SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
CARCO AUTO LOAN MASTER TRUST
(In which the Certificates evidence undivided interests)
DAIMLERCHRYSLER WHOLESALE RECEIVABLES LLC
(Depositor into the Trust described herein)
(Exact name of registrant as specified in its charter)
DELAWARE 6146 38-3523542
(State of (Primary Standard Industrial (I.R.S. Employer
Incorporation) Classification Code Number) Identification No.)
27777 Franklin Road
Southfield, Michigan 48034
(248) 948-3031
(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
(248) 948-3060
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-------------------
Copies to:
RENWICK D. MARTIN, ESQ.
Brown & Wood LLP
One World Trade Center
New York, New York 10048
(212) 839-5300
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, check the
following box. | |
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. |X|
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, please 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 Maximum Proposed Maximum Amount of
Title of each class of Amount to be Offering Price Per Aggregate Offering Registration
securities to be registered registered Unit(1) Price (1) Fee
<S> <C> <C> <C> <C>
Asset Backed Certificates....................... $1,000,000 100% $501,000,000(2) (3)
=================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Includes $500,000,000 of unissued Asset Backed Certificates registered
under Registration Statement No. 333-38873 (on which U.S. Auto Receivables
Company is the registrant).
(3) Includes the filing fee of $151,515 paid in connection with the
$500,000,000 of Asset Backed Certificates referred to in footnote (2). $278
is being paid herewith in respect of $1,000,000 of Asset Backed Certificates.
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.
In accordance with Rule 429 of the General Rules and Regulations
under the Securities Act of 1933, the Prospectus included herein is a combined
Prospectus which also relates to $500,000,000 of unissued Asset Backed
Certificates registered under Registration Statement No. 333-38873 and this
Registration Statement constitutes Post-Effective Amendment No. 1 to such
Registration Statement.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
securities and exchange commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration becomes
effective. This prospectus and the accompanying prospectus supplement shall
not constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of these securities in any state in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such state.
Subject to completion dated May 25, 2000
[Single class]
DAIMLERCHRYSLER
Prospectus Supplement
---------------------
To Prospectus dated , 200[ ]
$[ ]
CARCO AUTO LOAN MASTER TRUST
[Floating Rate][ %] Auto Loan Asset Backed Certificates, Series [200_-_],
due , 200 .
DAIMLERCHRYSLER WHOLESALE RECEIVABLES LLC, Seller
CHRYSLER FINANCIAL COMPANY, L.L.C., Servicer
Before you decide to invest in the Series [200_-_] certificates, please read
this prospectus supplement and the prospectus, especially the risk on factors
beginning on page [ ] this prospectus supplement and page [ ] of the
prospectus.
The Series [200_-_] certificates are interests in the trust only and do not
represent interests in or obligations of DaimlerChrysler AG, DaimlerChrysler
Wholesale receivables LLC, Chrysler Financial Company L.L.C. or any of their
affiliates.
General:
o The trust assets include wholesale receivables generated from time to time
in a portfolio of revolving financing arrangements with automobile dealers
to finance their automobile and light duty truck inventory. The trust's
main source of funds for making payments on the Series [200_-_]
certificates is collections on the receivables.
o [Interest on the series [200_-_] certificates will accrue at the rate of [
]% per annum.] [Interest on the Series [200_-_] certificates will accrue
at the rate of [ ]% per annum [above] [below] [times] [ ] [subject to
certain limitations.] Interest will be payable on the [ ] of each [month]
[quarter] [other], unless the [ ] is not a business day, in which case the
payment will be made on the following business day. The first payment will
be on [ ], 200[ ].
o Principal of the Series [200_-_] certificates is expected to be paid on [
], 200[ ].
o The seller's interest in the trust will be subordinated to the rights of
the holders of the Series [200_-_] certificates to the limited extent
described in this prospectus supplement. [Describe other Enhancement, if
any, and any additional subordination of the seller's interest, if
applicable.]
[The underwriters will purchase the Series [200_-_] certificates. The
underwriter will offer the Series [200_-_] certificates from time to time to
the public at varying prices. The underwriter will pay to the seller [ ]% of
the principal amount of the Series [200_-_] certificates, plus accrued
interest from [ ], 200[ ]. The seller's expenses of the offering are estimated
to be $[ ].]
<TABLE>
<CAPTION>
Proceeds to the
Original Principal Amount Price to Public(1) Underwriting Discount Seller(1)(2)
<S> <C> <C> <C> <C>
Per Certificate........... $ % % $
Total..................... $ $ $ $
</TABLE>
(1) Plus accrued interest, if any, at the Certificate Rate from [ ], 200[ ].
(2) Before deducting expenses, estimated to be $[ ].
We expect that delivery of the Series [200_-_] certificates will be made
in book-entry form only through the facilities of The Depository Trust
Company[, Clearstream Banking, societe anonyme or the Euroclear System] on or
about [ ], 200[ ].
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the Series [200_-_] certificates or
determined that this prospectus supplement or the prospectus is accurate or
complete. Any representation to the contrary is a criminal offense.
--------------------------------------------------------------
[Underwriter(s)]
--------------------------------------------------------------
The date of this prospectus supplement is , 200 .
<PAGE>
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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.
You should rely only on the information contained in this document. We
have not authorized anyone to provide you with different information. You
should not assume that the information in the prospectus supplement or the
prospectus is accurate as of any date other than the date at the bottom of the
front page of this document.
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 [ ]
in this document and on page [ ] in the prospectus to locate the referenced
sections.
The Index of Principal Terms on page S-[ ] in this prospectus supplement
lists the pages where capitalized terms used in this prospectus supplement are
defined. The Index of Principal Terms on page [ ] in the prospectus lists the
pages where capitalized terms used in the prospectus are defined.
LIMITATIONS ON OFFERS OR SOLICITATIONS
We do not intend this document to be an offer or solicitation:
(A) if used in a jurisdiction in which such offer or solicitation is
not authorized;
(B) if the person making such offer or solicitation is not qualified
to do so; or
(C) if such offer or solicitation is made to anyone to whom it is
unlawful to make such offer or solicitation.
<PAGE>
TABLE OF CONTENTS
Section Page
READING THE PROSPECTUS AND PROSPECTUS
SUPPLEMENT S-3
SUMMARY OF SERIES TERMS S-6
o PARTIES S-6
o TITLE OF SECURITIES S-6
o INVESTED AMOUNT S-6
o SERIES ISSUANCE DATE S-6
o SERIES CUT-OFF DATE S-6
o TERMS OF THE CERTIFICATES S-6
o LEGAL FINAL S-7
o REVOLVING PERIOD S-7
o ACCUMULATION PERIOD S-7
o CONTROLLED AMORTIZATION PERIOD S-7
o REINVESTMENT PERIOD S-7
o EXCLUDED SERIES; PREFUNDED PERIOD S-7
o EARLY AMORTIZATION PERIOD S-8
o CREDIT ENHANCEMENT S-8
o YIELD SUPPLEMENT ACCOUNT S-8
o EXCESS PRINCIPAL COLLECTIONS S-9
o EXCESS SERVICING S-9
o SERVICING FEE RATE S-9
o OPTIONAL REPURCHASE S-9
o OTHER SERIES OF CERTIFICATES S-9
o ERISA CONSIDERATIONS S-9
o TAX STATUS S-9
o CERTIFICATE RATINGS S-10
RISK FACTORS S-11
o THE TIMING OF PRINCIPAL PAYMENTS
MAY NOT BE AS EXPECTED S-11
o INTEREST RATES ON THE SERIES
[2000_-_] CERTIFICATES MAY BE
LOWER THAN EXPECTED S-12
o CREDIT ENHANCEMENT IS LIMITED
AND MAY BE REDUCED S-13
o THE TRUST IS DEPENDENT ON CFC
AND DAIMLERCHRYSLER S-13
USE OF PROCEEDS S-13
THE DEALER FLOORPLAN FINANCING BUSINESS S-14
THE ACCOUNTS S-15
CFC'S PERFORMANCE HISTORY S-16
o LOSS EXPERIENCE S-16
o AGING EXPERIENCE S-17
o GEOGRAPHIC DISTRIBUTION S-18
MATURITY AND PRINCIPAL PAYMENT
CONSIDERATIONS S-18
SERIES PROVISIONS S-21
o GENERAL S-21
o INTEREST S-21
o PRINCIPAL S-23
o EXCESS FUNDING ACCOUNT S-25
o ALLOCATION PERCENTAGES S-26
o PRINCIPAL COLLECTIONS FOR ALL
SERIES S-28
o ALLOCATION OF COLLECTIONS;
LIMITED SUBORDINATION OF SELLER'S
INTEREST S-29
o DEFICIENCY AMOUNT S-30
o AVAILABLE SUBORDINATED AMOUNT S-31
o DISTRIBUTIONS FROM THE
COLLECTION ACCOUNT[; RESERVE FUND];
[YIELD SUPPLEMENT ACCOUNT]; [OTHER
ENHANCEMENT] S-34
o PRINCIPAL COLLECTIONS S-38
o REQUIRED PARTICIPATION PERCENTAGE S-40
o [PRINCIPAL FUNDING ACCOUNT] S-40
o [PREFUNDING ACCOUNT] S-41
o [OTHER ENHANCEMENT] S-41
o DISTRIBUTIONS S-41
o OPTIONAL REPURCHASE S-43
o INVESTOR CHARGE-OFFS S-43
o [REINVESTMENT EVENTS] S-43
o EARLY AMORTIZATION EVENTS S-45
o TERMINATION S-48
o REPORTS S-48
UNDERWRITING S-50
LEGAL MATTERS S-50
INDEX OF PRINCIPAL TERMS S-51
OTHER SERIES OF INVESTOR CERTIFICATES A-1
<PAGE>
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SUMMARY OF SERIES TERMS
- -------------------------------------------------------------------------------
This summary highlights selected information from this prospectus
supplement and may not contain all the information that you need to consider
in making an investment decision. It provides general, simplified descriptions
of matters that are highly complex. You should carefully read this document
and the accompanying prospectus. You will find a detailed description of the
terms of the Series [200_-_] certificates following this summary and in the
prospectus.
PARTIES
Party Description
Issuer o CARCO Auto Loan
Master Trust (the "trust")
Seller o DaimlerChrysler Wholesale
Receivables LLC ("DCWR"), an
indirectly owned subsidiary of
Chrysler Financial Company
L.L.C. ("CFC").
o DCWR's executive offices are
located at 27777 Franklin Road,
Southfield, Michigan 48034-8286,
and its telephone number is
(248) 948-3031.
Servicer o CFC, a wholly owned subsidiary of
DaimlerChrysler Corporation
("DaimlerChrysler").
Trustee o The Bank of New York.
TITLE OF SECURITIES
[Floating Rate] [ %] Auto Loan Asset Backed Certificates, Series [200_-_]
(the "Series [200_-_] certificates").
INVESTED AMOUNT
The total principal amount of the Series [200_-_] certificates invested
in receivables on the date they are issued is expected to be $[ ]. This
invested amount is subject to decreases and increases as described in this
prospectus supplement under the caption "Series Provisions -- Allocation
Percentages".
SERIES ISSUANCE DATE
[ ], 200[ ].
SERIES CUT-OFF DATE
[ ], 200[ ].
TERMS OF THE CERTIFICATES
Interest Payment Dates
o Interest will be payable on the [ ] of each [month] [quarter]
[other], unless the [ ] is not a business day, in which case the
payment will be made on the following business day (each, a
["distribution date"] ["interest payment date"]). The first payment
will be on [ ], 200[ ].
Per Annum Interest [Rate] [Rates]
o [ ]. [[ ]] [above] [below] [times[ ] or, if lower, the assets
receivables rate described herein.] [Interest will be calculated on
the basis of the actual number of days in the applicable interest
period divided by 360.] [Interest will be calculated on the basis of
a 360-day year of twelve 30-day months.]
Interest Periods
o Each period from and including a [distribution date] [interest
payment date] to but excluding the day prior to the following
[distribution date][interest payment date], except that the first
interest period will be [ ] days.]
Principal Payments
o We expect to pay the principal of the Series [200_-_] certificates in
full on [ ], 200[ ], (the "Series [200_-_] Expected Payment Date").
o However, under some circumstances we may pay principal earlier or
later or in reduced amounts. See "Maturity and Principal Payment
Considerations" in this prospectus supplement.
LEGAL FINAL
We will be obligated to pay the outstanding principal amount of the
Series [200_-_] certificates, to the extent not previously paid, by [ ], 200[
].
REVOLVING PERIOD
During the revolving period, we will not pay principal on the Series
[2000_-_] certificates or accumulate principal for that purpose. The revolving
period will begin at the close of business on the Series Cut-Off Date and end
when the [accumulation period] [controlled amortization period] begins. The
revolving period will also end if an early amortization period that is not
terminated begins.
[ACCUMULATION PERIOD
We will accumulate principal for the Series [200_-_] certificates during
an accumulation period of between one and _____ months long unless an Early
Amortization Period that is not terminated begins before the start of the
Accumulation Period. See "Series Provisions -- Principal" in this prospectus
supplement.]
[CONTROLLED AMORTIZATION PERIOD
The Series [200_-_] certificates will have a controlled amortization
period of between one and ____ months long unless an early termination period
that is not terminated begins before the start of the controlled amortization
period. We expect to make payments of principal on the Series [200_-_]
certificates on each distribution date during that period. See "Series
Provisions -- Principal" in this prospectus supplement.].
[Reinvestment Period]
If a reinvestment event occurs, the Series [200_-_] certificates will
have a reinvestment period. Under some circumstances, the revolving period may
recommence if the seller takes certain actions. See "Series Provisions --
Reinvestment Events".]
[EXCLUDED SERIES; PREFUNDED PERIOD
During the prefunded period, the Series [200_-_] certificates will be an
Excluded Series and its initial invested amount will be kept in a prefunding
account. The prefunded period will not go beyond _________. As funds are
accumulated in an account for the related Paired Series, we will release an
equal amount of funds to the seller. Until the Paired Series is paid in full,
no collections on the receivables will be paid on the Series [200_-_]
certificates. During the prefunded period, interest on the Series [200_-_]
certificates will be paid out of net investment earnings from funds in the
prefunded account [and funds in a yield supplement account]. We will not pay
principal on the Series [200_-_] certificates until the Paired Series has been
paid in full. See "Series Provisions -- Excluded Series; Prefunded Period" in
this prospectus supplement.]
EARLY AMORTIZATION PERIOD
If an early amortization event occurs and is not cured, you will begin to
receive payments of principal. See "Description of the Certificates --
Reinvestment Events and Early Amortization Events" in the prospectus and
"Series Provisions -- Early Amortization Events" in this prospectus supplement
for a description of the events that might cause an Early Amortization Period
to start and, in certain cases, terminate.
CREDIT ENHANCEMENT
Subordination of the Seller's Interest
o The seller's interest in the trust will be subordinated to the rights
of the Series [200_-_] certificateholders to the extent described in
this prospectus supplement. Collections on the receivables otherwise
allocable to the seller may be used to pay interest on the Series
[200_-_] certificates and certain other amounts, but only to the
extent of the Available Subordinated Amount.
o The "Available Subordinated Amount" will initially be $[ ] but is
subject to reduction from time to time. See "Series Provisions --
Allocation of Collections; Limited Subordination of Seller's
Interest" in this prospectus supplement for more information about
the Available Subordinated Amount.
[Reserve Fund
o On the Series Issuance Date, the seller will deposit $[ ] into the
reserve fund for the Series [200_-_] Certificates. The reserve fund
required amount for any distribution date will equal [ ]% of the
outstanding principal balance of the Series [200_-_] certificates for
such distribution date (after giving effect to any change therein on
such distribution date). Amounts on deposit in the reserve fund will
be available to pay monthly interest, the monthly servicing fee and
investor default amounts and, on the final payment date, carry-over
amounts.]
[Other Enhancement]
o The trust will have the benefit of a [letter of credit] [interest
rate swap] [currency swap] [cash collateral account] [guaranty]
[surety bond] [insurance policy] [spread account] [other enhancement]
[issued by [ ]] for the benefit of the Series [200_-_]
certificateholders as described herein. [Describe subordination of
another series, if applicable.] See "Series Provisions --
Distributions from the Collection Account; Reserve Fund; [Yield
Supplement Account]; Other Enhancement" herein].
[YIELD SUPPLEMENT ACCOUNT
On the Series Issuance Date, the seller will deposit $[ ] in the yield
supplement account for the Series [200_-_] certificates. The yield supplement
account required amount for any distribution date will equal [ ]% of the
outstanding principal balance of the Series [200_-_] certificates for such
distribution date (after giving effect to any change therein on such
distribution date).
Amounts on deposit in the yield supplement account will be available to
pay carry-over amounts.]
EXCESS PRINCIPAL COLLECTIONS
Principal collections allocable to other series, to the extent not needed
to make payments in respect of such other series, will be applied to make
principal payments in respect of the Series [200_-_] certificates and of other
series of certificates entitled thereto.
[EXCESS SERVICING
All interest collections otherwise allocable to any series with respect
to any distribution date, to the extent such collections are not needed to
make payments to or deposits for the benefit of certificateholders of such
series or to restore the credit enhancement for such series, will be applied
to cover shortfalls with respect to interest payments and certain other
amounts due to or for the benefit of the holders of the Series 1999-1
certificates, the Series 1999-4 certificates, the Series [200_-_]
certificates, the Series [ ] certificates and each Series of certificates
issued after the Series [200_-_] certificates that is designated by the seller
to share such collections.]
SERVICING FEE RATE
[ ]% [per month] [per annum] [(on a [ ] day basis)], or less if the
servicer waives any portion of the monthly servicing fee on any date.
OPTIONAL REPURCHASE
The Series [200_-_] certificateholders' interest in the trust is subject
to optional repurchase by the servicer on any distribution date after the
invested amount for the Series [200_- ] certificates is reduced to $[ ] or
less.
OTHER SERIES OF CERTIFICATES
The trust has previously issued and may issue additional series of
certificates. A summary of series currently outstanding is contained in "Annex
I -- Other Series of Investor Certificates" at the end of this prospectus
supplement.
ERISA CONSIDERATIONS
[It is expected that the Series [200_-_] certificates will be eligible
for purchase by employee benefit plans. However, plans contemplating the
purchase of Series [200_-_] certificates should consult their counsel before
making a purchase. See "ERISA Considerations" in the prospectus.] [Other.]
TAX STATUS
In the opinion of Tax Counsel, the Series [200_-_] certificates will
properly be characterized as indebtedness of the seller that is secured by the
receivables and any other trust assets allocable to the Series [200_-_]
certificates. Each Series [200_-_] certificateholder, by the acceptance of a
certificate, will agree to treat the Series [200_-_] certificates as
indebtedness of the seller for federal, state and local income and franchise
tax purposes and Michigan single business tax purposes.
CERTIFICATE RATINGS
The trust will issue the Series [200_-_] certificates only if they are
rated at the time of issuance in the highest long-term rating category by at
least one nationally recognized rating agency.
<PAGE>
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RISK FACTORS
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The Timing of Principal Payments May Not be as Expected. Several factors
will have an effect on the amount and timing of principal payments on the
Series [200_-_] certificates. Some of those factors are described below.
Dependence on Other Series' o [The shorter the accumulation period
Allocated Principal the greater the chance that payment in
Collections May Result in full of the Series [200_-_]
Late Payment of Series certificates by the Series [200_-_]
[200_-_] Certificate Expected Payment Date will depend on
Principal: principal collections from other
series.] A series from which principal
collections are expected to be
available to make payments on the
Series [200_-_] certificates may enter
an early amortization period [or
reinvestment period] after [ ] [the [
] distribution date] [the accumulation
period commencement date]. Principal
collections from such series generally
will not be available to pay principal
of the Series [200_-_] certificates.
As a result, [the final payment of
principal of your Series [200_-_]
certificates may be later than the
Series [200_-_] Expected Payment Date]
[the amount distributed in respect of
principal of the Series [200_-_]
certificates on any distribution date
during the controlled amortization
period may be less than the amount we
expect to pay]. [Also, no amounts will
be paid in respect of principal of the
Series [200_-_] certificates until the
invested amount of the Paired Series
has been paid in full.] On written
request, the seller will give Series
[200_-_] certificateholders disclosure
documents relating to the other
outstanding series. Those documents
describe the events which could result
in the start of an early amortization
period for those series.]
Early Amortization of Series o A significant decline in the amount of
[200_-_] May Result in receivables enerated could cause an
Early, Late and/or Reduced early amortization of your
Payment of Series [200_-_] certificates. Such a reduction would
Certificate Principal: initially be covered by deposits of
collections to the excess funding
account. If the balance of the
receivables is not maintained at a
specified level, CFC must designate
additional accounts, the receivables
of which will be sold to the seller.
The seller will be required to
transfer those receivables to the
trust. If additional accounts are not
designated by CFC when required, an
early amortization period will begin
and you will begin to receive
principal payments. In certain cases,
however, the resulting early
amortization period may end and you
will stop receiving principal
payments.
Certain bankruptcy events of o If a bankruptcy event relating to CFC,
CFC, the seller or the seller or DaimlerChrysler occurred,
DaimlerChrysler may result an early amortization event would
in late payment of Principal: occur. In that case additional
receivables would not be transferred
to the trust and principal payments on
the Series [200_-_] certificates would
not be limited to the scheduled
amount.
See "The Dealer Floorplan Financing Business" in the prospectus and "Maturity
and Principal Payment Considerations" and "Series Provisions -- Early
Amortization Events" in this prospectus supplement for more information about
the timing of payments on the Series [200_-_] certificates.
[Interest Rates on the Series [200_-_] Certificates May be Lower than
Expected. The receivables generally bear interest at the prime rates of
certain banks plus a margin, while the certificate rate is based on [_____].
Several factors will have an effect on the interest rates of the Series
[200_-_] certificates. Some of those factors are described below.
The certificate rate is o The "Assets Receivables Rate" is based
limited by the Assets on the interest rates on the
Receivables Rate: receivables and investment earnings on
amounts on deposit in certain trust
bank accounts. If (a) the certificate
rate based on [_____] exceeds (b) the
Assets Receivables Rate, the
certificate rate will be the Assets
Receivables Rate.
The trust may not be able to o The certificate rate based on [ ]
make up a deficiency in may exceed the Assets Receivables
interest payments if the Rate as a result of (i) [ ]
certificate rate is higher exceeding the interest rate on the
than the Assets Receivables investment earnings on amounts, if any,
Rate: on trust accounts in which principal
collections are held. Any deficiency
in interest payments resulting from
the Assets Receivables Rate being
lower than the Certificate rate based
on [ ] and interest on such deficiency
(a "Carry-over Amount") will be paid
with:
o any amounts in the yield supplement
account;
o any funds remaining after all
required distributions and deposits
for the Series [200_-_]
certificates have been made; and
o on the last distribution date for
Series [200_-_], certain amounts in
the [reserve fund and] Available
Seller's Collections.
We cannot assure that those amounts, if any, will be sufficient to pay
Carry-over Amounts. If any Carry-over Amount is outstanding for six
distribution dates in a row, an [early amortization event] [reinvestment
event] will occur.]
Credit Enhancement is Limited and May be Reduced. Credit enhancement of
the Series [200_-_] certificates will be provided by the subordination of the
seller's interest to the extent of the Available Subordinated Amount as
described in this prospectus supplement [and by amounts in the reserve fund].
[Describe other subordination of the seller's interest, if applicable.]
[Describe any applicable credit enhancements.] The amount of such credit
enhancement is limited and will be reduced from time to time. See "Series
Provisions -- Allocation of Collections; Limited Subordination of Seller's
Interest" for more information about credit enhancement for the Series
[200_-_] certificates.
The Trust is Dependent on CFC and DaimlerChrysler. The trust is
completely dependent upon CFC for the generation of new receivables. The
ability of CFC to generate receivables is in turn dependent to a large extent
on the sales of automobiles and light duty trucks manufactured or distributed
by DaimlerChrysler. Several factors will have an effect on such dependence.
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USE OF PROCEEDS
- ------------------------------------------------------------------------------
[After making the deposits to the [Reserve Fund] [the Yield Supplement
Account] [the Excess Funding Account] described herein, the] [The] net
proceeds from the sale of the Series [200_-_] certificates will be [paid to
DCWR] [deposited in the Prefunding Account and released to DCWR from time to
time as described herein]. DCWR will use such proceeds (together with the
subordinated loan from CFC described under "DaimlerChrysler Wholesale
Receivables LLC and the trust -- DaimlerChrysler Wholesale Receivables LLC" in
the prospectus) to purchase receivables from CFC or to repay certain amounts
previously borrowed to purchase receivables. CFC will use the portion of the
proceeds paid to it for [general corporate purposes] [other].
- ------------------------------------------------------------------------------
THE DEALER FLOORPLAN FINANCING BUSINESS
- ------------------------------------------------------------------------------
Information regarding the dealer floorplan financing business is set
forth under "The Dealer Floorplan Financing Business" in the prospectus. Also,
the receivables sold to the trust by the seller pursuant to the Pooling and
Servicing Agreement were or will be selected from extensions of credit and
advances made by DaimlerChrysler, directly or as successor to Chrysler, and
CFC, directly or as successor to CFC Corp. or CCC, to approximately [ ]
domestic motor vehicle dealers.
o CFC financed [ ]% of the total number of all
DaimlerChrysler-franchised dealers as of [ ], 200[ ].
o CFC has extended credit lines to [ ] DaimlerChrysler-franchised
dealers that also operate non-DaimlerChrysler franchises
(representing approximately [ ]% of the aggregate credit lines of
dealers in the U.S. Wholesale Portfolio as of [ ], 200[ ]) and [ ]
non-DaimlerChrysler dealers (representing approximately [ ]% of such
aggregate credit lines).
o As of [ ], 200[ ], the balance of Principal Receivables in the U.S.
Wholesale Portfolio was approximately $[ ] billion.
o CFC currently services the U.S. Wholesale Portfolio through its home
office and through a network of [ ] zone offices located throughout
the United States.
o As of [ ], 200[ ], the average credit lines per dealer in the U.S.
Wholesale Portfolio for new and used vehicles (which includes
Auction Vehicles) were $[ ] million and $[ ] million, respectively,
and the average balance of principal receivables per dealer was $[ ]
million.
o As of [ ], 200[ ], the aggregate total receivables balance as a
percentage of the aggregate total credit lines was approximately [
]%.
The following table sets forth the percentages of dealer account balances
by year of credit line origination for the U.S. Wholesale Portfolio.
<TABLE>
<CAPTION>
Portfolio Percentages by Year
of Credit Line Origination
As of [ ], 200[ ]
Prior to
<S> <C> <C> <C> <C> <C> <C> <C>
200[ ] 1999 1998 1997 1996 1995 1994 1994
[ ]% [ ]% [ ]% [ ]% [ ]% [ ]% [ ]% [ ]%
</TABLE>
As of [ ], 200[ ], the weighted average spread over the Prime Rate
charged to dealers in the U.S. Wholesale Portfolio was approximately [ ]%.
Used vehicles (which excludes Auction Vehicles) represented approximately
[ ]% of the aggregate principal amount of receivables in the U.S. Wholesale
Portfolio as of [ ], 200[ ]. As of [ ], 200[ ], Used vehicles represented
approximately [ ]% of the aggregate principal amount of receivables in the
trust (including Excluded Receivables).
The following table provides the percentage of dealers in the U.S.
Wholesale Portfolio that were subject to finance hold as of the dates
indicated. Finance Hold Experience As of December 31,
<TABLE>
<CAPTION>
Finance Hold Experience
As of [ ] As of December 31,
200[ ] 1999 1998 1997 1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Percentage of
Dealers [ ]% 0.04% 0.9% 2.1% 1.1% 1.8% 1.6% 3.2% 6.8% 9.4%
</TABLE>
The following table provides the number and percentage of dealers in
Dealer Trouble Status in the U.S. Wholesale Portfolio as of the dates
indicated.
<TABLE>
<CAPTION>
Dealer Trouble Experience
As of [ ] As of December 31,
200[ ] 1999 1998 1997 1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Number of Dealers [ ] 27 21 24 20 6 12 21 56 100
Percentage of
Dealers [ ]% 0.9% 0.7% 0.7% 0.6% 0.2% 0.3% 0.6% 1.8% 3.1%
</TABLE>
- -------------------------------------------------------------------------------
THE ACCOUNTS
- -------------------------------------------------------------------------------
As of [ ], 200[ ], with respect to the Accounts in the trust:
o there were approximately [ ] Accounts and the Principal Receivables
balance was approximately $[ ] billion;
o the average credit lines per Dealer for new and used vehicles (which
include Auction Vehicles) were approximately $[ ]million and $[ ]
million, respectively, and the average balance of Principal
Receivables per Dealer was approximately $[ ] million; and
o the aggregate total receivables balance as a percentage of the
aggregate total credit line was approximately [ ]%.
Unless otherwise indicated, the statistics included in this paragraph, in the
table below and under "The Accounts -- General" and " -- Geographic
Distribution" with respect to the Accounts and the receivables in the trust
gives effect to approximately $[ ] million of principal receivables balances
with respect to certain Dealers (the "Excluded Receivables" and the "Excluded
Dealers", respectively), that are in voluntary or involuntary bankruptcy
proceedings or voluntary or involuntary liquidation or that, subject to
certain limitations, are being voluntarily removed by the seller (or the
servicer on its behalf) from the trust. A portion of such principal
receivables was created after such Dealers entered into such status or were
designated by the seller (or the servicer on its behalf) for removal from the
trust and, as a result thereof, are owned by CFC and not the trust. Principal
Receivables balances created prior to such Dealers entering into such status
or being designated for removal from the trust are included in the Principal
Receivables balance. See "Description of the Certificates -- Removal of
Accounts" in the prospectus for a description of the manner in which an
Account can be removed from the trust.
The following table sets forth the percentages of dealer account
balances by year of credit line origination for the accounts in the trust.
<TABLE>
<CAPTION>
Portfolio Percentages by Year
of Credit Line Origination
As of [ , 200[ ]
Prior to
<S> <C> <C> <C> <C> <C> <C> <C>
200[ ] 1999 1998 1997 1996 1995 1994 1994
[ ]% [ ]% [ ]% [ ]% [ ]% [ ]% [ ]% [ ]%
</TABLE>
As of [ ], 200[ ], the weighted average spread over the Prime Rate
charged to Dealers was approximately [ ]%.
- ------------------------------------------------------------------------------
CFC'S PERFORMANCE HISTORY
- ------------------------------------------------------------------------------
LOSS EXPERIENCE
The following tables set forth the average Principal Receivables balance
and loss experience for each of the periods shown on the U.S. Wholesale
Portfolio. Because the Eligible Accounts will be only a portion of the entire
U.S. Wholesale Portfolio, actual loss experience with respect to the Eligible
Accounts may be different. We cannot assure you that the loss experience for
the receivables in the future will be similar to the historical experience set
forth below with respect to the U.S. Wholesale Portfolio. Also, the historical
experience set forth below reflects financial assistance provided by Chrysler
or DaimlerChrysler to DaimlerChrysler-franchised dealers as described under
"The Dealer Floorplan Financing Business -- Relationship with DaimlerChrysler"
in the prospectus. If DaimlerChrysler is not able to or elects not to provide
such assistance, the loss experience in respect of the U.S. Wholesale
Portfolio may be adversely affected. See "Risk Factors -- Trust's Relationship
to DaimlerChrysler and CFC" in the prospectus and "Risk Factors -- The Trust
is Dependent on DaimlerChrysler and CFC" in this prospectus supplement.
<TABLE>
<CAPTION>
Loss Experience for the U.S. Wholesale Portfolio
($ Millions)
[ ] months Ended
[ ], Year Ended December 31,
200[ ] 1999 1999 1998 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Average Principal
Receivables Balance(1) $[ ] $[ ] $10,430 $9,236 $8,877 $8,825 $8,256 $6,754 $6,271
Net Losses/(Net Recoveries)(2) $[ ] $[ ] $ (0) $ 11 $ 4 $ (0) $ (1) $ (1) $ 12
Net Losses/(Net Recoveries) as
a Percent of Liquidations [ ]% [ ]% (0.001)% 0.020% 0.007% (0.000)% (0.002)% (0.003)% 0.035%
Net Losses/(Net Recoveries) as
a Percent of Average Principal
Receivables Balance(3) [ ]% [ ]% (0.00)% 0.12% 0.04% (0.00)% (0.01)% (0.01)% 0.19%
Year Ended December 31,
1992 1991 1990 1989 1988 1987
Average Principal
Receivables Balance(1) $5,344 $4,826 $4,726 $4,933 $4,129 $3,787
Net Losses/(Net Recoveries)(2) $ 26 $ 36 $ 23 $ 13 $ 3 $ 2
Net Losses/(Net Recoveries) as
a Percent of Liquidations 0.098% 0.163% 0.117% 0.060% 0.015% 0.015%
Net Losses/(Net Recoveries) as
a Percent of Average Principal
Receivables Balance(3) 0.49% 0.75% 0.49% 0.26% 0.07% 0.06%
</TABLE>
(1) Average Principal Receivables Balance is the average of the month-end
principal balances for the [ ] months ending on the last day of the
period, except for the [ ] months ended [ ], 200[ ] and [ ], [ ], which
are based on a [ ]-month average.
(2) Net losses in any period are gross losses less recoveries for such
period.
(3) Percentages for the [ ] months ended [ ], 200[ ] and [ ] are
expressed on an annualized basis.
AGING EXPERIENCE
The following table provides the age distribution of vehicle inventory
for all dealers in the U.S. Wholesale Portfolio, as a percentage of total
principal outstanding at the date indicated. Because the Eligible Accounts
will only be a portion of the entire U.S. Wholesale Portfolio, actual age
distribution with respect to the Eligible Accounts may be different.
<TABLE>
<CAPTION>
Age Distribution for the U.S. Wholesale Portfolio
As of
[ ] As of December 31,
200[ ] 1999 1998 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Days
1-120...... [ ]% 81.7% 81.7% 80.1% 80.4% 82.2% 82.5% 82.4%
121-180.... [ ] 12.1 11.0 10.8 10.0 9.3 10.1 9.6
181-270.... [ ] 3.6 4.1 4.2 5.0 3.8 4.0 4.6
over 270... [ ] 2.6 3.2 4.9 4.6 4.7 3.4 3.4
</TABLE>
GEOGRAPHIC DISTRIBUTION
The following table provides the geographic distribution of the vehicle
inventory for all dealers in the trust on the basis of receivables outstanding
and the number of dealers generating such portfolio.
<TABLE>
<CAPTION>
Geographic Distribution of Accounts in the trust
As of [ ], 200[ ]
Percentage of Percentage of
Receivables Receivables Total Number of Number of
Outstanding(2) Outstanding(2)(4) Dealers(3) Dealers(3)(4)
---------------- ----------------- ---------------- -------------
<S> <C> <C> <C> <C>
[Texas].............. $ % %
[California].........
[New York]...........
[Florida]............
[Illinois]...........
[New Jersey].........
[Michigan]...........
[ ]............. % %
Other(1).............
---------------- ----------------- ---------------- -------------
Total................ $ % %
================ ================= ================ =============
</TABLE>
(1) No other state includes more than 5% of the outstanding receivables.
(2) Includes Excluded Receivables.
(3) Includes Excluded Dealers.
(4) May not add to 100.00% due to rounding.
