold to investors ("PREVIOUSLY ISSUED SECURITIES"). In addition, a trust
may own the right to receive the overcollateralization distributions from
another trust.
Refer to the "Receivable Pools" section for additional information on the
receivables. Refer to the "Servicing" section in this prospectus and in the
"Transaction Overview -- Servicing" section in the accompanying prospectus
supplement for additional information on servicing the receivables. Refer to
the "Certain Legal Aspects of the Receivables" and "Sale Provisions" sections
for additional information on security interests in the financed vehicles.
________________________________________________________________________________
USE OF PROCEEDS
________________________________________________________________________________
Generally, a trust will use the net proceeds from the sale of a series of
securities to (i) purchase receivables and, if applicable, any Previously Issued
Securities from the seller, (ii) make the initial deposit into the reserve
funds, if any, and (iii) deposit the Pre-Funded Amount, if any, into the
Pre-Funding Account. Generally, the seller will use the proceeds it receives for
general corporate purposes.
________________________________________________________________________________
RECEIVABLE POOLS
________________________________________________________________________________
Each receivable in a pool is a motor vehicle retail installment sale
contract between a dealer and an obligor. The dealers are retail sellers of new
and used automobiles and light duty trucks. Most of the dealers sell products
manufactured and/or distributed by subsidiaries of DaimlerChrysler AG. Those
products include vehicles manufactured under the Chrysler, Plymouth, Dodge,
Jeep, and Mercedes-Benz trademarks.
Each receivable in a pool was or will be originated by dealers who
regularly sell such contracts to CFC or MBCC and has been or will be purchased
by CFC or MBCC. CFC and MBCC have purchased or will purchase receivables,
directly or indirectly, according to agreements with dealers throughout the
United States in the ordinary course of CFC's and MBCC's business.
Any MBCC receivables sold to a trust will first be purchased by CFC from
MBCC and subsequently sold to the trust. Receivable pools will continue to be
serviced by CFC, in such capacity as the servicer and will evidence indirect
financing made available by the seller to the obligors. Receivables generated by
MBCC may be subserviced by MBCC.
UNDERWRITING
CHRYSLER FINANCIAL COMPANY L.L.C.
CFC purchases contracts in accordance with its credit standards which are
based upon the vehicle buyer's ability and willingness to repay the obligation,
the value of the vehicle being financed, as well as other factors.
MERCEDES-BENZ CREDIT CORPORATION
MBCC purchases contracts using consistent underwriting policies and
procedures. MBCC's underwriting standards emphasize, among other factors, the
applicant's willingness and ability to repay according to the terms of the
receivable. The final credit decision is made based upon the degree of credit
risk perceived and the amount of credit requested.
SIMPLE INTEREST RECEIVABLES
"SIMPLE INTEREST RECEIVABLES" are receivables that amortize the amount
financed over a series of fixed level monthly payments. Under the "simple
interest" method, each monthly payment is generally allocated first to interest
and the remainder to principal. The interest allocation is calculated as
follows:
period between current and prior
outstanding principal x stated x payments
balance of the receivable APR (as a fraction of a calendar year)
Accordingly, the portion of the obligor's monthly payment allocated to
principal and interest depends on when an obligor pays the fixed monthly
installment relative to its scheduled due date. The following table illustrates
this relationship:
---------------------------------------------------------------------------
IF PAID ......
PORTION OF PAYMENT BEFORE SCHEDULED AFTER SCHEDULED
ALLOCATED TO DUE DATE DUE DATE
Principal Greater Less
---------------------------------------------------------------------------
Interest Less Greater
---------------------------------------------------------------------------
In either case, the obligor generally pays a fixed monthly installment
until the final scheduled payment date. The amount of the final installment is
increased or decreased as necessary to repay the outstanding principal balance
and any finance charges up to the date of final payment. If a Simple Interest
Receivable is prepaid in full, the obligor is required to pay interest only to
the date of prepayment.
If any receivables amortize according to a different method, the
prospectus supplement will describe it. All of CFC's contracts and some of
MBCC's contracts are Simple Interest Receivables.
PRECOMPUTED RECEIVABLES
Payments received on a "PRECOMPUTED RECEIVABLE" are allocated according to
the "actuarial" method. The actuarial method provides for amortization of the
loan over a series of fixed level monthly installments. Each monthly installment
is deemed to consist of an amount of interest equal to a percentage of the
stated APR of the loan multiplied by the scheduled principal balance. The
remainder of the scheduled payment is applied to principal. Generally, no
adjustment is made in the event of early or late payments, although in the
latter case the obligor is subject to a late payment penalty.
Even though scheduled payments received on a Precomputed Receivable are
allocated in accordance with the actuarial method, for a receivable which is
prepaid in full or accelerated under certain circumstances or the financed
vehicle is repossessed and sold or becomes a total loss, the amount owing by the
obligor will be determined by considering that previous payments on the
receivable were allocated according to the "simple interest" or "Rule of 78's"
method. Refer to the "Simple Interest Receivables" section above for a
description of the simple interest method.
Many of the Precomputed Receivables generally also provide that, in the
event of a prepaid receivable, if the amount owing by the obligor determined by
the "Rule of 78s" would be more favorable to the obligor, the amount owing may
be determined in accordance with such rule. A portion of MBCC's contracts and
none of CFC's contracts are Precomputed Receivables.
An "MBCC BALLOON RECEIVABLE" provides for monthly payments that amortize
the amount financed over its original term to maturity, except that a final
balloon payment, which is materially greater than the scheduled monthly
payments, becomes due on the final maturity date. MBCC Balloon Receivables are
a type of Precomputed Receivable, whose payments are allocated in the same
manner as described above.
CFC GOLD KEY PLUS RECEIVABLES
A " CFC GOLD KEY PLUS RECEIVABLE" has the following characteristics:
o requires a fixed, level monthly payment from the obligor,
o is originated under CFC's Gold Key Plus program,
o is secured by a new automobile or light duty truck, and
o has a final "Fixed Value Payment" which is materially greater than the
scheduled monthly payments.
A CFC Gold Key Plus Receivable provides for amortization of the loan over
a series of fixed level payment monthly installments, but also requires a final
Fixed Value Payment due after payment of the monthly installments. The final
Fixed Value Payment may be satisfied by:
o payment in full in cash of such amount,
o transfer of the vehicle to CFC provided certain conditions are
satisfied, or
o refinancing the Fixed Value Payment in accordance with certain
conditions.
Generally, a trust will only purchase the principal and interest payments
due prior to the final Fixed Value Payment and Premier Receivables L.L.C. will
purchase the final Fixed Value Payment. Premier Receivables L.L.C. will have the
option to transfer these final Fixed Value Payments to the related trust in
exchange for certificates representing interests in these final Fixed Value
Payments or indebtedness secured by these final Fixed Value Payments. Premier
Receivables L.L.C. may then sell those certificates or the indebtedness.
SELECTION CRITERIA
Each pool of receivables to be held by a trust and allocated to a series
of securities will be selected from the seller's portfolio and/or MBCC's
portfolio. Each pool of receivables may include only CFC contracts, or only MBCC
contracts or a combination of both CFC and MBCC contracts.
Generally, only receivables meeting the following criteria will be
selected:
o has been purchased by the seller, directly or indirectly, from
dealers in the ordinary course of business or from MBCC, which
will have purchased them from dealers
o is secured by a new or used vehicle
o has been originated in the United States
o satisfies the other criteria, if any, in the related prospectus
supplement
If a pool of receivables does not follow any of these selection criteria, the
related prospectus supplement will so specify.
The prospectus supplement will include information on each receivables
pool, including, to the extent appropriate:
o the composition
o the distribution of the receivables pool selected from the CFC
portfolio and from the MBCC portfolio
o the distribution of such receivables pool secured by new vehicles and
by used vehicles
o the distribution by outstanding principal balance
o the distribution by annual percentage rate ("APR")
o the distribution by U.S. state of origination
RECOURSE TO CFC DEALERS
CFC has recourse to its dealers on a portion of its retail installment
sale contracts. Under its recourse obligation, the dealer is responsible to CFC
for payment of the unpaid balance of the contract, provided that CFC repossesses
the vehicle from the retail buyer and returns it to the dealer within a
specified time. CFC applies the same underwriting standards to the purchase of
contracts regardless of whether there is recourse to dealers.
The net credit loss experience of contracts without recourse against
dealers is higher than that of contracts with recourse against dealers. Based on
its experience, CFC believes that there is no material difference between the
rates of delinquency and repossession on contracts with recourse against dealers
as compared to contracts without recourse against dealers.
In the event of a dealer's bankruptcy, a bankruptcy trustee might attempt
to characterize recourse sales of contracts as loans to the dealer secured by
the contracts. Such an attempt could result in payment delays and, if
successful, losses on the affected receivables. The prospectus supplement will
include information on the percentage of receivables in the pool with recourse
to dealers.
In addition, some dealers may be obligated to repurchase receivables
originated by them if the dealers have made certain misrepresentations about the
receivables.
RECOURSE TO MBCC DEALERS
MBCC's agreements with each of its dealers obligates the dealer to
repurchase any retail installment sale contract for the outstanding principal
balance if the dealer breaches certain representations and warranties. Upon
breach of any representation or warranty made by a dealer with respect to a
contract, pursuant to the dealer agreement, MBCC has a right of recourse against
such dealer to require it to repurchase such contract. Generally, in determining
whether to exercise such right, MBCC considers the prior performance of the
dealer and other business and commercial considerations. MBCC, as subservicer,
will be obligated to enforce such rights with respect to dealer agreements
relating to any MBCC receivables in a pool in accordance with such customary
practices, and the right to any proceeds received upon such enforcement will be
conveyed to the related trust.
NET CREDIT LOSS AND
DELINQUENCY EXPERIENCE
Each prospectus supplement will include specified net credit loss,
repossession and delinquency experience of the seller and, if applicable, MBCC.
We cannot assure you that the delinquency, repossession and net credit loss
experience on any receivables pool will be comparable to historical experience
or to such information.
________________________________________________________________________________
FLOW OF FUNDS
________________________________________________________________________________
SOURCES OF FUNDS
A trust may use funds from the following sources to pay its expenses and
make payments on its securities:
o collections on its receivables
o net recoveries from the liquidation of defaulted receivables
o amounts paid by the seller to repurchase a receivable as a result
of the seller's material breach of a representation and warranty
-- refer to "Sale Provisions"
o amounts paid by the servicer to purchase a receivable to which it
has made certain modifications -- refer to "Servicing -- Servicing
Procedures"
o investment earnings during the related collection period, if any,
on its reserve fund, if any, and on deposits, if any, in its
deposit account
o any reserve fund described in the related prospectus supplement
o any other sources described in the related prospectus supplement.
The funds available to pay expenses and make payments on securities for
any given period are referred to as "AVAILABLE FUNDS".
In the case of a trust that issues more than one series of securities, the
distributions on the securities of any one series will be made solely from funds
allocated to that series and not from the funds allocated to any other series
issued by that trust.
APPLICATION OF AVAILABLE FUNDS
On each payment date the available funds of a trust will be applied to its
expenses and payments on its securities in the amounts and the order of priority
set forth in the prospectus supplement.
NET DEPOSITS
As an administrative convenience, the servicer will deposit a trust's
available funds into any account of the trust net of a payments to be made to
the servicer. However, the servicer will account for available funds as if all
deposits and transfers of available funds were made individually rather than
net.
________________________________________________________________________________
CREDIT ENHANCEMENT
________________________________________________________________________________
Credit enhancements are intended to enhance the likelihood of full payment
of principal and interest due and to decrease the likelihood that
securityholders will experience losses. Unless otherwise specified in the
related prospectus supplement, the credit enhancement for a class or series of
securities will not provide protection against all risks of loss and will not
guarantee repayment of the entire principal balance and accrued interest. If
losses occur which exceed the amount covered by any credit enhancement or which
are not covered by any credit enhancement, securityholders of any class or
series will bear their allocable share of losses, as described in the related
prospectus supplement. In addition, if a form of credit enhancement covers more
than one series of securities, securityholders of any such series will be
subject to the risk that the credit enhancement will be exhausted by the claims
of securityholders of the other series.
A prospectus supplement for a series will specify whether there is any
credit or cash flow enhancement and how it works. Examples are:
o subordination of one or more classes of securities of a series,
o reserve funds,
o overcollateralization,
o letters of credit,
o credit or liquidity facilities,
o surety bonds,
o guaranteed investment contracts,
o swaps (including without limitation currency swaps),
o other interest rate protection agreements,
o repurchase obligations (including without limitation put options),
o yield supplement agreements,
o other agreements with respect to third party payments,
o any other arrangements as may be described in the related prospectus
supplement or
o any combination of two or more of the above.
RESERVE FUND
A trust may maintain a reserve fund in its Deposit Account. Generally, a
reserve fund will be established by an initial deposit by the seller on the
Closing Date. If a trust has a Funding Period, the reserve fund will also be
increased on each Subsequent Transfer Date to the extent described in the
related prospectus supplement. The amount of the reserve fund may be increased
on each payment date up to a required amount through an allocation of the
trust's Available Funds. The related prospectus supplement will describe the
manner in which the reserve fund will be applied.
<PAGE>
PAYMENTS ON THE SECURITIES
The prospectus supplement will describe
o the timing and priority of payments of principal and interest on each
class of the securities,
o their interest rates,
o the method of determining the amount of their principal payments,
o the priority of the application of the trust's available funds to its
expenses, and payments on its securities.
The rights of any class of securities may be senior or subordinate to
other classes of securities. A security may be entitled to
o principal payments with disproportionate, nominal or no interest
payments or
o interest payments with disproportionate, nominal or no principal
payments.
Interest rates may be fixed, variable or adjustable. A class of securities may
be redeemable. The aggregate initial principal amount of the securities of a
series may be greater than, equal to or less than the aggregate initial
principal amount of the receivables in that series.
Payments of principal and interest on any class of securities will be made
on a pro rata basis among all the securityholders of such class. A series may
provide for a liquidity facility or other arrangement (including without
limitation the issuance of additional securities by the trust) that permits one
or more classes of securities to be paid in planned amounts on scheduled
payment dates.
PRINCIPAL PAYMENTS
WEIGHTED AVERAGE LIFE OF THE SECURITIES
The weighted average life of the securities will generally be influenced
by the rate at which the principal balances of the related receivables are paid,
which payment may be in the form of scheduled amortization or prepayments. For
this purpose, the term "prepayments" includes prepayments in full, partial
prepayments including those related to rebates of extended warranty contract
costs and insurance premiums, liquidations due to default, as well as receipts
of proceeds from physical damage, credit life and disability insurance policies
and certain other receivables repurchased by the seller or the servicer for
administrative reasons. All of the receivables may be prepaid at any time
without penalty to the obligor. The rate of prepayment of automotive receivables
is influenced by a variety of economic, social and other factors, including the
fact that an obligor generally may not sell or transfer the financed vehicle
securing a receivable without the consent of the seller. The rate of prepayment
on the receivables may also be influenced by the structure of the loan. In
addition, under certain circumstances, the seller will be obligated to
repurchase receivables from a trust pursuant to the related Sale and Servicing
Agreement as a result of breaches of its representations and warranties and the
servicer will be obligated to purchase receivables from a trust pursuant to the
Sale and Servicing Agreement as a result of its breaches of certain covenants.
The servicer will also have an option to purchase all of a trust's receivables
when their outstanding amount declines to a specified level. Such a purchase
would result in the early redemption of the trust's securities.
Refer to the "Sale Provisions" and "Servicing" sections.
A prospectus supplement may provide for a Revolving Period during which
principal collections in respect of the receivables allocated to the related
series will be applied to purchase Additional Receivables for inclusion in the
related series trust property rather than applied to make distributions on the
related securities. Any such application would increase the weighted average
life of those securities. Also, a prospectus supplement may provide for a
liquidity facility or similar arrangement under which collections of principal
may be invested in Eligible Investments and distributed on the related
securities in planned amounts on scheduled payment dates.
In light of the above considerations, we cannot tell you the amount of
principal that will be paid on any class of securities on any payment date,
since that amount will depend, in part, on the amount of principal collected on
the related receivables pool during the applicable collection period. You will
bear any reinvestment risks resulting from a faster or slower incidence of
prepayment of the receivables that support your securities. The related
prospectus supplement may set forth certain additional information with respect
to the maturity and prepayment considerations applicable to the particular
receivables pool and the related series of securities.
INDEXED SECURITIES
A trust may issue a class of "INDEXED SECURITIES" in which the principal
amount payable at its final scheduled payment date (the "INDEXED PRINCIPAL
AMOUNT") is determined by reference to a measure (the "INDEX") which will relate
to the difference in the rate of exchange between United States dollars and a
currency or composite currency (the "INDEXED CURRENCY") specified in the
applicable prospectus supplement (such Indexed Securities, "CURRENCY INDEXED
SECURITIES");
o the difference in the price of a specified commodity (the "INDEXED
COMMODITY") on specified dates (such Indexed Securities,
"COMMODITY INDEXED SECURITIES");
o the difference in the level of a specified stock index (the "STOCK
INDEX"), which may be based on U.S. or foreign stocks, on
specified dates (such Indexed Securities, "STOCK INDEXED
SECURITIES"); or
o such other objective price or economic measures as are described in the
applicable prospectus supplement.
The applicable prospectus supplement will describe the manner of
determining the Indexed Principal Amount of an Indexed Security and historical
and other information concerning the Indexed Currency, the Indexed Commodity,
the Stock Index or other price or economic measures used in such determination.
The prospectus supplement will also include information concerning tax
consequences to the holders of such Indexed Securities.
Typically, interest on an Indexed Security will be payable based on the
amount designated in the applicable prospectus supplement. The prospectus
supplement will determine the terms of redemption or repayment of Indexed
Securities prior to the final schedule payment date.
OPTIONAL REDEMPTION
The prospectus supplement will state whether the servicer has an option to
repurchase the receivables in the related series and when it may exercise that
option. Normally, the option is exercisable when the total principal balance of
the receivables has declined to 10% of their total principal balance as of the
cut-off date. If the servicer exercises this option, the outstanding securities
of that series will be repaid at that time.
INTEREST PAYMENTS
A class of securities may bear interest at a fixed, variable, adjustable,
or zero rate per annum. The applicable prospectus supplement will provide the
detailed interest rate terms of your securities. The following sections provide
a general overview of the mechanics of the various types of interest rates.
FIXED RATE SECURITIES
Each class of fixed rate securities will bear interest at the applicable
per annum interest rate or pass through rate, as the case may be, specified in
the applicable prospectus supplement. Generally, interest on each class of fixed
rate securities will be computed on the basis of a 360-day year consisting of
twelve 30-day months.
FLOATING RATE SECURITIES
A trust may issue various types of floating rate securities. Each class of
floating rate securities will bear interest at the applicable per annum floating
interest rate. The following defined terms are used in the sections below to
illustrate how various floating rates are determined. All floating rate interest
calculations resulting in percentages will be rounded, if necessary, to the
nearest 1/100,000 of 1% (0.0000001), with five one-millionths of a percentage
point rounded upward.