- ------------------------------------------------------------------------------
MATURITY AND PRINCIPAL PAYMENT CONSIDERATIONS
- ------------------------------------------------------------------------------
You will begin receiving principal on your certificates if an Early
Amortization Period that is not terminated has commenced. Full amortization of
the Series [200_-_] certificates by the [ ] distribution date (the
"Series [200_-_] Expected Payment Date") depends on, among other things,
repayment by Dealers of the receivables and may not occur if Dealer payments
are insufficient. Because the receivables generally are paid upon retail sale
of the underlying vehicle, the timing of such payments is uncertain. In
addition, there is no assurance that CFC will generate additional receivables
under the Accounts or that any particular pattern of Dealer payments will
occur. [In addition, the shorter the Accumulation Period Length the greater
the likelihood that payment of the Series [200_-_] certificates in full by the
Series [200_-_] Expected Payment Date will be dependent on the reallocation of
Principal Collections which are initially allocated to other outstanding
series.] If one or more other series from which Principal Collections are
expected to be available to be reallocated to the payment of the Series
[200_-_] certificates enters into an early amortization period [or
reinvestment period] after [ ] [the [ ] distribution date] [the Accumulation
Period Commencement Date], Principal Collections allocated to such series
generally will not be available to be reallocated to make payments of
principal of the Series [200_-_] certificates and [the final payment of
principal of the Series [200_-_] certificates may be later than the Series
[200_-_] Expected Payment Date] [the amount distributed in respect of
principal of the Series [200_-_] certificates on any distribution date during
the Controlled Amortization Period may be less than the Controlled
Amortization Amount.] [In addition, no amounts will be paid in respect of
principal of the Series [200_-_] certificates until the invested amount of the
Paired Series has been reduced to zero.]
Because an Early Amortization Event with respect to the Series [200_-_]
certificates may occur and would initiate an Early Amortization Period, the
final distribution of principal on the Series [200_-_] certificates may be
made prior to the scheduled termination of the Revolving Period or prior to
the Series [200_-_] Expected Payment Date. [Several of the events which
constitute Reinvestment Events with respect to the Series [200_-_]
certificates may constitute early amortization events with respect to other
Series. Should such an event occur, holders of certificates of such other
series would receive monthly distribution of principal, which distributions
would not be limited to any controlled amortization amount, while
Certificateholder Principal Collections would be retained in the Principal
Funding Account and would not be distributed to Series [200_-_]
certificateholders until the Series [200_-_] Expected Payment Date or, if
earlier, the first distribution date following the occurrence of an Early
Amortization Event.
The amount of new receivables generated in any month and monthly payment
rates on the receivables may vary because of seasonal variations in vehicle
sales and inventory levels, retail incentive programs provided by vehicle
manufacturers and various economic factors affecting vehicle sales generally.
The following table sets forth the highest and lowest monthly payment rates
for the U.S. Wholesale Portfolio during any month in the periods shown and the
average of the monthly payment rates for all months during the periods shown,
in each case calculated as the percentage equivalent of a fraction, the
numerator of which is the aggregate of all collections of principal during the
period and the denominator of which is the average aggregate principal balance
for such period. There can be no assurance that the rate of Principal
Collections will be similar to the historical experience set forth below. As
the Eligible Accounts will be only a portion of the entire U.S. Wholesale
Portfolio, historical monthly payment rates with respect to the Eligible
Accounts may be different than those shown below.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Monthly Payment Rates for the U.S. Wholesale Portfolio
[ ] Months Ended Year Ended December 31,
----------------- -------------------------------------------------------------------------------------
|2000[ ] | [ ] | |1999| |1998| |1997| |1996| |1995| |1994| |1993| |1992| |1991|
----------------- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Highest Month [ ]% [ ]% 60.5% 60.8% 57.7% 58.3% 59.1% 59.7% 54.7% 50.6% 49.0%
- -------------------------------------------------------------------------------------------------------------------------------
Lowest Month [ ] [ ] 44.7% 42.5% 41.1% 43.2% 36.5% 34.2 35.9% 34.4% 30.2%
- -------------------------------------------------------------------------------------------------------------------------------
Average of the
Months
in the Period [ ] [ ] 52.0 50.0 48.2 49.0 45.6 50.3 46.6 41.3 38.2
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------------------------------------------------------------------------
SERIES PROVISIONS
- ----------------------------------------------------------------------------
GENERAL
The Series [200_-_] certificates will be issued pursuant to the Pooling
and Servicing Agreement and a Series Supplement relating to the Series
[200_-_] certificates (the "Series Supplement"). Beneficial interests in
Series [200_-_] certificates will be offered in minimum denominations of
$1,000 and integral multiples of that amount. The trustee will make available
for inspection a copy of the Pooling and Servicing Agreement (without exhibits
or schedules) on request. You should refer to the prospectus for additional
information concerning the Series [200_-_] certificates and the Pooling and
Servicing Agreement.
INTEREST
Interest on the principal balance of the Series [200_-_] certificates
will accrue at the Certificate Rate and will be payable to the Series [200_-_]
certificateholders on each [interest payment date] [distribution date],
commencing [ ], 200[ ] [, provided that, during any Early Amortization Period,
interest will be distributed to Series [200_-_] certificateholders on each
distribution date, commencing on the first distribution date following the
occurrence of an Early Amortization Event]. Interest payable on any [interest
payment date] [distribution date] will accrue from and including the preceding
[interest payment date] [distribution date] to but excluding such [interest
payment date] [distribution date] (or, in the case of the first [interest
payment date] [distribution date], from and including the Series Issuance Date
to but excluding the [ ] [interest payment date] [distribution date]). Each
such period is an "Interest Period." Interest will be calculated on a basis of
[the actual number of days in each Interest Period divided by [360] [other]]
[a 360-day year of twelve 30-day months]. Interest due for any [interest
payment date or] distribution date but not paid on such [interest payment date
or] distribution date will be due on the next [interest payment date or]
distribution date, [as applicable,] together with interest on such amount at
the Certificate Rate [calculated on the basis of [ ]], to the extent permitted
by applicable law. Interest payments on the Series [200_-_] certificates will
generally be derived from Series [200_-_] Certificateholder Interest
Collections for a Collection Period, [any withdrawals from the Reserve Fund,
[Excess Interest Collections, if any, allocated to Series [200_-_], ] and
Investment Proceeds and, under certain circumstances, Available Seller's
Collections to the extent of the Available Subordinated Amount [and any
withdrawals from the Yield Supplement Account] [describe other sources.]
The Certificate Rate for each [Interest Period] [other] will be
determined on the [LIBOR Determination Date ] [Adjustment Date] preceding such
Interest Period. The "Certificate Rate" will be [ %] [equal to [the lesser of
(a)] the index] [LIBOR] [plus] [minimum] [times] [ ]% [and (b) [except with
respect to [the Prefunded Period [other]] the [Assets Receivables Rate for the
Related distribution date].
"Monthly Interest" for any distribution date means the amount of interest
accrued in respect of the Series [200_-_] certificates as described above for
such distribution date.
["LIBOR" with respect to any Interest Period will be established by the
Calculation Agent and will equal the offered rate for United States dollar
deposits for one month that appears on Telerate Page 3750 as of 11:00 A.M.,
London time, on the second LIBOR Business Day prior to such Interest Period (a
"LIBOR Determination Date"). "Telerate Page 3750" means the display page so
designated on the Dow Jones Telerate Service (or such other page as may
replace that page on that service, or such other service as may be nominated
as the information vendor, for the purpose of displaying London interbank
offered rates of major banks). If such rate appears on Telerate Page 3750,
LIBOR will be such rate. "LIBOR Business Day" as used herein means 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. If on any
LIBOR Determination Date the offered rate does not appear on Telerate Page
3750, the Calculation Agent will request each of the reference banks (which
shall be major banks that are engaged in transactions in the London interbank
market selected by the Calculation Agent) to provide the Calculation Agent
with its offered quotation for United States dollar deposits for one month to
prime banks in the London interbank market as of 11:00 A.M., London time, on
such date. If at least two reference banks provide the Calculation Agent with
such offered quotations, LIBOR on such date will be the arithmetic mean,
rounded upwards, if necessary, to the nearest 1/100,000 of 1% (.0000001), with
five one-millionths of a percentage point rounded upward, of all such
quotations. If on such date fewer than two of the reference banks provide the
Calculation Agent with such offered quotations, LIBOR on such date will be the
arithmetic mean, rounded upwards, if necessary, to the nearest 1/100,000 of 1%
(.0000001), with five one-millionths of a percentage point rounded upward, of
the offered per annum rates that one or more leading banks in The City of New
York selected by the Calculation Agent are quoting as of 11:00 A.M., New York
City time, on such date to leading European banks for United States dollar
deposits for one month. If, however, such banks are not quoting as described
above, LIBOR for such date will be LIBOR applicable to the Interest Period
immediately preceding such Interest Period. The "Calculation Agent" will be
the trustee.
[Describe Index and define Adjustment Date.]
[If the Certificate Rate for a distribution date [other than a
distribution date [with respect to the Prefunded Period] [other]] calculated
on the basis of [the Index] [LIBOR] as described above is greater than the
Assets Receivable Rate, then the Certificate Rate for such distribution date
will be the Assets Receivables Rate.]
[The "Assets Receivables Rate" for any [Interest Period][period from one
distribution date to the immediately succeeding distribution date] shall equal
[the product of (a) the quotient obtained by dividing (i) 360 by (ii) the
actual number of days elapsed in such period and (b) a percentage, expressed
as a fraction, (i) the numerator of which is the sum of (A) Certificateholder
Interest Collections for the Collection Period immediately preceding the last
day of such period (which for this purpose only is based on interest amounts
billed to the Dealers which are due during such Collection Period) less the
Monthly Servicing Fee with respect to such immediately preceding Collection
Period] and [(B) the Investment Proceeds to be applied on the distribution
date related to such period [and (C) Excess Interest Collections allocated to
Series [2000_-_] with respect to such period] and (ii) the denominator of
which is [the sum of (A)] the product of (I) the Floating Allocation
Percentage, (II) the Series Allocation Percentage and (III) the average Pool
Balance (after giving effect to any charge-offs) for such immediately
preceding Collection Period, [(B) the principal balance on deposit in the
Excess Funding Account on the first day of such period (after giving effect to
all deposits to and withdrawals therefrom on such first day)] and [(C) the
principal balance on deposit in the Principal Funding Account on the first day
of such period (after giving effect to all deposits to and withdrawals
therefrom on such first day)] [other].
If the Certificate Rate for any distribution date is based on the Assets
Receivables Rate, the excess of (a) the amount of interest on the Series
[200_-_] certificates that would have accrued in respect of the related
[Interest Period][period from one distribution date to the immediately
succeeding distribution date] had interest been calculated based on
[LIBOR][the Index], over (b) the amount of interest on the Series [200_-_]
certificates actually accrued in respect of such Interest Period based on the
Assets Receivables Rate (such excess, together with the unpaid portion of any
such excess from prior distribution dates (and interest accrued thereon
calculated on the basis of [LIBOR][the Index]), is referred to as the
"Carry-over Amount"), will be paid on such distribution date from amounts on
deposit in the Yield Supplement Account and, if such amounts are depleted, to
the extent funds are allocated and available therefor after making all
required distributions and deposits with respect to the Series [200_-_]
certificates, including payments with respect to principal [(including
payments to the Excess Funding Account)], Monthly Interest, the Monthly
Servicing Fee[, the Reserve Fund Deposit Amount] and the Investor Default
Amount as described below under "Distributions from the Collection Account;
[Reserve Fund;] Yield Supplement Account" [Other Enhancement]. In addition,
any Carry-over Amount outstanding on the Final Payment Date, after making the
distributions described in the preceding sentence, will be paid on the Final
Payment Date from (i) certain amounts on deposit in the Reserve Fund (to the
extent such amounts would otherwise be available to the seller) and (ii)
Available Seller's Collections on deposit in the Collection Account (to the
extent such amounts would otherwise be available to the seller) as described
under "Distributions from the Collection Account; [Reserve Fund]; Yield
Supplement Account][Other Enhancement]". The rating of the Series [200_-_]
certificates does not address the likelihood of payment of any Carry-over
Amount.]
PRINCIPAL
In general, no principal payments will be made to the Series [200_-_]
certificateholders until the Series [200_-_] [Expected Payment Date]
[Principal Commencement Date] or, upon the commencement of an Early
Amortization Period that is not terminated as described herein, until the
first Special Payment Date. Notwithstanding the occurrence of an Early
Amortization Event, however, no principal payments will be made to the Series
[200_-_] certificateholders during the Prefunded Period.] On each distribution
date with respect to the Revolving Period, collections of Principal
Receivables allocable to the interest of the Series [200_-_]
certificateholders in the Trust Assets (the "Series [200_-_]
Certificateholders' Interest") that are not required to be deposited to the
Excess Funding Account, subject to certain limitations, will either be
o allocated to one or more Series which are in amortization, early
amortization or accumulation periods to cover principal payments due
to the certificateholders of any such Series or which provides for
excess funding accounts or similar arrangements or
o if no such Series is then amortizing or accumulating principal or
otherwise does not provide for excess funding accounts or similar
arrangements, paid to the seller to maintain the Series [200_-_]
Certificateholders' Interest or held as Unallocated Principal
Collections.
See "Allocation Percentages -- Principal Collections for all Series" and
"Distributions from the Collection Account[; Reserve Fund][; Yield Supplement
Account][; Other Enhancement] -- Principal Collections".
The "Revolving Period" will be the period beginning at the close of
business on the Series Cut-Off Date and terminating on the earlier of (a) the
close of business on the day immediately preceding the Accumulation Period
Commencement Date and (b) the close of business on the day an Early
Amortization Period commences. The Revolving Period, however, may recommence
in certain circumstances upon the termination of an Early Amortization Period.
See "Early Amortization Events".
[Unless an Early Amortization Period [or Reinvestment Period] that is not
terminated as described herein shall have commenced, the Series [200_-_]
certificates will have an Accumulation Period of one, two, three, four or five
month(s) long as described in the following paragraph.
On the [ ] distribution date and each distribution date thereafter that
occurs prior to the Accumulation Period Commencement Date, the servicer shall
calculate the Accumulation Period Length. The "Accumulation Period Length"
will be calculated on each such date as the lesser of (i) the number of full
Collection Periods between such distribution date and the Series [200_-_]
Expected Payment Date and (ii) the product, rounded upwards to the nearest
integer not greater than five, of (a) one divided by the lowest Monthly
Payment Rate on the receivables during the last [ ] months and (b) a fraction,
the numerator of which is the sum of (x) the Invested Amount as of such
distribution date (after giving effect to all changes therein on such date)
and (y) the invested amounts of all other series [(excluding certain series)]
currently in their amortization or accumulation periods or expected to be in
their amortization or accumulation periods by the Series [200_-_] Expected
Payment Date and the denominator of which is the sum of the Invested Amount
and the invested amounts as of such distribution date (after giving effect to
all changes therein on such date) of all other outstanding series [(excluding
certain series)] which are expected to be outstanding on the Series [200_-_]
Expected Payment Date.
The Accumulation Period Commencement Date (which will be the first day of
a Collection Period) will occur when the number of full Collection Periods
remaining until the Series [200_-_] Expected Payment Date first equals the
Accumulation Period Length as calculated above. If the Accumulation Period
Length is one month, two months, three months, four months or five months in
length, the "Accumulation Period Commencement Date" shall be the first day of
the [ ] Collection Period, the [ ] Collection Period, the [ ] Collection
Period, the [ ] Collection Period, or the [ ] Collection Period, respectively.
In addition, if at any time after the [ ] distribution date, any other
outstanding series [(excluding certain series)] shall have entered into an
early amortization period, the Accumulation Period Commencement Date shall be
the earlier of (i) the date that such outstanding series shall have entered
into its early amortization period and (ii) the Accumulation Period
Commencement Date as previously determined. See "Annex I -- Other Series of
Investor Certificates".
The effect of the calculation described above is to permit the reduction
of the length of the Accumulation Period based on the invested amounts of
certain other series which are scheduled to be in their revolving periods
during the Accumulation Period and on increases in the principal payment rate,
which, if continued, would result in a shorter Accumulation Period.]
Unless and until an Early Amortization Period [or Reinvestment Period]
that is not terminated as described herein shall have occurred and until the
outstanding principal balance of the Series [200_-_] certificates is paid in
full, on each distribution date with respect to the [Accumulation
Period][Controlled Amortization Period], collections of Principal Receivables
allocable to the Series [200_-_] Certificateholders' Interest plus certain
other amounts comprising Monthly Principal will no longer be paid for the
benefit of another series or to the seller as described above but instead an
amount thereof up to the [Controlled Deposit Amount][Controlled Distribution
Amount] for each such distribution date will be [deposited in the Principal
Funding Account][distributed to the Series [200_-_] certificateholders. [The
funds deposited in the Principal Funding Account and any amounts in the Excess
Funding Account will be used to pay the outstanding principal balance of the
Series [200_-_] certificates on the Series [200_-_] Expected Payment Date. If
on such date the sum of the Principal Funding Account Balance and any such
amounts in the Excess Funding Account is less than the outstanding principal
balance of the Series [200_-_] certificates, the Early Amortization Period
will commence and on each Special Payment Date the Series [200_-_]
certificateholders will receive distributions of Monthly Principal and Monthly
Interest until the outstanding principal balance of the Series [200_-_]
certificates has been paid in full or the Termination Date has occurred. Even
if the sum of the Principal Funding Account Balance and any such amounts in
the Excess Funding Account on the Series [200_-_] Expected Payment Date is
insufficient to pay the outstanding principal balance of the Series [200_-_]
certificates in full, such balances will be distributed to the Series [200_-_]
certificateholders at such time.] [Notwithstanding the foregoing, no payments
of principal will be made in respect of the Series [200_-_] certificates
during the Prefunded Period.]
We expect that the final principal payment with respect to the Series
[200_-_] certificates will be made on the Series [200_-_] Expected Payment
Date. However, principal of the Series [200_-_] certificates may be paid
earlier or, depending on the actual payment rate on the receivables, later, as
described under "Risk Factors -- Early Amortization of Series [200_-_] May
Result in Early, Late and/or Reduced Payment of Series [200_-_] Principal"
herein and "Risk Factors -- The Timing of Payments on the Receivables Will
Determine Whether Principal Will Be Paid on the Certificates When Intended" in
the prospectus.
EXCESS FUNDING ACCOUNT
Unless and until an Early Amortization Event [or Reinvestment Event]
shall have occurred, the Excess Funded Amount will be maintained in the Excess
Funding Account established with the trustee. The Excess Funded Amount will
initially equal the excess of the initial principal balance of the Series
[200_-_] certificates, if any, over the Initial Invested Amount. Funds on
deposit in the Excess Funding Account will be invested by the trustee at the
direction of the servicer generally in Eligible Investments. Such investments
must mature on or prior to the next distribution date.
Funds on deposit in the Excess Funding Account will be withdrawn and paid
to the seller or allocated to one or more series which are in amortization,
early amortization or accumulation periods to the extent of any increases in
the Invested Amount as a result of the addition of receivables to the trust, a
reduction in the Seller's Interest, or a reduction in the invested amount of
any other series. Additional amounts will be deposited in the Excess Funding
Account on a distribution date to the extent that the sum of (i) the Series
[200_-_] Certificateholders' Interest in Principal Receivables (determined for
this purpose by reducing such interest by the amount, if any, by which the
Required Participation Amount exceeds the Pool Balance due to an increase in
the Subordination Factor) and (i) the amount on deposit in the Excess Funding
Account prior to the deposit on such distribution date is less than the
outstanding principal balance of the Series [200_-_] certificates, but only to
the extent that funds are available therefor as described herein. If other
series issued by the trust provide for excess funding accounts or other
arrangements similar to the Excess Funding Account involving fluctuating
levels of investment in the receivables, the allocation of additional
receivables to increase the Invested Amount will generally be based on the
proportion that the amount on deposit in the Excess Funding Account bears to
the amounts on deposit in the excess funding accounts of all series providing
for excess funding accounts or such similar arrangements or to amounts
otherwise similarly available. The deposit of amounts in the Excess Funding
Account will be based on the proportion that the Adjusted Invested Amount
bears to the adjusted invested amounts of all series providing for excess
funding accounts or such similar arrangements.
On each distribution date, all investment income received on amounts in
the Excess Funding Account during the related Collection Period will be
withdrawn from the Excess Funding Account and applied as described herein.
Any funds on deposit in the Excess Funding Account on the _____________
distribution date will be deposited in the Principal Funding Account on such
date. No funds will be deposited in the Excess Funding Account during any
Early Amortization Period. Additionally, no amounts will be deposited in the
Excess Funding Account with respect to any Collection Period following the
_____________ Collection Period.]
ALLOCATION PERCENTAGES
Allocation between the Series [200_-_] Certificateholders and the Seller.
The servicer will allocate amounts initially allocated to Series [200_-_] as
described under "Description of the certificates -- Allocation Percentages --
Allocations among Series" in the prospectus between the Series [200_-_]
Certificateholders' Interest and the Seller's Interest for each Collection
Period as follows:
o Series Allocable Interest Collections and the Series Allocable
Defaulted Amount will be allocated to Series [200_-_]
certificateholders based on the Floating Allocation Percentage[.
During any Early Amortization Period, however, Series Allocable
Interest Collections will be allocated to the Series [200_-_]
certificateholders based on the Principal Allocation Percentage];
o during any period that is not the Accumulation Period or an Early
Amortization Period (a "Nonprincipal Period"), Series Allocable
Principal Collections will be allocated to Series [200_-_]
certificateholders based on the Floating Allocation Percentage;
o during the [Accumulation Period][Controlled Amortization Period] and
any Early Amortization Period [or Reinvestment Period], Series
Allocable Principal Collections will be allocated to Series [200_-_]
certificateholders based on the [Principal Allocation
Percentage][other]; and
o Series Allocable Miscellaneous Payments will at all times be
allocated to Series [200_-_] certificateholders.
Amounts not allocated to the Series [200_-_] certificateholders as
described above will be allocated to the seller.
"Floating Allocation Percentage" for any Collection Period means [the
percentage equivalent (which shall never exceed 100%) of a fraction, the
numerator of which is the Invested Amount as of the last day of the
immediately preceding Collection Period and the denominator of which is the
product of (x) the Pool Balance as of such last day and (y) the Series
Allocation Percentage for the Collection Period in respect of which the
Floating Allocation Percentage is being calculated. With respect to the first
Collection Period, however, the Floating Allocation Percentage shall mean the
percentage equivalent of a fraction, the numerator of which is the Initial
Invested Amount as of the Series Issuance Date and the denominator of which is
the Series Allocation Percentage of the Pool Balance as of the Series Cut-Off
Date][other].
"Principal Allocation Percentage" for any Collection Period generally
means [the percentage equivalent (which shall never exceed 100%) of a
fraction, the numerator of which is the Invested Amount as of the last day of
the Revolving Period, if such last day has occurred or, if such last day has
not occurred, as of the last day of the immediately preceding Collection
Period and the denominator of which is the product of (x) the Pool Balance as
of such last day and (y) the Series Allocation Percentage for the Collection
Period in respect of which the Principal Allocation Percentage is being
calculated][other].
"Invested Amount" means for any date [an amount equal to the Initial
Invested Amount,
o minus the amount, without duplication, of principal payments (except
principal payments made from the Excess Funding Account) made to
Series [200_-_] certificateholders or deposited to the Principal
Funding Account in respect of the Series [200_-_] certificates prior
to such date since the Series Issuance Date
o minus the excess, if any, of the aggregate amount of Investor
Charge-Offs for all distribution dates preceding such date, over the
aggregate amount of any reimbursements of Investor Charge-Offs for
all distribution dates preceding such date][other].
"Initial Invested Amount" means [[the portion of the initial principal
amount of the Series [200_-_] certificates which is invested in Principal
Receivables on the Series Issuance Date, which is expected to equal $[ ]
(based on information as of the Series Cut-off Date)][during the Prefunded
Period, zero and thereafter [ ]],
o plus the amount of any withdrawals from the Excess Funding Account
in connection with the purchase of an additional interest in
Principal Receivables since the Series Issuance Date,
o minus the amount of any additions to the Excess Funding Account in
connection with a reduction in the Principal Receivables in the
trust or an increase in the Subordination Factor since the Series
Issuance Date.
The Floating Allocation Percentage and the Principal Allocation
Percentage will be adjusted for any Collection Period in which Additional
Accounts are designated to reflect the additional receivables added to the
trust.
"Available Series [200_-_] Certificateholder Principal Collections" for
any distribution date means the sum of
(a) the product of (i) the Floating Allocation Percentage, with respect
to any Nonprincipal Period, or the Principal Allocation Percentage,
with respect to the [Accumulation Period][Controlled Amortization
Amount] or any Early Amortization Period [or Reinvestment Period],
for the related Collection Period and (ii) Series Allocable
Principal Collections deposited in the Collection Account for the
related Collection Period,
(b) the amount, if any, of Interest Collections, Investment Proceeds,
[funds in the Reserve Fund,] Available Seller's Collections and
Excess Servicing allocated to cover the Investor Default Amount or
reimburse Investor Charge-Offs,
(c) Series Allocable Miscellaneous Payments on deposit in the Collection
Account for such distribution date and
(d) Excess Principal Collections, if any, from other Series allocated to
Series [200_-_].
PRINCIPAL COLLECTIONS FOR ALL SERIES
Principal Collections allocated to the Series [200_-_]
Certificateholders' Interest for any Collection Period will first be allocated
[to make required deposits to the Excess Funding Account during the Revolving
Period], [to make required payments of principal [to the Principal Funding
Account during the [Accumulation Period] [or Reinvestment Period] and] to the
Series [200_-_] certificateholders during [the Controlled Amortization Period
and] any Early Amortization Period] [describe other applications, if
applicable]. See "Distributions from the Collection Account; [Reserve Fund;]
Yield Supplement Account; Other Enhancement -- Principal Collections". The
servicer will determine the amount of Available Certificateholder Principal
Collections for any Collection Period remaining after such required payments,
if any, and the amount of any similar excess for any other series ("Excess
Principal Collections"). The servicer will allocate Excess Principal
Collections to cover any principal distributions to certificateholders for any
series entitled thereto which are either scheduled or permitted and which have
not been covered out of Principal Collections and certain other amounts
allocated to such series ("Principal Shortfalls"). See "Maturity and Principal
Payment Considerations". Excess Principal Collections will generally not be
used to cover investor charge-offs for any series. If Principal Shortfalls
exceed Excess Principal Collections for any Collection Period, Excess
Principal Collections will be allocated [pro rata among the applicable series
based on the relative amounts of Principal Shortfalls] [describe other method
of applying, if applicable].
ALLOCATION OF COLLECTIONS; LIMITED SUBORDINATION OF SELLER'S INTEREST
[Except as otherwise described herein with respect to Interest
Collections and Principal Collections allocated to the Available Negative
Carry Subordinated Amount, [and [ ],] on] [On] any date on which collections
are deposited in the Collection Account, the servicer will distribute directly
to the seller an amount equal to (a) the Excess Seller's Percentage for the
related Collection Period of Series Allocable Interest Collections for such
date and (b) the Excess Seller's Percentage for the related Collection Period
of Series Allocable Principal Collections for such date, if the Seller's
Participation Amount (determined after giving effect to any Principal
Receivables transferred to the trust on such date) exceeds the Trust Available
Subordinated Amount for the immediately preceding Determination Date (after
giving effect to the allocations, distributions, withdrawals and deposits to
be made on the distribution date immediately following such Determination
Date). Also, during any Nonprincipal Period, subject to certain limitations,
the servicer will distribute directly to the seller on each such date of
deposit an amount equal to the Available Seller's Principal Collections for
such date, if the Seller's Participation Amount (determined after giving
effect to any Principal Receivables transferred to the trust on such date)
exceeds the Trust Available Subordinated Amount for the immediately preceding
Determination Date (after giving effect to the allocations, distributions,
withdrawals and deposits to be made on the distribution date immediately
following such Determination Date). [describe exceptions, if any]
"Available Seller's Collections" for any date means the sum of (a) the
Available Seller's Interest Collections for such date and (b) the Available
Seller's Principal Collections for such date. The Available Seller's
Collections, however, will be zero for any Collection Period with respect to
which the Available Subordinated Amount is zero on the Determination Date
immediately following the end of such Collection Period.
"Available Seller's Interest Collections" for any date means an amount
equal to the result obtained by multiplying (a) the excess of (i) the Seller's
Percentage for the related Collection Period over (ii) the Excess Seller's
Percentage for such Collection Period by (b) Series Allocable Interest
Collections for such date.
"Available Seller's Principal Collections" for any date means an amount
equal to the product of (a) the excess of (i) the Seller's Percentage for the
related Collection Period over (ii) the Excess Seller's Percentage for such
Collection Period and (b) Series Allocable Principal Collections for such
date.
"Seller's Percentage" means 100% minus (a) the Floating Allocation
Percentage, when used with respect to Interest Collections [(except during any
Early Amortization Period)], Defaulted Receivables and Principal Collections
during any Nonprincipal Period, and (b) the [Principal Allocation
Percentage][other], when used with respect to [Interest Collections during any
Early Amortization Period and] Principal Collections during the [Accumulation
Period] [Controlled Amortization Period] and any Early Amortization Period [or
Reinvestment Period].
"Excess Seller's Percentage" for any Collection Period means a percentage
(which percentage shall never be less than 0% nor more than 100%) equal to (a)
100% minus, when used with respect to Interest Collections [(except during any
Early Amortization Period)] and Principal Collections during any Nonprincipal
Period, the sum of (i) the Floating Allocation Percentage with respect to such
Collection Period and (ii) the percentage equivalent of a fraction, the
numerator of which is the Available Subordinated Amount as of the
Determination Date occurring in such Collection Period (after giving effect to
the allocations, distributions, withdrawals and deposits to be made on the
distribution date immediately following such Determination Date), and the
denominator of which is the product of (x) the Pool Balance as of the last day
of such immediately preceding Collection Period and (y) the Series Allocation
Percentage for the Collection Period in respect of which the Excess Seller's
Percentage is being calculated or (b) 100% minus, when used with respect to
[Interest Collections during any Early Amortization Period and] Principal
Collections during [the Accumulation Period] [Controlled Amortization Period]
and any Early Amortization Period [or Reinvestment Period], the sum of (i) the
[Principal Allocation Percentage] [other] with respect to such Collection
Period and (ii) the percentage described in clause (a)(ii) above for such
Collection Period.
"Seller's Participation Amount" for any date means an amount equal to the
Pool Balance on such date minus the aggregate invested amounts for all
outstanding series on such date.
DEFICIENCY AMOUNT
[On each Determination Date [with respect to a distribution date that
occurs on or prior to the Fully Reinvested Date [or any distribution date
thereafter during the Revolving Period, if the Revolving Period has
recommenced]], the servicer will determine for the Series [200_-_]
certificates the amount (the "Deficiency Amount"), if any, by which (a) the
sum of
(i) Monthly Interest for the following distribution date,
(ii) Monthly Interest accrued but not paid with respect to prior
distribution dates (and interest thereon),
(iii) the Monthly Servicing Fee for such distribution date,
(iv) the Investor Default Amount for such distribution date,
(v) the amount of any Adjustment Payment allocated to the Series
[200_-_] certificates for such distribution date that has not been
deposited in the Collection Account as required under the Pooling
and Servicing Agreement and
(vi) if such distribution date is the Final Payment Date, any Carry-over
Amount on such distribution date that will not be satisfied on such
date by the application of amounts on deposit in the Yield
Supplement Account as described under "Distributions from the
Collection Account; Reserve Fund; Yield Supplement Account; Other
Enhancement -- Yield Supplement Account",
exceeds (b) the sum of
[(i)] Certificateholder Interest Collections and Investment Proceeds for
such distribution date,
[(ii) Excess Interest collections allocated to Series [200_-_] with
respect to such distribution date] [and
(iii) the amount of funds in the Reserve Fund on such Determination Date
available to fund any portion of the Deficiency Amount as described
under "Distributions from the Collection Account; Reserve Fund[;
Yield Supplement Account] -- Interest Collections"].
The lesser of the Deficiency Amount and the Available Subordinated Amount is
the "Draw Amount".] [Include other sources of funds and applications of the
Draw Amount, as appropriate.](1)
"Final Payment Date" means the distribution date on which, after giving
effect to all payments to be made on such distribution date, the outstanding
principal balance of the [Series 200_-_] certificates will be paid in full.
AVAILABLE SUBORDINATED AMOUNT
The "Required Subordinated Amount" means, as of any date of
determination, [the sum of (i)] the product of the initial Subordinated
Percentage[, as adjusted from time to time as described herein other than as a
result of an increase therein at the option of the seller,] and the Invested
Amount [and (ii) the Incremental Subordinated Amount.] Assuming that the
Initial Invested Amount of the [Series 200_-_] certificates is equal to the
initial principal amount of the [Series 200_-_] certificates, such amount
would initially be $[ ].
The "Available Subordinated Amount" for a Determination Date is equal to
(a) the lesser of
(i) the Available Subordinated Amount for the preceding
Determination Date, minus, with certain limitations, the Draw
Amount for such preceding Determination Date, [minus funds from
the Reserve Fund applied to cover any portion of the Investor
Default Amount,] plus the excess, if any, of the Required
Subordinated Amount for such Determination Date over the
Required Subordinated Amount for the immediately preceding
Determination Date due to an increase in the Subordination
Factor, plus the amount of Excess Servicing available to be
paid to the seller as described under "Distributions from the
Collection Account[; Reserve Fund;] [Yield Supplement
Account][; Other Enhancement]-- Excess Servicing", and
- ---------------
1 Modify, as appropriate, if Interest Collections, Investment Proceeds and
Available sellers' Collections from one Series will be available to cover
interest or other shortfalls for a related Series.
(ii) the product of the fractional equivalent of the Subordinated
Percentage and the Invested Amount,
[minus (b) in the case of clause (a) (i) the Incremental Subordinated
Amount for such preceding Determination Date,]
[plus (c) the Incremental Subordinated Amount for the current
Determination Date,]
[plus (d) the Subordinated Percentage of funds to be withdrawn from the
Excess Funding Account on the succeeding distribution date and paid to
the seller or allocated to one or more series]
However, (x) from and after the commencement of the [Accumulation
Period][Controlled Amortization Period] until the [Series 200_-_] certificates
are paid in full and (y) from and after the commencement of any Early
Amortization Period that is not terminated as described herein until the
payment in full of the [Series 200_-_] certificates, the Available
Subordinated Amount shall be calculated based on the Invested Amount as of the
close of business on the day preceding the [Accumulation Period] [Controlled
Amortization Period] or Early Amortization Period, as applicable. [Also, from
and after the commencement of any Reinvestment Period that is not terminated
as described herein until the earliest of (i) the commencement of any Early
Amortization Period that is not terminated as described herein, (ii) the
payment in full of the [Series 200_-_] certificates and (iii) the Fully
Reinvested Date, the Available Subordinated Amount shall be calculated based
on the Investment Amount as of the close of business on the day preceding such
Reinvestment Period [less [describe permitted reductions e.g., based on
payment rates or amounts on deposit in the Principal Funding Account]]. The
Available Subordinated Amount for the first Determination Date is equal to the
Required Subordinated Amount.
The "Incremental Subordinated Amount" on any Determination Date will
equal the result obtained by multiplying
(a) a fraction, the numerator of which is the sum of the Invested Amount
on the last day of the immediately preceding Collection Period and
the Available Subordinated Amount for such Determination Date
(calculated without adding the Incremental Subordinated Amount for
such Determination Date as described in clause (c) above), and the
denominator of which is the Pool Balance on such last day by
(b) the excess, if any, of (x) the sum of the Overconcentration Amount,
the Installment Balance Amount and the aggregate amount of
Ineligible Receivables on such Determination Date over (y) the
aggregate amount of Ineligible Receivables, receivables in Accounts
containing Dealer Overconcentrations and receivables in Installment
Balances, in each case that became Defaulted Receivables during the
preceding Collection Period and are not subject to reassignment from
the trust, unless certain insolvency events relating to the seller
or CFC have occurred, as further described in the Pooling and
Servicing Agreement.
The "Subordinated Percentage" will initially equal the percentage
equivalent of a fraction, the numerator of which is the Subordination Factor
and the denominator of which will be the excess of 100% over the Subordination
Factor. The "Subordination Factor" will [initially] be [ ]% [, but will be
subject to increase [to [ ]% when the [Floating Rate] [ ]% Auto Loan Asset
Backed certificates Series [ ] have been paid in full] [to [ ]% in the event
that the rating of CFC's long-term unsecured debt is lowered below BBB- by
Standard & Poor's or withdrawn by Standard & Poor's, unless the seller
receives written confirmation from Standard & Poor's that the failure to so
increase the Subordination Factor would not result in such Rating Agency
lowering or withdrawing its rating of the [Series 200_-_] certificates. The
seller may, in its sole discretion, at any time increase the Available
Subordinated Amount for so long as the cumulative amount of such increases
does not exceed the lesser of (i) $[ ] or (ii) [ ]% of the Invested Amount.
The seller is not under any obligation to increase the Available Subordinated
Amount at any time, except as described herein. If [the sum of] the Available
Subordinated Amount [and the Incremental Subordinated Amount] were reduced to
less than the Required Subordinated Amount [and the Incremental Subordinated
Amount], a [Reinvestment Event] [Early Amortization Event] would occur. The
seller could elect to increase the Available Subordinated Amount at the time
such [Reinvestment Event] [Early Amortization Event] would otherwise occur,
thus preventing or delaying the occurrence of the [Reinvestment Event] [Early
Amortization Event] [Describe partial Reinvestment Periods resulting from a
failure to meet the test described above, if applicable.].
[Negative Carry Subordinated Amount. In the event of the occurrence of [a
Reinvestment Event,] [an Early Amortization Event] [or the commencement of the
Accumulation Period] [or the commencement of the Controlled Amortization
Period], Interest Collections and Principal Collections otherwise distributed
to the seller in respect of the Excess Seller's Percentage, in an amount not
to exceed the Available Negative Carry Subordinated Amount, will be deposited
to the Reserve Fund [and other] until the amounts on deposit therein equal the
Negative Carry Required Amount [and [ ]].
[The "Available Negative Carry Subordinated Amount" means, initially, the
Required Negative Carry Subordinated Amount. On any subsequent date, the
Available Negative Carry Subordinated Amount at the open of business on the
immediately preceding date less the amount of Seller's Collections deposited
on such immediately preceding date to the Reserve Fund [and other] in
accordance with the preceding paragraph.]
[The "Required Negative Carry Subordinated Amount" means [ ].]
[The "Negative Carry Required Amount" means [ ].]
[Describe other subordination of the Seller's Interest, if applicable.]
DISTRIBUTIONS FROM THE COLLECTION ACCOUNT[; RESERVE FUND][; YIELD
SUPPLEMENT ACCOUNT][; OTHER ENHANCEMENT]
Interest Collections. On each distribution date [with respect to a
Collection Period that ends prior to the Fully Invested Date [and each
Collection Period thereafter during the Revolving Period]], the servicer shall
instruct the trustee to apply Series [200_-_] Certificateholder Interest
Collections and Investment Proceeds, if any, [Excess Interest Collections
allocated to Series [200_-_] [other amounts] in respect of the related
Collection Period to make the following distributions in the following
priority:
[(i) first, an amount equal to Monthly Interest for such distribution
date, plus the amount of any Monthly Interest previously due but
not [deposited to the Interest Funding Account or] distributed on
a prior distribution date (plus, but only to the extent permitted
under applicable law, interest at the Certificate Rate on Monthly
Interest previously due but not [deposited or] distributed),
shall be [deposited to the Interest Funding Account] [distributed
to the Series [200_-_] certificateholders];
[(ii) second, [describe application, if any, to cover interest or other
shortfalls with respect to related series;]
(iii) third, an amount equal to the Monthly Servicing Fee for such
distribution date shall be distributed to the servicer (unless
such amount has been netted against deposits to the Collection
Account as described in the prospectus under "Description of the
Certificates -- Allocation of Collections; Deposits in Collection
Account" or waived by the servicer);
[(iv) fourth, an amount equal to the Reserve Fund Deposit Amount, if
any, for such distribution date shall be deposited in the Reserve
Fund;]
(v) fifth, an amount equal to the Investor Default Amount, if any,
for such distribution date shall be treated as a portion of
Available Series [200_-_] Certificateholder Principal Collections
for such distribution date;
[(vi) sixth, an amount equal to any outstanding Carry-over Amount
(after giving effect to any withdrawals from the Yield Supplement
Account) shall be distributed to the Series [200_-_]
certificateholders;]
[(vii) seventh, an amount equal to the Yield Supplement Account Deposit
Amount, if any, for such distribution date shall be deposited in
the Yield Supplement Account;]
[(viii) eighth, describe other applications, if any]; and
(ix) ninth, the balance shall constitute Excess Servicing].
[Describe application of Interest Collections, Investment Proceeds and
other amounts allocated to related series to cover distributions pursuant to
clause (i), if applicable.]
[If, during the Prefunded Period, such Investment Proceeds [describe
other funds] are not sufficient to make the entire distributions required by
clause [(i)] above, the trustee shall withdraw funds from the Yield Supplement
Account and apply such funds to complete the distributions pursuant to such
clause.]
[If [Series 200_-_] Certificateholder Interest Collections and Investment
Proceeds [Excess Interest Collections allocated to Series [200_-_] [describe
other funds] are not sufficient to make the entire distributions required by
clauses (i), (ii), (iii) and (v)] and, in the case of the Final Payment Date
only, clause (vi), the trustee [after applying amounts on deposit in the Yield
Supplement Account and [describe other funds]] shall withdraw funds from the
Reserve Fund (in the case of clause (vi) only to the extent such amounts would
otherwise be distributed to the seller) and apply such funds to complete the
distributions pursuant to such clauses. During any Early Amortization Period
[or Reinvestment Period], however, funds shall not be withdrawn from the
Reserve Fund to make distributions required by clause (v) to the extent that,
after giving effect to such withdrawal, the amount on deposit in the Reserve
Fund shall be less than $[ ].]
If there is a Draw Amount for such distribution date and such
distribution date is not the Final Payment Date, the trustee shall apply the
amount of Available seller's Collections for the related Collection Period on
deposit in the Collection Account on such distribution date, but only up to
the Draw Amount, to make the distributions required by clauses (i), (ii),
(iii) and (v) above [that have not been made through the application of funds
from the Reserve Fund [or the Yield Supplement Account] [or describe other
funds] as described in the preceding paragraph.] If there is a Draw Amount for
such distribution date and such distribution date is the Final Payment Date,
the trustee shall apply the amount of Available Seller's Collections for the
related Collection Period on deposit in the Collection Account on such
distribution date, but only up to the Draw Amount, to make the distributions
required by clauses (i), (ii), (iii), (v) and (vi) above that have not been
made through the application of funds from the Reserve Fund [or the Yield
Supplement Account] [or described other funds] as described in the preceding
paragraph.] Additionally, Available Seller's Collections will be applied to
any unpaid Adjustment Payments. The Available Subordinated Amount will be
reduced by the amount of Available Seller's Collections so applied. If the
Draw Amount exceeds such Available Seller's Collections, the Available
Subordinated Amount will be reduced by the amount of such excess, but not by
more than the sum of the Investor Default Amount and the portion of Adjustment
Payments not paid by the seller, in order to maintain the Invested Amount, but
not generally by more than the Investor Default Amount for such distribution
date.
"[Series 200_-_] Certificateholder Interest Collections" for any
distribution date means the portion of Series Allocable Interest Collections
for the related Collection Period allocated to the [Series 200_-_]
Certificateholders' Interest as described under "Allocation Percentages --
Allocation Between the [Series 200_-_] Certificateholders and the Seller".
"Investment Proceeds" for any distribution date means an amount equal to
the sum of investment earnings for the preceding Collection Period from:
[o funds held in the Reserve Fund;]
[o the Series Allocation Percentage of funds held
in the Collection Account;]
[o funds held in the Excess Funding Account;]
[o funds held in the Yield Supplement Account;]
[o funds held in the Principal Funding Account;]
[o funds held in the Prefunding Account;]
[o funds held in the Interest Funding Account;]
[o funds held in [other accounts].]
[Investment Proceeds. On each distribution date with respect to a
Collection Period that ends after the Fully Reinvested Date [other than any
such Collection Period during the Revolving Period], the servicer shall
instruct the trustee to apply Investment Proceeds [Excess Interest Collections
allocated to Series [200_-_]] [describe other funds], in respect of the
related Collection Period to make the following distributions in the following
priority:
(i) first, (x) an amount equal to Monthly Interest for such
distribution date, plus, the amount of any Monthly Interest previously
due but not [deposited in the Interest Funding Account or] distributed on
a prior distribution date (plus, but only to the extent permitted under
applicable law, interest at the Certificate Rate plus [ ]% on Monthly
Interest previously due but not [deposited or] distributed), shall be
[deposited to the Interest Funding Account] [distributed to Series
[200_-_] certificateholders;
[(ii) second, describe other applications, including, if applicable,
to cover interest or other shortfalls with respect to related series;
and]
(iii) third, the balance shall be distributed to the seller.]
[Describe application of Interest Collections, Investment Proceeds and
other amounts allocated to related Series to cover distributions pursuant to
clause (i), if applicable.]
[If, on any distribution date, Investment Proceeds [Excess Interest
Collections allocated to Series [200_-_]] [describe other funds] are not
sufficient to make the entire distribution required in clause (i) above [after
applying [describe other funds]], the trustee shall withdraw funds from the
Reserve Fund and apply such funds to complete the distribution pursuant to
such clause.]
[Reserve Fund. The "Reserve Fund" will be an Eligible Deposit Account
established and maintained in the name of the trustee for the benefit of the
[Series 200_-_] certificateholders. On the Series Issuance Date, the seller
will deposit $[ ] ([ ]% of the principal balance of the Series [200_-_]
certificates) into the Reserve Fund. The "Reserve Fund Required Amount" for
any distribution date will equal [ ]% of the outstanding principal balance of
the [Series 200_-_] certificates for such distribution date (after giving
effect to any change therein on such distribution date). [Describe any
increases in the Reserve Fund Required Amount, e.g., as a result of the
long-term rating of CFC falling below BBB- or to cover any negative carry
during a principal accumulation period.] The "Reserve Fund Deposit Amount" is
the amount, if any, by which the Reserve Fund Required Amount exceeds the
amount on deposit in the Reserve Fund. Funds in the Reserve Fund will be
invested in Eligible Investments that will mature on or prior to the next
distribution date. On each Determination Date, the servicer will apply any
investment earnings (net of losses and investment expenses) with respect to
the Reserve Fund as set forth under "Distributions from the Collection
Account; Reserve Fund[; Yield Supplement Account] [Other Enhancement]". After
the earlier of the payment in full of the outstanding principal balance of the
[Series 200_-_] certificates and the Termination Date, any funds remaining on
deposit in the Reserve Fund will be paid to the seller. [Describe other
applications, if any.]
If, after giving effect to the allocations, distributions and deposits in
the Reserve Fund described above under "Interest Collections", the amount in
the Reserve Fund is less than the Reserve Fund Required Amount for the next
following distribution date, the trustee shall deposit any remaining Available
Seller's Collections for the related Collection Period into the Reserve Fund
until the amount in the Reserve Fund is equal to such Reserve Fund Required
Amount.
If, for any distribution date with respect to an Early Amortization
Period [or Reinvestment Period], after giving effect to the allocations,
distributions and deposits described in the preceding paragraph, the amount in
the Reserve Fund is less than the Excess Reserve Fund Required Amount for such
distribution date, the trustee shall deposit the remaining Available Seller's
Collections for the related Collection Period into the Reserve Fund until the
amount in the Reserve Fund is equal to such Excess Reserve Fund Required
Amount. The "Excess Reserve Fund Required Amount" for any such distribution
date means an amount equal to the greater of (a) [ ]% of the initial principal
balance of the [Series 200_-_] certificates and (b) the excess of
(i) the sum of (x) the Available Subordinated Amount on the
preceding Determination Date (after giving effect to the allocations,
distributions, withdrawals and deposits to be made on such distribution
date) and (y) an amount equal to (A) the excess of the Required
Participation Percentage over 100%, multiplied by (B) the outstanding
principal balance of the [Series 200_-_] certificates on such
distribution date (after giving effect to any changes therein on such
distribution date)
over (ii) the excess of (x) the Series Allocation Percentage of the
Pool Balance on the last day of the immediately preceding Collection
Period over (y) the Invested Amount on such distribution date (after
giving effect to changes therein on such distribution date); provided
that the Excess Reserve Fund Required Amount shall not exceed such
Available Subordinated Amount. [Describe adjustments, if applicable]
[Yield Supplement Account. The Yield Supplement Account will be an
Eligible Deposit Account established and maintained in the name of the trustee
for the benefit of the Series [200_-_] certificateholders. On the Series
Issuance Date, the seller will deposit $[ ] ([ ]% of the principal balance of
the Series [200_-_] certificates) into the Yield Supplement Account. The
"Yield Supplement Account Required Amount" for any distribution date [(i) that
occurs during the Prefunded Period will equal [ ],] [(ii) that occurs
[thereafter and] prior to the Fully Reinvested Date [or any distribution date
thereafter during the Revolving Period]] will equal [ ]% of the outstanding
principal balance of the Series [200_-_] certificates for such distribution
date (after giving effect to any change therein on such distribution date)
[and (iii) for any [other] distribution date that occurs on or after the Fully
Reinvested Date, zero]. [On any distribution date with respect to the
Prefunded Period on which Investment Proceeds [describe other funds] are
insufficient to make the entire distributions required by clause [(i)] under
"Interest Collections" above, the amount on deposit in the Yield Supplement
Account on such distribution date shall be applied by the trustee up to the
amount of such insufficiency to satisfy such insufficiency.] [On any
distribution date on which there is a Carry-over Amount, the amount on deposit
in the Yield Supplement Account on such distribution date shall be applied by
the trustee up to the amount of such Carry-over Amount to satisfy such
Carry-over Amount.] [Describe other applications, e.g., to pay Monthly
Interest [other than during a Prefunded Period].] The "Yield Supplement
Account Deposit Amount" is the amount, if any, by which the Yield Supplement
Account Required Amount exceeds the amount on deposit in the Yield Supplement
Account. Funds in the Yield Supplement Account will be invested [in Eligible
Investments that mature on or prior to the next distribution date] [at the
direction of the servicer in any investments consisting of financial assets
that by their terms convert to cash within a finite period of time]. On each
Determination Date, the servicer will apply any investment earnings (net of
losses and investment expenses) with respect to the Yield Supplement Account
as set forth under "Distributions from the Collection Account; [Reserve Fund;]
Yield Supplement Account; Other Enhancement". After the earlier of the payment
in full of the outstanding principal balance of the Series [200_-_]
certificates and the Termination Date, any funds remaining on deposit in the
Yield Supplement Account will be paid to the seller. [Describe other
applications.]]
Excess Servicing. On each distribution date [with respect to a Collection
Period that ends prior to the Fully Reinvested Date [or any such Collection
Period thereafter during the Revolving Period]], the servicer will allocate
Excess Servicing with respect to the Collection Period immediately preceding
such distribution date, in the following priority:
(a) [first, an amount equal to the aggregate amount of Investor
Charge-Offs which have not been previously reimbursed (after giving
effect to the allocation on such distribution date of Series Allocable
Miscellaneous Payments with respect to such distribution date) will be
allocated in the same manner as Available [Series 200_-_]
Certificateholder Principal Collections for such distribution date;
(b) second, an amount equal to the aggregate outstanding amounts of
the Monthly Servicing Fee which have been previously waived as described
under "Description of the certificates -- Servicing Compensation and
Payment of Expenses" in the prospectus will be distributed to the
servicer;
[(c) third, describe other applications; and]
(d) fourth, the balance, if any, shall increase the Available
Subordinated Amount as described in the definition thereof and be
distributed to the seller.]
PRINCIPAL COLLECTIONS
On each distribution date [with respect to a Collection Period that ends
prior to the Fully Reinvested Date [or any such Collection Period thereafter
during the Revolving Period]], the servicer will allocate Available [Series
200_-_] Certificateholder Principal Collections as follows:
(a) for each distribution date with respect to any Nonprincipal
Period, all Available Series [200_-_] Certificateholder Principal
Collections will be allocated
(i) [first, to make a deposit to the Excess Funding Account if
the sum of (i) the [Series 200_-_] Certificateholders' Interest in
Principal Receivables (determined for this purpose by reducing such
interest by the amount, if any, by which the Required Participation
Amount exceeds the Pool Balance due to an increase in the
Subordination Factor) and (ii) the amount on deposit in the Excess
Funding Account prior to the allocation on such distribution date is
less than the outstanding principal balance of the [Series 200_-_]
certificates and
(ii) second] to Excess Principal Collections as described under
"Allocation Percentages -- Principal Collections for all Series";
and
(b) for each distribution date with respect to the [Accumulation
Period][Controlled Amortization Period], all Available [Series 200_-_]
Certificateholder Principal Collections will be allocated as follows:
(i) first, an amount equal to Monthly Principal for such
distribution date will be deposited to the Principal Funding
Account; and
(ii) second, the balance, if any, will be allocated to Excess
Principal Collections; and
(c) for each distribution date with respect to any Early Amortization
Period, an amount equal to the Monthly Principal will be distributed to the
[Series 200_-_] certificateholders.
[If the Invested Amount is greater than zero on the Termination Date, any
funds remaining in the Reserve Fund (after the application of funds in the
Reserve Fund as described above under "Interest Collections") will be treated
as a portion of Available [Series 200_-_] Certificateholder Principal
Collections for the distribution date occurring on the Termination Date.]
"Monthly Principal" with respect to any distribution date relating to the
[Accumulation Period][Controlled Amortization Period] or any Early
Amortization Period [or Reinvestment Period] will equal Available [Series
200_-_] Certificateholder Principal Collections for such distribution date.
For each distribution date, however, [with respect to the Controlled
Amortization Period, Monthly Principal may not exceed the Controlled Deposit
Amount]. Also, Monthly Principal will not exceed the Invested Amount.
"Controlled Deposit Amount" for a distribution date means the excess, if
any, of
(a) [the sum of
(i)] the product of the Controlled Accumulation Amount and the
number of distribution dates from and including the first distribution
date with respect to the Accumulation Period through and including such
distribution date (but not in excess of the Accumulation Period Length)
[and
(ii) the amount on deposit in the Excess Funding Account as of the [
] distribution date (after giving effect to any withdrawals from or
deposits to such account on such date (other than the transfer to the
Principal Funding Account of certain amounts on deposit therein on such
date)) ]
over (b) the sum of amounts on deposit in the [Excess Funding Account
and] the Principal Funding Account, in each case before giving effect to
any withdrawals from or deposits to such accounts on such distribution
date.]
["Controlled Accumulation Amount" means an amount equal to the Invested
Amount as of the [ ] distribution date (after giving effect to any changes
therein on such date) divided by the [Accumulation Period Length].]
REQUIRED PARTICIPATION PERCENTAGE
"Required Participation Percentage" for [Series 200_-_] is [ ]%. If,
however, the aggregate amount of Principal Receivables due from any Dealer or
group of affiliated Dealers at the close of business on the last day of any
Collection Period with respect to which such determination is being made is
greater than [ ]% of the Pool Balance on such last day, the Required
Participation Percentage shall mean, as of such last day and with respect to
such Collection Period and the immediately following Collection Period only, [
]%. Furthermore, the seller may, upon ten days' prior notice to the trustee,
the Rating Agencies and any Enhancement provider, reduce the Required
Participation Percentage to not less than 100%, so long as the Rating Agencies
shall not have notified the seller or the servicer that any such reduction
will result in a reduction or withdrawal of the rating of the [Series 200_-_]
certificates or any other outstanding series or class of certificates.
[PRINCIPAL FUNDING ACCOUNT
The servicer will establish and maintain in the name of the trustee, on
behalf of the trust, an Eligible Deposit Account for the benefit of the Series
[200_-_] certificateholders (the "Principal Funding Account"). On each
distribution date with respect to the [Accumulation Period] [or any
Reinvestment Period], Monthly Principal will be deposited in the Principal
Funding Account as provided above under "Principal Collections". If an Early
Amortization Period [that is not terminated as described herein] commences
during the [Accumulation Period] [or any Reinvestment Period], the Principal
Funding Account Balance shall be paid to the Series [200_-_]
certificateholders on the first Special Payment Date.
All amounts on deposit in the Principal Funding Account on any
distribution date (after giving effect to distributions to be made on such
distribution date) (the "Principal Funding Account Balance") will be invested
from the date of their deposit to on or prior to the Series [200_-_] Expected
Payment Date by the trustee at the direction of the servicer in Eligible
Investments that will mature on or prior to the following distribution date.
The servicer may select an appropriate agent as representative of the servicer
for the purpose of designating such investments. On each distribution date,
the interest and other investment income on the Principal Funding Account
Balance will be applied as provided above under "Distributions from the
Collection Account[; Reserve Fund][; Yield Supplement Account]; Other
Enhancement]".]
[PREFUNDING ACCOUNT
The servicer will establish and maintain in the name of the trustee, on
behalf of the trust, an Eligible Deposit Account for the benefit of the Series
[200_-_] certificateholders (the "Prefunding Account"). On the Series Issuance
Date an amount equal to the initial principal amount of the Series [200_-_]
certificates will be deposited in the Prefunding Account. As funds are
accumulated in the Principal Funding Account for the Paired Series or
distributed to holders of certificates of such series, an equal amount of
funds on deposit in the Prefunding Account will be released (which funds will
be distributed to the seller).
All amounts on deposit in the Prefunding Account on any distribution date
(after giving effect to distributions to be made on such distribution date)
(the "Prefunding Account Balance") will be invested from the date of their
deposit by the trustee at the direction of the servicer in Eligible
Investments that will mature on or prior to the following distribution date.
The servicer may select an appropriate agent as representative of the servicer
for the purpose of designating such investments. On each distribution date,
the interest and other investment income on the Prefunding Account Balance
will be applied as provided above under "Distributions from the Collection
Account[; Reserve Fund][; Yield Supplement Account][; Other Enhancement]".]
[Describe other Series [200_-_] accounts, if applicable.]
[OTHER ENHANCEMENT]
[Describe any other Enhancement]
DISTRIBUTIONS
Payments to Series [200_-_] certificateholders will be made from the
Collection Account, [the Reserve Fund,] [the Principal Funding Account,] [the
Interest Funding Account,] [the Yield Supplement Account,] [other] and [the
Excess Funding Account].
(a) The servicer shall instruct the trustee to apply funds on
deposit in the Collection Account, [the Reserve Fund,] [the Interest
Funding Account,] [the Yield Supplement Account,] [other] and shall
instruct the trustee to make the following distributions at the following
times:
(i) on each [distribution date] [interest payment date or Special
Payment Date] all amounts on deposit in the Collection Account, [the
Reserve Fund,] [the Interest Funding Account,] [the Yield Supplement
Account] [other] as are payable to the Series [200_-_]
certificateholders with respect to accrued interest will be
distributed to the Series [200_-_] certificateholders.
(b) The servicer shall instruct the trustee to apply the funds on
deposit in the [Collection Account,] [the Principal Funding Account,]
[other] and [the Excess Funding Account] and shall instruct the trustee
to make, without duplication, the following distributions at the
following times:
[(i) on each distribution date during the Controlled Amortization
Period all amounts on deposit in the Collection Account [and the
Excess Funding Account] [other] as are payable to the Series
[200_-_] certificateholders with respect to principal will be
distributed to the Series [200_-_] certificateholders; and]
[(ii) on the Series [200_-_] Expected Payment Date, the Principal
Funding Account Balance, [the amount on deposit in the Excess
Funding Account] [and all amounts on deposit in the Collection
Account [other] as are payable to Series [200_-_] certificateholders
with respect to principal shall be distributed to the Series
[200_-_] certificateholders up to a maximum amount on any such date
equal to the excess of the outstanding principal amount of the
Series [200_-_] certificates over unreimbursed Investor Charge-Offs,
each on such date].
[(iii) on each Special Payment Date, the Principal Funding Account
Balance, [the amount on deposit in the Excess Funding Account] [and
all amounts on deposit in the Collection Account][other] as are
payable to Series [200_-_] certificateholders with respect to
principal shall be distributed to the Series [200_-_]
certificateholders up to a maximum amount on such date equal to the
excess of the outstanding principal amount of the Series [200_-_]
certificates over unreimbursed Investor Charge-Offs, each on such
date.]
[(c) On each distribution date on which there is an unpaid
Carry-over Amount, the servicer shall instruct the trustee to distribute
to the Series [200_-_] certificateholders such Carry-over Amount to the
extent funds are available therefor first from amounts on deposit in the
Yield Supplement Account and second to the extent funds are available
therefor after making all required distributions and deposits with
respect to the Series [200_-_] certificates as provided above under
"Distributions from the Collection Account [; Reserve Fund;] [Yield
Supplement Account][; Other Enhancement] -- Interest Collections".];
[(d) If, on the Final Payment Date, there is any Carry-over Amount
(after giving effect to any distributions on such date pursuant to (a)
through (c) above), the trustee shall distribute to the Series [2000-A]
certificateholders (i) certain amounts on deposit in the Reserve Fund (to
the extent such amounts would otherwise be distributed to the seller) and
(ii) Available seller's Collections on deposit in the Collection Account
(to the extent such amounts would otherwise be distributed to the seller)
which are available to satisfy such Carry-over Amount on the Final
Payment Date, as described above under "Distributions from the Collection
Account; [Reserve Fund][; Yield Supplement Account][; Other Enhancement]
-- Interest Collections".
All distributions shall be made to the Series [200_-_] certificateholders
of record at the close of business on the day immediately preceding the
related distribution date (each such day a "Record Date"), except that the
final distribution with respect to any Series [200_-_] Certificate will be
made only upon surrender of such Series [2000-A] Certificate.
OPTIONAL REPURCHASE
The Series [200_-_] Certificateholders' Interest will be subject to
optional repurchase by the servicer on any distribution date after the
Invested Amount is reduced to an amount less than or equal to $[ ] ([ ]% of
the initial outstanding principal amount of the Series [200_-_] certificates).
[Series [200_-_] certificates will also be subject to repurchase at the option
of the seller or the Series [200_-_] certificateholders at any time on or
after the [ ] distribution date.] The purchase price will equal the sum of (i)
the Invested Amount of the Series [200_-_] certificates on the Determination
Date preceding the distribution date on which the purchase is scheduled to be
made, (ii) accrued and unpaid interest on the Series [200_-_] certificates at
the Certificate Rate (together with interest on overdue interest) [and (iii)
any outstanding Carry-Over Amount with respect to the Series [200_-_]
certificates.]
INVESTOR CHARGE-OFFS
If the Available Subordinated Amount is reduced to zero and on any
distribution date the Deficiency Amount is greater than zero, the outstanding
principal balance of the Series [200_-_] certificates will be reduced by the
Deficiency Amount, but not by more than the Investor Default Amount for such
distribution date (an "Investor Charge-Off"). Any reduction in the outstanding
principal balance of the Series [200_-_] certificates will have the effect of
slowing or reducing the return of principal to the holders of Series [200_-_]
certificates. If the outstanding principal balance of the Series [200_-_]
certificates has been reduced by any Investor Charge-Offs, it will thereafter
be increased on any distribution date (but not by an amount in excess of the
aggregate unreimbursed Investor Charge-Offs) by the sum of (a) Series
Allocable Miscellaneous Payments for such distribution date and (b) the amount
of Excess Servicing allocated and available for such purpose as described
above.
[REINVESTMENT EVENTS
The Reinvestment Events with respect to the Series [200_-_] certificates
are the following:
[1. failure on the part of DCWR, the servicer or CFC, as applicable,
(i) to make any payment or deposit required by the Pooling and Servicing
Agreement or the Receivables Purchase Agreement, including but not
limited to any Transfer Deposit Amount or Adjustment Payment, on or
before the date occurring two business days after the date such payment
or deposit is required to be made therein; (ii) to deliver a Distribution
Date Statement on the date required under the Pooling and Servicing
Agreement (or within the applicable grace period which will not exceed
five business days); (iii) to comply with its covenant not to create any
lien on a Receivable; or (iv) to observe or perform in any material
respect any other covenants or agreements set forth in the Pooling and
Servicing Agreement or the Receivables Purchase Agreement, which failure
continues unremedied for a period of 45 days after written notice of such
failure;
2. any representation or warranty made by the RPA seller in the
Receivables Purchase Agreement or by DCWR in the Pooling and Servicing
Agreement or any information required to be given by DCWR to the trustee
to identify the Accounts proves to have been incorrect in any material
respect when made and continues to be incorrect in any material respect
for a period of 60 days after written notice and as a result the
interests of the certificateholders are materially and adversely
affected. A Reinvestment Event, however, shall not be deemed to occur
thereunder if DCWR has repurchased the related receivables or all such
receivables, if applicable, during such period in accordance with the
provisions of the Pooling and Servicing Agreement;
3. the occurrence of certain events of bankruptcy, insolvency or
receivership relating to any of CFC or DaimlerChrysler;
4. a failure by DCWR to convey receivables in Additional Accounts to
the trust within five business days after the day on which it is required
to convey such receivables pursuant to the Pooling and Servicing
Agreement;
5. on any Determination Date, the Available Subordinated Amount for
the next distribution date will be reduced to an amount less than the
Required Subordinated Amount on such Determination Date after giving
effect to the distributions to be made on the next distribution date;
6. any Service Default with respect to the Series [200_-_]
certificates occurs;
7. on any Determination Date, as of the last day of the preceding
Collection Period, the aggregate amount of Principal Receivables relating
to Used Vehicles exceeds [ ]% of the Pool Balance on such last day;
8. on any Determination Date, the average of the Monthly Payment
Rates for the two preceding Collection Periods, is less than [ ]%;
9. the delivery by the seller to the trustee, of a notice stating
that the seller will no longer continue to sell receivables to the trust
commencing on [ ] or any yearly anniversary thereof; provided, however,
that the seller shall have delivered to the trustee an opinion of counsel
to the effect that, following such discontinuation of sales of
receivables, the trust shall not become an investment company within the
meaning of the Investment Company Act of 1940, as amended;
10. on any Determination Date, the quotient obtained by dividing (i)
the sum of (x) the amount on deposit in the Yield Supplement Account on
the next distribution date, after giving effect to the distribution to be
made on such distribution date, and (y) the amount on deposit in the
Yield Supplement Account on the immediately preceding distribution date,
after giving effect to the distributions made on such distribution date,
by (ii) the sum of (A) the outstanding principal balance of the Series
[200_-_] certificates on the next distribution date, after giving effect
to all distributions and payments to be made on such distribution date,
and (B) the outstanding principal balance of the Series [200_-_]
certificates on the immediately preceding distribution date, after giving
effect to all distributions and payments made on such distribution date,
is less than [ ]%;
11. interest at the Certificate Rate is not paid on the Series
[200_-_] Certificate on any interest payment date;
12. any Carry-over Amount is outstanding on six consecutive
distribution dates; and
13. [other].](2)
[In the case of any event described in clause [1, 2 or 6] above, a
Reinvestment Event with respect to Series [200_-_] will be deemed to have
occurred only if, after the applicable grace period described in such clauses,
if any, either the trustee or Series [200_-_] certificateholders holding
Series [200_-_] certificates evidencing more than 50% of the aggregate unpaid
principal amount of the Series [200_-_] certificates by written notice to the
seller and the servicer (and the trustee, if given by certificateholders)
declare that a Reinvestment Event has occurred as of the date of such notice.
In the case of any event described in clause [3, 4, 5, 7, 8, 9, 10, 11, 12 or
13] above, a Reinvestment Event with respect to Series [200_-_] will be deemed
to have occurred without any notice or other action on the part of the trustee
or the Series [200_-_] certificateholders immediately upon the occurrence of
such event.]
[Under certain limited circumstances, a Reinvestment Period which
commences prior to the scheduled end of the Revolving Period may terminate and
the Revolving Period recommence. If a Reinvestment Period results from the
failure by DCWR to convey receivables in Additional Accounts to the trust, as
described in paragraph 4 above, during the Revolving Period and no other
Reinvestment Period or Early Amortization Period [that has not been terminated
as described herein] has commenced, the Reinvestment Period resulting from
such failure will terminate and the Revolving Period will recommence (unless
the scheduled termination date of the Revolving Period has occurred) as of the
end of the first Collection Period during which the seller would no longer be
required to convey receivables to the trust. The seller may no longer be
required to convey receivables as described above as a result of a reduction
in the Invested Amount occurring due to principal payments made in respect of
the Series [200_-_] certificates and the certificates of other outstanding
series during the Reinvestment Period or as a result of the subsequent
addition of receivables to the trust. Notwithstanding the foregoing, if any
Reinvestment Event occurs, the Revolving Period will recommence following the
receipt of (i) written confirmation by each Rating Agency (other than Moody's)
that its rating of the Series [200_-_] certificates will not be withdrawn or
lowered as a result of such recommencement and (ii) the consent of Series
[200_-_] certificateholders holding Series [200_-_] certificates evidencing
more than 50% of the aggregate unpaid principal amount of the Series [200_-_]
certificates to such recommencement, provided that no other Reinvestment
Period or Early Amortization Period [that has not been terminated as described
herein] has commenced and the scheduled termination of the Revolving Period
has not occurred.]
[Describe other cures of Reinvestment Events and partial Reinvestment
Periods, if applicable.]
EARLY AMORTIZATION EVENTS
[The Early Amortization Events with respect to the Series [200_-_]
certificates will include each of the events so defined in the prospectus,
plus the following:
- -------------------
(2) Delete or modify, as appropriate.
1. failure on the part of DCWR, the servicer or CFC, as applicable,
(i) to make any payment or deposit required by the Pooling and Servicing
Agreement or the Receivables Purchase Agreement, including but not
limited to any Transfer Deposit Amount or Adjustment Payment, on or
before the date occurring two business days after the date such
payment or deposit is required to be made therein; or
(ii) to deliver a Distribution Date Statement on the date required under
the Pooling and Servicing Agreement (or within the applicable grace
period which will not exceed five business days); or
(iii) to comply with its covenant not to create any lien on a Receivable;
or
(iv) to observe or perform in any material respect any other covenants or
agreements set forth in the Pooling and Servicing Agreement or the
Receivables Purchase Agreement, which failure continues unremedied
for a period of 45 days after written notice of such failure;
2. any representation or warranty made by the RPA seller in the
Receivables Purchase Agreement or by DCWR in the Pooling and Servicing
Agreement or any information required to be given by DCWR to the trustee
to identify the Accounts proves to have been incorrect in any material
respect when made and continues to be incorrect in any material respect
for a period of 60 days after written notice and as a result the
interests of the certificateholders are materially and adversely
affected. An Early Amortization Event, however, shall not be deemed to
occur thereunder if DCWR has repurchased the related receivables or all
such receivables, if applicable, during such period in accordance with
the provisions of the Pooling and Servicing Agreement;
3. the occurrence of certain events of bankruptcy, insolvency or
receivership relating to CFC or DaimlerChrysler;
4. a failure by DCWR to convey receivables in Additional Accounts to
the trust within five business days after the day on which it is required
to convey such receivables pursuant to the Pooling and Servicing
Agreement;
5. on any Determination Date, the Available Subordinated Amount for
the next distribution date will be reduced to an amount less than the
Required Subordinated Amount on such Determination Date after giving
effect to the distributions to be made on the next distribution date;
6. any Service Default with respect to the Series [200_-_]
certificates occurs;
7. on any Determination Date, as of the last day of the preceding
Collection Period, the aggregate amount of Principal Receivables relating
to Used Vehicles exceeds [ ]% of the Pool Balance on such last day;
8. on any Determination Date, the average of the Monthly Payment
Rates for the three preceding Collection Periods, is less than [ ]%;
9. any Carry-over Amount is outstanding on six consecutive
distribution dates; and
10. the outstanding principal amount of the Series [200_-_]
certificates is not repaid by the Series [200_-_] Expected Payment Date;
and
11. [Other].](3)
[In the case of any event described in clause [1, 2 or 6] above, an Early
Amortization Event with respect to Series [200_-_] will be deemed to have
occurred only if, after the applicable grace period described in such clauses,
if any, either the trustee or Series [200_-_] certificateholders holding
Series [200_-_] certificates evidencing more than 50% of the aggregate unpaid
principal amount of the Series [200_-_] certificates by written notice to the
seller and the servicer (and the trustee, if given by certificateholders)
declare that an Early Amortization Event has occurred as of the date of such
notice. In the case of any Early Amortization Event described in the
prospectus or any event described in clauses 3, 4, 5, 7, 8, 9, 10 or 11 above,
an Early Amortization Event with respect to Series [200_-_] will be deemed to
have occurred without any notice or other action on the part of the trustee or
the Series [200_-_] certificateholders immediately upon the occurrence of such
event.]