"BASE RATE" - basis for floating interest rate on securities.
"SPREAD" - added to or subtracted from the Base Rate and generally a
stated number of basis points (one basis point equals one one-hundredth of a
percentage point).
"SPREAD MULTIPLIER" -generally a number expressed as a percentage.
"FLOATING RATE INTEREST ACCRUAL PERIOD" - the period over which interest
accrues at the floating interest rate.
"INDEX MATURITY" - the period of maturity of the instrument or obligation
from which the Base Rate is calculated (i.e., one month LIBOR).
"H.15(519)" - the publication entitled "Statistical Release H.15(519),
Selected Interest Rates", published by the Board of Governors of the Federal
Reserve System.
"COMPOSITE QUOTATIONS" - the daily statistical release entitled "Composite
3:30 p.m. Quotations for U.S. Government Securities" published by the Federal
Reserve Bank of New York.
"INTEREST RESET DATE" - the first day of the Floating Rate Interest
Accrual Period.
"CALCULATION AGENT" - representative appointed by the trust to calculate
the interest rate on a class of floating rate securities, typically the
indenture trustee. The Calculation Agent's determinations of interest, in the
absence of obvious error, are conclusive and binding for all purposes.
Floating rate securities may have either or both of the following:
o a maximum limitation, or ceiling, on the rate at which interest
may accrue during any Floating Rate Interest Accrual Period and
o a minimum limitation, or floor, on the rate at which interest may
accrue during any Floating Rate Interest Accrual Period.
In no event will the per annum floating interest rate be higher than the
maximum rate permitted by applicable law.
LIBOR Securities
- ----------------
LIBOR based floating rate securities will bear interest for each Floating
Rate Interest Accrual Period at LIBOR plus or minus the Spread or multiplied by
a Spread Multiplier, if any. The Calculation Agent determines LIBOR for each
Floating Rate Interest Accrual Period on the LIBOR Determination Date. The
"LIBOR DETERMINATION DATE" is the second LIBOR Business Day prior to the
Interest Reset Date. A "LIBOR BUSINESS DAY" is a day that is both a business day
and a day on which banking institutions in the City of London, England are not
required or authorized by law to be closed.
"LIBOR" equals the arithmetic mean of the offered rates for deposits in
U.S. dollars for the period of the Index Maturity commencing on the Interest
Reset Date, as displayed on Telerate Page 3750 at approximately 11:00 a.m.
London time on the LIBOR Determination Date. "TELERATE PAGE 3750" means the
display page so designated on the Dow Jones Telerate Service.
CD Rate Securities
- ------------------
CD Rate based floating rate securities will bear interest for each
Floating Rate Interest Accrual Period at the CD Rate plus or minus the Spread or
multiplied by a Spread Multiplier, if any. The Calculation Agent determines the
CD Rate for each Floating Rate Interest Accrual Period on the CD Rate
Determination Date. The "CD RATE DETERMINATION DATE" is the second business day
prior to the Interest Reset Date.
The "CD RATE" equals the rate on the CD Determination Date for negotiable
certificates of deposit for the period of the Index Maturity. This rate is
published in H.15(519) under the heading "CDs (Secondary Market)".
Commercial Paper Rate Securities
- --------------------------------
Commercial Paper Rate based floating rate securities will bear interest
for each Floating Rate Interest Accrual Period at the Commercial Paper Rate plus
or minus the Spread or multiplied by a Spread Multiplier, if any. The
Calculation Agent determines the Commercial Paper Rate for each Floating Rate
Interest Accrual Period as of the Commercial Paper Rate Determination Date. The
"COMMERCIAL PAPER RATE DETERMINATION DATE" is the second business day prior to
the Interest Reset Date.
The "COMMERCIAL PAPER RATE" for a Floating Rate Interest Accrual Period
equals the Money Market Yield on the Commercial Paper Rate Determination Date
for commercial paper having the period of the Index Maturity. The rate is
published in H.15(519) under the heading "Commercial Paper". "MONEY MARKET
YIELD" is calculated as follows:
Money Market Yield = D X 360 X 100
-------------
360 - (D X M)
where:
D = the applicable per annum rate for commercial
paper quoted on a bank discount basis and
expressed as a decimal
M = the actual number of days in the Index Maturity
Federal Funds Rate Securities
- -----------------------------
Federal Funds Rate based floating rate securities will bear interest for
each Floating Rate Interest Accrual Period at the Federal Funds Rate plus or
minus the Spread or multiplied by a Spread Multiplier, if any. The Calculation
Agent determines the Federal Funds Rate for each Floating Rate Interest Accrual
Period as of the Interest Reset Date.
The "FEDERAL FUNDS RATE" equals the effective rate on the Interest Reset
Date for Federal Funds having the period of the Index Maturity. This rate is
published in H.15(519) under the heading "Federal Funds (Effective)".
Treasury Rate Securities
- ------------------------
Treasury Rate based floating rate securities will bear interest for each
Floating Rate Interest Accrual Period at the Treasury Rate plus or minus the
Spread or multiplied by a Spread Multiplier, if any. The Calculation Agent
determines the Treasury Rate for each Floating Rate Interest Accrual Period as
of its Treasury Rate Determination Date.
The "TREASURY RATE DETERMINATION DATE" is the Monday of the week in which
the Interest Reset Date falls as Treasury bills are normally sold at auction on
Monday of each week. If the applicable Monday is a legal holiday and the auction
is held on Tuesday, then Tuesday would be the Treasury Rate Determination Date.
If the applicable Monday is a legal holiday and the auction is held on the
preceding Friday, then Friday would be the Treasury Rate Determination Date. If
the Interest Reset Date falls on an auction date, then such Interest Reset Date
will instead be the business day immediately following such auction date.
The "TREASURY RATE" equals the rate on the Treasury Determination Date for
the auction of direct obligations of the United States having the period of the
Index Maturity. This rate is published in H.15(519) under the heading "U.S.
Government Securities - Treasury Bills - auction average (investment)".
________________________________________________________________________________
FORM OF SECURITIES AND TRANSFERS
________________________________________________________________________________
Unless otherwise specified in the related prospectus supplement, each
class of securities will initially be represented by one or more securities
registered in the name of the nominee of DTC except as set forth below. Unless
otherwise specified in the related prospectus supplement, the securities will be
available for purchase in denominations of $1,000 in book-entry form only. The
seller has been informed by DTC that DTC's nominee will be Cede & Co. ("CEDE"),
unless another nominee is specified in the related prospectus supplement.
Accordingly, such nominee is expected to be the holder of record of the
securities of each class. Unless and until Definitive Securities are issued
under the limited circumstances described in this prospectus or in the related
prospectus supplement, no securityholder will be entitled to receive a physical
certificate representing a security. All references in this prospectus and in
the related prospectus supplement to actions by securityholders refer to actions
taken by DTC upon instructions from its participating organizations (the
"PARTICIPANTS") and all references in this prospectus or and in the related
prospectus supplement to distributions, notices, reports and statements to
securityholders refer to distributions, notices, reports and statements to DTC
or its nominee, as the registered holder of the securities, for distribution to
securityholders in accordance with DTC's procedures with respect thereto.
BOOK-ENTRY REGISTRATION
DTC is a limited purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York 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 Participants through electronic book-entries,
thereby eliminating the need for physical movement of certificates. Participants
include securities brokers and dealers, banks, trust companies and clearing
corporations. Indirect access to the DTC system also is available to others such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly
("INDIRECT PARTICIPANTS").
Unless otherwise specified in the related prospectus supplement,
securityholders that are not Participants or Indirect Participants but desire to
purchase, sell or otherwise transfer ownership of, or other interests in,
securities may do so only through Participants and Indirect Participants. In
addition, securityholders will receive all distributions of principal and
interest from the related indenture trustee or the related owner trustee, as
applicable, through Participants. Under a book-entry format, securityholders may
experience some delay in their receipt of payments, since such payments will be
forwarded by the applicable trustee to DTC's nominee. DTC will forward such
payments to its Participants, which thereafter will forward them to Indirect
Participants or securityholders. Except to the extent the applicable Premier
Receivables L.L.C. holds certificates with respect to any series of securities,
it is anticipated that the only "securityholder", "noteholder" and
"certificateholder" will be DTC's Nominee. Noteholders will not be recognized by
each indenture trustee as noteholders, as such term is used in each Indenture,
and noteholders will be permitted to exercise the rights of noteholders only
indirectly through DTC and its Participants. Similarly, certificateholders will
not be recognized by each owner trustee as certificateholders as such term is
used in each trust agreement, and certificateholders will be permitted to
exercise the rights of certificateholders only indirectly through DTC and its
Participants.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "RULES"), DTC is required to make book-entry transfers of
securities among Participants on whose behalf it acts with respect to the
securities and to receive and transmit distributions of principal of, and
interest on, the securities. Participants and Indirect Participants with which
securityholders have accounts with respect to the securities similarly are
required to make book-entry transfers and receive and transmit such payments on
behalf of their respective securityholders. Accordingly, although
securityholders will not possess securities, the Rules provide a mechanism by
which Participants will receive payments and will be able to transfer their
interests.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a
securityholder to pledge securities to persons or entities that do not
participate in the DTC system, or to otherwise act with respect to such
securities, may be limited due to the lack of a physical certificate for such
securities.
DTC has advised the seller that it will take any action permitted to be
taken by a noteholder under the related Indenture or a certificateholder under
the related Trust Agreement only at the direction of one or more Participants to
whose accounts with DTC the applicable notes or certificates are credited. DTC
may take conflicting actions with respect to other undivided interests to the
extent that such actions are taken on behalf of Participants whose holdings
include such undivided interests.
Except as required by law, neither any administrator, the applicable owner
trustee nor the applicable 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 securities of any series held by DTC's nominee, or
for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
Cedelbank is incorporated under the laws of Luxembourg as a professional
depository. Cedelbank holds securities for its participating organizations
("CEDELBANK PARTICIPANTS") and facilitates the clearance and settlement of
securities transactions between Cedelbank Participants through electronic
book-entry changes in accounts of Cedelbank Participants, thereby eliminating
the need for physical movement of certificated securities. Transactions may be
settled in Cedelbank in any of 28 currencies, including United States dollars.
Cedelbank provides to its Cedelbank Participants services for safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. Cedelbank interfaces with domestic markets
in several countries. As a professional depository, Cedelbank is subject to
regulation by the Luxembourg Monetary Institute. Cedelbank Participants are
recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations and may include the underwriters. Indirect
access to Cedelbank is also available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a Cedelbank Participant, either directly or indirectly.
The Euroclear System was created in 1968 to hold securities for
Participants of the Euroclear System ("EUROCLEAR Participants") and to clear and
settle transactions between Euroclear Participants through simultaneous
electronic book-entry delivery against payment, thereby eliminating the need for
physical movement of certificated securities and any risk from lack of
simultaneous transfers of securities and cash. Transactions may now be settled
in Euroclear in any of 32 currencies, including United States dollars. The
Euroclear System 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. The
Euroclear System is operated by Morgan Guaranty Trust Company of New York,
Brussels, Belgium office (the "EUROCLEAR OPERATOR" or "EUROCLEAR"), under
contract with Euroclear Clearance System, S.C., a Belgian cooperative
corporation (the "COOPERATIVE"). All operations are conducted by the Euroclear
Operator, and all Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear Operator, not the Cooperative. The
Cooperative establishes policy for the Euroclear System on behalf of Euroclear
Participants. Euroclear Participants include banks (including central banks),
securities brokers and dealers and other professional financial intermediaries
and may include the underwriters. Indirect access to the Euroclear System is
also available to other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, 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 the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating Procedures of the Euroclear System and applicable Belgian
law (collectively, the "TERMS AND CONDITIONS"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawal of
securities and cash from the Euroclear System, and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held as a single bulk holding without attribution of specific
certificated securities to specific securities clearance accounts. The Euroclear
Operator acts under the Terms and Conditions only on behalf of Euroclear
Participants and has no record of or relationship with persons holding through
Euroclear Participants.
Distributions with respect to securities held through Cedelbank or
Euroclear will be credited to the cash accounts of Cedelbank Participants or
Euroclear Participants in accordance with the relevant system's rules and
procedures, to the extent received by its Depositary. Such distributions will be
subject to tax reporting in accordance with relevant United States tax laws and
regulations. See "Certain Federal Income Tax Consequences" in this prospectus
and "Global Clearance, Settlement and Tax Documentation Procedures" to this
prospectus. Cedelbank or the Euroclear Operator, as the case may be, will take
any other action permitted to be taken by a securityholder under the Indenture
or Trust Agreement, as applicable, on behalf of a Cedelbank Participant or
Euroclear Participant only in accordance with its relevant rules and procedures
and subject to its Depositary's ability to effect such actions on its behalf
through DTC.
Cede, as nominee for DTC, will hold the securities. Cedelbank and
Euroclear will hold omnibus positions in the securities on behalf of the
Cedelbank Participants and the Euroclear Participants, respectively, through
customers' securities accounts in Cedelbank's and Euroclear's names on the books
of their respective depositaries (collectively, the "DEPOSITARIES"), which in
turn will hold such positions in customers' securities accounts in the
Depositaries' names on the books of DTC.
Transfers between DTC's Participants will occur in accordance with DTC
rules. Transfers between Cedelbank Participants and Euroclear Participants will
occur in the ordinary way in accordance with their applicable rules and
operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedelbank
Participants or Euroclear Participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of the relevant European international
clearing system by its Depositary. However, such cross-market transactions will
require delivery of instructions to the relevant European international clearing
system by the counterparty in such system in accordance with its rules and
procedures and within its established deadlines (European time). The relevant
European international clearing system will, if the transaction meets its
settlement requirements, deliver instructions to its Depositary to take action
to effect final settlement on its behalf by delivering or receiving securities
in DTC, and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. Cedelbank Participants and
Euroclear Participants may not deliver instructions directly to the
Depositaries.
Because of time-zone differences, credits of securities in Cedelbank or
Euroclear as a result of a transaction with a Participant will be made during
the subsequent securities settlement processing, dated the business day
following the DTC settlement date. Those credits or any transactions in those
securities settled during such processing will be reported to the relevant
Cedelbank Participant or Euroclear Participant on that business day. Cash
received in Cedelbank or Euroclear as a result of sales of securities by or
through a Cedelbank Participant or a Euroclear Participant to a Participant will
be received with value on the DTC settlement date but will be available in the
relevant Cedelbank or Euroclear cash account only as of the business day
following settlement in DTC.
Although DTC, Cedelbank and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of securities among Participants of
DTC, Cedelbank and Euroclear, they are under no obligation to perform or
continue to perform such procedures and such procedures may be discontinued at
any time.
In the event that any of DTC, Cedelbank or Euroclear should discontinue
its services, the administrator would seek an alternative depository (if
available) or cause the issuance of Definitive Securities to the owners thereof
or their nominees in the manner described in the prospectus below under "--
Definitive Securities".
DEFINITIVE SECURITIES
Unless otherwise specified in the related prospectus supplement, the
securities of a series will be issued in fully registered, certificated form
("DEFINITIVE SECURITIES") to securityholders or their respective nominees,
rather than to DTC or its nominee, only if
o the related administrator or indenture trustee, as applicable,
determines that DTC is no longer willing or able to discharge
properly its responsibilities as depository with respect to such
securities and such administrator or indenture trustee is unable
to locate a qualified successor (and if it is an administrator
that has made such determination, such administrator so notifies
the applicable trustee in writing), or
o the administrator or indenture trustee, as applicable, at its option,
elects to terminate the book-entry system through DTC or
o after the occurrence of an Event of Default or a Servicer Default
with respect to such securities, holders representing at least a
majority of the outstanding principal amount of the notes or the
certificates, as the case may be, of such series advise the
applicable trustee through DTC in writing that the continuation of
a book-entry system through DTC (or a successor thereto) with
respect to such notes or certificates is no longer in the best
interest of the holders of such securities.
Upon the occurrence of any event described in the immediately preceding
paragraph, the applicable trustee will be required to notify all applicable
securityholders of a given series through Participants of the availability of
Definitive Securities. When DTC surrenders the definitive certificates
representing the corresponding securities and gives instructions for
re-registration, the applicable trustee will reissue such securities as
Definitive Securities to such securityholders.
Distributions of principal of, and interest on, such Definitive Securities
will thereafter be made by the applicable trustee in accordance with the
procedures set forth in the related Indenture or the related Trust Agreement, as
applicable, directly to holders of Definitive Securities in whose names the
Definitive Securities were registered at the close of business on the Record
Date. Those distributions will be made by check mailed to the address of such
holder as it appears on the register maintained by the applicable trustee. The
final payment on any such Definitive Security, however, will be made only upon
presentation and surrender of such Definitive Security at the office or agency
specified in the notice of final distribution to the applicable securityholders.
Definitive Securities will be transferable and exchangeable at the offices
of the applicable trustee or of a registrar named in a notice delivered to
holders of Definitive Securities. No service charge will be imposed for any
registration of transfer or exchange, but the applicable trustee may require
payment of a sum sufficient to cover any tax or other governmental charge
imposed in connection therewith.
LIST OF SECURITYHOLDERS
Unless otherwise specified in the related prospectus supplement with
respect to the notes of any series, three or more holders of the notes of such
series or one or more holders of such notes evidencing not less than 25% of the
aggregate outstanding principal balance of such notes may, by written request to
the related indenture trustee, obtain access to the list of all noteholders
maintained by such indenture trustee for the purpose of communicating with other
noteholders with respect to their rights under the related Indenture or under
such notes. The indenture trustee may elect not to afford the requesting
noteholders access to the list of noteholders if it agrees to mail the desired
communication or proxy, on behalf of and at the expense of the requesting
noteholders, to all noteholders of such series.
Unless otherwise specified in the related prospectus supplement with
respect to the certificates of any series, three or more holders of the
certificates of such series or one or more holders of such certificates
evidencing not less than 25% of the certificate balance of such certificates
may, by written request to the related owner trustee, obtain access to the list
of all certificateholders maintained by such owner trustee for the purpose of
communicating with other certificateholders with respect to their rights under
the related trust agreement or under such certificates.
________________________________________________________________________________
SALE PROVISIONS
________________________________________________________________________________
On the closing date specified in a prospectus supplement (the "CLOSING
DATE"), the seller will transfer and assign to the applicable trust, without
recourse, pursuant to a Sale and Servicing Agreement, its entire interest in a
pool of receivables, including its security interests in the related financed
vehicles. Each such receivable will be identified in a schedule to the Sale and
Servicing Agreement. The applicable owner trustee will execute and deliver the
trust's notes and/or certificates, as applicable. Unless otherwise provided in
the related prospectus supplement, the net proceeds received from the sale of
the offered securities of a series will be applied to the purchase of the
related receivables from the seller and, to the extent specified in the related
prospectus supplement, to the deposit of the Pre-Funded Amount for such series
into the related Pre-Funding Account. The prospectus supplement will specify
whether Subsequent Receivables for such series will be sold by the seller to the
trust from time to time during any Funding Period for the trust on each date
specified as a transfer date in the prospectus supplement (each, a "SUBSEQUENT
TRANSFER DATE").