[Under certain limited circumstances, an Early Amortization Period which
commences prior to the scheduled end of the Revolving Period may terminate and
the Revolving Period recommence. If an Early Amortization Period results from
the failure by DCWR to convey receivables in Additional Accounts to the trust,
as described in paragraph 4 above, during the Revolving Period and no
[Reinvestment Event or] Early Amortization Event [that has not been cured or
waived as described herein] has occurred, the Early Amortization Period
resulting from such failure will terminate and the Revolving Period will
recommence (unless the scheduled termination date of the Revolving Period has
occurred) as of the end of the first Collection Period during which the seller
would no longer be required to convey receivables to the trust. The seller may
no longer be required to convey receivables as described above as a result of
a reduction in the Invested Amount occurring due to principal payments made in
respect of the Series [200_-_] certificates and the certificates of other
outstanding series during the Early Amortization Period or as a result of the
subsequent addition of receivables to the trust. Notwithstanding the
foregoing, if any Early Amortization Event (other than an Early Amortization
Event described in clause 3 above or in the prospectus) occurs, the Revolving
Period will recommence following receipt of (i) written confirmation by each
Rating Agency (other than Moody's) that its rating of the Series [200_-_]
certificates will not be withdrawn or lowered as a result of such
recommencement and (ii) the consent of Series [200_-_] certificateholders
holding Series [200_-_] certificates evidencing more than 50% of the aggregate
unpaid principal amount of the Series [200_-_] certificates to such
recommencement, provided that no other [Reinvestment Event or] Early
Amortization Event] [that has not been cured or waived as described herein]
has occurred and the scheduled termination of the Revolving Period has not
occurred.]
- ------------
(3) Delete or modify, as appropriate.
TERMINATION
The last payment of principal and interest on the Series [200_-_]
certificates will be due and payable no later than the [ ] distribution date
(the "Termination Date"). In the event that the aggregate Invested Amount is
greater than zero on the Termination Date (after giving effect to deposits and
distributions otherwise to be made on such Termination Date), the trustee will
sell or cause to be sold (and apply the proceeds to the extent necessary to
pay such remaining amounts to all Series [200_-_] certificateholders) an
interest in the receivables or certain receivables, as specified in the
Pooling and Servicing Agreement, in an amount equal to the sum of (a) 110% of
the aggregate Invested Amount on such Termination Date (after giving effect to
such deposits and distributions) and (b) the Available Subordinated Amount on
the preceding Determination Date (after giving effect to the allocations,
distributions, withdrawals and deposits to be made on the distribution date
following such Determination Date). In no event, however, shall such amount
exceed the product of the Series Allocation Percentage (for the Collection
Period in which such Termination Date occurs) of receivables on such
Termination Date. The net proceeds of such sale and any collections on the
receivables will be paid to Series [200_-_] certificateholders on the
Termination Date as the final payment of the Series [200_-_] certificates.
REPORTS
On each distribution date (including each distribution date that
corresponds to the Series [200_-_] Expected Payment Date or any Special
Payment Date), commencing with the initial distribution date, the trustee will
forward to each Series [200_-_] certificateholder of record a statement (the
"Distribution Date Statement") prepared by the servicer setting forth the
following information (which, in the case of the third, fourth and fifth
clauses below, will be stated on the basis of an original principal amount of
$1,000 per Series [200_-_] certificate if the [Accumulation Period]
[Controlled Amortization Period] or an Early Amortization Period][or
Reinvestment Period] has commenced):
o the aggregate amount of collections, the aggregate amount of
Interest Collections and the aggregate amount of Principal
Collections processed during the immediately preceding Collection
Period;
o the Series Allocation Percentage, the Floating Allocation
Percentage, the Principal Allocation Percentage and the Series
[200_-_] Certificate Principal Percentage for such Collection
Period;
o the total amount, if any, distributed on the Series [200_-_]
certificates;
o the amount of such distribution allocable to principal on the Series
[200_-_] certificates;
o the amount of such distribution allocable to interest on the Series
[200_-_] certificates;
o the Investor Default Amount for such distribution date;
o the Draw Amount, if any, for such Collection Period;
o the amount of the Investor Charge-Offs and the amounts of
reimbursements thereof for such Collection Period;
o the amount of the Monthly Servicing Fee for such Collection Period;
o the [Controlled Distribution Amount][Controlled Deposit Amount] for
the following distribution date;
o the Invested Amount[, the Excess Funded Amount] and the outstanding
principal balance of the Series [200_-_] certificates for such
distribution date (after giving effect to all distributions which
will occur on such distribution date);
o the "pool factor" for the Series [200_-_] certificates as of the
Determination Date with respect to such distribution date
(consisting of an eleven-digit decimal expressing the Invested
Amount as of such Determination Date (determined after taking into
account any reduction in such Invested Amount which will occur on
such distribution date) as a proportion of the Initial Invested
Amount);
o the Available Subordinated Amount for such Determination Date;
o [the Reserve Fund balance for such date];
o [the Principal Funding Account Balance,] [the Interest Funding
Account Balance,] [the Prefunding Account Balance] and [the Yield
Supplement Account balance] with respect to such date;
o [during any Reinvestment Period, information with respect to the
Eligible Investments in the accounts for the Series [200_-_]
certificates;] and
o [other].
[However, after the Fully Reinvested Date, [unless the Revolving Period has
recommenced,] such statement will not include the information in clauses
[_________________________________ above].]
- ------------------------------------------------------------------------------
UNDERWRITING
- ------------------------------------------------------------------------------
Subject to the terms and conditions set forth in the Underwriting
Agreement (the "Underwriting Agreement"), the seller has agreed to sell to the
underwriters named below (the "underwriters"), and each of the underwriters
has severally agreed to purchase from the seller, the principal amount of the
Series [200_-_] certificates set forth opposite its name:
Series [200_-_]
Underwriters Certificates
[ ]............................................ $[ ]
[ ]............................................ [ ]
Total.............................................. $[ ]
[Distribution of the Series [200_-_] certificates will be made from time
to time in negotiated transactions or otherwise at varying prices to be
determined at the time of sale. Proceeds to the seller will be [ ]% of the
aggregate principal amount of the Series [200_-_] certificates plus accrued
interest from [ ], before deducting expenses estimated to be $[ ]. In
connection with the purchase and sale of the Series [200_-_] certificates, the
underwriters may be deemed to have received compensation from the seller in
the form of underwriting discounts.
[In the ordinary course of their businesses, the underwriters and their
respective affiliates have engaged and may engage in investment banking
transactions with the seller and its affiliates.]
The underwriters intend to make a secondary market in the Series [200_-_]
certificates, but have no obligation to do so. We cannot assure you that a
secondary market for the Series [200_-_] certificates will develop or, if it
does develop, that it will continue or that it will provide holders of the
Series [200_-_] certificates with a sufficient level of liquidity of, or
trading markets for, the Series [200_-_] certificates.
- ------------------------------------------------------------------------------
LEGAL MATTERS
- ------------------------------------------------------------------------------
Certain legal matters relating to the Series [200_-_] certificates will
be passed upon for DCWR by Brown & Wood LLP, New York, New York, and for the
underwriters by Brown & Wood LLP. Certain Federal income tax and ERISA matters
will be passed upon for DCWR and the trust by Brown & Wood LLP. In addition to
representing the underwriters, Brown & Wood LLP from time to time represents
Chrysler Financial Company L.L.C. and its affiliates on other matters. See
"Legal Matters" in the prospectus.
<PAGE>
- -----------------------------------------------------------------------------
INDEX OF PRINCIPAL TERMS
- -----------------------------------------------------------------------------
Term Page
A
Accumulation Period Commencement Date............S-25
Accumulation Period Length.......................S-25
Assets Receivables Rate......................S-12, 23
Available Negative Carry Subordinated Amount.....S-34
Available Seller's Collections...................S-30
Available Seller's Interest Collections..........S-30
Available seller's Principal Collections.........S-30
Available Series [200_-_] Certificateholder
Principal Collections ..........................S-29
Available Subordinated Amount.................S-8, 32
C
Calculation Agent................................S-23
Carry-over Amount............................S-13, 24
Certificate Rate.................................S-22
CFC...............................................S-6
Controlled Accumulation Amount...................S-41
Controlled Deposit Amount........................S-40
D
DaimlerChrysler...................................S-6
DCWR..............................................S-6
Deficiency Amount................................S-31
distribution date.................................S-6
Distribution Date Statement......................S-49
Draw Amount......................................S-32
E
Excess Principal Collections.....................S-30
Excess Reserve Fund Required Amount..............S-38
Excess Seller's Percentage.......................S-31
Excluded Dealers.................................S-16
Excluded receivables.............................S-16
F
Final Payment Date...............................S-32
Floating Allocation Percentage...................S-28
I
Incremental Subordinated Amount..................S-33
Initial Invested Amount..........................S-29
Interest Collections.........................S-38, 40
interest payment date.............................S-6
Interest Period..................................S-22
Invested Amount...............................S-6, 28
Investment Proceeds..............................S-36
Investor Charge-Off..............................S-44
L
LIBOR............................................S-23
LIBOR Business Day...............................S-23
LIBOR Determination Date.........................S-23
M
Monthly Interest.................................S-22
Monthly Principal................................S-40
N
Negative Carry Required Amount...................S-35
Nonprincipal Period..............................S-28
P
pool factor......................................S-50
Prefunding Account...............................S-42
Prefunding Account Balance.......................S-42
Principal Allocation Percentage..................S-28
Principal Funding Account........................S-41
Principal Funding Account Balance................S-41
Principal Shortfalls.............................S-30
R
Record Date......................................S-43
Required Negative Carry Subordinated Amount......S-34
Required Participation Percentage................S-41
Required Subordinated Amount.....................S-32
Reserve Fund.....................................S-37
Reserve Fund Deposit Amount......................S-37
Reserve Fund Required Amount.....................S-37
Revolving Period.................................S-25
S
Seller's Participation Amount....................S-31
Seller's Percentage..............................S-31
[Series 200_-_] Certificateholder
Interest Collections ...........................S-36
Series [200_-_] Certificateholders' Interest.....S-24
Series [200_-_] certificates......................S-6
Series [200_-_] Expected Payment Date.........S-7, 19
Series Supplement................................S-22
Subordinated Percentage..........................S-34
Subordination Factor.............................S-34
T
Telerate Page 3750...............................S-23
Termination Date.................................S-49
trust.............................................S-6
U
underwriters.....................................S-51
Underwriting Agreement...........................S-51
Y
Yield Supplement Account Deposit Amount..........S-39
Yield Supplement Account Required Amount.........S-38
<PAGE>
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<PAGE>
ANNEX I
- ------------------------------------------------------------------------------
OTHER SERIES OF INVESTOR CERTIFICATES
- ------------------------------------------------------------------------------
This Annex I sets forth the principal characteristics of (i) the Floating
Rate Auto Loan Asset Backed Certificates, Series 1996-1, (ii) the Floating
Rate Auto Loan Asset Backed Certificates, Series 1996-2, (iii) the 6.689% Auto
Loan Asset Backed Certificates, Series 1997-1, (iv) the Floating Rate Auto
Loan Asset Backed Certificates, Series 1998-1, (v) the Fixed Rate Auto Loan
Asset Backed Certificates, Series 1999-1, (vi) the Floating Rate Auto Loan
Asset Backed Certificates, Series 1999-2, (vii) the Floating Rate Auto Loan
Asset Backed Certificates, Series 1999-3, (viii) the 6.43% Auto Loan Asset
Backed Certificates, Series 1999-4 and (ix) the Floating Rate Auto Loan Asset
Backed Certificates, Series 2000-A ("Series 1996-1", "Series 1996-2", "Series
1997-1", "Series 1998-1", "Series 1999-1", "Series 1999-2", "Series 1999-3",
"Series 1999-4" and "Series 2000-A", respectively). For more specific
information with respect to any Series, any prospective investor should
contact DCWR at (248) 948-3067. DCWR will provide, without charge, to any
prospective purchaser, a copy of the disclosure document with respect to such
series.
<TABLE>
<CAPTION>
<S> <C>
1. Series 1996-1
Initial Principal Amount............................... $500,000,000
Scheduled Interest Payment Date........................ Monthly, on or about the fifteenth day of each month
Current Principal Amount............................... $500,000,000
Required Participation Percentage...................... 103%
Initial Subordinated Amount............................ Approximately 11.1% of the Invested Amount
Revolving Period....................................... October 31, 1996 to the earlier of the commencement
of an Accumulation Period or an Early Amortization Period
Expected Payment Date.................................. November 2003 Distribution Date
Termination Date....................................... October 2005 Distribution Date
2. Series 1996-2
Initial Principal Amount............................... $500,000,000
Scheduled Interest Payment Date........................ Monthly, on or about the fifteenth day of each month
Current Principal Amount............................... $500,000,000
Required Participation Percentage...................... 103%
Initial Subordinated Amount............................ Approximately 11.1% of the Invested Amount
Revolving Period....................................... November 30, 1996 to the earlier of the commencement
of an Accumulation Period or an Early Amortization Period
Expected Payment Date.................................. December 2001 Distribution Date
Termination Date....................................... November 2003 Distribution Date
3. Series 1997-1
Initial Principal Amount............................... $700,000,000
Scheduled Interest Payment Date........................ Monthly, on or about the fifteenth day of each month
Current Principal Amount............................... $369,729,998.17
Required Participation Percentage...................... 103%
Initial Subordinated Amount............................ Approximately 11.1% of the Invested Amount
Revolving Period....................................... July 31, 1997 to the earlier of the commencement
of an Accumulation Period, a Reinvestment Period
or an Early Amortization Period
Expected Payment Date.................................. August 2004 Distribution Date
Termination Date....................................... August 2006 Distribution Date
4. Series 1998-1
Initial Principal Amount...............................
Class A-1 Certificates............................. $500,000,000
Class A-2 Certificates............................. $500,000,000
Scheduled Interest Payment Date........................ Monthly, on or about the fifteenth day of each month
Current Principal Amount
Class A-1 Certificates............................. $500,000,000
Class A-2 Certificates............................. $500,000,000
Required Participation Percentage...................... 103%
Initial Subordinated Amount............................ Approximately 11.1% of the Invested Amount
Revolving Period
Class A-1 Certificates............................. July 1, 1998 to the earlier of the commencement
of an Accumulation Period or an Early Amortization
Period
Class A-2 Certificates............................. July 1, 1998 to the earlier of the commencement
of an Accumulation Period or an Early Amortization
Period
Expected Payment Date
Class A-1 Certificates............................. June 2001 Distribution Date
Class A-2 Certificates............................. June 2002 Distribution Date
Termination Date
Class A-1 Certificates............................. March 2003 Distribution Date
Class A-2 Certificates............................. March 2004 Distribution Date
5. Series 1999-1
Initial Principal Amount
Class A-1 Certificates............................. $400,000,000
Class A-2 Certificates............................. $600,000,000
Scheduled Interest Payment Date........................ Monthly, on or about the fifteenth day of each month
Current Principal Amount
Class A-1 Certificates............................. $400,000,000
Class A-2 Certificates............................. $600,000,000
Required Participation Percentage...................... 103%
Initial Subordinated Amount............................ Approximately 11.7% of the Invested Amount
Revolving Period
Class A-1 Certificates............................. March 1, 1999 to the earlier of October 1, 2000 (or
later in certain circumstances) or an Early
Amortization Event
Class A-2 Certificates............................. March 1, 1999 to the earlier of October 1, 2001 (or
later in certain circumstances) or an Early
Amortization Event
Expected Payment Date
Class A-1 Certificates............................. March 2001 Distribution Date
Class A-2 Certificates............................. March 2002 Distribution Date
Termination Date
Class A-1 Certificates............................. March 2003 Distribution Date
Class A-2 Certificates............................. March 2004 Distribution Date
6. Series 1999-2
Initial Principal Amount
Class A-1 Certificates............................. $750,000,000
Class A-2 Certificates............................. $600,000,000
Scheduled Interest Payment Date........................ Monthly, on or about the fifteenth day of each month
Current Principal Amount
Class A-1 Certificates............................. $750,000,000
Class A-2 Certificates............................. $600,000,000
Required Participation Percentage...................... 103%
Initial Subordinated Amount............................ Approximately 11.1% of the Invested Amount
Revolving Period
Class A-1 Certificates............................. May 1, 1999 to the earlier of the commencement
of an Accumulation Period or an Early Amortization
Period
Class A-2 Certificates............................. May 1, 1999 to the earlier of the commencement
of an Accumulation Period or an Early Amortization
Period
Expected Payment Date
Class A-1 Certificates............................. May 2002 Distribution Date
Class A-2 Certificates............................. May 2004 Distribution Date
Termination Date
Class A-1 Certificates............................. May 2004 Distribution Date
Class A-2 Certificates............................. May 2006 Distribution Date
7. Series 1999-3
Initial Principal Amount............................... $1,000,000,000
Scheduled Interest Payment Date........................ Monthly, on or about the fifteenth day of each month
Current Principal Amount............................... $1,000,000,000
Required Participation Percentage...................... 103%
Initial Subordinated Amount............................ Approximately 11.1% of the Invested Amount
Revolving Period....................................... June 30, 1999 to the earlier of the commencement of an
Accumulation Period or an Early Amortization Period
Expected Payment Date.................................. July 15, 2002
Termination Date....................................... July 15, 2004
8. Series 1999-4
Initial Principal Amount............................... $500,000,000
Scheduled Interest Payment Date........................ Monthly, on or about the fifteenth day of each month
Current Principal Amount............................... $500,000,000
Required Participation Percentage...................... 103%
Initial Subordinated Amount............................ Approximately 12% of the Invested Amount
Revolving Period....................................... October 31, 1999 to the earlier of the commencement of
an Accumulation Period or an Early Amortization
Period
Expected Payment Date.................................. November 15, 2002
Termination Date....................................... November 15, 2004
9. 2000-A
Initial Principal Amount............................... $750,000,000
Scheduled Interest Payment Date........................ Monthly, on or about the fifteenth day of each month
Current Principal Amount............................... $750,000,000
Required Participation Percentage...................... 103%
Initial Subordinated Amount............................ Approximately 11.1% of the Invested Amount
Revolving Period....................................... March 31, 2000 to earlier of the commencement of an
Accumulation Period or an Early Amortization Period
Expected Payment Date.................................. March 17, 2003
Termination Date....................................... March 15, 2005
</TABLE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
securities and exchange commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration becomes effective.
This prospectus and the accompanying prospectus supplement shall not constitute
an offer to sell or the solicitation of an offer to buy nor shall there be any
sale of these securities in any state in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the securities
laws of any such state.
Subject to Completion Dated May 25, 2000
PROSPECTUS
DaimlerChrysler
CARCO AUTO LOAN MASTER TRUST
Auto Loan Asset Backed Certificates
DAIMLERCHRYSLER WHOLESALE RECEIVABLES LLC, Seller
CHRYSLER FINANCIAL COMPANY L.L.C., Servicer
The trust--
o may periodically issue asset backed certificates in one or more
series with one or more classes; and
o will own
-- receivables arising from a selected portfolio of
automobile dealer revolving floorplan financing
agreements;
-- payments due on those receivables; and
-- other property described in this prospectus and in
the prospectus supplement.
The certificates--
o will represent interests in the trust;
o will be paid only from the assets of the trust;
o will represent the right to payments in the amounts and at the
times described in the prospectus supplement for those certificates;
o offered by this prospectus will be rated in the highest long-term
rating category (unless otherwise specified) at the time of issuance by at
least one nationally recognized rating agency; and
o may benefit from one or more forms of credit enhancement.
Before you decide to invest in any of the certificates, please read
this prospectus and the related prospectus supplement, especially the risk
factors beginning on page of the prospectus. The certificates will be
interests in the trust only and neither the certificates nor the assets of
the trust will represent interests in or obligations of DaimlerChrysler
Wholesale Receivables LLC, DaimlerChrysler AG, DaimlerChrysler Corporation,
Chrysler Financial Company L.L.C. or any of their affiliates. Neither the
Securities and Exchange Commission 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 , 2000.
<PAGE>
READING THIS PROSPECTUS AND THE
ACCOMPANYING PROSPECTUS SUPPLEMENT
We provide information on your certificates 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 certificates, including your certificates,
and
o the accompanying prospectus supplement is a summary of the
specific terms of your certificates.
If the terms of the certificates 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 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.
WHERE YOU CAN FIND MORE INFORMATION
The seller has filed a Registration Statement (together with all
amendments and exhibits, the "Registration Statement") under the Securities
Act of 1933, as amended (the "Securities Act"), with the Securities and
Exchange Commission (the "Commission") with respect to the certificates
offered pursuant to this prospectus. This prospectus, which forms part of the
Registration Statement, does not contain all of the information contained in
the Registration Statement and the exhibits thereto.
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, Chicago, Illinois 60661, and
o at the SEC's regional office at Seven World Trade Center, New
York, New York 10048.
Also, the Commission 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
The Commission allows information filed with it to be incorporated by
reference into this prospectus. The following documents filed with the
Commission by the servicer, on behalf of the trust, are incorporated in this
prospectus by reference: the trust's Annual Report on Form 10-K for the year
ended December 31, 1999 and the trust's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2000. All reports and other documents filed by the
seller, as originator of any trust, pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this prospectus and prior
to the termination of the offering of the certificates shall be deemed to be
incorporated by reference in this prospectus.
For purposes of this prospectus, any statement in this prospectus or in
a document incorporated or deemed to be 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 requested 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 Commission
in Washington D.C., referred to previously.
<PAGE>
TABLE OF CONTENTS
Section Page
AVAILABLE INFORMATION 2
REPORTS TO CERTIFICATEHOLDERS 2
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE 2
SUMMARY 6
RISK FACTORS 10
o LIMITED ABILITY TO RESELL
CERTIFICATES 10
o CERTAIN LEGAL ASPECTS 10
o PAYMENTS 12
o SOCIAL, ECONOMIC AND OTHER FACTORS 12
o TRUST'S RELATIONSHIP TO
DAIMLERCHRYSLER AND CFC 12
o CREDIT ENHANCEMENT 13
o CONTROL 14
o ADDITIONAL SERIES 14
o RATINGS OF THE CERTIFICATES 14
o BOOK-ENTRY REGISTRATION 15
DAIMLERCHRYSLER WHOLESALE RECEIVABLES LLC
AND THE TRUST 15
o DAIMLERCHRYSLER WHOLESALE
RECEIVABLES LLC 15
o THE TRUST 17
USE OF PROCEEDS 18
THE DEALER FLOORPLAN FINANCING BUSINESS 18
o GENERAL 18
o CREATION OF RECEIVABLES 19
o CREDIT UNDERWRITING PROCESS 19
o BILLING, COLLECTION PROCEDURES AND
PAYMENT TERMS 20
o REVENUE EXPERIENCE 21
o RELATIONSHIP WITH DAIMLERCHRYSLER 22
o DEALER MONITORING 22
o "DEALER TROUBLE" STATUS AND CFC'S
WRITE-OFF POLICY 22
o ADDITIONAL INFORMATION 23
THE ACCOUNTS 24
o GENERAL 24
CHRYSLER FINANCIAL COMPANY L.L.C.,
CHRYSLER FINANCIAL CORPORATION AND
CHRYSLER CREDIT CORPORATION 25
DESCRIPTION OF THE CERTIFICATES 26
o GENERAL 26
o INTEREST 26
o PRINCIPAL 27
o BOOK-ENTRY REGISTRATION 30
o DEFINITIVE CERTIFICATES 33
o THE SELLER'S CERTIFICATE 34
o NEW ISSUANCES 36
o CONVEYANCE OF RECEIVABLES AND
COLLATERAL SECURITY 37
o REPRESENTATIONS AND WARRANTIES 38
o ELIGIBLE ACCOUNTS AND ELIGIBLE
RECEIVABLES 40
o INELIGIBLE RECEIVABLES, THE
INSTALLMENT BALANCE AMOUNT AND THE
OVERCONCENTRATION AMOUNT 43
o ADDITION OF ACCOUNTS 42
o REMOVAL OF ACCOUNTS 44
o EXCLUDED SERIES 48
o COLLECTION ACCOUNT 48
o EXCESS FUNDING ACCOUNT 49
o ALLOCATION PERCENTAGES 51
o ALLOCATION OF COLLECTIONS; DEPOSITS
IN COLLECTION ACCOUNT 52
o LIMITED SUBORDINATION OF SELLER'S
INTEREST; ENHANCEMENTS 54
o DISTRIBUTIONS 56
o DEFAULTED RECEIVABLES AND RECOVERIES 56
o OPTIONAL REPURCHASE 57
o REINVESTMENT EVENTS AND EARLY
AMORTIZATION EVENTS 57
o TERMINATION; FULLY REINVESTED DATE 59
o INDEMNIFICATION 60
o COLLECTION AND OTHER SERVICING
PROCEDURES 61
o SERVICER COVENANTS 61
o SERVICING COMPENSATION AND PAYMENT
OF EXPENSES 62
o CERTAIN MATTERS REGARDING THE SERVICER 63
o SERVICE DEFAULT 63
o REPORTS 64
o EVIDENCE AS TO COMPLIANCE 65
o AMENDMENTS 65
o LIST OF CERTIFICATEHOLDERS 67
o THE TRUSTEE 67
DESCRIPTION OF THE RECEIVABLES PURCHASE
AGREEMENT 67
o SALE OR TRANSFER OF RECEIVABLES 68
o REPRESENTATIONS AND WARRANTIES 68
o CERTAIN COVENANTS 69
o TERMINATION 69
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES 70
o TRANSFER OF RECEIVABLES 70
o CERTAIN MATTERS RELATING TO
BANKRUPTCY 71
CERTAIN TAX MATTERS 73
o FEDERAL INCOME TAX CONSEQUENCES 73
o STATE AND LOCAL TAX CONSEQUENCES 77
ERISA CONSIDERATIONS 78
o GENERAL 78
EXPERTS 80
PLAN OF DISTRIBUTION 81
LEGAL MATTERS 83
INDEX OF PRINCIPAL TERMS 84
GLOBAL CLEARANCE, SETTLEMENT AND TAX
DOCUMENTATION PROCEDURES A-1
<PAGE>
SUMMARY
The following summary is a short, concise description of the main
structural features that a series or class of certificates 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 certificate. You will
find a detailed description of the possible terms of a certificate following
this summary. Refer to the Index of Principal Terms for the location of the
definitions of each capitalized term used in this summary and elsewhere in
this prospectus.
PARTIES
Party Description
Issuer o CARCO Auto Loan Master
Trust (the "trust").
--------------------------------------------------
Seller o DaimlerChrysler Wholesale
Receivables LLC ("DCWR"),
a special-purpose indirectly
owned subsidiary of
Chrysler Financial Company
L.L.C. ("CFC").
--------------------------------------------------
Servicer o CFC, a wholly owned
subsidiary of
DaimlerChrysler Corporation
("DaimlerChrysler"), the
successor to Chrysler
Corporation.
--------------------------------------------------
Trustee o The Bank of New York.
--------------------------------------------------
TITLE OF SECURITIES
Auto Loan Asset Backed Certificates (the "certificates").
THE TRUST
The trust will be governed by a Pooling and Servicing Agreement dated as
of May 31, 1991, among DCWR (as an assignee), as seller, CFC (as a successor
by merger), as servicer, and The Bank of New York, as a successor trustee. The
assets of the trust include
o certain receivables existing under the accounts at the close of
business on May 31, 1991 (the "initial cut-off date"), certain
receivables generated under the accounts from time to time thereafter
during the term of the trust as well as certain receivables generated
under any accounts added to the trust from time to time,
o all funds collected or to be collected in respect of such receivables,
o all funds on deposit in certain accounts of the trust,
o any other enhancement issued with respect to any particular series or
class and
o a security interest in certain motor vehicles and certain parts
inventory, equipment, fixtures, service accounts and, in some cases,
realty and/or a personal guarantee (collectively, the "collateral
security") securing the receivables.
THE ACCOUNTS
The accounts pursuant to which the receivables have been or will be
generated are revolving credit agreements entered into with CFC, directly or
as successor to an affiliate, by dealers to finance the purchase of their
automobile and light duty truck inventory. Under certain circumstances
accounts may be added to, or removed from, the trust. See "The Accounts",
"Description of the Certificates -- Eligible Accounts and Eligible
Receivables", " -- Addition of Accounts" and " -- Removal of Accounts".
THE RECEIVABLES
The receivables consist of advances made by CFC to domestic motor
vehicle dealers to purchase the vehicles. The vehicles consist primarily of
new automobiles, light duty trucks and certain other vehicles. Generally, the
principal amount of an advance in respect of a vehicle is equal to the
wholesale purchase price of the vehicle plus destination charges and, subject
to certain exceptions, is due upon the retail sale of the vehicle. See "The
Dealer Floorplan Financing Business -- Creation of Receivables" and " --
Payment Terms." The receivables bear interest at a floating rate. See "The
Dealer Floorplan Financing Business -- Revenue Experience".
THE CERTIFICATES
The certificates will be issued in series, each of which will consist of
one or more classes. The prospectus supplement will set forth the specific
terms of a series of certificates.
The trust's assets will be allocated in part to the certificateholders
of each series, with the remainder allocated to the seller. A portion of the
seller's interest will be subordinated to the certificateholders' interest of
each series. The certificates of each series will evidence an undivided
beneficial interest in the trust and will generally represent the right to
receive from such assets funds required to make payments of interest on and
principal of such series.
The principal amount of the seller's interest may fluctuate as the
aggregate amount of the receivables balance changes from time to time, as new
series are issued and as outstanding series amortize.
FORM AND DENOMINATION OF CERTIFICATES
You may purchase certificates in book-entry form only and in $1,000
increments.
INTEREST
The trust will pay interest on the certificates in a series with the
frequency specified in the prospectus supplement. Each series or class of
certificates will have its own interest rate, which may be fixed, variable,
contingent, or adjustable or have any combination of these characteristics and
will be specified in the prospectus supplement. Generally, the trust's sources
of funds for the payment of interest on a series of certificates will include:
o interest collections on the receivables allocable to that series
o any available credit enhancement for that series
PRINCIPAL
Generally, principal payments on a series of certificates will be made
on one or more dates specified in the prospectus supplement. The sources of
funds the trust will use to pay principal will be specified in the prospectus
supplement. Typically, these sources will include:
o all or a portion of the principal collections on the receivables
allocable to that series
o all or a portion of the interest collections allocable to that series
remaining after interest payments have been made on that series
o any available credit enhancement for that series.
The manner in which the trust will accumulate or apply available funds
toward principal payments on a series of certificates will be set forth in the
prospectus supplement for that series.
Each series of certificates will have a revolving period during which no
principal payments are made. Among the possible ways principal payments may be
structured for a class of certificate are the following:
o a single expected final payment date, on which all principal is repaid
at once
o an amortization period, during which principal is repaid on each
specified distribution date until all principal is repaid
If a series has more than one class of certificates, the manner for
paying principal may be different for the various classes.
However, it is possible that principal payments on a class or series of
certificates will begin earlier than the date specified in the prospectus
supplement. Upon the occurrence of an early amortization event for a series of
certificates, the trust will apply all principal collections allocated to that
series to the repayment of the outstanding principal of certificates in that
series, unless the prospectus supplement provides that those funds will be set
aside for payment on a later date. An early amortization event will likely
result in the commencement of the repayment of principal on the certificates
occurring earlier than the expected date specified in the prospectus
supplement for that series. Also, an early amortization event may result in
delays or reductions in the payments on your certificates.
Also, the servicer or other designated person may have the option to
purchase the outstanding certificates of a series when its invested amount is
reduced to a specified level.
LIMITED SUBORDINATION OF
THE SELLER'S INTEREST;
ENHANCEMENTS
The seller's interest will be subordinated to the rights of the
certificateholders of each series to the extent described in the related
prospectus supplement. Also, other enhancements may be provided. See "Limited
Subordination of Seller's Interest; Enhancements".
TAX MATTERS
In the opinion of special tax counsel for the seller and the trust, the
certificates of each series will be characterized as debt of the seller for
federal income tax purposes and, in the opinion of Michigan counsel for the
seller and the trust, the certificates will be characterized as debt of the
seller for Michigan income and single business tax purposes. Each
certificateholder, by the acceptance of a certificate, will agree to treat
such certificates as indebtedness of the seller for federal, state and local
income and single business tax purposes. The certificates might be issued with
original issue discount. See "Certain Tax Matters" for additional information
concerning the application of federal and Michigan tax laws.
ERISA CONSIDERATIONS
If you are an employee benefit plan, you should review the
considerations discussed under "ERISA Considerations" in this prospectus and
consult counsel before investing in the certificates.
CERTIFICATE RATINGS
Unless otherwise specified in the related prospectus supplement, the
certificates of a series will only be issued if they are rated in the highest
long-term rating category by at least one nationally recognized rating agency.
See "Risk Factors -- Ratings of the certificates".
<PAGE>
RISK FACTORS
LIMITED ABILITY TO RESELL CERTIFICATES
There may be no secondary market for the certificates. Underwriters may
participate in making a secondary market in the certificates, 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 certificates.
CERTAIN LEGAL ASPECTS MAY RESULT IN DELAYS OR
REDUCTIONS IN OR LOSS OF PAYMENTS TO CERTIFICATEHOLDERS
There are certain limited circumstances under the Uniform Commercial
Code (the "UCC") and applicable federal law in which prior or subsequent
transferees of receivables could have an interest in such receivables with
priority over the trust's interest. See "Certain Legal Aspects of the
Receivables -- Transfer of Receivables". Under the Receivables Purchase
Agreement, CFC has warranted to the seller and, under the Pooling and
Servicing Agreement, the seller has warranted to the trust that the
receivables have been or will be transferred free and clear of the lien of any
third party. Each of CFC and the seller has also covenanted that it will not
sell, pledge, assign, transfer or grant any lien on any receivable or, except
as described under "Description of the Certificates -- The Seller's
Certificate", the Seller's Certificate (or any interest therein) other than to
the trust.
CFC has warranted to the seller in the Receivables Purchase Agreement
that the sale of the receivables by it to the seller is a valid sale of the
receivables to the seller. Also, CFC and the seller have and will treat the
transactions described herein as a sale of the receivables to the seller. CFC
has and will take all actions that are required under Michigan law to perfect
the seller's ownership interest in the receivables. See "Certain Legal Aspects
of the Receivables -- Transfer of Receivables". Notwithstanding the foregoing,
CFC may become a debtor in a bankruptcy case and a creditor or
trustee-in-bankruptcy of such debtor or such debtor itself may take the
position that the sale of receivables to the seller should be recharacterized
as a pledge of such receivables to secure a borrowing of such debtor. In such
case, delays in payments of collections of receivables to the seller could
occur or (should the court rule in favor of any such trustee, debtor or
creditor) reductions in the amount of such payments could result. If the
transfer of receivables to the seller is recharacterized as a pledge, a tax or
government lien on the property of CFC arising before any receivables come
into existence may have priority over the seller's interest in such
receivables. See "Certain Legal Aspects of the Receivables -- Certain Matters
Relating to Bankruptcy". If the transactions contemplated herein are treated
as a sale, except in certain limited circumstances, the receivables would not
be part of CFC's bankruptcy estate and would not be available to CFC's
creditors.