In each Sale and Servicing Agreement the seller will represent and warrant
to the applicable trust, among other things, that:
o the information provided in the schedule of receivables attached to the
Sale and Servicing Agreement is correct in all material respects;
o the obligor on each receivable is required to maintain physical
damage insurance covering the financed vehicle in accordance with
the seller's or MBCC's, as applicable, normal requirements;
o as of the applicable Closing Date or the applicable Subsequent
Transfer Date, if any, to the best of its knowledge, the related
receivables are free and clear of all security interests, liens,
charges and encumbrances and no offsets, defenses or counterclaims
have been asserted or threatened;
o as of the Closing Date or the applicable Subsequent Transfer Date,
if any, each related receivable is or will be secured by a first
perfected security interest in favor of the seller or MBCC, as
applicable, in the financed vehicle;
o each receivable, at the time it was originated, complied and, as
of the Closing Date or the applicable Subsequent Transfer Date, if
any, complies in all material respects with applicable federal and
state laws, including, without limitation, consumer credit, truth
in lending, equal credit opportunity and disclosure laws; and
o any other representations and warranties that may be set forth in the
related prospectus supplement.
Unless otherwise provided in the related prospectus supplement, as of the
last day of the second month following the discovery by or notice to the seller
of a breach of any representation or warranty of the seller that materially and
adversely affects the interests of the related trust in any receivable, the
seller will repurchase that receivable if the breach has not been cured. The
purchase price payable to the trust will be the unpaid principal balance owed by
the obligor on the receivable plus interest thereon at its APR to the last day
of the month of repurchase (the "REPURCHASE AMOUNT"). The repurchase obligation
constitutes the sole remedy available to the securityholders, the owner trustee
and the indenture trustee for any such uncured breach.
Pursuant to each Sale and Servicing Agreement, to assure uniform
quality in servicing the receivables and to reduce administrative costs, each
trust will designate the servicer as custodian to maintain possession, as such
trust's agent, of the related motor vehicle retail installment sale contracts
and any other documents relating to the receivables. The seller's accounting
records and computer systems will reflect the sale and assignment of the
related receivables to the applicable trust, and UCC financing statements
reflecting such sale and assignment will be filed. However, if another person
acquired possession of the motor vehicle retail installment contracts, under
some circumstances collections on those receivables would not be available to
make payments on the securities.
________________________________________________________________________________
SERVICING
________________________________________________________________________________
THE SERVICER
Unless otherwise specified in the prospectus supplement, CFC will service
the receivables. CFC is a wholly-owned subsidiary of DaimlerChrysler
Corporation ("DAIMLERCHRYSLER") and engages in providing consumer and dealer
automotive financing for the products of DaimlerChrysler, including retail and
lease financing for vehicles, dealer inventory and other financing needs.
DaimlerChrysler is a wholly-owned subsidiary of DaimlerChrysler AG.
DaimlerChrysler AG provides a wide range of transportation products and
financial and other services. It is one of the largest automobile manufacturers
in the world in terms of revenues. DaimlerChrysler AG operates in several
business segments including passenger cars, commercial vehicles, financial
services, and aerospace. The following chart illustrates the organization
effective as of January 1, 2000:
----------------------
| DaimlerChrysler AG |
----------------------
|
--------------------------------
| DaimlerChrysler North |
| America Holding Corporation |
--------------------------------
|
|
--------------------------------------------------------------
| |
| |
- -------------------- ---------------
| DaimlerChrysler | | MBCC |
| Corporation | ---------------
- --------------------
|
|
- -------------------
| CFC |
- -------------------
CFC's business is substantially dependent upon the operations of
DaimlerChrysler. In particular, lower levels of production and sale of
DaimlerChrysler's automotive products could result in a reduction in the level
of finance and insurance operations of CFC. CFC's executive offices are located
at 27777 Franklin Road, Southfield, Michigan 48034-9296, and its telephone
number is (248) 948-2067.
THE SUBSERVICER
CFC may purchase automobile and light duty truck receivables from MBCC and
subsequently sell them to a trust. The related prospectus supplement may
indicate the number and principal amount of such receivables included in a pool.
CFC may contract with MBCC to subservice the MBCC receivables.
As illustrated in the above organizational chart, both CFC and MBCC are
indirectly wholly-owned subsidiaries of DaimlerChrysler AG. MBCC provides a
variety of comprehensive financial services to dealers and customers of products
manufactured or distributed by DaimlerChrysler AG and its affiliates in North
America. MBCC and certain of its subsidiaries primarily provide retail and
wholesale financing, leasing, and other financial services to authorized
Mercedes-Benz automobile dealers and their customers. Additionally, a
wholly-owned subsidiary of MBCC provides financing for both DaimlerChrysler and
other manufacturers' products.
ACCOUNTS
With respect to each trust, the servicer will establish and maintain with
the related indenture trustee one or more accounts, in the name of the indenture
trustee on behalf of the securityholders of that series (the "DEPOSIT ACCOUNT").
The servicer will deposit the collections on a trust's receivables into the
trust's Deposit Account as described under "-- Collections" below. The
applicable trustee will apply available funds in a Deposit Account to pay the
trust's expenses and to make payments on its securities. If a trust has reserve
funds, they will be held in its Deposit Account. As described under "Sale
Provisions" a trust that has a Funding Period will have a Pre-Funding Account.
The prospectus supplement will describe any other accounts that a trust may
have.
Funds in any account of a trust will be invested in Eligible Investments.
"ELIGIBLE INVESTMENTS" are generally limited to investments acceptable to the
rating agencies rating the trust's offered securities as being consistent with
the ratings of those securities. Eligible Investments may include motor vehicle
retail sale contracts. Except as described below or in the related prospectus
supplement, Eligible Investments are generally limited to obligations or
securities that mature on or before the next payment date for such series.
However, to the extent permitted by the rating agencies for a series, funds in
any reserve funds for such series may be invested in securities that will not
mature prior to the next payment date and will not be sold to meet any
shortfalls. Thus, the amount of available cash in any reserve funds at any time
may be less than the balance of the reserve funds. If the amount required to be
withdrawn from any reserve funds to cover shortfalls in collections on the
receivables for the related series (as provided in the related prospectus
supplement) exceeds the amount of cash available in the reserve funds, a
temporary shortfall in the amounts distributed to the securityholders of that
series could result. Those shortfalls could, in turn, increase the average life
of those securities. Except as otherwise specified in the related prospectus
supplement, investment earnings on funds in the Deposit Account during the
related Collection Period, if any, net of losses and investment expenses shall
be deposited in the Deposit Account on each payment date and shall be treated as
collections of interest on the related receivables.
Any account for a trust will be maintained as an Eligible Deposit Account.
An "ELIGIBLE DEPOSIT ACCOUNT" is any segregated account with an Eligible
Institution or an institution otherwise acceptable to the rating agencies. An
"ELIGIBLE INSTITUTION" means (a) a depository institution organized under the
laws of the United States of America or any one of the states thereof or the
District of Columbia (or any domestic branch of a foreign bank) (i) which has
either (A) a long-term unsecured debt rating acceptable to the rating agencies
or (B) a short-term unsecured debt rating or certificate of deposit rating
acceptable to the rating agencies and (ii) whose deposits are insured by the
FDIC or (b) the corporate trust department of the related indenture trustee or
owner trustee.
SERVICING PROCEDURES
The servicer will make reasonable efforts to collect all payments due with
respect to the receivables held by any trust and will, consistent with the
related Sale and Servicing Agreement, follow such collection procedures as it
follows with respect to comparable motor vehicle retail installment sale
contracts it services for itself or others. Consistent with its normal
procedures, the servicer may, in its discretion, arrange with the obligor on a
receivable to extend or modify the payment schedule. Some of such arrangements
may result in the servicer purchasing the receivable for the Repurchase Amount.
The servicer may sell the financed vehicle securing the respective receivable at
public or private sale, or take any other action permitted by applicable law.
See "Certain Legal Aspects of the Receivables".
COLLECTIONS
The servicer will deposit collections on the receivables received by it
during the Collection Period on the payment date following that Collection
Period. A "COLLECTION PERIOD" is a calendar month unless otherwise specified in
the prospectus supplement. If at any time any of the following conditions are
true, the servicer must deposit collections on the receivables for that series
into its Deposit Account within two business days of receipt. The conditions
are: (i) CFC is no longer the servicer, or (ii) a Servicer Default exists, or
(iii) any other condition to making deposits monthly as may be specified by the
rating agencies or set forth in the related prospectus supplement. Pending
deposit into the Deposit Account, collections may be invested by the servicer at
its own risk and for its own benefit and will not be segregated from its own
funds. If the servicer were unable to remit such funds, securityholders might
incur a loss. To the extent set forth in the related prospectus supplement, the
servicer may, in order to satisfy the requirements described above, obtain a
letter of credit or other security for the benefit of the related trust to
secure timely remittances of collections on the related receivables and payment
of the aggregate Repurchase Amount with respect to receivables purchased by the
servicer.
Unless otherwise provided in the related prospectus supplement, the
servicer will not make advances of delinquent payments on the receivables.
CFC SERVICING AND COLLECTIONS
CFC's collectors are assigned to specific delinquent obligors and attempt
to contact the delinquent obligor by telephone or by letter based on the terms
of delinquency and the history of the account. Repossession procedures typically
begin when a contract becomes between 60 to 90 days delinquent. Repossession is
carried out according to specific procedures adopted by CFC.
Any deficiencies remaining, after repossession and sale of the vehicle
after the full charge-off of the contract, are pursued by CFC to the extent
practicable and legally permitted. Obligors are contacted, and when warranted by
individual circumstances, repayment schedules are established and monitored
until the deficiencies are either paid in full or become impractical to pursue.
MBCC SERVICING AND COLLECTIONS
MBCC measures delinquency by the number of days elapsed from the date a
payment is due under a contract. MBCC considers an account to be past due or
delinquent when the obligor has an overdue balance in excess of a predetermined
minimum amount. MBCC generally begins collection activities on delinquent
contracts on the 11th day after the due date of the scheduled payment. MBCC also
uses an automated system of monitoring delinquency, which categorizes delinquent
accounts into different priorities of collection activity, based on the level of
delinquency of each account.
MBCC's collectors are assigned to specific obligors and attempt to contact
the delinquent obligor by telephone or by letter based on the terms of
delinquency and the history of the account. Repossession procedures typically
begin when a contract becomes between 60 to 90 days delinquent. Repossession is
carried out according to specific procedures adopted by MBCC.
Any deficiencies remaining, after repossession and sale of the vehicle
after the full charge-off of the contract, are pursued by MBCC to the extent
practicable and legally permitted. Obligors are contacted, and when warranted by
individual circumstances, repayment schedules are established and monitored
until the deficiencies are either paid in full or become impractical to pursue.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Unless otherwise specified in the prospectus supplement for any series,
the servicer will be entitled to receive the Servicing Fee for each Collection
Period in an amount equal to a specified percentage per month of the total
receivables principal balance for such series as of the first day of that
Collection Period (the "SERVICING FEE"). The priority of payment of the
Servicing Fee will be set forth in the prospectus supplement
Unless otherwise provided in the related prospectus supplement, the
servicer will also collect and retain any late fees, prepayment charges and
other administrative fees or similar charges allowed by applicable law with
respect to the related receivables. The servicer will be entitled to
reimbursement from such trust for certain liabilities. Payments by or on behalf
of obligors will be allocated to scheduled payments and late fees and other
charges in accordance with the servicer's normal practices and procedures.
The Servicing Fee will compensate the servicer for performing the
functions of a third party servicer of motor vehicle receivables as an agent for
their beneficial owner, including collecting and posting all payments,
responding to inquiries of obligors on the receivables, investigating
delinquencies, sending payment coupons to obligors, reporting tax information to
obligors, paying costs of collections and disposition of defaults and policing
the collateral. The Servicing Fee also will compensate the servicer for
administering the particular receivables pool, including accounting for
collections and furnishing monthly and annual statements to the related owner
trustee and indenture trustee with respect to distributions and generating
federal income tax information for such trust and for the related
securityholders. The Servicing Fee also will reimburse the servicer for certain
taxes, the fees of the related owner trustee and indenture trustee, if any,
accounting fees, outside auditor fees, data processing costs and other costs
incurred in connection with administering a receivables pool.
REPORTS TO SECURITYHOLDERS
On or prior to each payment date, the servicer will prepare and provide to
the indenture trustee and owner trustee for each series a statement to be made
available to the securityholders of that series on such payment date. The
statement for a series will contain the following information for the current
payment date or the period since the prior payment date:
(i) the amount of principal paid on each class of securities;
(ii) the amount of the interest paid on each class of securities;
(iii) the total principal balance of the receivables as of the close
of business at the beginning and at the end of the related
Collection Period;
(iv) the outstanding principal balance of each class of securities,
both before and after giving effect to all principal payments
on that payment date;
(v) the amount of the servicing fee paid to the servicer with
respect to the related Collection Period;
(vi) the interest rate or pass through rate for the current Interest
Reset Period for any class of notes or certificates of such
series with variable or adjustable rates;
(vii) the amount of the aggregate realized losses, if any, for the
related Collection Period;
(viii) any shortfalls in the payments due on that payment date;
(ix) the total Repurchase Amounts, if any, for receivables that were
repurchased by the seller or the servicer during such
Collection Period;
(x) the balance of the reserve funds, if any, on that payment date
and the required amount, if any, of those reserve funds;
(xi) during the related Funding Period, if any, the remaining
Pre-Funded Amount; and
(xii) for the first such date that is on or immediately following the
end of the Funding Period, if any, the amount of any related
remaining Pre-Funded Amount that has not been used to fund the
purchase of Subsequent Receivables and is being passed through
as payments of principal on the securities of such series.
Each amount set forth pursuant to subclauses (i), (ii), (v) and (viii)
with respect to each security of any series will be expressed both in total and
as a dollar amount per $1,000 of the initial principal balance of that security.
Within the prescribed period of time for tax reporting purposes after the
end of each calendar year during the term of each trust, the applicable trustee
will mail to each person who at any time during such calendar year has been a
securityholder with respect to that trust and received any payment thereon a
statement containing certain information needed in the preparation of federal
income tax returns of that securityholder. Refer to "Certain Federal Income Tax
Consequences".
STATEMENTS TO TRUSTEES AND TRUST
Prior to each payment date or payment date with respect to each series of
securities, the servicer will provide to the applicable trustees a statement
setting forth substantially the same information as is required to be provided
in the periodic reports provided to securityholders of such series described
under "-- Reports to Securityholders".
EVIDENCE AS TO COMPLIANCE
Each Sale and Servicing Agreement will provide that a firm of independent
public accountants will furnish annually to the indenture trustee and owner
trustee a statement as to compliance by the servicer during the preceding twelve
months (or, in the case of the first such certificate, from the applicable
Closing Date) with certain standards relating to the servicing of the applicable
receivables, the servicer's accounting records and computer files with respect
thereto and certain other matters.
Under each Sale and Servicing Agreement the servicer will be obligated to
deliver annually to the indenture trustee and owner trustee a certificate signed
by an officer of the servicer stating that the servicer has fulfilled its
obligations under the Sale and Servicing Agreement throughout the preceding
twelve months (or, in the case of the first such certificate, from the Closing
Date). However, if there has been a default in the fulfillment of any such
obligation, the certificate describing each such default. The servicer has
agreed to give each indenture trustee and each owner trustee notice of certain
servicer Defaults under the related Sale and Servicing Agreement.
Copies of such statements and certificates may be obtained by
securityholders by a request in writing addressed to the applicable trustee.
CERTAIN MATTERS REGARDING THE SERVICER
Each Sale and Servicing Agreement will provide that CFC may not resign
from its obligations and duties as servicer thereunder, except upon
determination that CFC's performance of such duties is no longer permissible
under applicable law. No such resignation will become effective until the
related indenture trustee or owner trustee, as applicable, or a successor
servicer has assumed CFC's servicing obligations under the Sale and Servicing
Agreement.
Each 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 or the related noteholders or
certificateholders for taking any action or for refraining from taking any
action pursuant to such Sale and Servicing Agreement or for errors in judgment.
However, neither the servicer nor any such person will be protected against any
liability that would otherwise be imposed by reason of willful misfeasance, bad
faith or negligence in the performance of the servicer's duties thereunder or by
reason of reckless disregard of its obligations and duties thereunder. In
addition, each 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 such Sale and
Servicing Agreement and that, in its opinion, may cause it to incur any expense
or liability.
The following entities will automatically become the successor servicer
under a Sale and Servicing Agreement:
o any entity into which the servicer may be merged or consolidated, or
o any entity resulting from any merger or consolidation to which the
servicer is a party, or
o any entity succeeding to the business of the servicer or,
o any entity 50% or more of the voting stock of which is owned,
directly or indirectly, by DaimlerChrysler and which assumes the
servicer's obligations.
Such successor must assume the obligations of the servicer under the Sale and
Servicing Agreement.
SERVICER DEFAULT
Except as otherwise provided in the related prospectus supplement,
"Servicer Default" under each Sale and Servicing Agreement will consist of
o any failure by the servicer to deliver to the applicable trustee
for deposit in any of the related trust accounts any required
payment or to direct the applicable trustee to make any required
distributions therefrom, which failure continues unremedied for
five business days after written notice from the applicable
trustee is received by the servicer or after discovery of such
failure by the servicer;
o any failure by the servicer or the seller, as the case may be,
duly to observe or perform in any material respect any other
covenant or agreement in such Sale and Servicing Agreement, which
failure materially and adversely affects the rights of the
noteholders or the certificateholders of the related series and
which continues unremedied for 60 days after the giving of written
notice of such failure (A) to the servicer or the seller, as the
case may be, by the applicable trustee or (B) to the servicer or
the seller, as the case may be, and to the applicable trustee by
holders of notes or certificates of such series, as applicable,
evidencing not less than 25% in principal amount of such
outstanding notes or certificates; and
o the occurrence of an Insolvency Event with respect to the
servicer, the seller or Premier Receivables L.L.C. "INSOLVENCY
EVENT" means, with respect to any person, any of the following
events or actions: certain events of insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings
with respect to such person and certain actions by such person
indicating its insolvency, reorganization pursuant to bankruptcy
proceedings or inability to pay its obligations.
RIGHTS UPON SERVICER DEFAULT
In the case of any trust that has issued notes, unless otherwise provided
in the related prospectus supplement, as long as a Servicer Default under a Sale
and Servicing Agreement remains unremedied, the related indenture trustee or
holders of the notes evidencing not less than 51% of principal amount of such
notes then outstanding may terminate all the rights and obligations of the
servicer under such Sale and Servicing Agreement. Such indenture trustee or a
successor servicer appointed by such indenture trustee will succeed to all the
responsibilities, duties and liabilities of the servicer under such Sale and
Servicing Agreement and will be entitled to similar compensation arrangements.