Also, CFC may become a debtor in a bankruptcy case and a creditor or
trustee-in-bankruptcy of such debtor or such debtor itself may request a
bankruptcy court to order that CFC be substantively consolidated with the
seller. In such case, delays in and reductions in the amount of distributions
on the certificates could occur.
The seller has warranted in the Pooling and Servicing Agreement that the
transfer of the receivables to the trust is a sale of the receivables to the
trust. The seller has and will take all actions that are required under
Michigan law to perfect the trust's interest in the receivables. Also, the
seller has warranted that the trust will at all times have a first priority
perfected ownership interest in the receivables and, with certain exceptions,
in the proceeds of the receivables. However, the transfer of the receivables
to the trust could be deemed to create a security interest in the receivables.
If the transfer of the receivables to the trust were deemed to create a
security interest in the receivables under the UCC as in effect in Michigan, a
tax or statutory lien on property of CFC or the seller arising before a
Receivable is transferred to the trust may have priority over the trust's
interest in such receivables. The seller may become a debtor in a bankruptcy
case and a bankruptcy trustee or the seller as debtor in possession or a
creditor of the seller may take the position that the transfer of the
receivables from the seller to the trust should be recharacterized as a pledge
of such receivables. In such case, delays in distributions on the certificates
or, should the bankruptcy court rule in favor of any such trustee, debtor in
possession or creditor, reductions in such distributions could result.
In a 1993 case decided by the U.S. Court of Appeals for the Tenth
Circuit, Octagon Gas System, Inc. v. Rimmer, the court determined that
"accounts", as defined under the UCC, would be included in the bankruptcy
estate of a transferor regardless of whether the transfer is treated as a sale
or a secured loan. Although the receivables are likely to be viewed as
"chattel paper", as defined under the UCC, rather than as accounts, the
rationale behind the Octagon holding is equally applicable to chattel paper.
The circumstances under which the Octagon ruling would apply are not fully
known and the extent to which the Octagon decision will be followed in other
courts or outside of the Tenth Circuit is not certain. If the holding in the
Octagon case were applied in an RPA seller bankruptcy, however, even if the
transfer of receivables to the seller and the trust were treated as a sale,
the receivables would be part of the RPA seller's bankruptcy estate. In such
case, the receivables would be subject to claims of certain creditors, and
delays and reductions in payments to the seller and certificateholders could
result. See "Certain Legal Aspects of the receivables -- Certain Matters
Relating to Bankruptcy".
If certain events relating to the bankruptcy of DaimlerChrysler, CFC or
the seller were to occur, then a Reinvestment Event or Early Amortization
Event would occur with respect to each Series. In such case, pursuant to the
terms of the Pooling and Servicing Agreement, additional receivables would not
be transferred to the trust. See "Certain Legal Aspects of the Receivables --
Transfer of Receivables" and " -- Certain Matters Relating to Bankruptcy".
Payments may be made in respect of repurchases of receivables by CFC or
seller pursuant to the Pooling and Servicing Agreement within one year prior
to the filing of a bankruptcy case in respect of CFC or the seller. In such
case, such payments may be recoverable by CFC or the seller as debtor in
possession or a creditor or a trustee-in-bankruptcy of CFC or the seller as a
preferential transfer from CFC or the seller.
Application of federal and state bankruptcy and debtor relief laws could
affect the interests of the certificateholders in the receivables if such laws
result in any receivables being written off as uncollectible or result in
delays in payments due on such receivables. See "Description of the
Certificates -- Defaulted Receivables and Recoveries".
The seller has represented and warranted in the Pooling and Servicing
Agreement that each Receivable is at the time of creation secured by a first
priority perfected security interest in the related vehicle. Generally, under
applicable state laws, a security interest in an automobile or light duty
truck which secures wholesale financing obligations may be perfected by the
filing of UCC financing statements. CFC takes all actions necessary under
applicable state laws to perfect CFC's security interest in the vehicles.
However, at the time a vehicle is sold, CFC's security interest in the vehicle
will terminate. Therefore, if a Dealer fails to remit to CFC amounts owed with
respect to vehicles that have been sold, the related receivables will no
longer be secured by vehicles.
THE TIMING OF PAYMENTS ON THE RECEIVABLES WILL DETERMINE
WHETHER PRINCIPAL WILL BE PAID ON THE CERTIFICATES WHEN INTENDED
Receivables are generally paid by Dealers upon retail sale of the
underlying vehicle. The timing of such sales is uncertain. Also, we cannot
assure you that there will be additional receivables created under the
Accounts or that any particular pattern of Dealer repayments will occur. The
payment of principal on the certificates is dependent on Dealer repayments. As
a result
o the certificates of any series or class may not be fully amortized
by the Expected Payment Date, if any, with respect to such series or class
and
o the payment to certificateholders or deposit in a principal funding
account of principal during the controlled amortization period or
accumulation period, if any, with respect to a series or class of
certificates may not equal the controlled amortization amount or controlled
deposit amount, if any, with respect to such series or class.
SOCIAL, ECONOMIC AND OTHER FACTORS
Payment of the receivables is largely dependent upon the retail sale of
the related vehicles. The level of retail sales of cars and light duty trucks
may change as the result of a variety of social and economic factors. Economic
factors include
o interest rates, unemployment levels,
o the rate of inflation and
o consumer perception of economic conditions generally.
The use of incentive programs (e.g., manufacturers' rebate programs) may
affect retail sales. However, we are unable to determine and we have no basis
to predict whether or to what extent economic or social factors will affect
the level of vehicle sales.
TRUST'S RELATIONSHIP TO DAIMLERCHRYSLER AND CFC
Neither CFC nor DaimlerChrysler is obligated to make any payments in
respect of the certificates of any series or the receivables. Nevertheless CFC
has an obligation to purchase certain receivables from the trust due to the
failure to comply with certain covenants, as described under "Description of
the Certificates -- Servicer Covenants". However, the trust is completely
dependent upon CFC for the generation of new receivables. The ability of CFC
to generate receivables is in turn dependent to a large extent on the sales of
automobiles and light duty trucks manufactured or distributed by
DaimlerChrysler. Therefore, we cannot assure you that CFC will continue to
generate receivables at the same rate as receivables were generated in prior
years. Also, if CFC were to cease acting as servicer, delays in processing
payments on the receivables and information in respect thereof could occur and
result in delays in payments to the certificateholders.
In connection with the transfer of receivables by CFC to the seller and
the transfer of such receivables by the seller to the trust, each of CFC and
the seller makes representations and warranties with respect to the
characteristics of such receivables. CFC and the seller are required to
determine the accuracy of such representations and warranties and, in certain
circumstances, they are required to purchase receivables with respect to which
such representations and warranties have been breached. See "Description of
the Certificates -- Representations and Warranties" and "Description of the
Receivables Purchase Agreement -- Representations and Warranties". In
addition, subject to certain limitations, CFC has the ability to change the
terms of the Accounts, including the rate and the credit line, as well as
change its underwriting procedures.
Under agreements between DaimlerChrysler and DaimlerChrysler-franchised
dealers, DaimlerChrysler is committed to purchase unmiled vehicles from such
dealers upon dealership termination. If DaimlerChrysler is not able to
repurchase the new vehicles under the repurchase provision of new vehicles in
the dealer agreements, losses with respect to the receivables may be adversely
affected. See "The Dealer Floorplan Financing Business -- Relationship with
DaimlerChrysler". Also, because a substantial number of the vehicles to be
sold by the Dealers are manufactured or distributed by DaimlerChrysler, if
DaimlerChrysler were temporarily or permanently no longer manufacturing or
distributing vehicles, the rate of sales of DaimlerChrysler-manufactured
vehicles owned by the Dealers would decrease. In such case, payment rates and
the loss experience with respect to the receivables will be adversely
affected. See "The Dealer Floorplan Financing Business".
The prospectus supplement for any series offered hereby may set forth
certain additional information regarding CFC and DaimlerChrysler. Also,
DaimlerChrysler [and CFC] are subject to the informational requirements of the
Exchange Act and in accordance therewith file reports and other information
with the Commission. For further information regarding DaimlerChrysler [and
CFC] you should refer to such reports and other information which are
available as described under "Where You Can Find More Information".
CREDIT ENHANCEMENT IS LIMITED
Credit enhancement of each series of certificates offered hereby will be
provided by the subordination of the Seller's Interest to the extent of the
Available Subordinated Amount for such series as described in the related
prospectus supplement. The amount of such credit enhancement is limited and
will be reduced from time to time as described in the related prospectus
supplement. Also, any Enhancement provided with respect to a series or class
of certificates is expected to be limited. See "Limited Subordination of
Seller's Interest; Enhancements".
OTHER CERTIFICATEHOLDERS MAY
CONTROL THE ACTIONS OF THE TRUST
Under certain circumstances, the consent or approval of the holders of a
specified percentage of the aggregate unpaid principal amount of all
outstanding certificates of all outstanding series will be required to direct
certain actions. These actions include amending the Pooling and Servicing
Agreement in certain circumstances and directing a reassignment of the entire
portfolio of receivables. Also, following the occurrence of an insolvency
event with respect to the seller, the holders of certificates evidencing more
than 50% of the aggregate unpaid principal amount of each series or each class
of each series (and any holder of a Supplemental Certificate) will be required
to direct the trustee not to sell or otherwise liquidate the receivables.
THE ISSUANCE OF ADDITIONAL SERIES OF
CERTIFICATES MAY ADVERSELY AFFECT EXISTING SERIES
The trust, as a master trust, has previously issued series and is
expected to issue additional series (which may be represented by different
classes within a series) from time to time. A Series Supplement delivered in
connection with the issuance of other series will specify certain principal
terms applicable to such series. Such principal terms may include
o methods for determining applicable allocation percentages and
allocating collections,
o provisions creating different or additional security or other
credit enhancement,
o different classes of certificates (including subordinated
classes of certificates) and
o any other amendment or supplement to the Pooling and Servicing
Agreement which is made applicable only to such Series.
No Series Supplement, however, may change the terms of the certificates of
another series or the terms of the Pooling and Servicing Agreement as applied
to the certificates of another series. See "Description of the Certificates --
New Issuances". As long as the certificates of any series are outstanding, a
condition to the execution of any Series Supplement will be that the Rating
Agencies shall have advised the trustee that the issuance of such Additional
Series will not result in the reduction or withdrawal of their rating of the
certificates of any outstanding series or class of certificates. However, we
cannot assure you that the terms of any one series might not have an impact on
the timing or amount of payments received by a certificateholder of any other
series. The issuance of an additional series does not require the consent of
any certificateholders.
RATINGS OF THE CERTIFICATES
Unless otherwise specified in the related prospectus supplement, it will
be a condition to the issuance of the certificates of each series offered
hereby that they be rated in the highest long-term rating category by at least
one nationally recognized rating agency (such rating agency and each other
rating agency designated by the seller in the related Series Supplement in
respect of any outstanding series or class, a "Rating Agency"). Any rating
assigned to the certificates of a series or a class by a Rating Agency
o will reflect such Rating Agency's assessment of the likelihood that
certificateholders of such series or class will receive the payments of
interest and principal required to be made under the Pooling and Servicing
Agreement and
o will be based primarily on the value of the receivables in the
trust, the level of subordination of the Seller's Interest and the
availability of any Enhancement with respect to such series or class.
However, any such rating will not, unless otherwise specified in the related
prospectus supplement, address the likelihood that the principal of, or
interest on, any certificates of such series or class will be paid on a
scheduled date. The rating will not be a recommendation to buy, hold or sell
certificates of such series or class, inasmuch as such rating will not comment
as to the market price or suitability for a particular investor. We cannot
assure you that a rating will remain for any given period of time or that a
rating will not be lowered or withdrawn by a Rating Agency if in its judgment
circumstances in the future so warrant.
BOOK-ENTRY REGISTRATION MAY LIMIT YOUR
ABILITY TO RESELL OR PLEDGE YOUR CERTIFICATES
Unless otherwise specified in the prospectus supplement relating to a
series of certificates offered hereby, the certificates of each such series
will be initially represented by one or more certificates registered in the
name of Cede, the nominee for DTC, and will not be registered in your names or
your nominee's name. Accordingly, unless and until Definitive Certificates are
issued, you will not be recognized by the trustee as the "certificateholder"
(as that term is used in the Pooling and Servicing Agreement). You will only
be able to exercise the rights of a certificateholder indirectly through DTC
and its participating organizations, and unless the prospectus supplement for
a Series offered hereby provides otherwise, through Euroclear or Clearstream
Banking and their respective participating organizations. See "Description of
the Certificates -- General", " -- Book-Entry Registration" and " --
Definitive Certificates".
DAIMLERCHRYSLER WHOLESALE RECEIVABLES LLC AND THE TRUST
DAIMLERCHRYSLER WHOLESALE RECEIVABLES LLC
DCWR is a limited liability company formed under the laws of the State
of Delaware on February 4, 2000 as a wholly owned subsidiary of CFC, for the
limited purpose of purchasing wholesale, retail and other receivables from CFC
and transferring such receivables to third parties or issuing indebtedness
secured by receivables to third parties. DCWR is expected to acquire the
Seller's Interest from U.S. Auto Receivables Company ("USA") on or about May ,
2000. At that time DCWR will assume the obligations of the seller under the
Pooling and Servicing Agreement and the obligations of the purchaser under the
Receivables Purchase Agreement. On August 8, 1991, USA had acquired the
Seller's Interest from Chrysler Auto Receivables Company ("CARCO") and assumed
such obligations. At that time, USA will no longer have any obligations under
those agreements. USA and CARCO are both wholly-owned subsidiaries of CFC.
DCWR will be deemed to have made all representations and warranties of
the seller in the Pooling and Servicing Agreement and any Series Supplement
with respect to any series of certificates outstanding at such time. In
addition, DCWR will assume the obligations of USA under the certificates with
respect to any outstanding series, the Pooling and Servicing Agreement and the
Receivables Purchase Agreement and will agree to hold USA harmless from any
liability related to such obligations. Obligations transferred to and assumed
by DCWR include USA's obligation with respect to the subordinated notes held
by CFC, the proceeds of which note were used to fund a portion of the purchase
price of receivables from CCC on the Initial Closing Date and a portion of the
purchase prices of the receivables arising in the Additional Accounts added to
the trust on Addition Dates subsequent to the Initial Closing Date. CFC may
make additional subordinated loans to DCWR in the future.
The seller has taken steps in structuring the transactions contemplated
hereby that are intended to insure that the voluntary or involuntary
application for relief by CFC under the United States Bankruptcy Code or
similar applicable state laws ("Insolvency Laws") will not result in the
consolidation of the assets and liabilities of the seller with those of CFC.
These steps include the creation of the seller as a separate, limited-purpose
subsidiary pursuant to a limited liability company agreement containing
certain limitations on the nature of the seller's business, as described above
and on the seller's ability to commence a voluntary case or proceeding under
any Insolvency Law without the unanimous affirmative vote of all its officers.
However, we cannot assure you that the activities of the seller would not
result in a court concluding that the assets and liabilities of the seller
should be consolidated with those of CFC in a proceeding under any Insolvency
Law. See "Risk Factors -- Certain Legal Aspects May Result in Delays in or
Reductions or Loss of Payments to Certificateholders" and "Certain Legal
Aspects of the Receivables -- Certain Matters Relating to Bankruptcy".
Also, tax and certain other statutory liabilities, such as liabilities
to the Pension Benefit Guaranty Corporation relating to the underfunding of
pension plans, of DaimlerChrysler or CFC can be asserted against the seller.
To the extent that any such liabilities arise after the transfer of
receivables to the trust, the trust's interest in the receivables would be
prior to the interest of the claimant with respect to any such liabilities.
However, the existence of a claim against the seller could permit the claimant
to subject the seller to an involuntary proceeding under the Bankruptcy Code
or other Insolvency Law. See "Risk Factors -- Certain Legal Aspects May Result
in Delays in or Reductions or Loss of Payments to Certificateholders" and
"Certain Legal Aspects of the Receivables -- Certain Matters Relating to
Bankruptcy" and "Risk Factors --Trust's Relationship to DaimlerChrysler and
CFC".
DCWR's executive offices are located at 27777 Franklin Road, Southfield,
Michigan 48034-8286, and its telephone number is (248) 948-3031.
THE TRUST
The trust was formed in accordance with the laws of the State of New
York pursuant to the Pooling and Servicing Agreement. The property of the
trust consists of
o the receivables existing in the Accounts on May 31, 1991 (the
"Initial Cut-Off Date").
o all receivables generated in the Accounts from time to time
thereafter during the term of the trust as well as receivables generated
in any Accounts added to the trust from time to time (but excluding
receivables in any Accounts that are removed from the trust from time to
time after the Initial Cut-Off Date),
o an assignment of all the seller's rights and remedies under the
Receivables Purchase Agreement,
o all funds collected or to be collected in respect of the
receivables,
o all funds on deposit in certain accounts of the trust,
o any Enhancement issued with respect to any particular series or
class of certificates and
o a security interest in the vehicles and any other collateral
security.
See "Description of the Certificates -- Addition of Accounts". See
"Description of the Receivables Purchase Agreement" for a summary of certain
terms of the Receivables Purchase Agreement.
CFC will generally not convey to the trust receivables ("Fleet
Receivables") originated in connection with multiple new vehicle orders of at
least five vehicles by certain specified Dealers. The terms receivables and
Principal Receivables as used herein will not refer to Fleet Receivables.
The property of the Trust may also include Enhancements for the benefit
of certificateholders of a particular series or class. The certificateholders
of a particular series or class will not have any interest in any Enhancements
provided for the benefit of the certificateholders of another series or class,
unless so provided in the related Series Supplement or Series Supplements.
Pursuant to the Pooling and Servicing Agreement, the seller will be allowed
(subject to certain limitations and conditions), and in some circumstances
will be obligated,
o to designate from time to time Additional Accounts to be included
as Accounts and to convey to the trust the receivables of such Additional
Accounts, and
o to designate from time to time certain Accounts to be removed and
to require the trustee to convey receivables in such Removed Accounts to
the seller.
The trust was formed for this and like transactions pursuant to the
Pooling and Servicing Agreement and prior to formation had no assets or
obligations. The trust will not engage in any business activity other than
acquiring and holding the receivables and the other assets of the trust and
proceeds therefrom, issuing the certificates and the seller's certificate (and
any Supplemental certificates) and making payments thereon and related
activities. As a consequence, the trust is not expected to have any need for,
or source of, capital resources other than the assets of the trust.
USE OF PROCEEDS
Unless otherwise provided in the related prospectus supplement:
o the net proceeds from the sale of the certificates of a series
offered hereby will be paid to DCWR and used to make the deposit of the
Excess Funded Amount, if any, for such series, to the Excess Funding
Account for such series;
o DCWR will use the portion of such proceeds paid to it, together
with the subordinated loan from CFC described under "DaimlerChrysler
Wholesale Receivables LLC and the Trust -- DaimlerChrysler Wholesale
Receivables LLC", to purchase receivables from CFC or to repay certain
amounts previously borrowed to purchase receivables; and
o CFC will use the portion of the proceeds paid to it for general
corporate purposes.
THE DEALER FLOORPLAN FINANCING BUSINESS
GENERAL
The receivables transferred to the trust pursuant to the Pooling and
Servicing Agreement were or will be selected from extensions of credit and
advances (known generally as "wholesale" or "floorplan" financing) made by
DaimlerChrysler, directly or as successor to Chrysler Corporation, and CFC,
directly or as a successor to affiliates, to domestic motor vehicle dealers.
These funds are used by dealers to purchase new and used vehicles manufactured
or distributed by DaimlerChrysler and other manufacturers pending sale to
retail buyers. As described herein, receivables transferred to the trust are
secured by the vehicles and, in many cases, certain parts inventory,
equipment, fixtures and service accounts of the vehicle dealers. In some
cases, the receivables are also secured by realty owned by, and/or a personal
guarantee of, a vehicle dealer.
CFC, as successor to Chrysler Financial Corporation ("CFC Corp.") and
Chrysler Credit Corporation ("CCC"), is the primary wholesale financing source
for DaimlerChrysler-franchised dealers in the United States. DaimlerChrysler
vehicles for which CFC provides wholesale financing include vehicles
manufactured under the CHRYSLER, PLYMOUTH, DODGE and JEEP trademarks. CFC,
directly or as successor to CFC Corp. or CCC, has extended credit lines to
DaimlerChrysler-franchised dealers that also operate non-DaimlerChrysler
franchises and non-DaimlerChrysler dealers. CFC services the accounts of
domestic dealers financed by it (the "U.S. Wholesale Portfolio") through its
Southfield Support office located in Southfield, Michigan and through a
network of zone offices located throughout the United States.
Vehicles financed by any dealer under the floor plan program are
categorized by CFC, under its policies and procedures, as New Vehicles or Used
Vehicles based on whether such vehicles qualify for the new or used wholesale
and retail interest rate chargeable to such dealer in connection with the
vehicles financed. Currently, "New Vehicles" consist of
o current and prior model year unmiled vehicles,
o current model year miled vehicles purchased at a closed auction
conducted by DaimlerChrysler and
o prior model year and two year old miled vehicles. Currently, "Used
Vehicles" consist of previously owned vehicles, other than current model
year miled vehicles purchased at a closed auction conducted by
DaimlerChrysler and prior model year and two year old miled vehicles.
Vehicles purchased by a dealer at a closed auction conducted by
DaimlerChrysler are referred to, collectively, as "Auction Vehicles". New
Vehicles and Used Vehicles may be categorized differently in the future
based on CFC's practices and policies.
CREATION OF RECEIVABLES
CFC finances 100% of the wholesale invoice price of new vehicles,
including destination charges. DaimlerChrysler originates receivables in
respect of DaimlerChrysler-manufactured or distributed vehicles concurrently
with the shipment of such vehicles to the financed dealer.
Once a dealer has commenced the floorplanning of a manufacturer's
vehicles through CFC, CFC will finance all purchases of vehicles by such
dealer from such manufacturer. CFC will cancel this arrangement, however, if a
dealer's inventory is considered by CFC to be seriously overstocked, if a
dealer is experiencing financial difficulties or if a dealer requests
controlled vehicle releases. In such circumstances (known as "finance hold"),
the applicable local zone office of CFC assumes control of vehicle releases to
the dealer. Special arrangements are made by CFC to finance inter-dealer sales
of vehicles.
CREDIT UNDERWRITING PROCESS
CFC extends credit to dealers from time to time based upon established
credit lines. Dealers may establish lines of credit to finance purchases of
new, used and auction vehicles. All DaimlerChrysler- franchised dealers that
have a new vehicle line of credit in place are also eligible for a used
vehicle and an auction vehicle credit line. A new vehicle credit line relates
to New Vehicles (other than current model year miled vehicles purchased at a
closed auction conducted by DaimlerChrysler) used vehicle credit line relates
to Used Vehicles. An auction vehicle credit line relates to Auction Vehicles.
A newly franchised dealer requesting the establishment of a new vehicle
credit line must submit an application to a CFC zone office. After receipt of
such application, the local zone office investigates the prospective dealer.
The office reviews the prospective dealer's credit reports and bank references
and evaluating the dealer's marketing capabilities and start-up financial
resources and credit requirements. When an existing dealer requests the
establishment of a wholesale new vehicle credit line, the office reviews the
dealer's credit reports, including the experience of the dealer's current
financing source, and bank references. Further, the office investigates the
dealer's current state of operations and management, including evaluating a
factory reference, and marketing capabilities. For credit lines within an
office's approval limits, the office either approves or disapproves the
dealer's request. For credit lines in excess of an office's approval limits,
the office transmits the requisite documentation to the Southfield Support
Dealer Credit Department for approval or disapproval. CFC applies the same
underwriting standards for dealers franchised by other manufacturers.
Upon approval, dealers execute a series of financing agreements with CFC
and, in the case of DaimlerChrysler-franchised dealers, DaimlerChrysler. These
agreements provide CFC a first priority security interest in the vehicles and
other collateral and a demand master promissory note in favor of CFC. Pursuant
to these agreements, CFC requires all dealers to maintain insurance coverage
for each vehicle for which it provided floorplan financing, with CFC
designated as loss payee.
The size of a credit line initially offered to a dealer is based upon
the dealer's sales record, or, in the case of a prospective dealer, expected
annual sales, and the dealer's effective net worth. The amount of a dealer's
credit line for new vehicles is adjusted quarterly by CFC. The adjustment is
based upon the dealer's average new vehicle sales during the prior 180 days
and is, generally, in an amount sufficient to finance a 75-day supply of
vehicles. The amount of a dealer's credit line for used vehicles is also
adjusted periodically. This adjustment is based upon the dealer's average used
vehicle sales for the prior 180 days and is, generally, in an amount
sufficient to finance 50% of a 30 to 45-day supply of vehicles. CFC determines
the size of a dealer's auction vehicle credit line on a case by case basis and
makes adjustments periodically based on CFC's practices and procedures.
The aggregate amount advanced for each Used Vehicle is equal to the
National Automotive Dealers Association's Official Wholesale Used Car Trade-in
Guide wholesale book value for such vehicle. However, the aggregate amount of
the credit line for such used vehicles may not exceed 50% of the value of such
dealer's total inventory of used vehicles. The amount advanced for New
Vehicles and all Auction Vehicles is equal to the amount invoiced with respect
to such vehicles and the auction purchase price (including auction fees) of
such Auction Vehicles, respectively.
BILLING, COLLECTION PROCEDURES AND PAYMENT TERMS
CFC prepares and distributes each month to each dealer a statement
setting forth billing and related account information. CFC generates and mails
each dealer's bills on the sixth and seventh calendar day of the month.
Interest and other nonprincipal charges must be paid by the end of the month
in which they are billed. CFC bills interest and handling fees in arrears, but
bills insurance costs in advance. Upon the sale of a vehicle for which it has
provided floorplan financing, CFC is entitled to receive payment in full of
the related advance. Dealers remit payments by check directly to CFC's local
zone offices or electronically via an electronic funds transfer system
maintained by the Southfield Support office.
REVENUE EXPERIENCE
CFC charges dealers interest at a floating rate based on the rate (the
"Prime Rate") designated as the "prime rate" from time to time by certain
financial institutions selected by CFC, plus a designated spread ranging from
0.25% to 1.00% on New Vehicles. The Prime Rate is reset by CFC on the first
and sixteenth days of every month and is applied to all balances outstanding
during the applicable period. The actual spread for each dealer is determined
according to the total amount of such dealer's credit lines. CFC generally
increases the spreads charged on Used Vehicle balances by an additional 0.75%.
Previously owned vehicles, however, purchased at a DaimlerChrysler closed
auction are financed at the applicable New Vehicle rate. In the case of a few
larger dealers, CFC charges such dealers interest at a floating rate based on
LIBOR plus 2.75% up to the Prime Rate plus 0.50%.
RELATIONSHIP WITH DAIMLERCHRYSLER
DaimlerChrysler provides to some DaimlerChrysler-franchised dealers
financial assistance in the form of working capital loans and other loans. In
addition, DaimlerChrysler provides floorplan assistance to all
DaimlerChrysler-franchised dealers through a number of formal and informal
programs. On all new vehicle financings, DaimlerChrysler reimburses dealers
directly for the finance costs for a specified period from the date of
shipment. DaimlerChrysler also has a supplemental floorplan assistance
program. In this program, DaimlerChrysler reimburses dealers at the time of
retail sale, for a specified amount depending upon the vehicle model.
Under an agreement between DaimlerChrysler and each
DaimlerChrysler-franchised dealer, DaimlerChrysler commits to repurchase
unsold new vehicles in inventory upon dealership termination, at such
vehicles' wholesale prices less a specified margin. DaimlerChrysler only
repurchases current model year vehicles that are new, undamaged and unused.
DaimlerChrysler also agrees to repurchase from dealers, at the time of
franchise termination, parts inventory at specified percentages of the invoice
price. If CFC takes possession of a dealer's parts inventory, DaimlerChrysler
is only obligated to pay CFC 55% of the invoice price of such inventory. All
of such assistance, however, is provided by DaimlerChrysler for the benefit of
its dealers, and does not relieve such dealers of any of their obligations to
CFC.
Much of such assistance is provided at the option of DaimlerChrysler,
which may terminate any of such optional programs in whole or in part at any
time. If DaimlerChrysler is unable to or elects not to provide such
assistance, the loss experience of CFC in respect of the U.S. Wholesale
Portfolio may be adversely affected. In addition, because a substantial number
of the vehicles sold by the dealers are manufactured or distributed by
DaimlerChrysler, if DaimlerChrysler were temporarily or permanently no longer
in such business, the rate of sales of DaimlerChrysler-manufactured vehicles
would decrease. This would adversely affect payment rates and the loss
experience of the U.S. Wholesale Portfolio. See "Payment Terms" for a
discussion of an installment payment plan made available to dealers. See also
"Risk Factors -- trust's Relationship to DaimlerChrysler and CFC".
DEALER MONITORING
CFC's local zone offices monitor the level of each dealer's wholesale
credit line on a periodic basis. Dealers are permitted to exceed such lines on
a temporary basis. For example, a dealer may, immediately prior to a seasonal
sales peak, purchase more vehicles than it is otherwise permitted to finance
under its existing credit lines. As another example, because of slow inventory
turnover, a dealer's credit lines may be reduced prior to its liquidating a
sufficient portion of its vehicle inventory. If at any time CFC learns that a
dealer's balance exceeds its approved credit lines, CFC will evaluate such
dealer's financial position and may temporarily increase such dealer's credit
lines or place such dealer in a disciplinary category known as "finance hold".
See "Creation of Receivables".
Zone office personnel conduct audits of dealer vehicle inventories on a
regular basis. The timing of each visit is varied and no advance notice is
given to the audited dealer. Auditors review dealers' financial records and
conduct a physical inventory of the vehicles on the dealers' premises. Through
the audit process, CFC reconciles each dealer's physical inventory with its
records of financed vehicles. Audits are intended to identify instances where
a dealer sold vehicles but did not immediately repay the related advances. The
audit process also aids CFC in determining in those instances whether a dealer
received sale proceeds but diverted such proceeds to uses other than the
repayment of the obligations to CFC.
"DEALER TROUBLE" STATUS AND CFC'S WRITE-OFF POLICY
Under some circumstances, CFC will classify a dealer under "Dealer
Trouble" status. Such circumstances include
o failure to remit any principal or interest payment when due,
o any notifications of liens, levies or attachments and
o a general deterioration of its financial condition.
Once a dealer is assigned to Dealer Trouble status, CFC determines any more
extension of credit on a case-by-case basis.
CFC attempts to work with dealers to resolve instances of Dealer Trouble
status. If, however, a dealer remains on such status, it can result in one of
the following:
o an orderly liquidation in which the dealer voluntarily liquidates
its inventory through normal sales to retail customers,
o a forced liquidation in which the dealer's inventory is
repossessed and, in the case of DaimlerChrysler-franchised dealers, the
franchise is closed,
o a voluntary surrender of the dealer's inventory and, in the case
of DaimlerChrysler-franchised dealers, franchise closure, or
o a forced sale of the dealership. Generally, CFC works with
franchised dealers to find third parties to purchase a troubled
dealership.
The proceeds of such sales are used to repay amounts due to CFC. Once
liquidation has begun, CFC performs an analysis of its position, writes off
any amounts identified at such time as uncollectible and attempts to liquidate
all possible collateral remaining. During the course of a liquidation, CFC may
recognize additional losses or recoveries.
ADDITIONAL INFORMATION
The prospectus supplement for each Series will set forth additional
information with respect to the Dealer Floorplan Financing Business.
<PAGE>
THE ACCOUNTS
GENERAL
The receivables arise in the revolving financing arrangements (the
"Accounts") with domestic automobile dealers ("Dealers") franchised by
DaimlerChrysler and/or other automobile manufacturers. CFC selected the
Accounts from all the wholesale accounts in the U.S. Wholesale Portfolio that
are Eligible Accounts (the "Eligible Portfolio"). Each Account in the Eligible
Portfolio must be an account established by CFC, directly or as successor to
CFC Corp. or CCC, in the ordinary course of business and meet other criteria
provided in the Pooling and Servicing Agreement. See "Description of the
Certificates -- Representations and Warranties". CFC and the seller have
represented that each believes that the Accounts will be representative of the
accounts in the Eligible Portfolio and that the inclusion of the Accounts, as
a whole, will not represent an adverse selection from the Eligible Portfolio.
From time to time, Dealers deposit funds with CFC in cash management
accounts, limited in amount to the amount of the wholesale accounts. CFC
applies funds deposited by a Dealer in its cash management account to reduce
the Dealer's outstanding Principal Receivables balance. Under some
circumstances, a Dealer may reborrow the funds.
Pursuant to the Pooling and Servicing Agreement, the seller, and
pursuant to the Receivables Purchase Agreement, CFC has the right (subject to
limitations and conditions), and in some circumstances is obligated, to choose
from time to time additional qualifying wholesale accounts to be included as
Accounts and to convey to the trust some of the receivables of such Additional
Accounts, including receivables created after the conveyance. These accounts
must meet the eligibility criteria set forth above as of the date the accounts
are designated as Additional Accounts. CFC will convey the receivables then
existing, with certain exceptions, or later created under the Additional
Accounts to the seller. The seller will then convey them to the trust. See
"Description of the Certificates -- Addition of Accounts". In addition, as of
any Additional Cut-off Date in respect of Additional Accounts and the date any
new receivables are generated, CFC will represent and warrant to the seller,
and the seller will represent and warrant to the trust, that the receivables
meet the eligibility requirements set forth in the Pooling and Servicing
Agreement. See "Description of the Certificates -- Conveyance of Receivables".
Under some circumstances specified in the Pooling and Servicing Agreement, the
seller has the right to remove Accounts, and the receivables arising from the
Accounts, from the trust. See "Description of the Certificates -- Removal of
Accounts". During the term of the trust, the Accounts from which the
receivables arise will be the same Accounts designated by the seller on the
Initial Cut-Off Date plus any Additional Accounts, minus any Accounts removed
from the trust.
Each prospectus supplement will contain information about the Accounts.
CHRYSLER FINANCIAL COMPANY L.L.C.
CHRYSLER FINANCIAL CORPORATION AND
CHRYSLER CREDIT CORPORATION
CFC, a Michigan limited liability company and a wholly-owned subsidiary
of DaimlerChrysler, is a financial services organization. It is the continuing
company resulting from a merger on October 25, 1998, of CFC Corp. into CFC.
CFC Corp., a Michigan corporation, was the continuing corporation resulting
from a merger on June 1, 1967, of a financial services subsidiary of Chrysler
Corporation (as predecessor of DaimlerChrysler) into a newly acquired,
previously nonaffiliated finance company incorporated in 1926. CFC is engaged
in the following:
o automotive retail, wholesale and fleet financing,
o servicing commercial leases and loans,
o property, casualty and other insurance and
o automotive dealership facility development and management.
CFC's business depends substantially upon DaimlerChrysler's operations.
In particular, lower levels of production and sale of DaimlerChrysler's
automotive products could reduce the level of CFC's finance and insurance
operations. See "Risk Factors -- trust's Relationship to DaimlerChrysler and
CFC". CFC's executive offices are located at 27777 Franklin Road, Southfield,
Michigan 48034-8286 and its telephone number is (248) 948-3060.
CCC, a wholly owned subsidiary of CFC Corp., provided retail, wholesale
and lease financing services to automobile dealers and their customers
throughout the United States. On December 31, 1995, CCC merged into CFC Corp.