If, however, a bankruptcy trustee or similar official has been appointed for the
servicer, and no Servicer Default other than such appointment has occurred, such
trustee or official may have the power to prevent the indenture trustee, the
noteholders, the owner trustee or the certificateholders from effecting a
transfer of servicing. If 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 whose
regular business includes the servicing of motor vehicle receivables. The
indenture trustee or owner trustee may make arrangements for compensation to be
paid to the successor that is not greater than the servicing compensation to the
servicer under such Sale and Servicing Agreement.
WAIVER OF PAST DEFAULTS
Unless otherwise provided in the related prospectus supplement, the
holders of notes of a series evidencing at least a majority in principal amount
of the then outstanding notes of the series may, on behalf of all noteholders
and certificateholders of that series, waive any default by the servicer in the
performance of its obligations under the related Sale and Servicing Agreement
and its consequences. However, they cannot waive a Servicer Default in making
any required deposits to or payments from any of the trust accounts in
accordance with such Sale and Servicing Agreement. Holders of a majority of the
principal balance of the certificates of a series have similar rights with
respect to a default by the Servicer that does not adversely affect the
noteholders of the series.
________________________________________________________________________________
THE INDENTURE
________________________________________________________________________________
INDENTURE; MASTER INDENTURE
A trust will issue its notes pursuant to an indenture with the applicable
indenture trustee. If a trust issues more than one series of notes, each such
series may be issued pursuant to a separate indenture or pursuant to a base
indenture and a supplement for the series. In that case, the notes of a series
will be secured solely by the series trust property allocated to the series and
will not have any rights in, or receive any payments from, that series trust
property allocated to any other series of securities issued by the same trust.
Such an indenture or master indenture is referred to as an "INDENTURE".
MODIFICATION OF INDENTURE
With respect to each trust that has issued notes pursuant to an Indenture,
the trust and the indenture trustee may, with the consent of the holders of a
majority of the outstanding notes of the related series, execute a supplemental
indenture to add provisions to, change in any manner or eliminate any provisions
of, the related Indenture, or modify (except as provided below) in any manner
the rights of the related noteholders.
Unless otherwise specified in the related prospectus supplement with
respect to a series of notes, without the consent of the holder of each such
outstanding note affected thereby, no supplemental indenture will:
o change the due date of any installment of principal of or interest
on any such note or reduce the principal amount thereof, the
interest rate specified thereon or the redemption price with
respect thereto or change any place of payment where or the coin
or currency in which any such note or any interest thereon is
payable;
o impair the right to institute suit for the enforcement of certain
provisions of the related Indenture regarding payment;
o reduce the percentage of the aggregate amount of the outstanding
notes of such series, the consent of the holders of which is
required for any such supplemental indenture or the consent of the
holders of which is required for any waiver of compliance with
certain provisions of the related Indenture or of certain defaults
thereunder and their consequences as provided for in such
Indenture;
o modify or alter the provisions of the related Indenture regarding
the voting of notes held by the applicable trust, any other
obligor on such notes, the seller or an affiliate of any of them;
o reduce the percentage of the aggregate outstanding amount of such
notes, the consent of the holders of which is required to direct
the related indenture trustee to sell or liquidate the receivables
allocated to such series if the proceeds of such sale would be
insufficient to pay the principal amount and accrued but unpaid
interest on the outstanding notes of such series;
o decrease the percentage of the aggregate principal amount of such
notes required to amend the sections of the related Indenture
which specify the applicable percentage of aggregate principal
amount of the notes of such series necessary to amend such
Indenture or certain other related agreements; or
o permit the creation of any lien ranking prior to or on a parity
with the lien of the related Indenture with respect to any of the
series trust property securing such notes or, except as otherwise
permitted or contemplated in such Indenture, terminate the lien of
such Indenture on any such collateral or deprive the holder of any
such note of the security afforded by the lien of such Indenture.
Unless otherwise provided in the applicable prospectus supplement, the
trust and the applicable indenture trustee may also enter into supplemental
indentures, without obtaining the consent of the noteholders of the related
series, for the purpose of, among other things, adding any provisions to or
changing in any manner or eliminating any of the provisions of the related
Indenture or of modifying in any manner the rights of such noteholders; provided
that such action will not materially and adversely affect the interest of any
such noteholder.
EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT.
With respect to the notes of a series, unless otherwise specified in the
related prospectus supplement, "Events of Default" under the related Indenture
will consist of:
o a default for five days (or for such other longer period specified
in the related prospectus supplement) or more in the payment of
any interest on any such note;
o a default in the payment of the principal of or any installment of the
principal of any such note when the same becomes due and payable;
o a default in the observance or performance of any covenant or
agreement of the applicable trust made in the related Indenture
and the continuation of any such default for a period of 30 days
after notice thereof is given to such trust by the applicable
indenture trustee or to such trust and such indenture trustee by
the holders of at least 25% in principal amount of such notes then
outstanding;
o any representation or warranty made by such trust in the related
Indenture or in any certificate delivered pursuant thereto or in
connection therewith having been incorrect in any material respect
as of the time made, and such breach not having been cured within
30 days after notice thereof is given to such trust by the
applicable indenture trustee or to such trust and such indenture
trustee by the holders of at least 25% in principal amount of such
notes then outstanding; or
o certain events of bankruptcy, insolvency, receivership or liquidation
of the applicable trust.
The amount of principal required to be paid to noteholders of a series under the
related Indenture will generally be limited to amounts available in the
applicable Deposit Account and allocated for distribution to such noteholders.
Therefore, unless otherwise specified in the related prospectus supplement, the
failure to pay principal on a class of notes generally will not result in the
occurrence of an Event of Default until the final scheduled payment date for
such class of notes.
In the case of a trust that issues more than one series of notes, an Event
of Default with respect to one such series of notes will not of itself
constitute an Event of Default with respect to any such other series of notes.
If an Event of Default with respect to the notes of any series should
occur and continue, the related indenture trustee or holders of a majority in
principal amount of such notes then outstanding may declare the principal of
such notes to be immediately due and payable. Unless otherwise specified in the
related prospectus supplement, such declaration may, under certain
circumstances, be rescinded by the holders of a majority in principal amount of
such notes then outstanding.
If the notes of any series are due and payable following an Event of
Default with respect thereto, the related indenture trustee may institute
proceedings to collect amounts due or foreclose on series trust property
allocated to such series, exercise remedies as a secured party, sell the
receivables included in such series trust property or elect to have the
applicable trust maintain possession of such receivables and continue to apply
collections on such receivables as if there had been no declaration of
acceleration. Unless otherwise specified in the related prospectus supplement,
however, such indenture trustee is prohibited from selling the related
receivables following an Event of Default, other than a default in the payment
of any principal of or a default for five days (or such longer period specified
in the related Indenture) or more in the payment of any interest on any note of
such series, unless
o the holders of all the outstanding notes of such series consent to such
sale,
o the proceeds of such sale are sufficient to pay in full the
principal of and the accrued interest on such outstanding notes at
the date of such sale or
o such indenture trustee determines that the proceeds of such
receivables would not be sufficient on an ongoing basis to make
all payments on such notes as such payments would have become due
if such obligations had not been declared due and payable, and
such indenture trustee obtains the consent of the holders of 66
2/3% of the aggregate outstanding amount of such notes.
If a trust issues more than one series of notes, each such series of notes
will be secured solely by the series trust property allocated to such series and
will not have any rights in or claims on, or receive any payments from, the
series trust property allocated to any other series of securities issued by such
trust.
Subject to the provisions of the applicable Indenture relating to the
duties of the related indenture trustee, if an Event of Default occurs and is
continuing with respect to a series of notes, such indenture trustee will be
under no obligation to exercise any of the rights or powers under such Indenture
at the request or direction of any of the holders of such notes, if such
indenture trustee reasonably believes it will not be adequately indemnified
against the costs, expenses and liabilities which it might incur in complying
with such request. Subject to the provisions for indemnification and certain
limitations contained in the related Indenture, the holders of a majority in
principal amount of the outstanding notes of a series will have the right to
direct the time, method and place of conducting any proceeding or any remedy
available to the applicable indenture trustee in respect of such series, and the
holders of a majority in principal amount of such notes then outstanding may, in
certain cases, waive any default with respect to such notes, except a default in
the payment of principal or interest or a default in respect of a covenant or
provision of such Indenture that cannot be modified without the waiver or
consent of all the holders of such outstanding notes.
Unless otherwise specified in the related prospectus supplement, no holder
of a note of any series will have the right to institute any proceeding with
respect to the related Indenture, unless
o such holder has given to the applicable indenture trustee prior written
notice of a continuing Event of Default,
o the holders of not less than 25% in principal amount of the
outstanding notes of such series have made written request to such
indenture trustee to institute such proceeding in its own name as
indenture trustee,
o such holder or holders have offered such indenture trustee reasonable
indemnity,
o such indenture trustee has for 60 days failed to institute such
proceeding, and
o no direction inconsistent with such written request has been given
to such indenture trustee during such 60-day period by the holders
of a majority in principal amount of such outstanding notes.
In addition, each indenture trustee and the holders of a series of notes,
by accepting such notes, will covenant, to the extent legally enforceable, that
they will not at any time institute against the applicable trust any bankruptcy,
reorganization or other proceeding under any federal or state bankruptcy or
similar law and that they do not have and will not assert any claims against any
series trust property allocated to any other series of notes issued by such
trust.
For any series, neither the related indenture trustee nor the related
owner trustee in its individual capacity, nor any holder of a certificate
representing an ownership interest in the trust 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 such notes or for the agreements of such trust contained in the applicable
Indenture.
CERTAIN COVENANTS
Each Indenture will provide that the related trust may not consolidate
with or merge into any other entity, unless
o the entity formed by or surviving such consolidation or merger is
organized under the laws of the United States, any state or the
District of Columbia,
o such entity expressly assumes such trust's obligation to make due
and punctual payments upon the notes of the related series and the
performance or observance of every agreement and covenant of such
trust under the Indenture,
o no Event of Default shall have occurred and be continuing immediately
after such merger or consolidation,
o such trust has been advised that the rating of the notes or the
certificates of such series then in effect would not be reduced or
withdrawn by the rating agencies as a result of such merger or
consolidation and
o such trust has received an opinion of counsel to the effect that
such consolidation or merger would have no material adverse
federal income tax consequence to the trust or to any related
noteholder or certificateholder.
No trust will, among other things,
o except as expressly permitted by its documents, sell, transfer,
exchange or otherwise dispose of any of its property,
o claim any credit on or make any deduction from the principal and
interest payable in respect of its notes (other than amounts
withheld under the Code or applicable state law) or assert any
claim against any present or former holder of such notes because
of the payment of taxes levied or assessed upon the trust,
o dissolve or liquidate in whole or in part,
o 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 such notes under such Indenture
except as may be expressly permitted thereby or
o 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 such series trust property or any
part thereof, or any interest therein or the proceeds thereof.
No trust may engage in any activity other than as specified under the
section of the related prospectus supplement entitled "Transaction Overview --
The Trust". No trust will incur, assume or guarantee any indebtedness other than
indebtedness incurred pursuant to one or more series of notes issued by it and
the related Indentures, pursuant to any advances made to it by the servicer or
otherwise in accordance with its documents.
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 for each series of notes will be required to mail
each year to all related noteholders a brief report relating to its eligibility
and qualification to continue as indenture trustee under the related Indenture,
any amounts advanced by it under the Indenture, the amount, interest rate and
maturity date of certain indebtedness owing by the related trust to the
applicable indenture trustee in its individual capacity, the property and funds
physically held by such indenture trustee as such and any action taken by it
that materially affects the related notes and that has not been previously
reported.
SATISFACTION AND DISCHARGE OF INDENTURE
An Indenture will be discharged with respect to the series trust property
securing a series of notes upon the delivery to the related indenture trustee
for cancellation of all such notes or, with certain limitations, upon deposit
with such indenture trustee of funds sufficient for the payment in full of all
such notes.
THE INDENTURE TRUSTEE
The indenture trustee for a series of notes will be specified in the
related prospectus supplement. The indenture trustee for any series may resign
at any time, in which event the trust will be obligated to appoint a successor
trustee for such series. A trust may also remove any such indenture trustee if
such indenture trustee ceases to be eligible to continue as such under the
related Indenture or if such indenture trustee becomes insolvent. In such
circumstances, the trust will be obligated to appoint a successor indenture
trustee for the applicable series of notes. Any resignation or removal of the
indenture trustee for any series of notes does not become effective until
acceptance of the appointment by the successor trustee for such series.
________________________________________________________________________________
MISCELLANEOUS PROVISIONS
OF PRINCIPAL DOCUMENTS
________________________________________________________________________________
AMENDMENT
Unless otherwise provided in the related prospectus supplement, each of a
trust's principal documents may be amended by the parties thereto, without the
consent of the related noteholders or certificateholders, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of any of those agreement or of modifying in any manner the rights of
such noteholders or certificateholders so long as such action will not, in the
opinion of counsel satisfactory to the related owner trustee or indenture
trustee, as applicable, materially and adversely affect the interest of any such
noteholder or certificateholder. Unless otherwise specified in the related
prospectus supplement, those agreements may also be amended by the seller, the
servicer, the related owner trustee and any related indenture trustee with the
consent of the holders of notes evidencing at least a majority in principal
amount of then outstanding notes, if any, of the related series and the holders
of the certificates of such series evidencing at least a majority of the
principal amount of such certificates then outstanding, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of those agreements or of modifying in any manner the rights of such
noteholders or certificateholders. However, no such amendment may (i) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on the related receivables or distributions that are
required to be made for the benefit of such noteholders or certificateholders or
(ii) reduce the aforesaid percentage of the notes or certificates of such series
that are required to consent to any such amendment, without the consent of the
holders of all the outstanding notes or certificates, as the case may be, of
such series.
THE OWNER TRUSTEE
The owner trustee for each trust will be specified in the related
prospectus supplement. The owner trustee's liability in connection with the
issuance and sale of the related securities is limited solely to the express
obligations of such owner trustee set forth in the related Trust Agreement and
the Sale and Servicing Agreement, as applicable. An owner trustee may resign at
any time, in which event the servicer will be obligated to appoint a successor
owner trustee. The administrator of a trust may also remove the owner trustee if
the owner trustee ceases to be eligible to continue as owner trustee under the
related trust agreement or if the owner trustee becomes insolvent. In such
circumstances, the administrator will be obligated to appoint a successor owner
trustee. Any resignation or removal of an owner trustee will not become
effective until acceptance of the appointment by the successor owner trustee.
INSOLVENCY EVENT
Each Trust Agreement will provide that the applicable owner trustee does
not have the power to commence a voluntary proceeding in bankruptcy with respect
to the related trust without the unanimous prior approval of all
certificateholders (including Premier Receivables L.L.C.) of such trust and the
delivery to the owner trustee by each such certificateholder (including Premier
Receivables L.L.C.) of a certificate certifying that such certificateholder
reasonably believes that such trust is insolvent.
PAYMENT OF NOTES
Upon the payment in full of all outstanding notes of a series and the
satisfaction and discharge of the related Indenture, the related owner trustee
will succeed to all the rights of the indenture trustee, and the
certificateholders of such series will succeed to all the rights of the
noteholders of such series, under the related Sale and Servicing Agreement,
except as otherwise provided therein.
TERMINATION
With respect to each series, the obligations of the servicer, the seller,
the related owner trustee and the related indenture trustee, if any, pursuant to
the principal agreements of the trust will terminate upon the earliest of
o the maturity or other liquidation of the last related receivable
included in the series trust property allocated to such series and
the disposition of any amounts received upon liquidation of any
such remaining receivables,
o the payment to noteholders, if any, and certificateholders of such
series of all amounts required to be paid to them pursuant to the
Sale and Servicing Agreement and the Indenture, and
o the occurrence of either event described below.
Unless otherwise provided in the related prospectus supplement, in order
to avoid excessive administrative expense, the servicer will be permitted at its
option to purchase from each trust, as of the end of any applicable Collection
Period, if the total outstanding principal amount of the receivables in a series
is 10% or less of the total principal amount of the receivables as of the
cut-off date for the series. The purchase price will equal the aggregate of the
Repurchase Amounts for the receivables as of the end of such Collection Period.
If and to the extent provided in the related prospectus supplement with
respect to a trust, the applicable trustee will, within ten days following a
payment date as of which the total principal amount of the receivables in a
series is equal to or less than the percentage of the total principal amount of
the receivables as of the cut-off date for the series specified in the related
prospectus supplement, solicit bids for the purchase of such receivables, in the
manner and subject to the terms and conditions set forth in such prospectus
supplement. If the applicable trustee receives satisfactory bids as described in
such prospectus supplement, then such remaining receivables will be sold to the
highest bidder.
As more fully described in the related prospectus supplement, any
outstanding notes of the related series will be redeemed concurrently with
either of the events specified above. The subsequent distribution to the related
certificateholders of all amounts required to be distributed to them pursuant to
the applicable Trust Agreement will effect early retirement of those
certificates.
ADMINISTRATION AGREEMENT
CFC, in its capacity as administrator, will enter into an agreement (as
amended and supplemented from time to time, an "ADMINISTRATION AGREEMENT") with
each trust that issues notes and the related indenture trustee. The
administrator will agree, to the extent provided in such Administration
Agreement, to provide the notices and to perform other administrative
obligations required by the related Indenture. Unless otherwise specified in the
related prospectus supplement, as compensation for the performance of the
administrator's obligations under the applicable Administration Agreement and as
reimbursement for its expenses related thereto, the administrator will be
entitled to a monthly administration fee in an amount equal to $200 per month
with respect to each series of notes (the "ADMINISTRATION FEE"), which fee will
be paid by the servicer.
________________________________________________________________________________
CERTAIN LEGAL ASPECTS OF THE
RECEIVABLES
________________________________________________________________________________
SECURITY INTEREST IN VEHICLES
The retail installment sales contracts evidencing the receivables also
grant security interests in the financed vehicles under the applicable UCC.
Perfection of security interests in the automobiles and light duty trucks
financed by the seller is generally governed by the motor vehicle registration
laws of the state in which the vehicle is located. In all states in which the
receivables have been originated, a security interest in automobiles and light
duty trucks is perfected by obtaining the certificate of title to the financed
vehicle or a notation of the secured party's lien on the vehicles' certificate
of title. (In Louisiana, a copy of the installment sale contract must also be
filed with the appropriate governmental recording office).
All contracts originated or acquired by the seller name the seller as
obligee or assignee and as the secured party. The seller also takes all actions
necessary under the laws of the state in which the financed vehicle is located
to perfect the seller's security interest in the financed vehicle, including,
where applicable, having a notation of its lien recorded on such vehicle's
certificate of title. Because the seller continues to service the contracts, the
obligors on the contracts will not be notified of the sale to a trust. No action
will be taken to record the transfer of the security interest from the seller to
a trust by amendment of the certificates of title for the financed vehicles or
otherwise.
The seller will assign its security interests in the financed vehicles
securing the related receivables to each trust pursuant to the related Sale and
Servicing Agreement. However, because of the administrative burden and expense,
neither the seller nor the related owner trustee will amend any certificate of
title to identify a trust as the new secured party on the certificate of title
relating to a financed vehicle. Also, the seller will continue to hold any
certificates of title relating to the vehicles in its possession as custodian
for the trust pursuant to the related Sale and Servicing Agreement. Refer to
"Sale Provisions".
In most states, an assignment such as that under each Sale and Servicing
Agreement is an effective conveyance of a security interest without amendment of
any lien noted on a vehicle's certificate of title, and the assignee succeeds
thereby to the assignor's rights as secured party. However, by not identifying a
trust as the secured party on the certificate of title, the security interest of
a trust in the vehicle could be defeated through fraud or negligence. In such
states, in the absence of fraud or forgery by the vehicle owner or the seller or
administrative error by state or local agencies, the notation of the seller's
lien on the certificates of title will be sufficient to protect a trust against
the rights of subsequent purchasers of a financed vehicle or subsequent lenders
who take a security interest in a financed vehicle. If there are any financed
vehicles as to which the seller failed to obtain or assign to a trust a
perfected security interest, the security interest of that trust would be
subordinate to, among others, the interests of subsequent purchasers of the
financed vehicles and holders of perfected security interests therein. Such a
failure, however, would constitute a breach of the warranties of the seller
under the related Sale and Servicing Agreement and would create an obligation of
the seller to repurchase the related receivable unless the breach were cured.
Refer to "Sale Provisions" and "Risk Factors -- Trusts May Not have a Perfected
Security Interest in Certain Financed Vehicles".
Under the laws of most states, the perfected security interest in a
vehicle would continue for four months after the vehicle is moved to a state
other than the state in which it is initially registered and thereafter until
the owner thereof reregisters the vehicle in the new state. A majority of states
generally require surrender of a certificate of title to reregister a vehicle.
Accordingly, a secured party must surrender possession if it holds the
certificate of title to the vehicle. If a vehicle is registered in a state
providing for the notation of a lien on the certificate of title but not
possession by the secured party, the secured party would receive notice of
surrender if the security interest is noted on the certificate of title. Thus,
the secured party would have the opportunity to re-perfect its security interest
in the vehicle in the state of relocation. In states that do not require a
certificate of title for registration of a motor vehicle, re-registration could
defeat perfection. In the ordinary course of servicing motor vehicle
receivables, the servicer takes steps to effect re-perfection upon receipt of
notice of re-registration or information from the obligor as to relocation.
Similarly, when an obligor sells a vehicle, the servicer must surrender
possession of the certificate of title or will receive notice as a result of its
lien noted thereon and accordingly will have an opportunity to require
satisfaction of the related receivable before release of the lien. Under each
Sale and Servicing Agreement the servicer is obligated to take appropriate steps
to maintain perfection of security interests in the financed vehicles and is
obligated to purchase the related receivable if it fails to do so.
Under the laws of most states, liens for repairs performed on a motor
vehicle and liens for unpaid taxes take priority over even a perfected security
interest in a financed vehicle. The Code also grants priority to certain federal
tax liens over the lien of a secured party. The laws of certain states and
federal law permit the confiscation of vehicles by governmental authorities
under certain circumstances if used in unlawful activities, which may result in
the loss of a secured party's perfected security interest in the confiscated
vehicle. Under each Sale and Servicing Agreement the seller will represent to
the related trust that, as of the date the related receivable is sold to the
trust, each security interest in a financed vehicle is or will be prior to all
other present liens (other than tax liens and other liens that arise by
operation of law) upon and security interests in such financed vehicle. However,
liens for repairs or taxes could arise, or the confiscation of a financed
vehicle could occur, at any time during the term of a receivable. No notice will
be given to the owner trustee, any indenture trustee or any securityholders in
respect of a trust if such a lien arises or confiscation occurs.
REPOSSESSION
In the event of default by a vehicle purchaser, the holder of the motor
vehicle retail installment sale contract has all the remedies of a secured party
under the UCC, except where specifically limited by other state laws. Among the
UCC remedies, the secured party has the right to perform self-help repossession
unless such act would constitute a breach of the peace. Self-help is the method
employed by the servicer in most cases and is accomplished simply by retaking
possession of the financed vehicle. In the event of default by the obligor, some
jurisdictions require that the obligor be notified of the default and be given a
time period within which he may cure the default prior to repossession.
Generally, the right of reinstatement may be exercised on a limited number of
occasions in any one-year period. In cases where the obligor objects or raises a
defense to repossession, or if otherwise required by applicable state law, a
court order must be obtained from the appropriate state court. The vehicle must
then be repossessed in accordance with that order.
NOTICE OF SALE; REDEMPTION RIGHTS
The UCC and other state laws require the secured party to provide the
obligor with reasonable notice of the date, time and place of any public sale
and/or the date after which any private sale of the collateral may be held. The
obligor has the right to redeem the collateral prior to actual sale by paying
the secured party the unpaid principal balance of the obligation plus reasonable
expenses for repossessing, holding and preparing the collateral for disposition
and arranging for its sale, plus, in some jurisdictions, reasonable attorneys'
fees. In some states, payment of delinquent installments is sufficient.
DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS
The proceeds of resale of the vehicles generally will be applied first to
the expenses of resale and repossession and then to the satisfaction of the
indebtedness. Some states impose prohibitions or limitations on deficiency
judgments if the net proceeds from resale do not cover the full amount of the
indebtedness; others do not. However, the deficiency judgment would be a
personal judgment against the obligor for the shortfall, and a defaulting
obligor can be expected to have very little capital or sources of income
available following repossession. Therefore, in many cases, it may not be useful
to seek a deficiency judgment or, if one is obtained, it may be settled at a
significant discount.
Occasionally, after resale of a vehicle and payment of all expenses and
all indebtedness, there is a surplus of funds. In that case, the UCC requires
the creditor to remit the surplus to any holder of a lien with respect to the
vehicle. If no such lienholder exists and there are remaining funds, the UCC
requires the creditor to remit the surplus to the former owner of the vehicle.
CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws and related
regulations impose substantial requirements upon lenders and servicers involved
in consumer finance. These laws include the Truth-in-Lending Act, the Equal
Credit Opportunity Act, the Federal Trade Commission Act, the Fair Credit
Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection Procedures
Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations B
and Z, the Soldiers' and Sailors' Civil Relief Act of 1940, the Texas Consumer
Credit Code, state adoptions of the National Consumer Act and of the Uniform
Consumer Credit Code and state motor vehicle retail installment sales acts,
retail installment sales acts and other similar laws. Also, state laws impose
finance charge ceilings and other restrictions on consumer transactions and
require contract disclosures in addition to those required under federal law.
These requirements impose specific statutory liabilities upon creditors who fail
to comply with their provisions. In some cases, this liability could affect an
assignee's ability to enforce consumer finance contracts such as the
receivables.
The so-called "Holder-in-Due-Course" Rule of the Federal Trade Commission
(the "FTC Rule"), the provisions of which are generally duplicated by the
Uniform Consumer Credit Code, other statutes or the common law, has the effect
of subjecting a seller in a consumer credit transaction (and certain related
creditors and their assignees) to all claims and defenses which the obligor in
the transaction could assert against the seller of the goods. Liability under
the FTC Rule is limited to the amounts paid by the obligor under the contract
and the holder of the contract may also be unable to collect any balance
remaining due thereunder from the obligor.
Most of the receivables will be subject to the requirements of the FTC
Rule. Accordingly, each trust, as holder of its receivables, will be subject to
any claims or defenses that the purchaser of the applicable financed vehicle may
assert against the seller of the financed vehicle. Such claims are limited to a
maximum liability equal to the amounts paid by the obligor on the receivable.
Courts have applied general equitable principles to secured parties
pursuing repossession and litigation involving deficiency balances. These
equitable principles may have the effect of relieving an obligor from some or
all of the legal consequences of a default.
In several cases, consumers have asserted that the self-help remedies of
secured parties under the UCC and related laws violate the due process
protections provided under the 14th Amendment to the Constitution of the United
States. Courts have generally upheld the notice provisions of the UCC and
related laws as reasonable or have found that the repossession and resale by the
creditor do not involve sufficient state action to afford constitutional
protection to borrowers.
Under each Sale and Servicing Agreement the seller will warrant to the
related trust that each receivable complies with all requirements of law in all
material respects. Accordingly, if an obligor has a claim against the trust for
violation of any law and such claim materially and adversely affects the trust's
interest in a receivable, such violation would constitute a breach of the
warranties of the seller under such Sale and Servicing Agreement and would
create an obligation of the seller to repurchase the receivable unless the
breach is cured. Refer to "Sale Provisions".
OTHER LIMITATIONS
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a secured party
to realize upon collateral or to enforce a deficiency judgment. For example, in
a Chapter 13 proceeding under the federal bankruptcy law, a court may prevent a
creditor from repossessing a vehicle, and, as part of the rehabilitation plan,
reduce the amount of the secured indebtedness to the market value of the vehicle
at the time of bankruptcy (as determined by the court), leaving the creditor as
a general unsecured creditor for the remainder of the indebtedness. A bankruptcy
court may also reduce the monthly payments due under a contract or change the
rate of interest and time of repayment of the indebtedness.
________________________________________________________________________________
CERTAIN FEDERAL INCOME TAX
CONSEQUENCES
________________________________________________________________________________
The following is a general summary of certain federal income tax
consequences of the purchase, ownership and disposition of the notes and the
certificates. The summary does not purport to deal with federal income tax
consequences applicable to all categories of holders, some of which may be
subject to special rules. For example, it does not discuss the tax treatment of
noteholders or certificateholders that are insurance companies, regulated
investment companies or dealers in securities. Moreover, there are no cases or
Internal Revenue Service ("IRS") rulings on similar transactions involving both
debt and equity interests issued by a trust with terms similar to those of the
notes and the certificates. As a result, the IRS may disagree with all or a part
of the discussion below. Prospective investors are urged to consult their own
tax advisors in determining the federal, state, local, foreign and any other tax
consequences to them of the purchase, ownership and disposition of the notes and
the certificates.
The following summary is based upon current provisions of the Internal
Revenue Code of 1986, as amended (the "CODE"), the Treasury regulations
promulgated thereunder and judicial or ruling authority, all of which are
subject to change, which change may be retroactive. Each trust will be provided
with an opinion of special Federal tax counsel to each trust specified in the
related prospectus supplement ("FEDERAL TAX COUNSEL"), regarding certain federal
income tax matters discussed below. An opinion of Federal Tax Counsel, however,
is not binding on the IRS or the courts. No ruling on any of the issues
discussed below will be sought from the IRS. For purposes of the following
summary, references to the trust, the notes, the certificates and related terms,
parties and documents shall be deemed to refer, unless otherwise specified
herein, to each trust and the notes, certificates and related terms, parties and
documents applicable to such trust.
The federal income tax consequences to certificateholders will vary
depending on whether (i) an election is made to treat the trust as a partnership
under the Code or (ii) all the certificates are retained by the seller or an
affiliate thereof. The prospectus supplement for each series of certificates
will specify whether a partnership election will be made.
TRUSTS FOR WHICH A PARTNERSHIP ELECTION IS MADE
TAX CHARACTERIZATION OF THE TRUST AS A PARTNERSHIP
Federal Tax Counsel will deliver its opinion that a trust for which a
partnership election is made will not be an association (or publicly traded
partnership) taxable as a corporation for federal income tax purposes. This
opinion will be based on the assumption that the terms of the trust agreement
and related documents will be complied with, and on counsel's conclusions that
the nature of the income of the trust will exempt it from the rule that certain
publicly traded partnerships are taxable as corporations.
TAX CONSEQUENCES TO HOLDERS OF THE NOTES
Treatment of the Notes as Indebtedness
- --------------------------------------
The seller will agree, and the noteholders will agree by their purchase of
notes, to treat the notes as debt for federal income tax purposes. Federal Tax
Counsel will, except as otherwise provided in the related prospectus supplement,
advise the trust that the notes will be classified as debt for federal income
tax purposes. The discussion below assumes this characterization of the notes is
correct.
OID, Indexed securities, Etc.
- -----------------------------
The discussion below assumes that all payments on the notes are
denominated in U.S. dollars, and that the notes are not Indexed securities or
Strip notes. Moreover, the discussion assumes that the interest formula for the
notes meets the requirements for "qualified stated interest" under Treasury
regulations (the "OID regulations") relating to original issue discount ("OID"),
and that any OID on the notes (i.e., any excess of the principal amount of the
notes over their issue price) does not exceed a de minimis amount (i.e., 1/4% of
their principal amount multiplied by the number of full years included in their
term), all within the meaning of the OID regulations. If these conditions are
not satisfied with respect to any given series of notes, additional tax
considerations with respect to such notes will be disclosed in the applicable
prospectus supplement.
Interest Income on the Notes
- ----------------------------
Based on the above assumptions, except as discussed in the following
paragraph, the notes will not be considered issued with OID. The stated interest
thereon will be taxable to a noteholder as ordinary interest income when
received or accrued in accordance with such noteholder's method of tax
accounting. Under the OID regulations, a holder of a note issued with a de
minimis amount of OID must include such OID in income, on a pro rata basis, as
principal payments are made on the note. It is believed that any prepayment
premium paid as a result of a mandatory redemption will be taxable as contingent
interest when it becomes fixed and unconditionally payable. A purchaser who buys
a note for more or less than its principal amount will generally be subject,
respectively, to the premium amortization or market discount rules of the Code.
A holder of a note that has a fixed maturity date of not more than one
year from the issue date of such note (a "Short-Term note") may be subject to
special rules. An accrual basis holder of a Short-Term note (and certain cash
method holders, including regulated investment companies, as set forth in
Section 1281 of the Code) generally would be required to report interest income
as interest accrues on a straight-line basis over the term of each interest
period. Other cash basis holders of a Short-Term note would, in general, be
required to report interest income as interest is paid (or, if earlier, upon the
taxable disposition of the Short-Term note). However, a cash basis holder of a
Short-Term note reporting interest income as it is paid may be required to defer
a portion of any interest expense otherwise deductible on indebtedness incurred
to purchase or carry the Short-Term note until the taxable disposition of the
Short-Term note. A cash basis taxpayer may elect under Section 1281 of the Code
to accrue interest income on all non-government debt obligations with a term of
one year or less, in which case the taxpayer would include interest on the
Short-Term note in income as it accrues, but would not be subject to the
interest expense deferral rule referred to in the preceding sentence. Certain
special rules apply if a Short-Term note is purchased for more or less than its
principal amount.
Sale or Other Disposition
- -------------------------
If a noteholder sells a 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 note. The adjusted tax basis of a note to a
particular noteholder will equal the holder's cost for the note, increased by
any market discount, acquisition discount, OID (including de minimis OID) and
gain previously included by such noteholder in income with respect to the note
and decreased by the amount of bond premium (if any) previously amortized and by
the amount of principal payments previously received by such noteholder with
respect to such note. Any such gain or loss will be capital gain or loss if the
note was held as a capital asset, except for gain representing accrued interest
and accrued market discount not previously included in income. Any capital gain
recognized upon a sale, exchange or other disposition of a note will be
long-term capital gain if the seller's holding period is more than one year and
will be short-term capital gain if the seller's holding period is one year or
less. The deductibility of capital losses is subject to certain limitations.
Prospective investors should consult with their own tax advisors concerning the
U.S. federal tax consequences of the sale, exchange or other disposition of a
note.
Foreign Holders
- ---------------
Interest payments made (or accrued) to a noteholder who is a nonresident
alien, foreign corporation or other non-U.S. person (a "foreign person")
generally will be considered "portfolio interest", and generally will not be
subject to United States federal income tax and withholding tax, if the interest
is not effectively connected with the conduct of a trade or business within the
United States by the foreign person and the foreign person (i) is not actually
or constructively a "10 percent shareholder" of the trust or the seller
(including a holder of 10% of the outstanding certificates) or a "controlled
foreign corporation" with respect to which the trust or the seller is a "related
person" within the meaning of the Code and (ii) provides the owner trustee or
other person who is otherwise required to withhold U.S. tax with respect to the
notes with an appropriate statement (on Form W8 or a similar form), signed under
penalties of perjury, certifying that the beneficial owner of the note is a
foreign person and providing the foreign person's name and address. If a note is
held through a securities clearing organization or certain other financial
institutions, the organization or institution may provide the relevant signed
statement to the withholding agent; in that case, however, the signed statement
must be accompanied by a Form W8 or substitute form provided by the foreign
person that owns the note. If such interest is not portfolio interest, then it
will be subject to United States federal income at graduated rates (if received
by a non-U.S. person with effectively connected income) and withholding tax at a
rate of 30 percent, unless reduced or eliminated pursuant to an applicable tax
treaty.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a note by a foreign person will be exempt from United
States federal income and withholding tax, provided that (i) such gain is not
effectively connected with the conduct of a trade or business in the United
States by the foreign person and (ii) in the case of an individual foreign
person, the foreign person is not present in the United States for 183 days or
more in the taxable year and does not otherwise have a "tax home" within the
United States.
Backup Withholding
- ------------------
Each holder of a note (other than an exempt holder such as a corporation,
tax-exempt organization, qualified pension and profit-sharing trust, individual
retirement account or nonresident alien who provides certification as to status
as a nonresident) will be required to provide, under penalties of perjury, a
certificate containing the holder's name, address, correct federal taxpayer
identification number and a statement that the holder is not subject to backup
withholding. Should a nonexempt noteholder fail to provide the required
certification, the trust will be required to withhold 31 percent of the amount
otherwise payable to the holder, and remit the withheld amount to the IRS as a
credit against the holder's federal income tax liability.
New Withholding Regulations
- ---------------------------
Recently, the Treasury Department issued new regulations (the "New
Regulations") which make certain modifications to withholding, backup
withholding and information reporting rules. The New Regulations attempt to
unify certification requirements and modify reliance standards. The New
Regulations will generally be effective for payments made after December 31,
2000, subject to certain transition rules. Prospective investors are urged to
consult their own tax advisors regarding the New Regulations.
Possible Alternative Treatments of the Notes
- --------------------------------------------
If, contrary to the opinion of Federal Tax Counsel, the IRS successfully
asserted that one or more of the notes did not represent debt for federal income
tax purposes, the notes might be treated as equity interests in the trust. If so
treated, the trust might be treated as a publicly traded partnership taxable as
a corporation with potentially adverse tax consequences (and the publicly traded
partnership taxable as a corporation would not be able to reduce its taxable
income by deductions for interest expense on notes recharacterized as equity).
Alternatively, and most likely in the view of Federal Tax Counsel, the trust
would be treated as a publicly traded partnership that would not be taxable as a
corporation because it would meet certain qualifying income tests. Nonetheless,
treatment of the notes as equity interests in such a partnership could have
adverse tax consequences to certain holders. For example, income to certain
tax-exempt entities (including pension funds) would be "unrelated business
taxable income", income to foreign holders generally would be subject to U.S.
tax and U.S. tax return filing and withholding requirements, and individual
holders might be subject to certain limitations on their ability to deduct their
share of trust expenses.