CFC Corp., in accordance with the terms of the Pooling and Servicing Agreement
and the Receivables Purchase Agreement, assumed all the rights and obligations
of CCC under (a) the Pooling and Servicing (including rights and obligations
as servicer) and (b) the Receivables Purchase Agreement (including rights and
obligations of the seller). After that merger, CFC Corp. provided retail,
wholesale and lease financing services to automobile dealers and their
customers throughout the United States. On October 25, 1998, CFC Corp. merged
into CFC. CFC, in accordance with the terms of the Pooling and Servicing
Agreement, assumed all the rights and obligations of CFC Corp. under (a) the
Pooling and Servicing Agreement (including rights and obligations of servicer)
and (b) the Receivables Purchase Agreement (including rights and obligations
of the seller).
The prospectus supplement for each series will contain additional
information about CFC.
DESCRIPTION OF THE CERTIFICATES
GENERAL
The certificates of a series will be issued pursuant to a Pooling and
Servicing Agreement (as amended and supplemented from time to time, the
"Pooling and Servicing Agreement"), among DCWR, as seller of the receivables,
CFC, as servicer of the receivables, and the trustee. The Pooling and
Servicing Agreement will be substantially in the form filed as an exhibit to
the Registration Statement of which this prospectus is a part. The trustee
will make available for inspection a copy of the Pooling and Servicing
Agreement, without exhibits or schedules, to certificateholders of a Series on
written request. The following summary describes terms generally applicable to
the certificates of each Series, is not complete and is qualified in its
entirety by reference to the Pooling and Servicing Agreement and the
applicable Series Supplement.
The certificates of each series will evidence undivided beneficial
interests in certain assets of the trust allocated to the Interest of the
Certificateholders of such series (the "Certificateholders' Interest"). These
interests will represent the right to receive from the trust assets funds up
to, but not in excess of, the amounts required to make payments of interest on
and principal of the certificates of the series pursuant to the Pooling and
Servicing Agreement as described in the related prospectus supplement.
The certificates of each series will initially be represented by
certificates registered in the name of the nominee of DTC (together with any
successor depository selected by the seller, the "Depository"), except as set
forth below. Unless the related prospectus supplement states otherwise, the
certificates of each Series will be available for purchase in minimum
denominations of $1,000 and integral multiples of $1,000 in book-entry form
only. DTC has informed the seller that DTC's nominee will be Cede.
Accordingly, Cede is expected to be the holder of record of the certificates.
Unless and until Definitive Certificates are issued, no certificateholder will
be entitled to receive a physical certificate representing a certificate. All
references in this prospectus to actions by certificateholders shall refer to
actions taken by DTC upon instructions from Participants. Also, all references
in this prospectus to distributions, notices, reports and statements to
certificateholders shall refer to distributions, notices, reports and
statements to DTC or Cede, as the registered holder of the certificates, as
the case may be. See "Book-Entry Registration" and "Definitive Certificates".
INTEREST
The certificates of a series or class will accrue interest on their
principal balance at the per annum rate set forth in or determined as
described in the prospectus supplement. Interest will be payable to the
certificateholders of a series or class on the interest payment dates
specified in the prospectus supplement. If the prospectus supplement for a
series or class of certificates so provides, the interest rate and the
interest payment dates for each certificate of that series or class may be
adjusted from time to time, including as a result of a decline in the interest
rate of the receivables.
Except as otherwise stated in this prospectus or in the related
prospectus supplement, Interest Collections and other amounts allocable to the
Certificateholders' Interest of a Series will be used to make interest
payments to certificateholders of such Series on each interest payment date
with respect to those certificateholders. During any Early Amortization
Period, however, with respect to a Series, interest will be distributed to the
certificateholders monthly on each Special Payment Date.
If the interest payment dates for a series or class occur less than
monthly, the collections or other amounts (or the portion allocable to the
class) will be deposited in one or more trust accounts (each an "Interest
Funding Account"). The amounts in the Interest Funding Account will be used to
make interest payments to certificateholders of the series or class on the
following interest payment date with respect to those certificateholders. If a
Series has more than one class of certificates, each class may have a separate
Interest Funding Account.
PRINCIPAL
The certificates of each series and class will have a revolving period
(the "Revolving Period"). During the Revolving Period, Principal Collections
and other amounts otherwise allocable to the Certificateholders' Interest of
such series or class will be
o paid to the seller,
o deposited to the Excess Funding Account, if any, for such series
or
o distributed to, or for the benefit of, the certificateholders of
other classes or series.
A Revolving Period for a series will begin on the date stated in the related
prospectus supplement (the "Series Cut-off Date") and end on the earlier of:
o the day immediately before the Accumulation Period commencement
date or the controlled amortization period commencement date for the
series and
o the day immediately before the day on which an Early Amortization
Event or a Reinvestment Event occurs with respect to the series.
If a series has more than one class of certificates, each class may have
a different Revolving Period.
The trust may use any of the following structures for paying principal on
a series or class of certificates. We will describe the actual structure for a
series or class in the related prospectus supplement.
A series may have an accumulation period (the "Accumulation Period").
The Accumulation Period will begin at the close of business on the date
specified in or determined in the manner specified in the prospectus
supplement and end on the earliest of:
o the beginning of a Reinvestment Period with respect to the series,
o the beginning of an Early Amortization Period with respect to the
series and
o payment in full of the outstanding principal amount of the series
certificates.
During the Accumulation Period for a series, Principal Collections and
other amounts allocable to the Certificateholders' Interest of such series,
which may include some Excess Principal Collections, will be deposited on each
distribution date in a trust account established for the benefit of the
certificateholders of such series (a "Principal Funding Account"). The amounts
in the Principal Funding Account, together with any amounts in the Excess
Funding Account allocable to the series, will be used to make principal
distributions to the certificateholders of the series when due. The amount to
be deposited in a Principal Funding Account for any series on any distribution
date may, but will not necessarily, be limited to the Controlled Deposit
Amount. The "Controlled Deposit Amount" is equal to an amount stated in the
related prospectus supplement plus, in the case of some distribution dates,
any amounts in the Excess Funding Account allocable to the series. If a series
has more than one class of certificates, each class may have a different
Accumulation Period and a separate Principal Funding Account and Controlled
Deposit Amount. Also, there may be priorities among the classes with respect
to deposits of principal into the Principal Funding Accounts.
A series may have a controlled amortization period (the "Controlled
Amortization Period"). The Controlled Amortization Period will begin at the
close of business on the date stated in or determined in the manner stated in
the related prospectus supplement and will end on the earliest of:
o the beginning of a Reinvestment Period with respect to the series,
o the beginning of an Early Amortization Period with respect to the
series and
o payment in full of the outstanding principal amount of the
certificates of that series.
During the Controlled Amortization Period for a series, Principal
Collections and other amounts allocable to the Certificateholders' Interest of
the series, which may include Excess Principal Collections and amounts in the
Excess Funding Account, will be used on each distribution date to make
principal distributions to any class of certificateholders of the series then
scheduled to receive distributions. The amount to be distributed to those
certificateholders may be limited to the Controlled Amortization Amount for
the series. If a series has more than one class of certificates, each class
may have a different Controlled Amortization Period and a separate Controlled
Amortization Amount. In addition, the related prospectus supplement may
describe priorities among the classes with respect to the distributions.
A series may have a reinvestment period (the "Reinvestment Period"). The
Reinvestment Period will begin on the day on which a Reinvestment Event has
occurred and end on the earliest of:
o the beginning of an Early Amortization Period with respect to the
series,
o the recommencement of the Revolving Period in accordance with the
related Series Supplement and
o payment in full of the outstanding principal amount of the
certificates of that series.
During the Reinvestment Period for a series, Principal Collections and
other amounts allocable to the Certificateholders' Interest of the series,
which may include some Excess Principal Collections, will be deposited on each
distribution date in a Principal Funding Account. The Funds in the Principal
Funding Account, together with any amounts in the Excess Funding Account
allocable to the series, will be used to make principal distributions to the
certificateholders of the series when due. The amount to be deposited in a
Principal Funding Account for any series on any distribution date will not be
limited to any Controlled Deposit Amount or Controlled Amortization Amount. If
a series has more than one class of certificates, each class may have a
separate Principal Funding Account and there may be priorities among the
classes with respect to deposits of principal into the Principal Funding
Accounts.
The "Early Amortization Period" for a series is the period beginning on
the day on which an Early Amortization Event has occurred with respect to the
series and ending on the earliest of:
o payment in full of the outstanding principal amount of the
certificates of that series,
o the recommencement of the Revolving Period in accordance with the
related Series Supplement and
o the Termination Date for the series.
During an Early Amortization Period for a series, its Revolving Period,
Reinvestment Period, Controlled Amortization Period or Accumulation Period, as
applicable, will end. Further, Principal Collections and some other amounts
allocable to the Certificateholders' Interest of that series will no longer be
paid to the seller or the holders of any other outstanding series or deposited
in a Principal Funding Account. Instead, they will be distributed as principal
payments to the applicable certificateholders of that series monthly on each
distribution date beginning with the distribution date following the
Collection Period in which that Early Amortization Period begins (each such
distribution date, a "Special Payment Date"). During an Early Amortization
Period for a series, distributions of principal to certificateholders of the
series will not be limited to any Controlled Deposit Amount or Controlled
Amortization Amount. In addition, on the first Special Payment Date with
respect to any series, to the extent stated in the related Series Supplement,
any funds on deposit in the Excess Funding Account, if any, with respect to
the series and any funds on deposit in the Principal Funding Account with
respect to that series will be paid to the certificateholders of the relevant
class or series up to the outstanding principal balance of the certificates of
that series or class. See "Reinvestment Events and Early Amortization Events"
for a discussion of the events which might lead to the beginning of an Early
Amortization Period with respect to a Series.
The trust may use any combination of the above described structures for
a series or class and may use any other principal payment structure set forth
in a prospectus supplement.
Funds on deposit in any Principal Funding Account will be invested in
Eligible Investments. The Eligible Investments may be subject to a guarantee
or guaranteed investment contract or other mechanism stated. The Eligible
Investments in the related prospectus supplement intended to assure a minimum
rate of return on the investment of the funds. To make it more likely that the
principal amount of a series or class of certificates will be paid in full at
the end of its Accumulation Period, the series or class may be subject to a
maturity liquidity facility or other similar mechanism stated in the relevant
prospectus supplement. A maturity liquidity facility is a financial contract
that generally provides that enough principal will be available to retire the
certificates at a specified date.
Certificates of a series or class may also be purchased from time to
time, generally at their respective principal amounts, in connection with a
remarketing thereof if so stated in the related prospectus supplement. A
purchase of certificates of a series or class may cause the outstanding
principal amount of series or class to decrease prior to the start of any
Controlled Amortization Period or Early Amortization Period. The prospectus
supplement for any series subject to purchase will describe the conditions to
and procedures for any purchase. The proceeds of any purchase would be paid to
the holders of the certificates so purchased.
BOOK-ENTRY REGISTRATION
Unless in the related prospectus supplement states otherwise,
certificateholders may hold certificates of a Series through DTC, in the
United States, or Clearstream Banking, societe anonyme ("Clearstream") or
Euroclear, in Europe, if they are participants of those systems, or indirectly
through organizations which are participants in those systems.
Cede, as nominee for DTC, will be the registered holder of the global
certificates. Except as described in this prospectus, no certificateholder
will be entitled to receive a certificate representing that person's interest
in the certificates. Unless and until Definitive Certificates are issued, all
references in this prospectus to actions by certificateholders shall refer to
actions taken by DTC upon instructions from its Participants. Also, all
references in this prospectus to distributions, notices, reports and
statements to certificateholders shall refer to distributions, notices,
reports and statements to Cede, as the registered holder of the certificates,
for distribution to the certificateholders in accordance with DTC procedures.
Clearstream and Euroclear will hold omnibus positions on behalf of their
participants through customers' securities accounts in Clearstream's and
Euroclear's names on the books of their respective depositaries. Those
depositaries will hold those positions in customers' securities accounts in
the depositaries' names on the books of DTC. Citibank, N.A. ("Citibank") will
act as depositary for Clearstream and Morgan Guaranty Trust Company of New
York ("Morgan") will act as depositary for Euroclear (in those capacities, the
"Foreign Agency Depositaries").
Transfers between DTC participants will occur in the ordinary way in
accordance with DTC rules. Transfers between Clearstream 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 Clearstream
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 Foreign Agency Depositary. Such cross-market transactions,
however, will require the counterparty in the relevant European international
clearing system to deliver instructions to the system in accordance with its
rules and procedures and within its European time deadlines. The relevant
European international clearing system will, if the transaction meets its
settlement requirements, deliver instructions to its Foreign Agency Depositary
to take action to effect final settlement on its behalf. The Foreign Action
Depositary will then deliver or receive securities in DTC, and make or receive
payment in accordance with normal procedures for same-day funds settlement
applicable to DTC. Clearstream Participants and Euroclear Participants may not
deliver instructions directly to the Foreign Agency Depositaries.
Because of time-zone differences, credits of securities received in
Clearstream or Euroclear as a result of a transaction with a DTC participant
will be made during subsequent securities settlement processing and dated the
business day following the DTC settlement date. Those credits or any
transactions in the securities settled during the processing will be reported
to the relevant Euroclear or Clearstream participant on that business day.
Cash received in Clearstream or Euroclear as a result of sales of securities
by or through a Clearstream Participant or a Euroclear Participant to a DTC
participant will be received with value on the DTC settlement date but will be
available in the relevant Clearstream or Euroclear cash account only as of the
business day following settlement in DTC. For additional information regarding
clearance and settlement procedures for the certificates, see Annex I. Also,
for information with respect to tax documentation procedures relating to the
certificates, see Annex I and "Certain Tax Matters -- Certain Federal Income
Tax Consequences -- Foreign Investors".
DTC is
o a limited-purpose trust company organized under the laws of the
State of New York,
o a member of the Federal Reserve System,
o a "clearing corporation" within the meaning of the UCC and
o a "clearing agency" registered pursuant to the provisions of
Section 17A of the Exchange Act.
DTC was created to hold securities for its participating organizations
("Participants") and facilitate the clearance and settlement of securities
transactions between Participants through electronic book-entry changes in
their accounts, eliminating the need for physical movement of certificates.
Participants include securities brokers and dealers, banks, trust companies
and clearing corporations and may include certain other organizations.
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").
Certificateholders that are not Participants or Indirect Participants
but desire to purchase, sell or otherwise transfer ownership of, or other
interests in, certificates may do so only through Participants and Indirect
Participants. In addition, certificateholders will receive all distributions
of principal of and interest on the certificates from the trustee through DTC
and its Participants. Under a book-entry format, certificateholders will
receive payments after the related distribution date because, while payments
are required to be forwarded to Cede, as nominee for DTC, on each such date,
DTC will forward such payments to its Participants which thereafter will be
required to forward them to Indirect Participants or certificateholders. It is
anticipated that the only "Certificateholder", as that term is used in the
Pooling and Servicing Agreement, will be Cede, as nominee of DTC, and that
certificateholders will not be recognized by the trustee as certificateholders
under the Pooling and Servicing Agreement. Certificateholders will only be
permitted to exercise the rights of certificateholders under the Pooling and
Servicing Agreement indirectly through DTC and its Participants who in turn
will exercise their rights through DTC.
Under the rules, regulations and procedures creating and affecting DTC
and its operations, DTC must make book-entry transfers among Participants on
whose behalf it acts with respect to the certificates and must receive and
transmit distributions of principal of and interest on the certificates.
Participants and Indirect Participants with which certificateholders have
accounts with respect to the certificates also must make book-entry transfers
and receive and transmit those payments on behalf of their respective
certificateholders.
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
certificateholder to pledge certificates to persons or entities that do not
participate in the DTC system, or otherwise take actions in respect of the
certificates, may be limited due to the lack of a physical certificate for the
certificates.
DTC has told the seller that it will take any action permitted to be
taken by a certificateholder under the Pooling and Servicing Agreement only at
the direction of one or more Participants to whose account with DTC the
certificates are credited.
Clearstream is incorporated under the laws of Luxembourg as a
professional depository. Clearstream holds securities for Clearstream
participants and facilitates the clearance and settlement of securities
transactions between Clearstream participants through electronic book-entry
changes in accounts of Clearstream participants, eliminating the need for
physical movement of certificates. Transactions may be settled in Clearstream
in any of 28 currencies, including United States dollars. Clearstream provides
to Clearstream participants, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. Clearstream interfaces with domestic
markets in several countries. As a professional depository, Clearstream is
subject to regulation by the Luxembourg Monetary Institute. Clearstream
participants are recognized financial institutions around the world, including
underwriters, securities brokers and dealers, banks, trust companies,
checkering corporations and other organizations. Indirect access to
Clearstream is also available to others, including banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
Clearstream 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, eliminating the need for
physical movement of certificates and any risk from lack of simultaneous
transfers of securities and cash. Transactions may now be settled in any of 27
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 described above. 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 S.C., a Belgian cooperative corporation (the
"Cooperative"). All operations are conducted by the Euroclear Operator, and
all Euroclear securities clearance accounts and Euroclear Clearance System
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 any underwriters, agents or dealers involved in
the distribution of the certificates. 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 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 Operative 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, withdrawals 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 on a fungible basis without
attribution of specific certificates 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 certificates held through Clearstream or
Euroclear will be credited to the cash accounts of Clearstream Participants or
Euroclear Participants in accordance with the relevant system's rules and
procedures, to the extent received by its Foreign Agency Depositary. The
distributions will be subject to tax reporting in accordance with relevant
United States tax laws and regulations. See "Certain Tax Matters". Clearstream
or the Euroclear Operator, as the case may be, will take any other action
permitted to be taken by a certificateholder under the Pooling and Servicing
Agreement or the applicable Series Supplement on behalf of a Clearstream
Participant or Euroclear Participant only in accordance with its relevant
rules and procedures and subject to its Foreign Agency Depositary's ability to
effect those actions on its behalf through DTC.
Although DTC, Clearstream and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of certificates among participants
of DTC, Clearstream and Euroclear, they are under no obligation to perform or
continue to perform such procedures and the procedures may be discontinued at
any time.
DEFINITIVE CERTIFICATES
Unless the related prospectus supplement states otherwise, the
certificates of a series or class will be issued in fully registered,
certificated form to certificateholders or their nominees ("Definitive
Certificates"), rather than to DTC or its nominee only if
o the seller advises the trustee in writing that DTC is no longer
willing or able to properly discharge its responsibilities as Depository
with respect to the certificates of such series or class and the seller
is unable to locate a qualified successor,
o the seller, at its option, chooses to end the book-entry system
through DTC with respect to such series or class or
o after a Service Default occurs, certificateholders representing
not less than 50% of the aggregate unpaid principal amount of the
certificates of such series or class advise the trustee and DTC through
Participants in writing that the continuation of a book-entry system
through DTC, or a successor to DTC, is no longer in the best interests of
the certificateholders.
If any of the events described in the immediately preceding paragraph
occurs, DTC must notify all Participants of the availability of Definitive
Certificates. When DTC surrenders the certificate or certificates representing
those certificates and gives instructions for re-registration, the trustee
will issue the certificates in the form of Definitive Certificates. After
doing so, the trustee will recognize the holders of the Definitive
Certificates as certificateholders under the Pooling and Servicing Agreement
("Holders"). In the event that Definitive Certificates are issued or DTC
ceases to be the clearing agency for any series or class of certificates, the
Pooling and Servicing Agreement provides that the applicable
certificateholders will be notified of such event.
The trustee will make distributions of principal of, and interest on,
the certificates directly to Holders in accordance with the procedures set
forth in this prospectus and in the Pooling and Servicing Agreement. On each
distribution date the trustee will make distributions to Holders in whose
names the Definitive Certificates were registered at the close of business on
the related record date. The trustee will make distributions by check mailed
to the address of the Holder as it appears on the register maintained by the
trustee. The trustee will make the final distribution on any Certificate,
whether Definitive Certificates or the certificate or certificates registered
in the name of Cede representing the certificates, however, only when the
certificate is presented and surrendered on the final payment date at the
office or agency that is specified in the notice of final distribution to
certificateholders. The trustee will provide that notice to registered
certificateholders not later than the fifth day of the month of the final
distribution.
Definitive Certificates will be transferable and exchangeable at the
offices of the trustee, which shall initially be 101 Barclay Street, New York,
New York 10286. The trustee will not impose any service charge for any
registration of transfer or exchange, but the trustee may require payment of a
sum sufficient to cover any tax or other governmental charge imposed in
connection with a transfer exchange.
THE SELLER'S CERTIFICATE
The Pooling and Servicing Agreement provides that the seller may, from
time to time, exchange a portion of the certificate evidencing the Seller's
Interest (the "Seller's Certificate") for another certificate (a "Supplemental
Certificate") for transfer or assignment to a person or entity chosen by the
seller upon the execution and delivery of a supplement to the Pooling and
Servicing Agreement, if
o the seller shall at the time of that exchange and after giving
effect to the exchange have an interest in the Pool Balance of not less
than 2% of the aggregate amount of the principal balances of the
receivables (the "Pool Balance"),
o the seller shall have delivered to the trustee, the Rating Agencies
and any Enhancement provider a Tax Opinion with respect to the exchange and
o the seller shall have delivered to the trustee written confirmation
from the applicable Rating Agencies that such exchange will not result in a
reduction or withdrawal of the rating of any outstanding series or class of
certificates. Any later transfer or assignment of a Supplemental
Certificate is also subject to the second and third conditions described in
the preceding sentence.
The seller may transfer a Supplemental Certificate to a securitization vehicle
that in turn issues asset-backed securities based on that Supplemental
Certificate.
NEW ISSUANCES
The Pooling and Servicing Agreement states that pursuant to one or more
Series Supplements, the trustee may issue two types of certificates:
o one or more series of certificates which are transferable and have
the characteristics described below and
o the Seller's Certificate (and any Supplemental Certificate) which
will evidence the Seller's Interest and will be transferable only upon
the satisfaction of certain conditions described under "The Seller's
Certificate"
The Pooling and Servicing Agreement also provides that, pursuant to one
or more Series Supplements, the seller may cause the trustee to issue one or
more new series. Under the Pooling and Servicing Agreement, the seller may
specify, among other things, with respect to any series:
o its name or designation,
o its initial principal amount, or method for calculating such
amount,
o its certificate rate, or the method for determining its
certificate rate,
o a date on which it will begin its Accumulation Period or
Controlled Amortization Period, if any,
o the method for allocating principal and interest to
certificateholders of such series,
o the percentage used to calculate monthly servicing fees,
o the issuer and terms of any Enhancement or the level of
subordination provided by the Seller's Interest,
o the terms on which the certificates of such series may be
exchanged for certificates of another Series, be subject to repurchase,
optional redemption or mandatory redemption by the seller or be
remarketed by any remarketing agent,
o the Series Termination Date and
o any other terms permitted by the Pooling and Servicing Agreement
(all such terms, the "Principal Terms" of the Series).
The seller may offer any series to the public under a prospectus or
other disclosure document in transactions either registered under the
Securities Act or exempt from registration thereunder, directly or through one
or more underwriters or placement agents. There is no limit to the number of
series that may be issued under the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement provides that the seller may specify
Principal Terms of a new series such that each series has a Controlled
Amortization Period or Accumulation Period which may have a different length
and begin on a different date than the Controlled Amortization Period or
Accumulation Period for any other series. Further, one or more series may be
in their Reinvestment Periods, Early Amortization Periods, Controlled
Amortization Periods or Accumulation Periods while other series are not. Thus,
certain series may be amortizing or accumulating principal, while other series
are not. Moreover, different series may have the benefits of different forms
of Enhancement issued by different entities. Under the Pooling and Servicing
Agreement, the trustee will hold each form of Enhancement only on behalf of
the series, or a particular class within a series, with respect to which it
relates, unless the related Series Supplement or Series Supplements state
otherwise. The Pooling and Servicing Agreement also states that the seller may
specify different certificate rates and Monthly Servicing Fees with respect to
each series, or a particular class. In addition, the seller has the option
under the Pooling and Servicing Agreement to vary among series, or classes
within a series, the terms upon which the seller may repurchase a series, or
classes within a series.
Under the Pooling and Servicing Agreement and pursuant to a Series
Supplement, a new series may be issued only if specified conditions are
satisfied. The seller may cause the issuance of a new series by notifying the
trustee at least five business days in advance of the applicable Series
Issuance Date. The notice shall state the designation of any series, and
classes within a series, if any. The Pooling and Servicing Agreement states
that the trustee will issue a new series only when it is delivered the
following:
o a Series Supplement in form satisfactory to the trustee signed by
the seller and the servicer and specifying the Principal Terms of the
series,
o the form of any Enhancement and any related agreement,
o an opinion of counsel to the effect that, for federal income and
Michigan income and single business tax purposes, (x) the issuance will
not adversely affect the characterization of the certificates of any
outstanding series or class as debt of the seller, (y) such issuance will
not cause a taxable event to any certificateholders (an opinion of
counsel to the effect referred to in clauses (x) and (y) with respect to
any action is referred to in this prospectus as a "Tax Opinion") and (z)
the new series will be characterized as debt of the seller, and
o written confirmation from the applicable Rating Agencies that the
issuance will not cause the rating of any outstanding series or class of
certificates to be reduced or withdrawn.
The issuance is also subject to the conditions that (a) the seller shall
have represented and warranted that the issuance shall not, in the reasonable
belief of the seller, cause an Early Amortization Event or Reinvestment Event
to occur with respect to any outstanding series and (b) after giving effect to
such issuance, the seller's interest in the Pool Balance shall not be less
than 2% of the Pool Balance. When all of these conditions are satisfied, the
trustee will issue the series.
CONVEYANCE OF RECEIVABLES AND COLLATERAL SECURITY
CARCO, USA and/or DCWR, as applicable, has sold and assigned or will sell
and assign to the trust
o all of its right, title and interest in and to the receivables and
the related Collateral Security as of the Initial Cut-Off Date,
o all receivables thereafter created in the Accounts,
o its interests in the related Collateral Security and the
Receivables Purchase Agreement and
o the proceeds of all of the foregoing.
The "Collateral Security" in respect of the receivables is a security interest
in certain vehicles and certain parts inventory, equipment, fixtures, service
accounts and, in some cases, realty and a personal guarantee.
DCWR and CFC must indicate in their computer records that the
receivables in the Accounts and the related Collateral Security have been
conveyed to the trust. In addition, the seller must provide to the trustee a
computer file or microfiche or written list containing a true and complete
list showing for each Account, as of the Initial Cut-Off Date and the
applicable Additional Cut-Off Date,
o its account number,
o the outstanding balance of the receivables in the Account and
o the outstanding balance of Principal Receivables in the Account.
CFC will retain and will not deliver to the trustee any other records or
agreements relating to the receivables. Except as set forth above, the records
and agreements relating to the receivables have not and will not be segregated
from those relating to other accounts of CFC, and the physical documentation
relating to the receivables has not and will not be stamped or marked to
reflect the transfer of the receivables to the trust. The seller will file one
or more financing statements in accordance with applicable state law to
perfect the trust's interest in the receivables, the Collateral Security, the
Receivables Purchase Agreement and the proceeds thereof. See "Risk Factors"
and "Certain Legal Aspects of the Receivables."
As contemplated above and as described below under "Addition of
Accounts", the seller has the right, subject to certain limitations and
conditions, and in some circumstances is obligated, to designate from time to
time additional accounts to be included as Additional Accounts, to purchase
from CFC the receivables then existing or thereafter created in such
Additional Accounts and to convey such receivables to the trust. Each
Additional Account must be an Eligible Account. In respect of any conveyance
of receivables in Additional Accounts, the seller will follow the procedures
set forth in the preceding paragraph, except the list will show information
for such Additional Accounts as of the date such Additional Accounts are
identified and selected (the "Additional Cut-Off Date").
REPRESENTATIONS AND WARRANTIES
The seller will represent and warrant to the trust, among other things,
that
o as of each Series Cut-Off Date, and the date of issuance of any
series (a "Series Issuance Date"), or, in the case of the Additional
Accounts, as of the Additional Cut-Off Date and the date the related
receivables are transferred to the trust (an "Addition Date"), each Account
or Additional Account was an Eligible Account,
o as of the Series Cut-Off Date, or as of the Additional Cut-Off
Date, in the case of any Additional Accounts, or as of the date any future
receivable is generated (a "Transfer Date"), each receivable is an Eligible
Receivable or, if such receivable is not an Eligible Receivable, such
receivable is conveyed to the trust as described below under "Ineligible
Receivables, the Installment Balance Amount and the Overconcentration
Amount",
o each receivable and all Collateral Security conveyed to the trust
on the Transfer Date or, in the case of Additional Accounts, on the
Addition Date, and all of the seller's right, title and interest in the
Receivables Purchase Agreement, have been conveyed to the trust free and
clear of any liens and
o all appropriate consents and governmental authorizations required
to be obtained by the seller in connection with the conveyance of each such
receivable or Collateral Security have been duly obtained.
If the seller breaches any representation and warranty described in this
paragraph and the breach remains uncured for 30 days or a longer period as may
be agreed to by the trustee, after the earlier to occur of the discovery of
such breach by the seller or the servicer or receipt of written notice of such
breach by the seller or the servicer, and such breach has a materially adverse
effect on the Certificateholders' Interest in any receivable or Account, the
Certificateholders' Interest in such receivable or, in the case of a breach
relating to an Account, all receivables in the related Account ("Ineligible
Receivables") will be reassigned to the seller on the terms and conditions set
forth below and the Account shall no longer be included as an Account.
Each such receivable shall be reassigned to the seller on or before the
end of the Collection Period in which such reassignment obligation arises by
the seller directing the servicer to deduct the principal balance of the
receivable from the Pool Balance. A deduction may cause the Pool Balance minus
the aggregate Invested Amounts for all outstanding series (the "Seller's
Participation Amount") to be less than the aggregate Available Subordinated
Amounts for all outstanding series (the "Trust Available Subordinated Amount")
on the second business day preceding the distribution date (each second
business day preceding a Distribution Day, a "Determination Date"), after
giving effect to the allocations, distributions, withdrawals and deposits to
be made on such distribution date. If this happens, the seller must make a
deposit into the Collection Account in immediately available funds in an
amount equal to the amount by which the Seller's Participation Amount would be
less than the Trust Available Subordinated Amount (that amount, a "Transfer
Deposit Amount"). If the Transfer Deposit Amount is not so deposited, the
principal balance of the related receivables will be deducted from the Pool
Balance only to the extent the Seller's Participation Amount is not reduced
below the Trust Available Subordinated Amount. Any principal balance not so
deducted will not be reassigned and will remain part of the trust. The
reassignment of any receivable to the seller and the payment of any related
Transfer Deposit Amount will be the sole remedy for any breach of the
representations and warranties described in the preceding paragraph with
respect to the receivable available to certificateholders or the trustee on
behalf of certificateholders.
The seller will also represent and warrant to the trust that, among
other things, as of each Series Issuance Date
o it is duly formed as a limited liability company and in good
standing, it has the authority to consummate the transactions contemplated
by the Pooling and Servicing Agreement and the Pooling and Servicing
Agreement constitutes a valid, binding and enforceable agreement of the
seller, and
o the Pooling and Servicing Agreement constitutes a valid sale,
transfer and assignment to the trust of all right, title and interest of
the seller in the receivables and the Collateral Security, whether then
existing or thereafter created, the Receivables Purchase Agreement, and the
proceeds thereof, including proceeds in any of the accounts established for
the benefit of the certificateholders of any series, subject to the rights
of the Purchasers with respect to some of the Collateral Security, under
the UCC as then in effect in the State of Michigan, which is effective as
to each receivable existing on the Initial Closing Date, or as of the
Addition Date, if applicable, or, as to each receivable arising thereafter,
upon the creation thereof and until termination of the trust.
In the event that a breach of any of the representations and warranties
described in this paragraph has a materially adverse effect on the
Certificateholders' Interest in the receivables, either the trustee or the
holders of certificates of all outstanding series evidencing not less than a
majority of the aggregate unpaid principal amount of all outstanding series,
by written notice to the seller and the servicer, and to the trustee and the
issuer or provider of any Enhancement if given by certificateholders, may
direct the seller to accept the reassignment of the Certificateholders'
Interest of all series within 60 days of the notice, or within a longer period
specified in the notice. The seller must accept the reassignment of the
Certificateholders' Interest on a distribution date occurring within the
60-day period. However, the reassignment need not be made if at the end of the
applicable period, the representations and warranties shall then be true and
correct in all material respects and any materially adverse effect caused by
the breach shall have been cured. The price for the reassignment will
generally be equal to the sum of:
o the aggregate "Invested Amounts", as specified in the related
Series Supplements, of all series on the Determination Date preceding the
distribution date on which the purchase is scheduled to be made,
o accrued and unpaid interest on the unpaid principal amount of the
certificates at the applicable certificate rate (together with interest on
overdue interest) and
o with respect to any particular series, any other amounts stated in
its Series Supplement.
The payment of the reassignment price for all outstanding series will be
considered a payment in full of the Certificateholders' Interest. Those funds
will be distributed to the certificateholders entitled thereto upon
presentation and surrender of the certificates. If the trustee or the
certificateholders give a notice as provided above, the obligation of the
seller to make any such deposit will constitute the sole remedy respecting a
breach of the representations and warranties available to certificateholders
or the trustee on behalf of the certificateholders.
DCWR will be deemed to have made all the representations and warranties
of the seller in the Pooling and Servicing Agreement and in any Series
Supplement with respect to any series or class of certificates.
ELIGIBLE ACCOUNTS AND ELIGIBLE RECEIVABLES
An "Eligible Account" is a wholesale financing line of credit extended
by CFC, directly or as successor to CFC Corp. or CCC, to a Dealer, which, as
of its date of determination:
o is established by CFC, directly or as successor to CFC Corp. or
CCC, in the ordinary course of business pursuant to a floorplan financing
agreement,
o is in favor of an Eligible Dealer,
o is in existence and maintained and serviced by CFC, directly or as
successor to CFC Corp. or CCC, and
o in respect of which no amounts have been charged off as
uncollectible or are classified as past due or delinquent.
An "Eligible Dealer" is a Dealer:
o which is located in the United States of America, including its
territories and possessions,
o which has not been identified by the servicer as being the subject
of any voluntary or involuntary bankruptcy proceeding or in voluntary or
involuntary liquidation,
o in which DaimlerChrysler or any affiliate of DaimlerChrysler does
not have an equity investment and
o which has not been classified by the servicer as being under
Dealer Trouble status.
An "Eligible Receivable" is a receivable:
o which was originated or acquired by CFC, directly or as successor
to CFC Corp. or CCC, in the ordinary course of business,
o which has arisen under an Eligible Account and is payable in
United States dollars,
o which is owned by CFC, CFC Corp. or CCC at the time of sale to the
seller,
o which represents the obligation of a Dealer to repay an advance
made to the Dealer to finance the acquisition of vehicles,
o which at the time of creation and at the time of transfer to the
trust is secured by a perfected first priority security interest in the
related vehicle,
o which was created in compliance in all respects with all
requirements of law applicable thereto and pursuant to a floorplan
financing agreement which complies in all respects with all requirements
of law applicable to any party thereto,
o with respect to which all consents and governmental authorizations
required to be obtained by DaimlerChrysler, CCC, CFC Corp., CFC or the
seller in connection with the creation of the receivable or the transfer
thereof to the trust or the performance by CCC, CFC Corp. or CFC of the
floorplan financing agreement pursuant to which the receivable was
created, have been duly obtained,
o as to which at all times following the transfer of the receivable
to the trust, the trust will have good and marketable title thereto free
and clear of all liens arising prior to the transfer or arising at any
time, other than liens permitted pursuant to the Pooling and Servicing
Agreement,
o which has been the subject of a valid transfer and assignment from
the seller to the trust of all the seller's interest therein, including
any proceeds thereof,
o which will at all times be the legal and assignable payment
obligation of the related Dealer, enforceable against the Dealer in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy or other similar laws,
o which at the time of transfer to the trust is not subject to any
right of rescission, setoff, or any other defense, including defenses
arising out of violations of usury laws, of the Dealer,
o as to which, at the time of transfer of such Receivable to the
trust, DaimlerChrysler, CCC, CFC Corp., CFC and the seller have satisfied
all their respective obligations with respect to the Receivable required
to be satisfied at that time,
o as to which, at the time of transfer of such Receivable to the
trust, neither DaimlerChrysler, CCC, CFC Corp. or CFC nor the seller has
taken or failed to take any action which would impair the rights of the
trust or the certificateholders,
o which constitutes "chattel paper" as defined in Article 9 of the
UCC as then in effect in the State of Michigan and
o which was transferred to the trust with all applicable
governmental authorization.