TAX CONSEQUENCES TO HOLDERS OF THE CERTIFICATES
Treatment of the Trust as a Partnership
- ---------------------------------------
The seller and the servicer will agree, and the certificateholders will
agree by their purchase of certificates, to treat the trust and each separate
series trust property as a partnership for purposes of federal and state income
tax, franchise tax and any other tax measured in whole or in part by income,
with the assets of the partnership being the assets held by the trust, the
partners of the partnership being the certificateholders (including Premier
Receivables L.L.C. in its capacity as recipient of distributions from the
reserve funds), and the notes being debt of the related partnership. However,
the proper characterization of the arrangement involving the trust, the
certificates, the notes, the seller, Premier Receivables L.L.C. and the
servicer is not clear because there is no authority on transactions closely
comparable to that contemplated herein.
A variety of alternative characterizations are possible. For example,
because the certificates have certain features characteristic of debt, the
certificates might be considered debt of Premier Receivables L.L.C. or the
trust. Any such characterization would not result in materially adverse tax
consequences to certificateholders as compared to the consequences from
treatment of the certificates as equity in a partnership, described below. The
following discussion assumes that the certificates represent equity interests in
a partnership.
Indexed Securities, Etc.
- ------------------------
The following discussion assumes that all payments on the certificates are
denominated in U.S. dollars, none of the certificates are Indexed securities or
Strip certificates, and that a series of securities includes a single class of
certificates. If these conditions are not satisfied with respect to any given
series of certificates, additional tax considerations with respect to such
certificates will be disclosed in the applicable prospectus supplement.
Partnership Taxation
- --------------------
As a partnership, the trust will not be subject to federal income tax.
Rather, each certificateholder will be required to separately take into account
such holder's allocated share of income, gains, losses, deductions and credits
of the trust. The trust's income will consist primarily of interest and finance
charges earned on the receivables (including appropriate adjustments for market
discount, OID and bond premium) and any gain upon collection or disposition of
receivables. The trust's deductions will consist primarily of interest accruing
with respect to the notes, servicing and other fees, and losses or deductions
upon collection or disposition of receivables.
The tax items of a partnership are allocable to the partners in accordance
with the Code, Treasury regulations and the partnership agreement (here, the
trust agreement and related documents). The trust agreement will provide, in
general, that the certificateholders will be allocated taxable income of the
trust for each month equal to the sum of (i) the interest that accrues on the
certificates in accordance with their terms for such month, including interest
accruing at the pass through rate for such month and interest on amounts
previously due on the certificates but not yet distributed; (ii) any trust
income attributable to discount on the receivables that corresponds to any
excess of the principal amount of the certificates over their initial issue
price; (iii) prepayment premium payable to the certificateholders for such
month; and (iv) any other amounts of income payable to the certificateholders
for such month. Such allocation will be reduced by any amortization by the trust
of premium on receivables that corresponds to any excess of the issue price of
certificates over their principal amount. All remaining taxable income of the
trust will be allocated to Premier Receivables L.L.C. Based on the economic
arrangement of the parties, this approach for allocating trust income should be
permissible under applicable Treasury regulations, although no assurance can be
given that the IRS would not require a greater amount of income to be allocated
to certificateholders. Moreover, even under the foregoing method of allocation,
certificateholders may be allocated income equal to the entire pass through rate
plus the other items described above even though the trust might not have
sufficient cash to make current cash distributions of such amount. Thus, cash
basis holders will in effect be required to report income from the certificates
on the accrual basis and certificateholders may become liable for taxes on trust
income even if they have not received cash from the trust to pay such taxes. In
addition, because tax allocations and tax reporting will be done on a uniform
basis for all certificateholders but certificateholders may be purchasing
certificates at different times and at different prices, certificateholders may
be required to report on their tax returns taxable income that is greater or
less than the amount reported to them by the trust.
All of the taxable income allocated to a certificateholder that is a
pension, profit sharing or employee benefit plan or other tax-exempt entity
(including an individual retirement account) will constitute "unrelated business
taxable income" generally taxable to such a holder under the Code.
An individual taxpayer's share of expenses of the trust (including fees to
the servicer but not interest expense) would be miscellaneous itemized
deductions. Such deductions might be disallowed to the individual in whole or in
part and might result in such holder being taxed on an amount of income that
exceeds the amount of cash actually distributed to such holder over the life of
the trust.
The trust intends to make all tax calculations relating to income and
allocations to certificateholders on an aggregate basis. If the IRS were to
require that such calculations be made separately for each receivable, the trust
might be required to incur additional expense but it is believed that there
would not be a material adverse effect on certificateholders.
Discount and Premium
- --------------------
It is believed that the receivables were not issued with OID, and,
therefore, the trust should not have OID income. However, the purchase price
paid by the trust for the receivables may be greater or less than the remaining
principal balance of the receivables at the time of purchase. If so, the
receivables will have been acquired at a premium or discount, as the case may
be. (As indicated above, the trust will make this calculation on an aggregate
basis, but might be required to recompute it on a receivable-by-receivable
basis.)
If the trust acquires the receivables at a market discount or premium, the
trust will elect to include any such discount in income currently as it accrues
over the life of the receivables or to offset any such premium against interest
income on the receivables. As indicated above, a portion of such market discount
income or premium deduction may be allocated to certificateholders.
Section 708 Termination
- -----------------------
Under Section 708 of the Code, the trust will be deemed to terminate for
federal income tax purposes if 50% or more of the capital and profits interests
in the trust are sold or exchanged within a 12-month period. Pursuant to final
Treasury regulations issued on May 9, 1997, if such a termination occurs, the
trust will be considered to have contributed the assets of the trust (the "old
partnership") to a new partnership (the "new partnership") in exchange for
interests in the partnership. Such interests would be deemed distributed to the
partners of the old partnership in liquidation thereof, which would not
constitute a sale or exchange.
Disposition of Certificates
- ---------------------------
Generally, capital gain or loss will be recognized on a sale of
certificates in an amount equal to the difference between the amount realized
and the seller's tax basis in the certificates sold. A certificateholder's tax
basis in a certificate will generally equal the holder's cost increased by the
holder's share of trust income (includible in income) and decreased by any
distributions received with respect to such certificate. In addition, both the
tax basis in the certificates and the amount realized on a sale of a certificate
would include the holder's share of the notes and other liabilities of the
trust. A holder acquiring certificates at different prices may be required to
maintain a single aggregate adjusted tax basis in such certificates, and, upon
sale or other disposition of some of the certificates, allocate a portion of
such aggregate tax basis to the certificates sold (rather than maintaining a
separate tax basis in each certificate for purposes of computing gain or loss on
a sale of that certificate).
Any gain on the sale of a certificate attributable to the holder's share
of unrecognized accrued market discount on the receivables would generally be
treated as ordinary income to the holder and would give rise to special tax
reporting requirements. The trust does not expect to have any other assets that
would give rise to such special reporting requirements. Thus, to avoid those
special reporting requirements, the trust will elect to include market discount
in income as it accrues.
If a certificateholder is required to recognize an aggregate amount of
income (not including income attributable to disallowed itemized deductions
described above) over the life of the certificates that exceeds the aggregate
cash distributions with respect thereto, such excess will generally give rise to
a capital loss upon the retirement of the certificates.
Allocations Between Transferors and Transferees
- -----------------------------------------------
In general, the trust's taxable income and losses will be determined
monthly and the tax items for a particular calendar month will be apportioned
among the certificateholders in proportion to the principal amount of
certificates owned by them as of the close of the last day of such month. As a
result, a holder purchasing certificates may be allocated tax items (which will
affect its tax liability and tax basis) attributable to periods before the
actual transaction.
The use of such a monthly convention may not be permitted by existing
regulations. If a monthly convention is not allowed (or only applies to
transfers of less than all of the partner's interest), taxable income or losses
of the trust might be reallocated among the certificateholders. Premier
Receivables L.L.C. is authorized to revise the trust's method of allocation
between transferors and transferees to conform to a method permitted by future
regulations.
Section 754 Election
- --------------------
In the event that a certificateholder sells its certificates at a profit
(or loss), the purchasing certificateholder will have a higher (or lower) basis
in the certificates than the selling certificateholder had. The tax basis of the
trust's assets will not be adjusted to reflect that higher (or lower) basis
unless the trust were to file an election under Section 754 of the Code. In
order to avoid the administrative complexities that would be involved in keeping
accurate accounting records, as well as potentially onerous information
reporting requirements, the trust will not make such an election. As a result,
certificateholders might be allocated a greater or lesser amount of trust income
than would be appropriate based on their own purchase price for the
certificates.
Administrative Matters
- ----------------------
The owner trustee is required to keep or have kept complete and accurate
books of the trust. Such books will be maintained for financial reporting and
tax purposes on an accrual basis and the fiscal year of the trust will be the
calendar year. The owner trustee will file a partnership information return (IRS
Form 1065) with the IRS for each taxable year of the trust and will report each
certificateholder's allocable share of items of trust income and expense to
holders and the IRS on Schedule K1. The trust will provide the Schedule K1
information to nominees that fail to provide the trust with the information
statement described below and such nominees will be required to forward such
information to the beneficial owners of the certificates. Generally, holders
must file tax returns that are consistent with the information return filed by
the trust or be subject to penalties unless the holder notifies the IRS of all
such inconsistencies.
Under Section 6031 of the Code, any person that holds certificates as a
nominee at any time during a calendar year is required to furnish the trust with
a statement containing certain information on the nominee, the beneficial owners
and the certificates so held. Such information includes (i) the name, address
and taxpayer identification number of the nominee and (ii) as to each beneficial
owner (x) the name, address and identification number of such person, (y)
whether such person is a United States person, a tax-exempt entity or a foreign
government, an international organization, or any wholly owned agency or
instrumentality of either of the foregoing, and (z) certain information on
certificates that were held, bought or sold on behalf of such person throughout
the year. In addition, brokers and financial institutions that hold certificates
through a nominee are required to furnish directly to the trust information as
to themselves and their ownership of certificates. A clearing agency registered
under Section 17A of the Exchange Act is not required to furnish any such
information statement to the trust. The information referred to above for any
calendar year must be furnished to the trust on or before the following January
31. Nominees, brokers and financial institutions that fail to provide the trust
with the information described above may be subject to penalties.
Premier Receivables L.L.C. will be designated as the tax matters partner
in the related trust agreement and, as such, will be responsible for
representing the certificateholders in any dispute with the IRS. The Code
provides for administrative examination of a partnership as if the partnership
were a separate and distinct taxpayer. Generally, the statute of limitations
for partnership items does not expire before three years after the date on
which the partnership information return is filed. Any adverse determination
following an audit of the return of the trust by the appropriate taxing
authorities could result in an adjustment of the returns of the
certificateholders, and, under certain circumstances, a certificateholder may
be precluded from separately litigating a proposed adjustment to the items of
the trust. An adjustment could also result in an audit of a certificateholder's
returns and adjustments of items not related to the income and losses of the
trust.
Tax Consequences to Foreign Certificateholders
- ----------------------------------------------
It is not clear whether the trust would be considered to be engaged in a
trade or business in the United States for purposes of federal withholding taxes
with respect to non-U.S. persons because there is no clear authority dealing
with that issue under facts substantially similar to those described herein.
Although it is not expected that the trust would be engaged in a trade or
business in the United States for such purposes, the trust will withhold as if
it were so engaged in order to protect the trust from possible adverse
consequences of a failure to withhold. The trust expects to withhold on the
portion of its taxable income that is allocable to foreign certificateholders
pursuant to Section 1446 of the Code, as if such income were effectively
connected to a U.S. trade or business, at a rate of 35% for foreign holders that
are taxable as corporations and 39.6% for all other foreign holders. Subsequent
adoption of Treasury regulations or the issuance of other administrative
pronouncements may require the trust to change its withholding procedures. In
determining a holder's withholding status, the trust may rely on IRS Form W8,
IRS Form W9 or the holder's certification of non-foreign status signed under
penalties of perjury.
Each foreign holder might be required to file a U.S. individual or
corporate income tax return (including, in the case of a corporation, the branch
profits tax) on its share of the trust's income. Each foreign holder must obtain
a taxpayer identification number from the IRS and submit that number to the
trust on Form W8 (or substantially identical form) in order to assure
appropriate crediting of the taxes withheld. A foreign holder generally would be
entitled to file with the IRS a claim for refund with respect to taxes withheld
by the trust, taking the position that no taxes were due because the trust was
not engaged in a U.S. trade or business. However, interest payments made (or
accrued) to a certificateholder who is a foreign person generally will be
considered guaranteed payments to the extent such payments are determined
without regard to the income of the trust. If these interest payments are
properly characterized as guaranteed payments, then the interest will not be
considered "portfolio interest". As a result, certificateholders will be subject
to United States federal income tax and withholding tax at a rate of 30%, unless
reduced or eliminated pursuant to an applicable treaty. In such case, a foreign
holder would only be entitled to claim a refund for that portion of the taxes in
excess of the taxes that should be withheld with respect to the guaranteed
payments.
Backup Withholdings
- -------------------
Distributions made on the certificates and proceeds from the sale of the
certificates will be subject to a "backup" withholding tax of 31% if, in
general, the certificateholder fails to comply with certain identification
procedures, unless the holder is an exempt recipient under applicable provisions
of the Code.
New Withholding Regulations
- ---------------------------
Recently, the Treasury Department issued the New Regulations which attempt
to unify certification requirements and modify reliance standards. The New
Regulations will generally be effective for payments made after December 31,
2000, subject to certain transition rules. Prospective investors are urged to
consult their own tax advisors regarding the New Regulations.
TRUSTS IN WHICH ALL CERTIFICATES ARE RETAINED BY THE SELLER
OR AN AFFILIATE OF THE SELLER
TAX CHARACTERIZATION OF THE TRUST
Federal Tax Counsel will deliver its opinion that a trust which issues one
or more classes of notes to investors and all the certificates of which are
retained by seller or an affiliate thereof will not be an association (or
publicly traded partnership) taxable as a corporation for federal income tax
purposes. This opinion will be based on the assumption that the terms of the
trust agreement and related documents will be complied with, and on counsel's
conclusions that the trust will constitute a mere security arrangement for the
issuance of debt by the single certificateholder.
Treatment of the Notes as Indebtedness
- --------------------------------------
The seller will agree, and the noteholders will agree by their purchase of
notes, to treat the notes as debt for federal income tax purposes. Federal Tax
Counsel will, except as otherwise provided in the related prospectus supplement,
advise the trust that the notes will be classified as debt for federal income
tax purposes. Assuming such characterization of the notes is correct, the
federal income tax consequences to noteholders described above under the heading
"Trusts for Which a Partnership Election is Made -- Tax Consequences to Holders
of the notes" would apply to the noteholders.
If, contrary to the opinion of Federal Tax Counsel, the IRS successfully
asserted that one or more classes of notes did not represent debt for federal
income tax purposes, such class or classes of notes might be treated as equity
interests in the trust. If so treated, the trust might be treated as a publicly
traded partnership taxable as a corporation with potentially adverse tax
consequences (and the publicly traded partnership taxable as a corporation would
not be able to reduce its taxable income by deductions for interest expense on
notes recharacterized as equity). Alternatively, and more likely in the view of
Federal Tax Counsel, the trust would most likely be treated as a publicly traded
partnership that would not be taxable as a corporation because it would meet
certain qualifying income tests. Nonetheless, treatment of notes as equity
interests in such a partnership could have adverse tax consequences to certain
holders of such notes. For example, income to certain tax-exempt entities
(including pension funds) would be "unrelated business taxable income", income
to foreign holders may be subject to U.S. withholding tax and U.S. tax return
filing requirements, and individual holders might be subject to certain
limitations on their ability to deduct their share of trust expenses. In the
event one or more classes of notes were treated as interests in a partnership,
the consequences governing the certificates as equity interests in a partnership
described above under "Trusts for Which a Partnership Election is Made -- Tax
Consequences to Holders of the certificates" would apply to the holders of such
notes.
FASITS
FASIT PROVISIONS
The Small Business and Job Protection Act of 1996 added sections 860H
through 860L to the Code (the "FASIT provisions"), which provide for a new
type of entity for United States federal income tax purposes known as a
"financial asset securitization investment trust" (a "FASIT"). The legislation
providing for the new FASIT entity became effective on September 1, 1997, but
many technical issues are to be addressed in Treasury regulations yet to be
drafted. In general, the FASIT legislation will enable a trust to be treated
as a pass through entity not subject to United States federal entity level
income tax (except with respect to certain prohibited transactions) and to
issue securities that would be treated as debt for United States federal
income tax purposes. The prospectus supplement for a trust that elects FASIT
treatment will provide additional information on the FASIT provision. Also, a
FASIT election may be made with respect to a trust in connection with the
issuance of future series of its securities, upon satisfaction of certain
conditions, delivery by the trust of appropriate legal opinions and a
determination by the trust that such election will have no adverse impact on
holders of any then-existing classes of securities of the trust.
CERTAIN STATE TAX CONSEQUENCES
The activities of servicing and collecting the receivables will be
undertaken by the servicer, a Michigan limited liability company. Because of
the variation in each state's tax laws based in whole or in part upon income,
it is impossible to predict tax consequences to holders of notes and
certificates in all of the state taxing jurisdictions in which they are already
subject to tax. Noteholders and certificateholders are urged to consult their
own tax advisors with respect to state tax consequences arising out of the
purchase, ownership and disposition of notes and certificates.
* * *
THE FEDERAL AND STATE TAX DISCUSSIONS SET FORTH ABOVE ARE INCLUDED FOR
GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A NOTEHOLDER'S
OR CERTIFICATEHOLDER'S PARTICULAR TAX SITUATION. PROSPECTIVE PURCHASERS SHOULD
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF NOTES AND CERTIFICATES, INCLUDING THE TAX
CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE
EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
________________________________________________________________________________
ERISA CONSIDERATIONS
________________________________________________________________________________
Section 406 of ERISA and Section 4975 of the Code prohibit a pension,
profit sharing or other employee benefit or other plan (such as an individual
retirement account and certain types of Keogh Plans) that is subject to Title I
of ERISA or to Section 4975 of the Code from engaging in certain transactions
involving "plan assets" with persons that are "parties in interest" under ERISA
or "disqualified persons" under the Code with respect to the plan. Certain
governmental plans, although not subject to ERISA or the Code, are subject to
federal, state or local laws ("SIMILAR LAW") that impose similar requirements.
Such plans subject to ERISA, Section 4975, or Similar Law are referred to herein
as "PLANS". A violation of these "prohibited transaction" rules may generate
excise tax and other liabilities under ERISA and the Code or under Similar Law
for such persons.
Depending on the relevant facts and circumstances, certain prohibited
transaction exemptions may apply to the purchase or holding of the securities --
for example:
o Prohibited Transaction Class Exemption ("PTE") 9623, which exempts
certain transactions effected on behalf of a Plan by an "in-house
asset manager"
o PTE 9560, which exempts certain transactions between insurance
company general accounts and parties in interest; PTE 9138, which
exempts certain transactions between bank collective investment
funds and parties in interest
o PTE 901, which exempts certain transactions between insurance company
pooled separate accounts and parties in interest
o PTE 8414, which exempts certain transactions effected on behalf of
a Plan by a "qualified professional asset manager". There can be
no assurance that any of these exemptions will apply with respect
to any Plan's investment in the securities, or that such an
exemption, if it did apply, would apply to all prohibited
transactions that may occur in connection with such investment.
Furthermore, these exemptions would not apply to transactions
involved in operation of the trust if, as described below, the
assets of the trust were considered to include Plan assets.
ERISA also imposes certain duties on persons who are fiduciaries of Plans
subject to ERISA, including the requirements of investment prudence and
diversification, and the requirement that such a Plan's investments be made in
accordance with the documents governing the Plan. Under ERISA, any person who
exercises any authority or control respecting the management or disposition of
the assets of a Plan is considered to be a fiduciary of such Plan. Plan
fiduciaries must determine whether the acquisition and holding of securities and
the operations of the trust would result in prohibited transactions if Plans
that purchase the securities were deemed to own an interest in the underlying
assets of the trust under the rules discussed below. There may also be an
improper delegation of the responsibility to manage Plan assets if Plans that
purchase the securities are deemed to own an interest in the underlying assets
of the trust.
Pursuant to Department of Labor Regulation Section 2510.3101 (the "Plan
Assets Regulation"), in general when a Plan acquires an equity interest in an
entity such as a trust and such interest does not represent a "publicly offered
security" or a security issued by an investment company registered under the
Investment Company Act of 1940, as amended, the Plan's assets include both the
equity interest and an undivided interest in each of the underlying assets of
the entity, unless it is established either that the entity is an "operating
company" or that equity participation in the entity by "benefit plan investors"
is not "significant". In general, an "equity interest" is defined under the Plan
Assets Regulation as any interest in an entity other than an instrument which is
treated as indebtedness under applicable local law and which has no substantial
equity features. However, it is anticipated that the certificates will be
considered equity interests in the trust for purposes of the Plan Assets
Regulation. In that case, the assets of the trust would constitute plan assets
if certificates are acquired by Plans. In such event, the fiduciary and
prohibited transaction restrictions of ERISA and section 4975 of the Code would
apply to transactions involving the assets of the trust. As a result, except in
the case of Senior Certificates with respect to which the Exemption is available
(as described below), certificates generally shall not be transferred unless the
owner trustee receives
o a representation substantially to the effect that the proposed
transferee is not a Plan and is not acquiring the certificates on
behalf of or with the assets of a Plan (including assets that may
be held in an insurance company's separate or general accounts
where assets in such accounts may be deemed "plan assets" for
purposes of ERISA), or
o an opinion of counsel in form and substance satisfactory to the
owner trustee and the seller that the purchase or holding of the
certificates by or on behalf of a Plan will not constitute a
prohibited transaction and will not result in the assets of the
trust being deemed to be "plan assets" and subject to the
fiduciary responsibility provisions of ERISA or the prohibited
transaction provisions of ERISA and the Code or any Similar Law or
subject any owner trustee, the certificate administrator or the
seller to any obligation in addition to those undertaken in the
trust agreement.
Unless otherwise specified in the related prospectus supplement, the
offered notes may be purchased by a Plan. A fiduciary of a Plan must determine
that the purchase of a note is consistent with its fiduciary duties under ERISA
and does not result in a nonexempt prohibited transaction as defined in Section
406 of ERISA or Section 4975 of the Code. However, the notes may not be
purchased with the assets of a Plan if the seller, an underwriter, the indenture
trustee, the owner trustee or any of their affiliates
o has investment or administrative discretion with respect to such Plan
assets;
o has authority or responsibility to give, or regularly gives,
investment advice with respect to such Plan assets for a fee and
pursuant to an agreement or understanding that such advice
- will serve as a primary basis for investment decisions with respect
to such Plan assets and
- will be based on the particular investment needs for such Plan; or
o is an employer maintaining or contributing to such Plan.
Employee benefit plans that are governmental plans (as defined in Section
3(32) of ERISA) and certain church plans (as defined in Section 3(33) of ERISA)
are not subject to ERISA requirements. However, any such governmental or church
plan which is qualified under Section 401(a) of the Code and exempt from
taxation under Section 501(a) of the Code is subject to the prohibited
transaction rules in Section 503 of the Code.
A fiduciary of a Plan considering the purchase of securities of a given
series 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.
SENIOR CERTIFICATES
The following discussion applies only to nonsubordinated certificates
(referred to herein as "SENIOR CERTIFICATES") issued by a trust.
The U.S. Department of Labor (the "DOL") has granted to the lead
underwriter named in the prospectus supplement an exemption (the "EXEMPTION")
from certain of the prohibited transaction rules of ERISA with respect to the
initial purchase, the holding and the subsequent resale by Plans of certificates
representing interests in asset-backed pass-through trusts that consist of
certain receivables, loans and other obligations that meet the conditions and
requirements of the Exemption. The receivables covered by the Exemption include
motor vehicle installment sales contracts such as a trust's receivables. The
Exemption will apply to the acquisition, holding and resale of the Senior
Certificates by a Plan, provided that certain conditions (certain of which are
described below) are met.
Among the conditions which must be satisfied for the Exemption to apply to
the Senior certificates are the following:
1. The acquisition of the Senior Certificates by a Plan is on terms
(including the price for the Senior certificates) that are at
least as favorable to the Plan as they would be in an arm's length
transaction with an unrelated party;
2. The rights and interests evidenced by the Senior Certificates
acquired by the Plan are not subordinated to the rights and
interests evidenced by other certificates of the trust;
3. The Senior Certificates acquired by the Plan have received a
rating at the time of such acquisition that is in one of the three
highest generic rating categories from either Standard & Poor's
Corporation, Moody's Investors Service, Inc., Duff & Phelps Inc.
or Fitch IBCA, Inc.;
4. The owner trustee is not an affiliate of any other member of the
Restricted Group (as defined below);
5. The sum of all payments made to the underwriters in connection
with the distribution of the Senior Certificates represents not
more than reasonable compensation for underwriting the Senior
Certificates; the sum of all payments made to and retained by the
seller pursuant to the sale of the receivables to the trust
represents not more than the fair market value of such
receivables; and the sum of all payments made to and retained by
the servicer represents not more than reasonable compensation for
the servicer's services under the Sale and Servicing Agreement and
reimbursement of the servicer's reasonable expenses in connection
therewith; and
6. The Plan investing in the Senior Certificates is an "accredited
investor" as defined in Rule 501(a)(1) of Regulation D of the SEC
under the securities Act of 1933.
On July 21, 1997, the DOL published in the Federal Register an amendment
to the Exemption, which extends exemptive relief to certain mortgage-backed and
asset-backed securities transactions using pre-funding accounts for trusts
issuing pass-through certificates. The amendment generally allows mortgage loans
or other secured receivables (the "Obligations") supporting payments to
certificateholders, and having a value equal to no more than twenty-five percent
(25%) of the total principal amount of the certificates being offered by the
trust, to be transferred to the trust within a 90-day or three-month period
following the closing date (the "Pre-Funding Period"), instead of requiring that
all such Obligations be either identified or transferred on or before the
Closing Date. The relief is available when the following conditions are met:
1. The ratio of the amount allocated to the pre-funding account to
the total principal amount of the certificates being offered (the
"Pre-Funding Limit") must not exceed twenty-five percent (25%).
2. All Obligations transferred after the Closing Date (the
"ADDITIONAL OBLIGATIONS") must meet the same terms and conditions
for eligibility as the original Obligations used to create the
trust, which terms and conditions have been approved by a rating
agency.
3. The transfer of such Additional Obligations to the trust during
the Pre-Funding Period must not result in the certificates to be
covered by the Exemption receiving a lower credit rating from a
rating agency upon termination of the Pre-Funding Period than the
rating that was obtained at the time of the initial issuance of
the certificates by the trust.
4. Solely as a result of the use of pre-funding, the weighted average
annual percentage interest rate for all of the Obligations in the
trust at the end of the Pre-Funding Period must not be more than
100 basis points lower than the average interest rate for the
Obligations transferred to the trust on the Closing Date.
5. In order to insure that the characteristics of the Additional
Obligations are substantially similar to the original Obligations
which were transferred to the trust Fund:
(i) the characteristics of the Additional Obligations must be
monitored by an insurer or other credit support provider
that is independent of the depositor; or
(ii) an independent accountant retained by the depositor must
provide the depositor with a letter (with copies provided to
each rating agency rating the certificates, the related
underwriter and the related trustee) stating whether or not
the characteristics of the Additional Obligations conform to
the characteristics described in the related prospectus or
prospectus supplement. In preparing such letter, the
independent accountant must use the same type of procedures
as were applicable to the Obligations transferred to the
trust as of the Closing Date.
6. The Pre-Funding Period must end no later than three months or 90
days after the Closing Date or earlier in certain circumstances if
an Event of Default occurs.
7. Amounts transferred to any pre-funding account and/or capitalized
interest account used in connection with the pre-funding may be
invested only in certain permitted investments ("Permitted
Investments").
8. The related prospectus or prospectus supplement must describe:
(i) any pre-funding account and/or capitalized interest account
used in connection with a pre-funding account;
(ii) the duration of the Pre-Funding Period;
(iii) the percentage and/or dollar amount of the Pre-Funding Limit
for the trust; and
(iv) that the amounts remaining in the pre-funding account at the
end of the Pre-Funding Period will be remitted to
certificateholders as repayments of principal.
The Exemption would also provide relief from certain self-dealing/conflict
of interest or prohibited transactions that may occur when the Plan fiduciary
causes a Plan to acquire certificates in a trust when the fiduciary (or its
affiliate) is an obligor on receivables held in the trust only if, among other
requirements,
(i) in the case of the acquisition of Senior Certificates in
connection with the initial issuance, at least fifty (50)
percent of the Senior certificates are acquired by persons
independent of the Restricted Group (as defined below),
(ii) such fiduciary (or its affiliate) is an obligor with respect
to five percent (5%) or less of the fair market value of the
obligations contained in the trust,
(iii) the Plan's investment in Senior certificates does not exceed
twenty-five (25) percent of all of the Senior certificates
outstanding at the time of the acquisition, and
(iv) immediately after the acquisition, no more than twenty-five
(25) percent of the assets of any Plan with respect to which
the fiduciary has discretionary authority or renders
investment advice are invested in certificates representing
an interest in one or more trusts containing assets sold or
serviced by the same entity. The Exemption does not apply to
Plans sponsored by the seller, any underwriter, the owner
trustee, the servicer, any obligor with respect to
receivables included in the trust constituting more than
five percent of the aggregate unamortized principal balance
of the assets in the trust, or any affiliate of such parties
(the "RESTRICTED GROUP").
The prospectus supplement for each series of securities will indicate the
classes of securities, if any, offered thereby to which it is expected that the
Exemption will apply.
Any Plan fiduciary which proposes to cause a Plan to purchase securities
should consult with counsel concerning the impact of ERISA and the Code, the
applicability of the Exemption (as amended) and the potential consequences in
their specific circumstances, prior to making such investment. Also, each Plan
fiduciary should determine whether, under the general fiduciary standards of
investment prudence and diversification, an investment in the securities is
appropriate for the Plan, taking into account the overall investment policy of
the Plan and the composition of the Plan's investment portfolio.
________________________________________________________________________________
PLAN OF DISTRIBUTION
________________________________________________________________________________
On the terms and conditions set forth in one or more underwriting
agreements for a series (collectively, the "UNDERWRITING AGREEMENT"), the seller
will agree to cause the related trust to sell to the underwriters named in the
related prospectus supplement, and each of such underwriters will severally
agree to purchase, the offered securities set forth in that prospectus
supplement.
In an Underwriting Agreement for a series, the several underwriters will
agree, subject to the terms and conditions set forth therein, to purchase all
the offered securities if any of the offered securities are purchased.
Each prospectus supplement will either (i) set forth the price at which
each class of offered securities will be offered to the public and any
concessions that may be offered to certain dealers participating in the offering
of such notes and certificates or (ii) specify that the offered securities are
to be resold by the underwriters in negotiated transactions at varying prices to
be determined at the time of such sale. After the initial public offering of any
offered securities, the public offering prices and concessions may be changed.
Each Underwriting Agreement will provide that the seller will indemnify
the underwriters against certain civil liabilities, including liabilities under
the Securities Act, or contribute to payments the several underwriters may be
required to make in respect thereof.
Each trust may, from time to time, invest the funds in its accounts in
Eligible Investments acquired from the underwriters or the seller.
Pursuant to the Underwriting Agreement for a series of securities, the
closing of the sale of any class of offered securities will be conditioned on
the closing of the sale of all other offered securities of that series.
The place and time of delivery for a series of securities will be set
forth in the related prospectus supplement.
Until the distribution of the offered securities of a series is completed,
rules of the Commission may limit the ability of the underwriters and certain
selling group members to bid for and purchase those securities. As an exception
to these rules, the underwriters are permitted to engage in certain transactions
that stabilize the price of those securities. Such transactions consist of bids
or purchases for the purpose of pegging, fixing or maintaining the price of the
securities.
The underwriters may create a short position in the securities being
offered by selling more offered securities than are set forth on the cover page
of the related prospectus supplement. The underwriters may reduce that short
position by purchasing those offered securities in the open market.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases.
Neither the seller nor any of the underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the prices of the securities of any trust. In
addition, neither the seller nor any of the underwriters makes any
representation that the underwriters will engage in such transactions or that
such transactions, once commenced, will not be discontinued without notice.
If any securities of a series are offered in the United Kingdom, each
underwriter will represent and agree that
o it has not offered or sold, and will not offer or sell, any of
those securities to persons in the United Kingdom except to
persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or
agent) for the purposes of their businesses or otherwise in
circumstances that do not constitute an offer to the public in the
United Kingdom for the purposes of the Public Offers of Securities
Regulations 1995,
o it has complied and will comply with all applicable provisions of
the Financial Services Act of 1986 of Great Britain with respect
to anything done by it in relation to those securities in, from or
otherwise involving the United Kingdom and
o it has only issued or passed on and will only issue or pass on in
the United Kingdom any document in connection with the issue of
those securities to a person who is of a kind described in Article
11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1995 or is a person to whom the
document may otherwise lawfully be issued or passed on.
If you initially receive an electronic copy of the prospectus and
prospectus supplement from an underwriter, you will receive a paper copy of the
prospectus and prospectus supplement upon request to the underwriter.
Upon receipt of a qualifying request, the underwriter will promptly deliver a
paper copy of the prospectus and prospectus supplement to you free of charge.
________________________________________________________________________________
LEGAL OPINIONS
________________________________________________________________________________
Certain legal matters relating to the securities of any series will be
passed upon for the related trust and the seller by Brown & Wood LLP as to
matters of New York law and Richards, Layton & Finger as to matters of Delaware
law.
<PAGE>
________________________________________________________________________________
INDEX OF PRINCIPAL TERMS
________________________________________________________________________________
A
Additional Obligations.............................69
Additional Receivables.............................16
Administration Agreement...........................50
Administration Fee.................................51
APR................................................20
Available Funds....................................21
B
Base Rate..........................................26
C
Calculation Agent..................................27
CD Rate............................................28
CD Rate Determination Date.........................28
Cede...............................................29
Cedelbank Participants.............................30
CFC.................................................6
CFC Gold Key Plus Receivable.......................19
Closing Date.......................................34
Code...............................................55
Collection Period..................................38
Commercial Paper Rate..............................28
Commercial Paper Rate Determination Date...........28
Commodity Indexed Securities.......................25
Composite Quotations...............................27
Cooperative........................................31
Currency Indexed Securities........................25
cut-off date.......................................15
D
DaimlerChrysler....................................35
DaimlerChrysler AG.............................16, 36
Definitive Securities..............................33
Deposit Account....................................36
Depositaries.......................................32
DOL................................................68
DTC................................................10
E
Eligible Deposit Account...........................37
Eligible Institution...............................37
Eligible Investments...............................37
Euroclear..........................................31
Euroclear Operator.................................31
Euroclear Participants.............................31
Exemption..........................................68
Excess Interest Collections......................S-19
F
FASIT..............................................65
FASIT provisions...................................65
Federal Funds Rate.................................28
Federal Tax Counsel................................55
Fixed Value Payment................................19
Floating Rate Interest Accrual Period..............26
foreign person.....................................57
FTC Rule...........................................54
Funding Period.....................................15
H
H.15(519)..........................................27
I
Indenture..........................................43
Index..............................................25
Index Maturity.....................................27
Indexed Commodity..................................25
Indexed Currency...................................25
Indexed Principal Amount...........................25
Indexed Securities.................................25
Indirect Participants..............................29
Insolvency Event...................................42
Interest Reset Date................................27
IRS................................................55
L
LIBOR..............................................27
LIBOR Business Day.................................27
LIBOR Determination Date...........................27
M
MBCC................................................6
MBCC Balloon Receivable............................18
Money Market Yield.................................28
N
new partnership....................................61
New Regulations....................................58
O
Obligations........................................68
OID................................................56
OID regulations....................................56
old partnership....................................61
P
Participants.......................................29
Permitted Investments..............................69
Plan Assets Regulation.............................66
Plans..............................................66
Precomputed Receivable.............................18
Pre-Funding Account................................16
Pre-Funding Limit..................................69
Pre-Funding Period.................................69
Previously Issued Securities.......................16
PTE................................................66
R
Registration Statement..............................2
Repurchase Amount..................................35
Restricted Group...................................70
Revolving Period...................................16
Rules..............................................30
S
Sale and Servicing Agreement.......................15
SEC.................................................2
Senior Certificates................................68
Series Trust Property..............................15
Servicer Default...................................42
Servicing Fee......................................39
Short-Term note....................................56
Similar Law........................................65
Simple Interest Receivables........................17
Spread.............................................26
Spread Multiplier..................................26
Stock Index........................................25
Stock Indexed Securities...........................25
Subsequent Receivables.............................15
Subsequent Transfer Date...........................34
T
Telerate Page 3750.................................27
Terms and Conditions...............................31
Treasury Rate......................................29
Treasury Rate Determination Date...................28
U
U.S. person.........................................5
UCC............................................11, 35
Underwriting Agreement.............................70
<PAGE>
ANNEX I
________________________________________________________________________________
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
________________________________________________________________________________
OVERVIEW
Except in certain limited circumstances, the globally offered securities
will be available only in book-entry form. Investors may hold the globally
offered securities through any of DTC, Cedelbank or Euroclear. In both the
European and U.S. domestic markets, the globally offered securities will trade
as home market instruments. Initial settlement and all secondary trades will
settle in same-day funds.
Secondary market trading between investors holding globally offered
securities through Cedelbank and Euroclear will be conducted in the ordinary way
in accordance with their normal rules and operating procedures and in accordance
with conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding globally offered
securities through DTC will be conducted according to the rules and procedures
applicable to U.S. corporate debt obligations.
Secondary cross-market trading between Cedelbank or Euroclear and DTC
Participants holding offered securities will be effected on a
delivery-against-payment basis through the respective depositaries of Cedelbank
and Euroclear (in such capacity) and DTC Participants.