The trustee did not and it is not required or anticipated that the
trustee will make any initial or periodic general examination of the
receivables or any records relating to the receivables for the purpose of
establishing the presence or absence of defects, compliance with
representations and warranties of the seller or for any other purpose. Also,
it is not anticipated or required that the trustee will make any initial or
periodic general examination of the servicer for the purpose of establishing
the compliance by the servicer with its representations or warranties, the
observation of its obligations under the Pooling and Servicing Agreement or
for any other purpose. The servicer, however, will deliver to the trustee on
or before March 31 of each calendar year, an opinion of counsel with respect
to the validity of the interest of the trust in and to the receivables and
other components of the trust.
INELIGIBLE RECEIVABLES, THE INSTALLMENT BALANCE AMOUNT
AND THE OVERCONCENTRATION AMOUNT
For the purpose of facilitating the administration and reporting
requirements of the servicer under the Pooling and Servicing Agreement, all
Ineligible Receivables arising in an Eligible Account shall be transferred to
the trust. If, however, the Series Supplement for a series so states, the
Incremental Subordinated Amount for the series will be adjusted by the portion
of the aggregate principal amount of receivables included in the series
allocable to the Certificateholders' Interest of the series. Also, if the
Series Supplement for a series so states, the Incremental Subordinated Amount
for the series shall be adjusted to reflect, on each distribution date,
o the aggregate principal amount of receivables in the trust on such
distribution date which are Dealer Overconcentrations (the
"Overconcentration Amount") allocable to the Certificateholders' Interest
of the series and
o the portion of the aggregate amount of Installment Balances in
respect of which CFC has not received an offsetting payment from the
related Dealer on such distribution date (the "Installment Balance Amount")
allocable to the Certificateholders' Interest of the series.
As used in this prospectus, "Dealer Overconcentrations" on any
distribution date means, with respect to any Dealer or group of affiliated
Dealers, the excess of (x) the aggregate principal amount of receivables due
from the Dealer or group of affiliated Dealers on the last day of the
Collection Period immediately preceding such distribution date over (y) 2% of
the Pool Balance on the last day of the immediately preceding Collection
Period.
ADDITION OF ACCOUNTS
Subject to the conditions described below, the seller has the right to
designate from time to time additional accounts to be included as Accounts
(the "Additional Accounts"). Also, the seller must add the receivables of
Additional Accounts if the Pool Balance on the last day of any Collection
Period is less than the Required Participation Amount as of the following
distribution date, after giving effect to the allocations, distributions,
withdrawals and deposits to be made on such distribution date. In that case,
unless certain insolvency events have occurred with respect to the seller, CFC
or DaimlerChrysler, CFC under the Receivables Purchase Agreement must sell to
the seller, and the seller under the Pooling and Servicing Agreement must
transfer and assign to the trust, within 10 business days after the end of
such Collection Period, interests in all receivables arising in such
Additional Accounts, whether the receivables are then existing or thereafter
created. Any designation of Additional Accounts is subject to the following
conditions, among others:
o each Additional Account must be an Eligible Account;
o the seller shall represent and warrant that the addition of the
Additional Accounts shall not, in the reasonable belief of the seller,
cause an Early Amortization Event or Reinvestment Event to occur with
respect to any series;
o the seller shall not select such Additional Accounts in a manner
that it believes is adverse to the interests of the certificateholders or
any Enhancement provider;
o if the addition is not required, the seller shall deliver a Tax
Opinion and certain other opinions of counsel with respect to the
addition of such Additional Accounts to the trustee, the Rating Agencies
and any Enhancement provider; and
o the applicable Rating Agencies shall have provided written
confirmation that the addition will not cause the rating of any
outstanding series or class of certificates to be reduced or withdrawn.
Notwithstanding the foregoing, the seller may from time to time, at its
discretion, and subject only to the limitations specified in this paragraph,
designate Additional Accounts. (Additional Accounts designated in accordance
with the provisions described in this paragraph are referred to herein as
"Automatic Additional Accounts".) Unless each Rating Agency otherwise
consents, the number of Automatic Additional Accounts designated with respect
to any of the three consecutive Collection Periods beginning in January,
April, July and October of each calendar year shall not exceed 8% of the
number of Accounts as of the first day of the calendar year during which the
Collection Periods begin and the number of Automatic Additional Accounts
designated during any calendar year shall not exceed 20% of the number of
Accounts as of the first day of the calendar year. On or before the first
business day of each Collection Period beginning in January, April, July and
October of each calendar year, the seller shall have requested and obtained
notification from each Rating Agency of any limitations to the right of the
seller to designate Eligible Accounts as Automatic Additional Accounts during
any period which includes the Collection Period. On or before January 31,
April 30, July 31 and October 31 of each calendar year, the trustee shall have
received confirmation from each Rating Agency that the addition of all
Automatic Additional Accounts included as Accounts during the three
consecutive Collection Periods ending in the calendar month prior to that date
shall not have resulted in any applicable Rating Agency reducing or
withdrawing its rating of any outstanding series or class of certificates. On
or before January 31 and July 31 of each calendar year, or on or before the
last day of each month in certain circumstances, the seller shall have
delivered to the trustee, each Rating Agency and any Enhancement provider an
opinion of counsel with respect to the Automatic Additional Accounts included
as Accounts during the preceding calendar year confirming the validity and
perfection of each transfer of that Automatic Additional Accounts. If the
Rating Agency confirmation or opinion of counsel with respect to any Automatic
Additional Accounts is not so received, the Automatic Additional Accounts will
be removed from the trust.
Each Additional Account, including each Automatic Additional Account,
must be an Eligible Account at the time of its addition. However, since
Additional Accounts may not have been a part of the initial portfolio of CCC,
CFC Corp. or CFC, they may not be of the same credit quality as the initial
Accounts. Additional Accounts may have been originated by CCC, CFC Corp. or
CFC at a later date using credit criteria different from those which were
applied to the initial Accounts or may have been acquired by CCC, CFC Corp. or
CFC from another wholesale lender that had different credit criteria. In
addition, the seller will be permitted to designate as Additional Accounts
accounts which contain receivables that have been sold or pledged to third
parties. Following, however, the applicable Additional Cut-Off Date, no
receivables thereafter arising in any such accounts shall be sold or pledged
to any third parties.
"Required Participation Amount" for any date is an amount equal to
the sum of:
o the sum of the amounts for each series obtained by multiplying the
Required Participation Percentage for the series by the Initial Invested
Amount for the series at that time. However, each Excluded Series will be
excluded from this calculation until the Invested Amount of the related
Paired Series is reduced to zero; and
o the Trust Available Subordinated Amount on the immediately
preceding Determination Date, after giving effect to the allocations,
distributions, withdrawals and deposits to be made on the distribution
date following such Determination Date.
"Required Participation Percentage" for a series will be specified
in the related Series Supplement.
REMOVAL OF ACCOUNTS
The seller shall have the right at any time to require the removal from
the trust of Eligible Accounts. To remove any Eligible Account, the seller, or
the servicer on its behalf, shall, among other things,
o furnish to the trustee, any Enhancement provider and the Rating
Agencies a written notice (the "Removal Notice") stating the
Determination Date on which removal of one or more Accounts will commence
(a "Removal Commencement Date") and the Accounts to be removed from the
trust (the "Designated Accounts"),
o determine on the Removal Commencement Date the aggregate principal
balance of receivables in respect of each the Designated Account (the
"Designated Balance"),
o from and after the Removal Commencement Date, cease to transfer to
the trust all receivables arising in the Designated Accounts,
o from and after the Removal Commencement Date, allocate all
Principal Collections in respect of each Designated Account, first to the
oldest outstanding principal balance of the Designated Account, until the
Determination Date on which the Designated Balance in the Designated
Account is reduced to zero (the "Removal Date"),
o on each business day from and after the Removal Commencement Date
to and until the related Removal Date, allocate (i) to the trust, to be
further allocated pursuant to the Pooling and Servicing Agreement,
Interest Collections in respect of each Designated Account with respect
to receivables in all Designated Accounts sold to the trust and (ii) to
the seller the remainder of the Interest Collections in all of those
Designated Accounts,
o represent and warrant that the removal of any Eligible Account on
any Removal Date shall not, in the reasonable belief of the seller, cause
an Early Amortization Event or Reinvestment Event to occur with respect
to any Series or cause the Pool Balance to be less than the Required
Participation Amount,
o represent and warrant that no selection procedures believed by the
seller to be adverse to the interests of the certificateholders were
utilized in selecting the Designated Accounts,
o represent and warrant that the removal will not cause the rating
of any outstanding series or class of certificates to be reduced or
withdrawn and
o on or before the related Removal Date, deliver to the trustee and
any Enhancement provider an officers' certificate confirming the items
set forth in the sixth, seventh and eighth clauses above and a Tax
Opinion with respect to the removal.
No Designated Accounts shall be removed if such removal will cause the
rating of any outstanding series or class of certificates to be reduced or
withdrawn.
On any date on which an Account becomes an Ineligible Account, which
date will be deemed the Removal Commencement Date for such Account, the seller
will start the removal of the Account from the trust by taking each of the
actions specified in the first five clauses of the preceding paragraph with
respect to the Ineligible Account.
Upon satisfaction of the above conditions, on the Removal Date with
respect to any the Designated Account, the seller will stop allocating
collections of receivables to the Designated Account and it shall be deemed
removed from the trust for all purposes (a "Removed Account").
In addition to the removal rights described above, the seller shall have
the right at any time to remove Accounts from the trust and, in connection
therewith, repurchase the then existing receivables in the Accounts. To remove
Accounts and repurchase the then existing receivables in the Accounts, the
seller, or the servicer on its behalf, shall, among other things:
o furnish to the trust, each Enhancement provider and the Rating
Agencies a Removal Notice stating the Designated Accounts which are to be
removed, and the then existing receivables in the Designated Accounts (the
"Designated Receivables") which are to be repurchased from the trust and
the Determination Date on which the removal of the Designated Accounts and
the purchase of the Designated Receivables will occur (a "Removal and
Repurchase Date"),
o deliver to the trustee on the Removal and Repurchase Date a
computer file or microfiche or written list containing a true and complete
list of the Removed Accounts stating for each Account its account number
and the aggregate amount of receivables outstanding in the Account,
o represent and warrant that the removal of any Eligible Account and
the repurchase of the receivables then existing in the Account on any
Removal and Repurchase Date shall not, in the reasonable belief of the
seller, cause an Early Amortization Event or Reinvestment Event to occur
with respect to any Series or cause the Pool Balance to be less than the
Required Participation Amount,
o represent and warrant that no selection procedures believed by the
seller to be adverse to the interests of the certificateholders were used
in selecting the Designated Accounts,
o represent and warrant as of the Removal and Repurchase Date that
the list of Removed Accounts delivered pursuant to the second clause above,
as of the Removal and Repurchase Date, is true and complete in all material
respects,
o represent and warrant that such removal and repurchase will not
cause the rating of any outstanding series or class of certificates to be
reduced or withdrawn by the applicable Rating Agency,
o deliver to the trustee, each Rating Agency and any Enhancement
providers a Tax Opinion, dated the Removal and Repurchase Date, with
respect to the removal and repurchase, and
o deliver to the trustee and any Enhancement providers an officers'
certificate confirming the items set forth in the fourth through seventh
clauses above.
No Designated Accounts shall be removed and no Designated Receivables
shall be repurchased unless each Rating Agency shall have notified the seller,
the servicer and the trustee in writing that the removal and repurchase will
not cause the Rating Agency's rating of any outstanding series or class of
certificates to be reduced or withdrawn.
Upon satisfaction of the above conditions, on the Removal and Repurchase
Date with respect to any Designated Account and Designated Receivables, the
Designated Account shall be deemed removed, and the Designated Receivables
("Repurchased Receivables") shall be deemed repurchased, from the trust for
all purposes.
On each distribution date, any amounts on deposit in the Collection
Account on the distribution date resulting from payment by the seller of the
Repurchased Receivables Purchase Price will be applied first, to fund any
unpaid Miscellaneous Payment due on or prior to such distribution date.
Second, an amount equal to the product of (i) the amount of any Repurchased
Receivables Purchase Price initially deposited by the seller in the Collection
Account pursuant to the repurchase and (ii) the Monthly Payment Rate for the
immediately preceding Collection Period, shall be treated as Principal
Collections collected in the immediately preceding Collection Period. The
"Monthly Payment Rate" for a Collection Period is the percentage obtained by
dividing Principal Collections for such Collection Period by the daily average
Pool Balance for such Collection Period.
Notwithstanding the provisions described above, the seller shall have
the right to require the reassignment to it of all the trust's right, title
and interest in, to and under the receivables then existing and thereafter
created, all monies due or to become due and all amounts received with respect
thereto and all proceeds thereof in or with respect to the Accounts
("Automatic Removed Accounts") designated by the seller, upon satisfaction of
the following conditions:
o on or before the fifth business day immediately preceding the date
upon which the Accounts are to be removed, the seller shall have given the
trust, each Enhancement provider and the Rating Agencies a Removal Notice
specifying the date for removal of the Automatic Removed Accounts (the
"Automatic Removal Date");
o on or prior to the date that is five business days after the
Automatic Removal Date, the seller shall have delivered to the trustee a
computer file or microfiche or written list containing a true and complete
list of the Automatic Removed Accounts stating for each Account, as of the
removal notice date, its account number and the aggregate amount of
receivables outstanding in the Account;
o the seller shall have represented and warranted as of each
Automatic Removal Date that the list of Automatic Removed Accounts
delivered pursuant to the second clause above, as of the Automatic Removal
Date, is true and complete in all material respects;
o the trustee shall have received confirmation from each Rating
Agency that such removal will not cause such Ratings Agency's rating of any
outstanding series or class of certificates to be reduced or withdrawn;
o the seller shall have delivered to the trustee, each Rating Agency
and any Enhancement providers an officers' certificate, dated the Automatic
Removal Date, to the effect that the seller reasonably believes the such
removal will not cause an Early Amortization Event or Reinvestment Event to
occur with respect to any series; and
o the seller shall have delivered to the trustee, each Rating Agency
and any Enhancement providers a Tax Opinion, dated the Automatic Removal
Date, with respect to such removal.
Notwithstanding the provisions described above, from and after the date
on which no series issued prior to March 10, 1999, is outstanding, the
conditions specified in the first clause above that relate to Enhancement
providers and Rating Agencies and the conditions specified in the fourth,
fifth and sixth clauses above will not be required if all of the Accounts to
be removed have liquidated and have zero balances.
Upon satisfaction of the above conditions, on the Automatic Removal Date
all the right, title and interest of the trust in and to the receivables
arising in the Automatic Removed Accounts, all monies due and to become due
and all amounts received with respect thereto and all proceeds thereof shall
be deemed removed from the trust for all purposes.
EXCLUDED SERIES
A series of certificates may be designated as an excluded series (an
"Excluded Series") with respect to a series of certificates previously issued
by the trust as to which the Accumulation Period or Controlled Amortization
Period has commenced (a "Paired Series").
Each Excluded Series will be prefunded with an initial deposit to a
prefunding account in an amount equal to the initial principal balance of the
Excluded Series and primarily from the proceeds of the offering of the
Excluded Series. Any prefunding account will be held for the benefit of the
Excluded Series and not for the benefit of the Paired Series. As funds are
accumulated in the Principal Funding Account for the Paired Series or
distributed to holders of certificates of the Paired Series, an equal amount
of funds on deposit in any prefunding account for the Excluded Series will be
released and distributed to the seller. Until payment in full of the Paired
Series, no Interest Collections, Principal Collections, Defaulted Amounts or
Miscellaneous Payments will be allocated to the related Excluded Series. In
addition, it is expected that any Excluded Series will be excluded from the
calculation of the Required Participation Amount as described under " --
Addition of Accounts".
COLLECTION ACCOUNT
The servicer has established and will maintain an Eligible Deposit
Account for the benefit of the certificateholders in the name of the trustee,
on behalf of the trust (the "Collection Account"). "Eligible Deposit Account"
means either
o a segregated account with an Eligible Institution or
o a segregated trust account with the corporate trust department of
a depository institution organized under the laws of the United States or
any one of the states thereof, or any domestic branch of a foreign bank,
having corporate trust powers and acting as trustee for funds deposited
in such account, so long as any of the securities of the depository
institution has a credit rating from each Rating Agency in one of its
generic rating categories which signifies investment grade.
"Eligible Institution" means
o the corporate trust department of the trustee or
o a depository institution organized under the laws of the United
States or any one of the states thereof, or the District of Columbia, or
a domestic branch of a foreign bank, which at all times (i) has either
(x) a long-term unsecured debt rating of A2 or better by Moody's
Investors Service, Inc. ("Moody's") and of AAA or better by Standard &
Poor's Ratings Services, a division of The McGraw-Hill Companies
("Standard & Poor's") or (y) a certificate of deposit rating of P-1 by
Moody's or A-1+ by Standard & Poor's and (ii) is a member of the FDIC.
Funds in the Collection Account generally will be invested in Eligible
Investments.
o "Eligible Investments" are book-entry securities, negotiable
instruments or physical securities having original or remaining
maturities of 30 days or less, but in no event occurring later than the
distribution date next succeeding the trustee's acquisition thereof,
except as otherwise provided in the related Series Supplement. Eligible
Investments are limited to:
o direct obligations of, and obligations fully guaranteed as to
timely payment by, the United States of America;
o demand deposits, time deposits or certificates of deposit of any
depositary institution or trust company incorporated under the laws of
the United States of America or any state thereof, or any domestic branch
of a foreign bank, and subject to supervision and examination by Federal
or state banking or depository institution authorities. However, at the
time of the trust's investment or contractual commitment to invest
therein, the commercial paper or other short-term unsecured debt
obligations, other than such obligations the rating of which is based on
the credit of a person or entity other than such depository institution
or trust company, thereof shall have a credit rating from each of the
Rating Agencies in its highest investment category;
o commercial paper having, at the time of the trust's investment or
contractual commitment to invest therein, a rating from each of the
Rating Agencies in its highest investment category;
o except during a Reinvestment Period with respect to any series,
investments in money market funds having a rating from each of the Rating
Agencies in its highest investment category or otherwise approved in
writing thereby;
o bankers' acceptances issued by any depository institution or trust
company referred to in the second clause of this sentence;
o certain repurchase obligations, including those of appropriately
rated broker-dealers and financial institutions; and
o any other investment consisting of a financial asset that by its
terms converts to cash within a finite period of time, provided that each
Rating Agency shall have notified the seller, the servicer and the
trustee that the trust's investment therein will not cause its then
rating of any outstanding class or series with respect to which it is a
Rating Agency to be reduced or withdrawn.
Any earnings, net of losses and investment expenses, on funds in the
Collection Account will be credited to the Collection Account. The servicer
will have the revocable power to instruct the trustee to make withdrawals and
payments from the Collection Account for the purpose of carrying out its
duties under the Pooling and Servicing Agreement. The servicer may select an
appropriate agent as representative of the servicer for the purpose of
choosing such investments.
EXCESS FUNDING ACCOUNT
Except, to the extent provided in the related Series Supplement, during
an Early Amortization Period or Reinvestment Period for a series, the Excess
Funded Amount, if any, for that series will be maintained in an Eligible
Account (the "Excess Funding Account") established with the trustee for the
series. The "Excess Funded Amount" for a series will initially equal the
excess, if any, of the initial principal balance of the certificates of the
series over the Initial Invested Amount thereof. Funds on deposit in the
Excess Funding Account for a series will be invested by the trustee at the
direction of the servicer generally in Eligible Investments. Such investments
must mature on or prior to the next distribution date. The servicer may select
an agent for the purpose of designating the investments.
Funds on deposit in the Excess Funding Account for a series will be
withdrawn and paid to the seller or allocated to one or more other series
which are in Controlled Amortization, Early Amortization, Reinvestment or
Accumulation Periods to the extent of any increases in the Invested Amount of
the series in question as a result of the addition of receivables to the
trust, a reduction in the Seller's Interest, or a reduction in the Initial
Invested Amount of any other series. Additional amounts will be deposited in
the Excess Funding Account for a series on a distribution date to the extent
that the sum of the Certificateholders' Interest of such series in Principal
Receivables and the amount on deposit in the Excess Funding Account, if any,
for such series prior to the deposit on such distribution date is less than
the outstanding principal balance of the certificates of the series, but only
to the extent that funds are available as provided in the related Series
Supplement. The allocation of additional receivables to increase the Invested
Amount of each series that provides for an Excess Funding Account or similar
arrangement involving fluctuating levels of investment in the receivables will
generally be based on the proportion that the amount on deposit in the Excess
Funding Account for that series bears to the amounts on deposit in the Excess
Funding Accounts of all series providing for Excess Funding Accounts or such
similar arrangements or to amounts otherwise similarly available. The deposit
of amounts in the Excess Funding Accounts for each such series will be based
on the proportion that the Adjusted Invested Amount of that series bears to
the Adjusted Invested Amounts of all series providing for Excess Funding
Accounts or such similar arrangements.
On each distribution date, all investment income earned on amounts in
the Excess Funding Account for any series since the preceding distribution
date will be withdrawn from such Excess Funding Account and applied as
described herein and in the related prospectus supplement.
Funds on deposit in the Excess Funding Account for a series on the
earliest of
o the commencement of a Reinvestment Period with respect to the
series,
o the commencement of an Early Amortization Period with respect to
the series and
o the distribution date or distribution dates specified in or
determined in the manner provided in the Series Supplement for the series
will be distributed to the certificateholders of the series or a class thereof
or deposited in the Principal Funding Account for the series or a class
thereof, in each case if and to the extent the related Series Supplement so
states. Also, except as otherwise provided in the related Series Supplement,
no funds will be deposited in the Excess Funding Account for a series during
any Early Amortization Period or Reinvestment Period with respect to the
series or with respect to any Collection Period following the Collection
Period stated in or determined in the manner provided in the Series Supplement
for the series.
ALLOCATION PERCENTAGES
Allocations among Series. Pursuant to the Pooling and Servicing
Agreement, during each Collection Period the servicer will allocate to each
outstanding Series its share of Interest Collections, Principal Collections,
Defaulted Receivables and Miscellaneous Payments based on the applicable
Series Allocable Interest Collections, Series Allocable Principal Collections,
Series Allocable Defaulted Amount and Series Allocable Miscellaneous Payments.
"Series Allocable Interest Collections", "Series Allocable Principal
Collections", "Series Allocable Defaulted Amount" and "Series Allocable
Miscellaneous Payments" are, with respect to any series of certificates
for any Collection Period, the product of the Series Allocation
Percentage for the series and the amount of Interest Collections and
Principal Collections, the Defaulted Amount and Miscellaneous Payments,
respectively, with respect to the Collection Period.
"Miscellaneous Payments" for any Collection Period are the sum of
o Adjustment Payments and Transfer Deposit Amounts received
with respect to the Collection Period and
o Unallocated Principal Collections on the distribution date
available to be treated as Miscellaneous Payments as described below
under "Principal Collections for all Series".
"Series Allocation Percentage" is, with respect to a series for any
Collection Period, the percentage equivalent of a fraction, the numerator
of which is the Adjusted Invested Amount of the series as of the last day
of the immediately preceding Collection Period and the denominator of
which is the Trust Adjusted Invested Amount as of that last day.
"Adjusted Invested Amount" is, with respect to a series for any date, an
amount equal to the sum of
o the Initial Invested Amount of the series, minus unreimbursed
Investor Charge-Offs for the series and
o the Available Subordinated Amount with respect to the series,
after giving effect to the allocations, distributions, withdrawals
and deposits to be made on the distribution date during the
Collection Period in which such date occurs.
"Trust Adjusted Invested Amount" is, with respect to any Collection
Period, the sum of the Adjusted Invested Amounts for all outstanding
series.
"Initial Invested Amount" is, with respect to any series and for any
date, the amount stated as such in the related Series Supplement. The
Initial Invested Amount for any series may be increased or decreased from
time to time as stated in the related Series Supplement, including as a
result of deposits to or withdrawals from the Excess Funding Account, if
any, for the series.
Allocation Between the Certificateholders and the Seller. The servicer
will allocate amounts initially allocated to each series between the
Certificateholders' Interest and the Seller's Interest for each Collection
Period as stated in the related Series Supplement and described in the related
prospectus supplement. If a series consists of more than one class, the
amounts allocated to the Certificateholders' Interest of the series will be
further allocated between those classes as stated in the related Series
Supplement and described in the related prospectus supplement.
Principal Collections for all Series. Principal Collections allocated to
the Certificateholders' Interest of any series, for any Collection Period with
respect to any Accumulation Period, Controlled Amortization Period,
Reinvestment Period or Early Amortization Period with respect to such series
or a class thereof, will first be allocated to make required payments of
principal to the Principal Funding Account or to the Certificateholders of
such series or class, in each case if and to the extent stated in the Series
Supplement for the series. The servicer will determine the amount of available
certificateholder principal collections for each series and any Collection
Period remaining after such required payments, if any ("Excess Principal
Collections"). The servicer will allocate Excess Principal Collections to
cover any principal distributions to Certificateholders of any series which
are either scheduled or permitted and which have not been covered out of
Principal Collections and certain other amounts allocated to such series
("Principal Shortfalls"). Excess Principal Collections will generally not be
used to cover Investor Charge-Offs for any series. If Principal Shortfalls
exceed Excess Principal Collections for any Collection Period, Excess
Principal Collections will be allocated pro rata among the applicable series
based on the relative amounts of Principal Shortfalls, unless otherwise
provided in the applicable Series Supplements. To the extent that Excess
Principal Collections exceed Principal Shortfalls, the balance will be paid to
the seller if the Seller's Participation Amount, determined after giving
effect to any Principal Receivables transferred to the trust on that date,
exceeds the Trust Available Subordinated Amount for the immediately preceding
Determination Date, after giving effect to the allocations, distributions,
withdrawals and deposits to be made on the distribution date immediately
following such Determination Date. Any amount not allocated to the seller
because the Seller's Participation Amount does not exceed the Trust Available
Subordinated Amount will be held unallocated ("Unallocated Principal
Collections") until the Seller's Participation Amount exceeds the Trust
Available Subordinated Amount, at which time such amount will be allocated to
the seller, or until an Early Amortization Period, Accumulation Period,
Controlled Amortization Period or Reinvestment Period commences for any
series, after which such amount will be treated as a Series Allocable
Miscellaneous Payment.
ALLOCATION OF COLLECTIONS; DEPOSITS IN COLLECTION ACCOUNT
On each Determination Date, the servicer will calculate the amounts to
be allocated in respect of collections on receivables received with respect to
the related Collection Period to the Certificateholders of each outstanding
series or class or the seller in accordance with the Series Supplements.
The servicer, no later than two business days after the processing date,
will deposit all collections received with respect to the receivables
(excluding, with exceptions, portions allocable to the seller) in each
Collection Period into the Collection Account. However, the servicer need not
make daily deposits if
o CFC remains the servicer under the Pooling and Servicing
Agreement,
o no Service Default has occurred and is continuing and
o CFC has and maintains a short-term debt rating of at
least A-1 by Standard & Poor's and P-1 by Moody's, and
o CFC arranges for and maintains a letter of credit or
other form of Enhancement in respect of the servicer's
obligation to make deposits of collections on the
receivables in the Collection Account that is acceptable
in form and substance to each Rating Agency or
o CFC otherwise obtains the Rating Agency confirmations
described below.
In that case, subject to any limitations referred to below, CFC may use for
its own benefit all collections until the related distribution date. At that
time CFC will make the deposits in an amount equal to the net amount of the
deposits and withdrawals which would have been made if deposits were made on a
daily basis. However, before ceasing daily deposits as described above, the
seller must deliver to the trustee written confirmation from the applicable
Rating Agencies that the failure by CFC to make daily deposits will not cause
the rating of any outstanding series or class of certificates to be reduced or
withdrawn.
In addition, during any Collection Period the servicer will generally be
required to deposit Interest Collections and Principal Collections into the
Collection Account only to the extent of
o the distributions required to be made to certificateholders,
o the amounts required to be deposited into any account
maintained for the benefit of certificateholders of any series
and certain other parties and
o the amounts required to be paid to any Enhancement provider on
the distribution date relating to such Collection Period.
Also, if, at any time prior to that distribution date, the amount of
collections deposited in the Collection Account exceeds the amount required to
be deposited, the servicer will be permitted to withdraw the excess from the
Collection Account.
On any date on which collections are deposited in the Collection
Account, the servicer will distribute directly to the seller the amount of the
Interest Collections allocable to each series stated in the related Series
Supplement and described in the related prospectus supplement if the Seller's
Participation Amount, determined after giving effect to any Principal
Receivables transferred to the trust on such date, exceeds the Trust Available
Subordinated Amount for the immediately preceding Determination Date, after
giving effect to the allocations, distributions, withdrawals and deposits to
be made on the distribution date immediately following the Determination Date.
In addition, during the Revolving Period for any series, subject to
limitations, the servicer will distribute directly to the seller on each such
date of deposit the amount of Principal Collections allocable to each series
stated in the related Series Supplement and described in the related
prospectus supplement if the Seller's Participation Amount, determined after
giving effect to any Principal Receivables transferred to the trust on such
date, exceeds the Trust Available Subordinated Amount for the immediately
preceding Determination Date, after giving effect to the allocations,
distributions, withdrawals and deposits to be made on the distribution date
immediately following the Determination Date).
LIMITED SUBORDINATION OF SELLER'S INTEREST; ENHANCEMENTS
Subordination of Seller's Interest. With respect to any series of
certificates, the Seller's Interest will be subordinated to the rights of
certificateholders of the series to the extent described in the related
prospectus supplement. This will provide credit enhancement to the series. The
amount of the subordination with respect to any series is the "Available
Subordinated Amount" for the series. The Available Subordinated Amount for any
series will be decreased and increased from time to time if and to the extent
described in the related prospectus supplement. The prospectus supplement for
each series will describe the manner in which collections attributable to the
Available Subordinated Amount for the series may be drawn upon to make
payments to or for the benefit of the holders of certificates of the series.
If the related Series Supplements so state, the Available Subordinated Amount
for a series may be available to more than one series of certificates.
Enhancements. In addition to the subordination described above, for any
series, enhancements ("Enhancements")may be provided with respect to one or
more classes of the series, including one or more of the following:
o letter of credit,
o surety bond,
o cash collateral account,
o spread account,
o guaranteed rate agreement,
o swap (including without limitation currency swaps) or other
interest protection agreement,
o repurchase obligation,
o cash deposit or
o another form of credit enhancement described in the related
prospectus supplement.
Enhancements may also be provided to a series or class or classes of a series
by subordination provisions which require that distributions of principal
and/or interest be made with respect to the certificates of the series or the
class or classes before distributions are made to one or more series or one or
more classes of the series. If provided in the related prospectus supplement,
any form of Enhancement may be available to more than one class or series. The
trust may use a currency swap to issue certificates payable in a currency
other than United States dollars.
If Enhancement is provided with respect to a series, the related
prospectus supplement will include a description of
o the amount payable under the Enhancement,
o any conditions to payment not otherwise described in this
prospectus,
o the conditions, if any, under which the amount payable under
the Enhancement may be reduced and under which the Enhancement
may be terminated or replaced and
o any material provisions of any agreement relating to the
Enhancement.
Additionally, in certain cases, the related prospectus supplement may set
forth the information with respect to the applicable Enhancement provider,
including
o a brief description of its principal business activities,
o its principal place of business, place of incorporation and
the jurisdiction under which it is chartered or licensed to
do business,
o if applicable, the identity of regulatory agencies which
exercise primary jurisdiction over the conduct of its
business and
o its total assets, and its stockholders' equity or
policyholders' surplus, if applicable, as of a date stated
in the prospectus supplement.
Limitations on Subordination and Enhancements. The presence of an
Available Subordinated Amount or Enhancement with respect to a series or class
is intended to enhance the likelihood of receipt by certificateholders of the
series or class of the full amount of principal and interest and to decrease
the likelihood that the certificateholders will experience losses. However,
unless otherwise stated in the prospectus supplement for a series, neither
subordination of the Seller's Interest nor the Enhancement, if any, will
provide protection against all risks of loss or will guarantee repayment of
the entire principal balance of the certificates and interest on the
certificates. If losses exceed the amount covered by the subordination or
Enhancement or are not covered by the subordination or Enhancement,
certificateholders will bear their allocable share of deficiencies. In
addition, if specific Enhancement is provided for the benefit of more than one
class or series, certificateholders of any such class or series will be
subject to the risk that the Enhancement will be exhausted by the claims of
certificateholders of other classes or series.
DISTRIBUTIONS
Payments to certificateholders of a series or a class will be made from
the Collection Account and any accounts established for the benefit of the
certificateholders as described in the related prospectus supplement.
DEFAULTED RECEIVABLES AND RECOVERIES
"Defaulted Receivables" on any Determination Date are
o all receivables which were charged off as uncollectible in respect
of the immediately preceding Collection Period and
o all receivables which were Eligible Receivables when transferred
to the trust, which arose in an Account which became an Ineligible
Account after the date of transfer of such receivables to the trust and
which were not Eligible Receivables for any six consecutive Determination
Dates thereafter.
The "Defaulted Amount" for any Collection Period will be an amount, which
shall not be less than zero, equal to
(a) the principal amount of receivables that became Defaulted
Receivables during the preceding Collection Period minus
(b) the sum of (i) the full amount of any Defaulted Receivables
subject to reassignment to the seller or purchase by the servicer for the
Collection Period unless events of bankruptcy, insolvency or receivership have
occurred with respect to either of the seller or the servicer, in which event
the Defaulted Amount will not be reduced for those Defaulted Receivables and
(ii) the excess, if any, for the immediately preceding Determination Date of
the amount determined pursuant to this clause (b) for such Determination Date
over the amount determined pursuant to clause (a) for such Determination Date.
Receivables will be charged off as uncollectible in accordance with the
servicer's customary and usual policies and procedures for servicing its own
comparable revolving dealer wholesale loan accounts. A portion of the Series
Allocable Defaulted Amount for each series and Collection Period will be
allocated between the certificateholders of the series and the seller as
stated in the related Series Supplement. The portion of the Defaulted Amount
allocated to the certificateholders of a series will be the "Investor Default
Amount" for such series. The Investor Default Amount for any series that
consists of more than one class will be further allocated between those
classes as stated in the related Series Supplement.
If the servicer adjusts the amount of any receivable because of a
rebate, billing error or certain other non-cash items to a Dealer, or because
the receivable was created in respect of inventory which was refused or
returned by a Dealer, the principal amount of each of the Seller's Interest
and the Pool Balance will be reduced by the amount of the adjustment or
charge-off. Further, to the extent that the reduction in the Seller's Interest
would reduce the Seller's Participation Amount below the Trust Available
Subordinated Amount for the immediately preceding Determination Date, after
giving effect to the allocations, distributions, withdrawals and deposits to
be made on the distribution date immediately following such Determination
Date, the seller will deposit a cash amount equal to the deficiency into the
Collection Account in immediately available funds (an "Adjustment Payment") on
the day on which the adjustment occurs.