Non-U.S. holders (as described below) of globally offered securities will
be subject to U.S. withholding taxes unless such holders meet certain
requirements and deliver appropriate U.S. tax documents to the securities
clearing organizations or their Participants.
INITIAL SETTLEMENT
All globally offered securities will be held in book-entry form by DTC in
the name of Cede & Co. as nominee of DTC. Investors' interests in the globally
offered securities will be represented through financial institutions acting on
their behalf as direct and Indirect Participants in DTC. As a result, Cedelbank
and Euroclear will hold positions on behalf of their Participants through their
respective depositaries, which in turn will hold such positions in accounts as
DTC Participants.
Investors electing to hold their globally offered securities through DTC
will follow the settlement practices applicable to prior debt issues. Investors'
securities custody accounts will be credited with their holdings against payment
in same-day funds on the settlement date.
Investors electing to hold their globally offered securities through
Cedelbank or Euroclear accounts will follow the settlement procedures applicable
to conventional eurobonds, except that there will be no temporary global
security and no "lock-up" or restricted period. Globally offered securities will
be credited to the securities custody accounts on the settlement date against
payments in same-day funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade the location of both the purchaser's and
seller's accounts to ensure that settlement can be made on the desired value
date.
TRADING BETWEEN DTC PARTICIPANTS
Secondary market trading between DTC Participants will be settled using
the procedures applicable to book-entry securities in same-day funds.
TRADING BETWEEN CEDELBANK AND/OR EUROCLEAR PARTICIPANTS
Secondary market trading between Cedelbank Participants or Euroclear
Participants will be settled using the procedures applicable to conventional
eurobonds in same-day funds.
TRADING BETWEEN DTC SELLER AND CEDELBANK OR EUROCLEAR PURCHASER
When globally offered securities are to be transferred from the account of
a DTC Participant to the account of a Cedelbank Participant or a Euroclear
Participant, the purchaser will send instructions to Cedelbank or Euroclear
through a Cedelbank Participant or Euroclear Participant at least one business
day prior to settlement. Cedelbank or Euroclear, as applicable, will instruct
its depositary to receive the globally offered securities against payment.
Payment will include interest accrued on the globally offered securities from
and including the last coupon payment date to and excluding the settlement date.
Payment will then be made by such depositary to the DTC Participant's account
against delivery of the globally offered securities. After settlement has been
completed, the globally offered securities will be credited to the applicable
clearing system and by the clearing system, in accordance with its usual
procedures, to the Cedelbank Participant's or Euroclear Participant's account.
The globally offered securities' credit will appear the next day (European time)
and the cash debit will be back-valued to, and the interest on the globally
offered securities will accrue from, the value date (which would be the
preceding day when settlement occurred in New York). If settlement is not
completed on the intended value date (i.e., the trade fails), the Cedelbank or
Euroclear cash debit will be valued instead as of the actual settlement date.
Cedelbank Participants and Euroclear Participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to pre-position
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Cedelbank or Euroclear. Under
this approach, they may take on credit exposure to Cedelbank or Euroclear until
the globally offered securities are credited to their accounts one day later.
As an alternative, if Cedelbank or Euroclear has extended a line of credit
to them, Cedelbank Participants or Euroclear Participants can elect not to
pre-position funds and allow that credit line to be drawn upon to finance
settlement. Under this procedure, Cedelbank Participants or Euroclear
Participants purchasing globally offered securities would incur overdraft
charges for one day, assuming they cleared the overdraft when the globally
offered securities were credited to their accounts. However, interest on the
globally offered securities would accrue from the value date. Therefore, in many
cases the investment income on the globally offered securities earned during
that one-day period may substantially reduce or offset the amount of such
overdraft charges, although this result will depend on each Cedelbank
Participant's or Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending globally offered
securities to the respective depositary for the benefit of Cedelbank
Participants or Euroclear Participants. The sale proceeds will be available to
the DTC seller on the settlement date. Thus, to the DTC Participant a
cross-market transaction will settle no differently than a trade between two DTC
Participants.
TRADING BETWEEN CEDELBANK OR EUROCLEAR SELLER AND DTC PURCHASER
Due to time zone differences in their favor, Cedelbank Participants and
Euroclear Participants may employ their customary procedures for transactions in
which globally offered securities are to be transferred by the respective
clearing systems, through their respective depositaries, to a DTC Participant.
The seller will send instructions to Cedelbank or Euroclear through a Cedelbank
Participant or Euroclear Participant at least one business day prior to
settlement.
In these cases, Cedelbank or Euroclear will instruct their respective
depositaries, as appropriate, to deliver the securities to the DTC Participant's
account against payment. Payment will include interest accrued on the globally
offered securities from and including the last coupon payment date to and
excluding the settlement date. The payment will then be reflected in the account
of the Cedelbank Participant or Euroclear Participant the following day, and
receipt of the cash proceeds in the Cedelbank Participant's or Euroclear
Participant's account would be back-valued to the value date (which would be the
preceding day, when settlement occurred in New York).
Should the Cedelbank Participant or Euroclear Participant have a line of
credit with its clearing system and elect to be in debt in anticipation of
receipt of the sale proceeds in its account, the back-valuation will extinguish
any overdraft charges incurred over that one-day period. If settlement is not
completed on the intended value date (i.e., the trade fails), receipt of the
cash proceeds in the Cedelbank Participant's or Euroclear Participant's account
would instead be valued as of the actual settlement date.
Finally, day traders that use Cedelbank or Euroclear and that purchase
globally offered securities from DTC Participants for delivery to Cedelbank
Participants or Euroclear Participants should note that these trades would
automatically fail on the sale side unless affirmative action were taken. At
least three techniques should be readily available to eliminate this potential
problem:
o borrowing through Cedelbank or Euroclear for one day (until the
purchase side of the day trade is reflected in their Cedelbank or
Euroclear accounts) in accordance with the clearing system's
customary procedures;
o borrowing the globally offered securities in the U.S. from a DTC
Participant no later than one day prior to settlement, which would
give the globally offered securities sufficient time to be
reflected in their Cedelbank or Euroclear account in order to
settle the sale side of the trade; or
o staggering the value dates for the buy and sell sides of the trade
so that the value date for the purchase from the DTC Participant
is at least one day prior to the value date for the sale to the
Cedelbank Participant or Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of globally offered securities holding securities
through Cedelbank or Euroclear (or through DTC if the holder has an address
outside the U.S.) will be subject to the 30% U.S. withholding tax that generally
applies to payments of interest (including original issue discount) on
registered debt issued by U.S. persons, unless each clearing system, bank or
other financial institution that holds customers' securities in the ordinary
course of its trade or business in the chain of intermediaries between such
beneficial owner and the U.S. entity required to withhold tax complies with
applicable certification requirements and such beneficial owner takes one of the
following steps to obtain an exemption or reduced tax rate:
EXEMPTION OF NON-U.S. PERSONS (FORM W-8)
Beneficial owners of offered securities that are non-U.S. persons generally
can obtain a complete exemption from the withholding tax by filing a signed Form
W-8 (Certificate of Foreign Status). If the information shown on Form W-8
changes, a new Form W-8 must be filed within 30 days of such change.
EXEMPTION FOR NON-U.S. PERSON WITH EFFECTIVELY CONNECTED INCOME (FORM 4224)
A non-U.S. person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the United
States).
EXEMPTION OR REDUCED RATE FOR NON-U.S. PERSONS RESIDENT IN TREATY COUNTRIES
(FORM 1001)
Non-U.S. persons that are beneficial owners of offered securities and are
residing in a country that has a tax treaty with the United States can obtain an
exemption or reduced tax rate (depending on the treaty terms) by filing Form
1001 (Ownership, Exemption or Reduced Rate Certificate). If the treaty provides
only for a reduced rate, withholding tax will be imposed at that rate unless the
filer alternatively files Form W-8. Form 1001 may be filed by the beneficial
owner of offered securities or such owner's agent.
EXEMPTION FOR U.S. PERSONS (FORM W-9)
U.S. persons can obtain a complete exemption from the withholding tax by
filing Form W-9 (Payer's Request for Taxpayer Identification Number and
Certification).
U.S. FEDERAL INCOME TAX REPORTING PROCEDURE
The beneficial owner of a Global Security or, in the case of a Form 1001 or
a Form 4224 filer, such owner's agent, files by submitting the appropriate form
to the person through whom it holds the security (the clearing agency, in the
case of persons holding directly on the books of the clearing agency). Form W-8
and Form 1001 are effective for three calendar years and Form 4224 is effective
for one calendar year.
The term "U.S. person" means
o a citizen or resident of the United States or
o a corporation or partnership (including an entity treated as a
corporation or partnership for United States federal income tax
purposes) created or organized in or under the laws of the United
States, any state thereof or the District of Columbia, (unless, in
the case of partnership, Treasury regulations are adopted that
provide otherwise),
o an estate the income of which is includible in gross income for United
States tax purposes, regardless of its source or
o a trust if a court within the United States is able to exercise
primary supervision of the administration of the trust and one or
more United States persons have the authority to control all
substantial decisions of the trust or
o to the extent provided in Treasury regulations, certain trusts in
existence on August 20, 1996 and treated as United States persons
before such date that elect to be so treated or
o any holder of a Note whose income or gain in respect to its
investment in a Note is effectively connected with the conduct of
a U.S. trade or business.
The term non-U.S. person means a beneficial owner of a Note that is not a
U.S. person. The discussion under the heading of "Certain Federal Income Tax
Consequences" applies to U.S. persons, except as provided otherwise. The terms
U.S. person and non-U.S. person have the same meaning as defined here.
This summary does not deal with all aspects of U.S. federal income tax
withholding that may be relevant to foreign holders of the globally offered
securities. Investors are advised to consult their own tax advisors for specific
tax advice concerning their holding and disposing of the globally offered
securities.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*
The following is an itemized list of the estimated expenses to be
incurred in connection with the offering of the securities being offered
hereunder other than underwriting discounts and commissions.
Registration Fee....................................................$2,640,000
Printing Expenses..................................................$ 280,000
Trustee Fees and Expenses..........................................$ 215,000
Legal Fees and Expenses............................................$ 187,500
Accountants' Fees and Expenses.....................................$ 187,500
Rating Agencies' Fees...............................................$1,875,000
Miscellaneous......................................................$ 115,000
Total..................................................... $5,500,000
- ---------------
*All amounts except the SEC Registration Fee are estimates of
expenses in connection with the issuance and distribution of ten Series of
Securities in an aggregate principal amount assumed for these purposes to be
equal to $10,000,000,000.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 3.5 of the Operating Agreement of the Registrant provides
that to the fullest extent permitted by the Michigan Limited Liability Company
Act, the Registrant to the extent of its assets legally available for such
purpose, will indemnify and hold harmless each person who is or was a manager,
officer, committee member, employee, member, or who serves or may have served
at the Registrant's request as a member, director, manager, officer, or
employee of any company or corporation that the Registrant owns directly or
indirectly, and any member's respective shareholders, directors, officers,
agents, affiliates and professional or other advisors (collectively, the
"Indemnified Persons") from and against any and all loss, cost, damage,
expense (including, without limitation, fees and expenses of attorneys and
other advisors and any court costs incurred by any Indemnified Person) or
liability by reason of anything any Indemnified Person does or refrains from
doing for, or in connection with the business or affairs of, the Registrant
and its subsidiaries and affiliates, except to the extent that it is finally
judicially determined by a court of competent jurisdiction that the loss,
cost, damage, expense or liability resulted primarily from the Indemnified
Person's negligence, misconduct in the performance of her or her duty, or
willful breach of a material provision of the Operating Agreement which in any
event causes actual material damage to the Registrant. The Registrant may pay
in advance or reimburse reasonable expenses (including advancing the
reasonable cost of defense) incurred by an Indemnified Person who is, or is
threatened to be, named or made a defendant or a respondent in a proceeding
concerning the business affairs of the Registrant. Reference is made to
Exhibit 3.2 to this Registration Statement for the complete texts of Section
3.5 of the Operating Agreement.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 by the Registrant may be permitted to directors,
officers and controlling persons of the Registrant under the foregoing
provisions, or otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against
public policy as expressed in said Act and therefore may be unenforceable. If
a claim for indemnification against such liabilities (except insofar as it
provides for the payment by the Registrant of expenses incurred or paid by a
director or officer in the successful defense of any action, suit or
proceeding) is asserted against the Registrant by a director, officer or
controlling person in connection with the securities offered hereby and the
Securities and Exchange Commission is still of the same opinion, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether or not such indemnification by it is against
public policy as expressed in the Act, and will be governed by the final
adjudication of such issue.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS
(a) All financial statements, schedules and historical financial
information have been omitted as they are not applicable.
1.1 Form of Underwriting Agreement for the Notes.*
1.2 Form of Underwriting Agreement for the Certificates.*
3.1 Copy of Articles of Organization of Chrysler Financial Company
L.L.C.**
3.2 Copy of Amended and Restated Operating Agreement of Chrysler
Financial Company L.L.C.**
3.3 Form of Certificate of Trust for DaimlerChrysler Auto Trusts
(included in Exhibit 4.4).*
4.1 Form of Indenture between the Trust and the Indenture Trustee
(including Forms of Notes).*
4.2 Form of Master Indenture (for issuance of more than one series
of Notes) between the Trust and the Indenture Trustee.*
4.3 Form of Series Indenture Supplement between the Trust and the
Indenture Trustee (including forms of Notes).*
4.4 Form of Amended and Restated Trust Agreement among the
Registrant, the Company and the Trustee (including forms of
Certificates).*
4.5 Form of Amended and Restated Trust Agreement (for issuance of
more than one Series of Certificates) among the Registrant, the
Company and the Trustee (including forms of Certificates).*
5.1 Opinion of Brown & Wood LLP with respect to legality.*
5.2 Opinion of Richards, Layton & Finger with respect to legality.*
8.1 Opinion of Brown & Wood LLP with respect to federal tax matters.*
23.1 Consent of Brown & Wood LLP (included in its opinions filed as
Exhibits 5.1 and 8.1).*
23.2 Consent of Richards, Layton & Finger (included in its opinion
filed as Exhibit 5.2).*
24.1 Powers of Attorney.*
25.1 Form of T-1 Statement of Eligibility under the Trust Indenture
Act of 1939 of Bank One, National Association.*
25.2 Form of T-1 Statement of Eligibility under the Trust Indenture
Act of 1939 of The Bank of New York.*
99.1 Form of Sale and Servicing Agreement between the Registrant and
the Trust.*
99.2 Form of Administration Agreement among the Trust, the
Administrator and the Indenture Trustee.*
99.3 Form of Purchase Agreement between the Company and the
Registrant.*
- ------------------------
* Previously filed.
** Incorporated by reference to the Registration Statement on Form S-3 (Reg.
No. 333-71169).
ITEM 17. UNDERTAKINGS
(a) As to Rule 415:
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made of the securities registered hereby, a post-effective
amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933, as amended;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of this Registration Statement
(or the most recent post-effective amendment hereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in this Registration Statement; and
(iii) to include any material information with respect to
the plan of distribution not previously disclosed in this
Registration Statement or any material change to such
information in this Registration Statement;
provided, however, that the undertakings set forth in clauses (i) and
(ii) above do not apply if the information required to be included in
a post-effective amendment by those clauses is contained in periodic
reports filed by the registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934, as amended, that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended, each such post-effective
amendment shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) The registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of that Act.
(c) As to documents subsequently filed that are incorporated by
reference:
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing of the registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934, as amended, that is incorporated
by reference in this registration statement shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(d) As to indemnification:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to directors, officers
and controlling persons of the registrant pursuant to the provisions described
under Item 15 above, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933, as amended,
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in such
Securities Act of 1933, as amended, and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-3 and has duly caused this
Pre-Effective Amendment No. 1 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Southfield
and State of Michigan, on the 21st day of December, 1999.
CHRYSLER FINANCIAL COMPANY L.L.C.,
By: /s/ D.L. Davis
--------------------------
D.L. Davis
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Principal Executive Officer:
/s/ D.L. Davis Chairman of the Board December 21, 1999
- ---------------------
D.L. Davis
Principal Financial Officer:
/s/ M. Muehlbayer Vice President and December 21, 1999
- ---------------------- Chief Financial Officer
M. Muehlbayer
Principal Accounting Officer:
/s/ D.H. Olsen Vice President and December 21, 1999
- ---------------------- Controller
D.H. Olsen
Board of Managers:
/s/T. P. Capo* Manager December 21, 1999
- -----------------------
T. P. Capo
/s/D. L. Davis* Manager December 21, 1999
- -----------------------
D. L. Davis
/s/W. J. O'Brien III* Manager December 21, 1999
- -----------------------
W. J. O'Brien III
/s/G. C. Valade* Manager December 21, 1999
- -----------------------
G. C. Valade
*By: /s/Byron C. Babbish
- -----------------------------------
Byron C. Babbish
ATTORNEY-IN-FACT
December 21, 1999
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
1.1 Form of Underwriting Agreement for the Notes.*
1.2 Form of Underwriting Agreement for the Certificates.*
3.1 Copy of Articles of Organization of Chrysler Financial Company
L.L.C.**
3.2 Copy of Amended and Restated Operating Agreement of Chrysler
Financial Company L.L.C.**
3.3 Form of Certificate of Trust for DaimlerChrysler Auto Trusts
(included in Exhibit 4.4).*
4.1 Form of Indenture between the Trust and the Indenture Trustee
(including Forms of Notes).*
4.2 Form of Master Indenture (for issuance of more than one series
of Notes) between the Trust and the Indenture Trustee.*
4.3 Form of Series Indenture Supplement between the Trust and the
Indenture Trustee (including forms of Notes).*
4.4 Form of Amended and Restated Trust Agreement among the
Registrant, the Company and the Trustee (including forms of
Certificates).*
4.5 Form of Amended and Restated Trust Agreement (for issuance of
more than one Series of Certificates) among the Registrant, the
Company and the Trustee (including forms of Certificates).*
5.1 Opinion of Brown & Wood LLP with respect to legality.*
5.2 Opinion of Richards, Layton & Finger with respect to legality.*
8.1 Opinion of Brown & Wood LLP with respect to federal tax matters.*
23.1 Consent of Brown & Wood LLP (included in its opinions filed as
Exhibits 5.1 and 8.1).*
23.2 Consent of Richards, Layton & Finger (included in its opinion
filed as Exhibit 5.2).*
24.1 Powers of Attorney.*
25.1 Form of T-1 Statement of Eligibility under the Trust Indenture
Act of 1939 of Bank One, National Association.*
25.2 Form of T-1 Statement of Eligibility under the Trust Indenture
Act of 1939 of The Bank of New York.*
99.1 Form of Sale and Servicing Agreement between the Registrant and
the Trust.*
99.2 Form of Administration Agreement among the Trust, the
Administrator and the Indenture Trustee.*
99.3 Form of Purchase Agreement between the Company and the
Registrant.*
- --------------------------
* Previously filed.
** Incorporated by reference to the Registration Statement on Form S-3 (Reg.
No. 333-71169) and the same exhibit therein.