OPTIONAL REPURCHASE
If a prospectus supplement relating to a series of certificates so
states, on any distribution date occurring after the Invested Amount of the
certificates of the series is reduced to the percentage of the initial
outstanding principal amount of the certificates of the series stated in the
prospectus supplement, the servicer will have the option, subject to
conditions, to repurchase the Certificateholders' Interest of the series. The
purchase price will generally be equal to the Invested Amount of the series on
the Determination Date preceding the distribution date on which the repurchase
will be made plus accrued and unpaid interest on the unpaid principal amount
of the certificates of the series at the applicable certificate rate, together
with interest on overdue interest (to the extent lawful), plus any other
amounts stated in the related Series Supplement. The purchase price will be
deposited in the Collection Account in immediately available funds on the
distribution date on which CFC exercises that option. Following any purchase,
the certificateholders of the series will have no further rights with respect
to the Certificateholders' Interest of the series, other than the right to
receive the final distribution on the certificates of that series. If CFC
fails for any reason to deposit the purchase price, payments will continue to
be made to the certificateholders of the series as described in the related
prospectus supplement.
REINVESTMENT EVENTS AND EARLY AMORTIZATION EVENTS
Beginning on the first distribution date following the Collection Period
in which a Reinvestment Event has occurred with respect to any series,
o Principal Collections allocable to the Certificateholders' Interest
of the series will no longer be paid to DCWR or allocated to any other
series but instead will be deposited to the Principal Funding Account for
the series monthly on each distribution date, and
o the Controlled Deposit Amount or Controlled Amortization Amount, if
any, will no longer apply to distributions of principal in respect of the
certificates of the series,
in each case except as described below or stated in the related Series
Supplement. A "Reinvestment Event" is, for any series, any of the events so
defined in the related Series Supplement and described in the related
prospectus supplement.
If any event so defined occurs, a Reinvestment Event will be deemed to
have occurred with respect to the series without any notice or other action on
the part of any other party immediately upon the occurrence of the event. The
Reinvestment Period with respect to the series will begin as of the close of
business on the business day immediately preceding the day on which the
Reinvestment Event is deemed to have occurred. Monthly deposits of principal
to the Principal Funding Account for such series will, except as described
below or stated in the related Series Supplement, begin on the first
distribution date following the Collection Period in which a Reinvestment
Period has begun with respect to such series.
Beginning on the first distribution date following the Collection Period
in which an Early Amortization Event has occurred with respect to any series,
o Principal Collections allocable to the Certificateholders' Interest
of such series will no longer be paid to DCWR, allocated to any other
series or retained in the Principal Funding Account for such series but
instead will be distributed to certificateholders of the series monthly on
each distribution date and
o the Controlled Deposit Amount or Controlled Amortization Amount, if
any, will no longer apply to distributions of principal on the certificates
of such series,
in each case except as described below or stated in the related Series
Supplement. An "Early Amortization Event" is, for any series, any of the
events so defined in the related Series Supplement and, described in the
related prospectus supplement, as well as each of the following events:
o the occurrence of certain events of bankruptcy, insolvency or
receivership relating to the trust or the seller; and
o the trust or DCWR becomes an investment company within the meaning
of the Investment Company Act of 1940.
If any event described above or in the prospectus supplement for a
series occurs, an Early Amortization Event will be deemed to have occurred
with respect to the series without any notice or other action on the part of
any other party immediately upon the occurrence of the event. The Early
Amortization Period with respect to the series will begin as of the close of
business on the business day immediately preceding the day on which the Early
Amortization Event is deemed to have occurred. Monthly distributions of
principal to the certificateholders of the series will begin on the first
distribution date following the Collection Period in which an Early
Amortization Period has begun with respect to such series, except as described
below. The failure of the trust to pay the outstanding principal amount of the
certificates of any series or class by their Expected Payment Date will have
the same consequences as the occurrence of an Early Amortization Event with
respect to such series or class. All references herein to Early Amortization
Events shall be deemed to include such a failure.
Even if a Reinvestment Period or an Early Amortization Period begins
with respect to a series, such period may terminate and the Revolving Period
with respect to the series and any class may recommence when the event giving
rise to the beginning of the Reinvestment Period or Early Amortization Period
no longer exists, whether as a result of the distribution of principal to
certificateholders of the series or otherwise, in each case if and to the
extent stated in the Series Supplement for such series.
In addition, if an insolvency event occurs with respect to DCWR, or DCWR
violates its covenant not to create any lien on any receivable, in each case
as provided in the Pooling and Servicing Agreement, on the day of the
insolvency event or violation, as applicable, DCWR will, subject to the
actions of the certificateholders, immediately cease to transfer receivables
to the trust and promptly give notice to the trustee of the insolvency event
or violation, as applicable. Under the terms of the Pooling and Servicing
Agreement, within 15 days the trustee will publish a notice of the insolvency
event or violation stating that the trustee intends to sell, liquidate or
otherwise dispose of the receivables in a commercially reasonable manner and
on commercially reasonable terms, unless within a stated period of time
holders of certificates of each outstanding series representing more than 50%
of the aggregate unpaid principal amount of the certificates of each such
series (or, with respect to any series with two or more classes, the
certificates of each such class) and each person holding a Supplemental
Certificate, instruct the trustee not to sell, dispose of or otherwise
liquidate the receivables and to continue transferring receivables as before
the insolvency event or violation, as applicable. If the portion of the
proceeds allocated to the Certificateholders' Interest and the proceeds of any
collections on the receivables in the Collection Account allocable to the
Certificateholders' Interest are not enough to pay the aggregate unpaid
principal balance of the certificates in full plus accrued and unpaid interest
thereon, certificateholders will incur a loss.
TERMINATION; FULLY REINVESTED DATE
Termination. The trust will terminate on the earliest to occur of
o the day following the distribution date on which the aggregate
Invested Amounts for all series is zero,
o May 31, 2012 and
o the date on which proceeds from the sale, disposal or other
liquidation of the receivables are distributed to the certificateholders
following an insolvency event with respect to DCWR or any violation by
DCWR of its covenant not to create any lien on any receivable, in each
case as stated in the Pooling and Servicing Agreement and as described
above under "Reinvestment Events and Early Amortization Events".
When the trust is terminated, all right, title and interest in the receivables
and other funds of the trust, other than amounts in the trust's accounts for
the final distribution of principal and interest to certificateholders, will
be transferred to DCWR.
In any event, the last payment of principal and interest on any series
of certificates will be due and payable no later than the date stated in the
related prospectus supplement (the "Series Termination Date").
Fully Reinvested Date. The "Fully Reinvested Date" is the date on which
the amount on deposit in the Principal Funding Account with respect to a
series equals the outstanding principal amount of the certificates of the
series. After the Fully Reinvested Date occurs with respect to any series,
certificateholders of that series will no longer have any interest in the
receivables. Further, all the representations and covenants of the seller and
the servicer relating to the receivables, as well as certain other provisions
of the Pooling and Servicing Agreement and all remedies for breaches thereof,
will no longer accrue to the benefit of the certificateholders of that series,
in each case unless the Revolving Period with respect to the series
recommences as stated in the related Series Supplement. Those representations,
covenants and other provisions include
o the conditions to the exchange of the Seller's Certificate
described under "The Seller's Certificate",
o the conditions to the issuance of a new Series described under
"New Issuances",
o the representations described under "Representations and
Warranties" to the extent they relate to the receivables and the
Collateral Security,
o the limitations on additions and removals of Accounts described
under "Addition of Accounts" and "Removal of Accounts", respectively, and
o the obligations of the servicer with respect to servicing the
receivables described under "Collection and Other Servicing Procedures"
and "Servicer Covenants".
Also, if the Fully Reinvested Date occurs with respect to any series, no
Interest Collections, Principal Collections, Defaulted receivables or
Miscellaneous Payments will be allocated to that series, unless the series'
Revolving Period begins again as described above. Notwithstanding the
foregoing, when the final distribution has been made with respect to each
series of certificates or the series' Fully Reinvested Date has occurred, all
right, title and interest in the receivables will be conveyed and transferred
to DCWR.
INDEMNIFICATION
The Pooling and Servicing Agreement states that the servicer will
indemnify the trust and the trustee from and against any loss, liability,
expense, damage or injury suffered or sustained arising out of any acts,
omissions or alleged acts or omissions arising out of activities of the trust,
the trustee or the servicer pursuant to the Pooling and Servicing Agreement.
The trust or the trustee, however, will not be so indemnified if the acts,
omissions or alleged acts or omissions constitute fraud, gross negligence,
breach of fiduciary duty or willful misconduct by the trustee. However, the
servicer will not indemnify the trust, the trustee or the certificateholders
for any act taken by the trustee at the request of the certificateholders or
for any tax required to be paid by the trust or the certificateholders.
The Pooling and Servicing Agreement states that, except as described
above and with other exceptions, neither the seller, the servicer nor any of
their directors, officers, employees or agents will be under any liability to
the trust, the trustee, the certificateholders or any other person for taking
any action, or for refraining from taking any action, pursuant to the Pooling
and Servicing Agreement. However, neither the seller, the servicer nor any of
their directors, officers, employees or agents will be protected against any
liability which would otherwise be imposed by reason of willful misfeasance,
bad faith or gross negligence of any such person in the performance of their
duties or by reason of reckless disregard of their obligations and duties
under the Pooling and Servicing Agreement.
Also, the Pooling and Servicing Agreement states that the servicer is
not under any obligation to appear in, prosecute or defend any legal action
which is not incidental to its servicing responsibilities under the Pooling
and Servicing Agreement. The servicer may, in its sole discretion, undertake
any legal action which it may deem necessary or desirable for the benefit of
the certificateholders with respect to the Pooling and Servicing Agreement and
the rights and duties of the parties thereto and the interest of the
certificateholders thereunder.
COLLECTION AND OTHER SERVICING PROCEDURES
Pursuant to the Pooling and Servicing Agreement, the servicer is
responsible for servicing, collecting, enforcing and administering the
receivables. The servicer must do so in accordance with customary and usual
procedures for servicing its own revolving credit line dealer wholesale loans,
except where the failure to so act would not materially and adversely affect
the rights of the trust.
CFC covenants that it may only change the terms relating to the Accounts
if
o in the servicer's reasonable judgment, the charge will not cause
any Early Amortization Event or Reinvestment Event to occur with respect
to any series and
o the change is applied to the comparable segment of the portfolio
of revolving credit line dealer wholesale loan accounts with similar
characteristics owned or serviced by CFC and not only to the Accounts.
When acting as a servicer, the servicer will, among other things
o collect and record payments,
o communicate with dealers,
o investigate payment delinquencies,
o evaluate the increase of credit limits, and
o maintain internal records with respect to each Account.
Managerial and custodial services performed by the servicer on behalf of
the trust include
o providing assistance in any inspections of the documents and
records relating to the Accounts and receivables by the trustee pursuant
to the Pooling and Servicing Agreement,
o maintaining the agreements, documents and files relating to the
Accounts and receivables as custodian for the trust and
o providing related data processing and reporting services for
certificateholders and on behalf of the trustee.
SERVICER COVENANTS
In the Pooling and Servicing Agreement the servicer covenants that:
o it will duly satisfy all obligations on its part to be fulfilled
under or in connection with the receivables and the Accounts, will
maintain in effect all qualifications required in order to service the
receivables and the Accounts and will comply in all material respects
with all requirements of law in connection with servicing the receivables
and the Accounts, the failure to comply with which would have a
materially adverse effect on the certificateholders of any outstanding
series;
o it will not permit any rescission or cancellation of a receivable
except as ordered by a court of competent jurisdiction or other
government authority;
o it will do nothing to impair the rights of the certificateholders
in the receivables or the Accounts; and
o it will not reschedule, revise or defer payments due on any
receivable except in accordance with its guidelines for servicing
revolving credit line dealer wholesale loans.
Under the terms of the Pooling and Servicing Agreement, if the seller or
the servicer discovers, or receives written notice, that any covenant of the
servicer set forth above has not been complied with in all material respects
and such noncompliance has not been cured within 30 days thereafter, or such
longer period as the trustee may agree to, and has a materially adverse effect
on the interests of all certificateholders in any receivable or Account, CFC,
as servicer, will purchase the receivable or all receivables in such Account,
as applicable. If CFC is the servicer, CFC will purchase the receivable or
receivables on the Determination Date following the expiration of the 30-day
cure period and the servicer will be obligated to deposit into the Collection
Account an amount equal to the amount of the Receivable or receivables plus
accrued and unpaid interest thereon. The amount of the deposit shall be deemed
a Transfer Deposit Amount. The purchase by the servicer constitutes the sole
remedy available to the certificateholders if such covenant or warranty of the
servicer is not satisfied and the trust's interest in any such purchased
receivables shall be automatically assigned to the servicer.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Unless the related Series Supplement or prospectus supplement states
otherwise, the servicer's compensation with respect to the certificates of a
series for its servicing activities and reimbursement for its expenses will be
a monthly servicing fee (the "Servicing Fee"). The Servicing Fee is an amount
payable in arrears on each distribution date on or before the Series
Termination Date of the series and the Fully Reinvested Date, if any, of the
series, and thereafter during the Revolving Period with respect to the series,
if the Revolving Period begins again, generally equal to one-twelfth of the
product of
o the "Servicing Fee Rate" set forth in the Series Supplement,
o the Pool Balance as of the last day of the second preceding
Collection Period and
o the Series Allocation Percentage for the Series for the
immediately preceding Collection Period.
Unless a related Series Supplement or prospectus supplement states otherwise,
the share of the Servicing Fee allocable to certificateholders of any series
with respect to any distribution date (the "Monthly Servicing Fee") shall
generally be equal to one-twelfth of the product of
o the Servicing Fee Rate and
o the Invested Amount of the series as of the last day of the second
preceding Collection Period.
The seller shall pay the remainder of the Servicing Fee with respect to any
series. The servicer shall pay the Monthly Servicing Fee with respect to any
series solely to the extent amounts are available for distribution therefor in
accordance with the terms of the Pooling and Servicing Agreement.
The servicer may waive its right to receive the Servicing Fee with
respect to any series on any distribution date, so long as it believes that
enough Interest Collections will be available on a future distribution date to
pay the Monthly Servicing Fee relating to the waived Servicing Fee. If that
happens, the Servicing Fee and the Monthly Servicing Fee for the series and
the distribution date shall be deemed to be zero.
The servicer will pay from its servicing compensation expenses it incurs
when servicing the Accounts and the receivables including, without limitation,
payment of fees and disbursements of the trustee and independent accountants
and all other fees and expenses which are not expressly stated in the Pooling
and Servicing Agreement to be payable by the trust or the certificateholders
other than federal, state and local income and franchise taxes, if any, of the
trust or the certificateholders.
CERTAIN MATTERS REGARDING THE SERVICER
The servicer may not resign from its obligations and duties under the
Pooling and Servicing Agreement, except upon determination that those duties
are no longer permissible under applicable law. No resignation will become
effective until the trustee or a successor to the servicer has assumed the
servicer's responsibilities and obligations under the Pooling and Servicing
Agreement (CFC or any successor servicer, the "servicer"). The servicer may
delegate any of its duties as servicer to any of its affiliates, but any
delegation will not relieve the servicer of its obligation under the Pooling
and Servicing Agreement.
Any person into which, in accordance with the Pooling and Servicing
Agreement, the servicer may be merged or consolidated or any person resulting
from any merger or consolidation to which the servicer is a party, or any
person succeeding to the business of the servicer, will be the successor to
the servicer under the Pooling and Servicing Agreement.
SERVICE DEFAULT
In the event of any Service Default, the trustee, by written notice to
the servicer, may terminate all of the rights and obligations of the servicer,
as servicer, under the Pooling and Servicing Agreement and in and to the
receivables and the proceeds thereof and appoint a new servicer (a "Service
Transfer"). The rights and interest of the seller under the Pooling and
Servicing Agreement in the Seller's Interest will not be affected by any
Service Transfer. The trustee shall as promptly as possible appoint a
successor servicer and if no successor servicer has been appointed by the
trustee and has accepted such appointment by the time the servicer ceases to
act as servicer, all rights, authority, power and obligations of the servicer
under the Pooling and Servicing Agreement shall pass to and be vested in the
trustee. Before any Service Transfer, the trustee will review any bids
obtained from potential servicers meeting certain eligibility requirements set
forth in the Pooling and Servicing Agreement to serve as successor servicer
for servicing compensation not in excess of the Servicing Fee, plus certain
excess amounts payable to the seller.
A "Service Default" refers to any of the following events:
o failure by the servicer to make any payment, transfer or deposit,
or to give instructions to the trustee to make any payment, transfer or
deposit, on the date the servicer is required to do so under the Pooling
and Servicing Agreement, which is not cured within a five business day
grace period;
o failure by the servicer duly to observe or perform any other
covenants or agreements of the servicer in the Pooling and Servicing
Agreement which failure has a materially adverse effect on the
certificateholders of any outstanding series and which continues
unremedied for a period of 30 days after the date written notice of the
failure shall have been given to the servicer by the trustee,
o the servicer delegates its duties under the Pooling and Servicing
Agreement, except as specifically permitted thereunder;
o any representation, warranty or certification made by the servicer
in the Pooling and Servicing Agreement or in any certificate delivered
pursuant to the Pooling and Servicing Agreement proves to have been
incorrect in any material respect when made, has a materially adverse
effect on the rights of the certificateholders of any outstanding Series,
and which materially adverse effect continues for a period of 60 days
after written notice thereof shall have been given to the servicer by the
trustee; or
o certain events of bankruptcy, insolvency or receivership occur
with respect to the servicer.
Notwithstanding the foregoing, a delay in or failure of performance
referred to under the first clause for a period of ten business days or
referred to under the second, third or fourth clauses for a period of 60
business days, shall not constitute a Service Default if the delay or failure
was caused by an act of God or other similar occurrence. If any such event
occurs, the servicer shall not be relieved from using its best efforts to
perform its obligations in a timely manner in accordance with the terms of the
Pooling and Servicing Agreement and the servicer shall provide the trustee,
any Enhancement provider, the seller and the certificateholders prompt notice
of the failure or delay by it, together with a description of its efforts to
so perform its obligations. The servicer shall immediately notify the trustee
in writing of any Service Default.
REPORTS
On each distribution date, including each distribution date that
corresponds to an interest payment date or any Special Payment Date, the
trustee will forward to each certificateholder of record of any series a
statement (the "Distribution Date Statement") prepared by the servicer. The
Distribution Date Statement will set forth information with respect to the
trust and the certificates of the series, as stated in the related Series
Supplement and described in the related prospectus supplement.
With respect to each interest payment date or Special Payment Date, the
Distribution Date Statement with respect to any Series will include the
following information with respect to the certificates of the series:
o the total amount distributed on the certificates of the series;
o the amount of the distribution allocable to principal on the
certificates of the series; and
o the amount of the distribution allocable to interest on the
certificates of the series.
On or before January 31 of each calendar year, the trustee will furnish,
or cause to be furnished, to each person who at any time during the preceding
calendar year was a certificateholder of record a statement containing the
information required to be provided by an issuer of indebtedness under the
Code for the preceding calendar year or the applicable portion thereof during
which the person was a certificateholder, together with other customary
information which the Code requires issuers of indebtedness to provide and
other customary information which certificateholders need to prepare their tax
returns. See "Certain Tax Matters".
EVIDENCE AS TO COMPLIANCE
The Pooling and Servicing Agreement states that on or before March 31 of
each calendar year, the servicer will cause a firm of nationally recognized
independent public accountants, who will also render other services to the
servicer or the seller, to furnish a report regarding matters in connection
with the servicing of CFC's portfolio of wholesale receivables.
The Pooling and Servicing Agreement states that on or before March 31 of
each calendar year, the servicer will deliver to the trustee a statement,
signed by an officer of the servicer. The statement will state that the
servicer has fully performed, or caused to be fully performed, its obligations
in all material respects under the Pooling and Servicing Agreement throughout
the preceding year or, if there has been a default in the performance of any
such obligation, will state the nature and status of the default.
Copies of all statements, certificates and reports furnished to the
trustee may be obtained by delivering a written request to the trustee.
AMENDMENTS
The seller, the servicer and the trustee may amend the Pooling and
Servicing Agreement and any Series Supplement, without certificateholder
consent, so long as any amendment shall not, as evidenced by an opinion of
counsel, adversely affect in any material respect the interests of the
certificateholders.
The seller, the servicer and the trustee may amend the Pooling and
Servicing Agreement and any Series Supplement with the consent of the holders
of certificates evidencing not less than 66-2/3% of the aggregate unpaid
principal amount of the certificates of all adversely affected series for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Pooling and Servicing Agreement or of modifying
in any manner the rights of certificateholders. No such amendment, however,
may
o reduce in any manner the amount of or delay the timing of
distributions required to be made to certificateholders or deposits of
amounts to be so distributed without the consent of each affected
certificateholder,
o change the definition or the manner of calculating any
Certificateholders' Interest without the consent of each affected
certificateholder,
o reduce the amount available under any Enhancement without the
consent of each affected certificateholder,
o adversely affect the rating of any series or class by each Rating
Agency without the consent of the holders of certificates of such series
or class evidencing not less than 66-2/3% of the aggregate unpaid
principal amount of the certificates of such series or class or
o reduce that percentage of the unpaid principal amount of
certificates the holders of which are required to consent to any such
amendment without the consent of each certificateholder.
Promptly following the execution of any amendment to the Pooling and Servicing
Agreement, other than an amendment described in the preceding paragraph, the
trustee will notify each certificateholder in writing of the substance of such
amendment.
The foregoing notwithstanding, each holder of a certificate offered
hereby, by its acceptance thereof, will be deemed to have consented to an
amendment to the Pooling and Servicing Agreement that
o provides that funds in the Collection Account may be invested in
any Eligible Investments,
o provides that the seller need not make any deposit to the
Collection Account in respect of the Repurchased Receivables Price of any
Designated Receivables repurchased from the trust,
o otherwise changes the procedures for removing receivables from the
trust as described under "Removal of Accounts",
o provides that, subject to the limitations described herein, CFC
need not deposit collections with respect to any Collection Period in the
Collection Account until the related distribution date or
o permits the designation of Automatic Additional Accounts as
described herein.
The Pooling and Servicing Agreement may not be amended in any manner
which materially adversely affects the interests of any Enhancement provider
without its prior consent.
LIST OF CERTIFICATEHOLDERS
Upon written request of any three or more certificateholders of record,
the trustee will give those certificateholders access during business hours to
the current list of certificateholders of a series or all outstanding series,
as applicable, for purposes of communicating with other certificateholders of
the series or all outstanding series, as applicable, with respect to their
rights under the Pooling and Servicing Agreement. See "Book-Entry
Registration" and "Definitive Certificates".
The Pooling and Servicing Agreement will not provide for any annual or
other meetings of certificateholders.
THE TRUSTEE
The Bank of New York, a New York banking corporation, will act as
trustee under the Pooling and Servicing Agreement. On August 23, 1996, The
Bank of New York, a New York banking corporation, succeeded Manufacturers and
Traders trust Company, as trustee, in accordance with the terms of the Pooling
and Servicing Agreement and pursuant to an Agreement of Resignation,
Appointment and Acceptance dated as of August 23, 1996 between DCWR, CFC, as
successor to CFC Corp., Manufacturers and Traders trust Company, as resigning
trustee, and The Bank of New York, as successor trustee. The Corporate trust
Office of the Bank of New York is located at 101 Barclay Street, New York, New
York 10286. The seller, the servicer and their respective affiliates may from
time to time enter into normal banking and trustee relationships with the
trustee and its affiliates. The trustee may hold certificates in its own name
with the same rights it would have if it were not the trustee. In addition,
for purposes of meeting the legal requirements of certain local jurisdictions,
the trustee shall have the power to appoint a co-trustee or separate trustees
of all or a part of the trust. In the event of such appointments, all rights,
powers, duties and obligations shall be conferred or imposed upon the trustee
and such separate trustee or co-trustee jointly, or, in any jurisdiction in
which the trustee shall be incompetent or unqualified to perform some acts,
singly upon the separate trustee or co-trustee, who shall exercise and perform
those rights, powers, duties and obligations solely at the direction of the
trustee.
The trustee may resign at any time, in which event the seller must
appoint a successor trustee. The servicer may also remove the trustee if the
trustee ceases to be eligible to continue as the trustee under the Pooling and
Servicing Agreement or if the trustee becomes insolvent. If that happens, the
servicer may appoint a successor trustee. Any resignation or removal of the
trustee and appointment of a successor trustee does not become effective until
the acceptance of the appointment by the successor trustee.
DESCRIPTION OF THE RECEIVABLES PURCHASE AGREEMENT
The parties to the Receivables Purchase are CFC, as seller (together
with its predecessors as appropriate, the "RPA seller"), and DCWR, as
purchaser. CFC became the RPA seller as successor by merger. DCWR became the
purchaser as assignee of USA, which was in turn an assignee of CARCO. The
following summary describes certain terms of the Receivables Purchase
Agreement and is qualified in its entirety by reference to the Receivables
Purchase Agreement.
SALE OR TRANSFER OF RECEIVABLES
Pursuant to the Receivables Purchase Agreement, the RPA seller sold or
transferred to the seller all of its right, title and interest in and to all
of the receivables and the Collateral Security as of the Initial Cut-Off Date
and all of the receivables thereafter created. In addition, the RPA seller has
previously designated Additional Accounts, and has previously conveyed to the
seller the Principal Receivables in such Additional Accounts, together with
the related Collateral Security, as of the applicable Additional Cut-Off Date
and all receivables, and related Collateral Security, created thereafter. As
described in this prospectus, pursuant to the Pooling and Servicing Agreement,
the seller has transferred to the trust all of its right, title and interest
in and to the Receivables Purchase Agreement.
In connection with the sale or transfer of the receivables to the
seller, the RPA seller must indicate in its computer files that the
receivables have been sold or transferred to the seller, and that the
receivables have been transferred by the seller to the trust. In addition, the
RPA seller must provide to the seller a computer file or microfiche or written
list containing a true and complete list of all the receivables. The records
and agreements relating to the Accounts and receivables have not and will not
be segregated by the RPA seller from other documents and agreements relating
to other accounts and receivables and are not and will not be stamped or
marked to reflect the sale or transfer of the receivables to the seller. The
computer records, however, of the RPA seller have been and will be marked to
evidence such sale or transfer. The RPA seller has filed UCC financing
statements with respect to the receivables meeting the requirements of
Michigan state law. See "Risk Factors -- Certain Legal Aspects" and "Certain
Legal Aspects of the receivables -- Transfer of receivables".
REPRESENTATIONS AND WARRANTIES
The RPA seller has or will make certain representations and warranties
to the seller that, among other things, as of the Initial Closing Date and
each Series Issuance Date, it was duly formed and in good standing and that it
has the authority to consummate the transactions contemplated by the
Receivables Purchase Agreement.
The RPA seller has or will also make representations and warranties to
the seller relating to the receivables to the effect, among other things, that
o as of the Initial Closing Date and each Series Issuance Date, each
of the Accounts is an Eligible Account and
o as of the date any new receivable is created, the receivable is an
Eligible Receivable.
If any representation and warranty set forth in this paragraph is breached and
the breach results in an Ineligible Receivable and the requirement that the
seller accept retransfer of the Ineligible Receivable pursuant to the Pooling
and Servicing Agreement, the RPA seller shall repurchase the Ineligible
Receivable from the seller on the date of the retransfer. The purchase price
for the Ineligible Receivable shall be the face amount thereof, of which at
least the amount of any cash deposit required to be made by the seller under
the Pooling and Servicing Agreement in respect of the retransfer of such
Ineligible Receivable shall be paid in cash.
The RPA seller has or will also make representations and warranties to
the seller to the effect, among other things, that as of the Initial Closing
Date and each Series Issuance Date
o the Receivables Purchase Agreement is a legal, valid and binding
obligation of the RPA seller and
o the Receivables Purchase Agreement is a valid sale or transfer to
the seller of all right, title and interest of the RPA seller in and to
the receivables, whether then existing or thereafter created in the
Accounts, the Collateral Security and the proceeds thereof which is
effective as to each Receivable upon the creation thereof.
If any of the representations and warranties described in this paragraph are
breached and the breach results in the obligation of the seller under the
Pooling and Servicing Agreement to accept retransfer of the receivables, the
RPA seller will repurchase the receivables retransferred to the RPA seller for
an amount of cash equal to the amount of cash the seller is required to
deposit under the Pooling and Servicing Agreement in connection with the
retransfer.
The RPA seller has agreed to indemnify the seller and to hold the seller
harmless from and against any and all losses, damages and expenses, including
reasonable attorneys' fees, suffered or incurred by the seller if the
foregoing representations and warranties are materially false.
CERTAIN COVENANTS
In the Receivables Purchase Agreement, the RPA seller has covenanted
that it will perform its obligations under the agreements relating to the
receivables and the Accounts in conformity with its current policies and
procedures relating to the receivables and the Accounts.
The RPA seller has covenanted further that, except for the sale and
conveyances under the Receivables Purchase Agreement and the interests created
under the Pooling and Servicing Agreement, the RPA seller will not sell,
pledge, assign or transfer any interest in the receivables to any other
person. The RPA seller also has covenanted to defend and indemnify the seller
for any loss, liability or expense incurred by the seller in connection with a
breach by the RPA seller of any of its representations, warranties or
covenants contained in the Receivables Purchase Agreement.
In addition, the RPA seller has expressly acknowledged and consented to
the seller's assignment of its rights relating to the receivables under the
Receivables Purchase Agreement to the trustee.
TERMINATION
The Receivables Purchase Agreement will terminate immediately after the
trust terminates. Also, if pursuant to certain provisions of federal law the
RPA seller becomes party to any bankruptcy or similar proceeding, other than
as a claimant, and, if such proceeding is not voluntary and is not dismissed
within 60 days of its institution, the RPA seller will immediately cease to
sell or transfer receivables to the seller and will promptly give notice of
that event to the seller and to the trustee.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES
On the Initial Closing Date, the RPA seller sold and assigned the
receivables to the seller, and the receivables were immediately transferred to
the trust. The seller has represented and warranted and will represent and
warranty on the Series Issuance Date with respect to each Series that
o the transfer to the trust constituted a valid transfer to the
trust of all right, title and interest of the seller in and to the
receivables and
o under the UCC, as in effect in Michigan, there exists a valid,
subsisting and enforceable first-priority perfected ownership interest in
the receivables, in existence at the time of the formation of the trust
or at the date of addition of any Additional Accounts, in favor of the
trust and a valid, subsisting and enforceable first-priority perfected
ownership interest in the receivables created thereafter in favor of the
trust on and after their creation.
However, the transfer of receivables by the seller to the trust could be
deemed to create a security interest under the UCC. For a discussion of the
trust's rights arising from these representations and warranties not being
satisfied, see "Description of the Certificates -- Representations and
Warranties".
Each of the RPA seller and the seller has represented that the
receivables are "chattel paper" for purposes of the UCC as in effect in
Michigan. If the receivables are deemed to be chattel paper and the transfer
thereof by either the RPA seller to the seller or by the seller to the trust
is deemed either to be a sale or to create a security interest, the UCC as in
effect in Michigan applies and the transferee must either take possession of
the chattel paper or file an appropriate financing statement or statements in
order to perfect its interest therein. Both the seller and the trust have
filed financing statements covering the receivables under the UCC as in effect
in Michigan to perfect their respective interests in the receivables and
continuation statements will be filed as required to continue the perfection
of those interests. The receivables have not and will not be stamped to
indicate the interest of the seller or the trustee.
There are circumstances under the UCC and applicable federal law in
which prior or subsequent transferees of receivables could have an interest in
the receivables with priority over the trust's interest. A purchaser of the
receivables who gives new value and takes possession of the instruments which
evidence the receivables, i.e., the chattel paper, in the ordinary course of
the purchaser's business may, under some circumstances, have priority over the
interest of the trust in the receivables. A tax or other government lien on
property of the RPA seller or the seller arising prior to the time a
Receivable is conveyed to the trust may also have priority over the interest
of the trust in the Receivable. Under the Receivables Purchase Agreement, the
RPA seller will warrant to the seller, and under the Pooling and Servicing
Agreement, the seller has warranted to the trust, that the receivables have
been transferred free and clear of the lien of any third party. Each of the
RPA seller and the seller has also covenanted that it will not sell, pledge,
assign, transfer or grant any lien on any Receivable or, except as described
under "Description of the certificates -- The Seller's Certificate", the
Seller's Certificate, or any interest therein, other than to the trust. Also,
while CFC is the servicer, cash collections on the receivables may, under
certain circumstances, be commingled with the funds of CFC prior to each
distribution date and, in the event of the bankruptcy of CFC, the trust may
not have a perfected interest in those collections.
CERTAIN MATTERS RELATING TO BANKRUPTCY
The RPA seller has warranted to the seller in the Receivables Purchase
Agreement that the sale of the receivables by it to the seller is a valid sale
of the receivables to the seller. Also, the RPA seller and the seller have
agreed to treat the transactions described in this prospectus as a sale of the
receivables to the seller, and the RPA seller has or will take all actions
that are required under Michigan law to perfect the seller's ownership
interest in the receivables. Notwithstanding the foregoing, if the RPA seller
were to become a debtor in a bankruptcy case and a creditor or
trustee-in-bankruptcy of the debtor or the debtor itself were to take the
position that the sale of receivables from the debtor to the seller should be
recharacterized as a pledge of such receivables to secure a borrowing from the
debtor, then delays in payments of collections of receivables to the seller
could occur. If the court should the court rule in favor of any such trustee,
debtor in possession or creditor, reductions in the amount of such payments
could result. See "Special Considerations -- Certain Legal Aspects".
In a 1993 case decided by the U.S. Court of Appeals for the Tenth
Circuit, Octagon Gas System, Inc. v. Rimmer, the court determined that
"accounts", as defined under the Uniform Commercial Code, would be included in
the bankruptcy estate of a transferor regardless of whether the transfer is
treated as a sale or a secured loan. Although the receivables are likely to be
viewed as "chattel paper", as defined under the Uniform Commercial Code,
rather than as accounts, the Octagon holding is equally applicable to chattel
paper. The circumstances under which the Octagon ruling would apply are not
fully known and the extent to which the Octagon decision will be followed in
other courts or outside of the Tenth Circuit is not certain. If the holding in
the Octagon case were applied in a CFC bankruptcy, however, even if the
transfer of receivables to the seller and the trust were treated as a sale,
the receivables would be part of CFC's bankruptcy estate and would be subject
to claims of certain creditors, which could cause delays and reductions in
payments to the seller and certificateholders.
In addition, if the RPA seller were to become a debtor in a bankruptcy
case and a creditor or trustee-in-bankruptcy of the debtor or the debtor
itself were to request a court to order that the RPA seller should be
substantively consolidated with the seller, delays in payments on the
certificates could result. A bankruptcy court ruling in favor of any such
creditor, trustee-in-bankruptcy or such debtor could reduce those payments.
The seller has warranted to the trust that the transfer of the
receivables to the trust is a sale of the receivables to the trust. The seller
has or will take all actions that are required under Michigan law to perfect
the trust's ownership interest in the receivables and the seller has warranted
to the trust that the trust will at all times have a first priority perfected
ownership interest therein and, with certain exceptions, in proceeds thereof.
Nevertheless, a tax or government lien on property of CFC or the seller
arising prior to the time a receivable is conveyed to the trust may have
priority over the interest of the trust in the receivable. DCWR's limited
liability agreement provides that it shall not file a voluntary application
for relief under Title 11 of the United States Code (the "Bankruptcy Code")
without the affirmative vote of the two independent directors of its member.
Pursuant to the Pooling and Servicing Agreement, the trustee, all
certificateholders and any Enhancement provider will covenant that they will
not at any time institute against the seller any bankruptcy, reorganization or
other proceedings under any federal or state bankruptcy or similar law. In
addition, certain other steps will be taken to avoid the seller's becoming a
debtor in a bankruptcy case. Notwithstanding such steps, if the seller were to
become a debtor in a bankruptcy case, and a bankruptcy trustee for the seller
or the seller as debtor in possession or a creditor of the seller were to take
the position that the transfer of the receivables from the seller to the trust
should be recharacterized as a pledge of such receivables, then delays in
payments on the certificates or, should the court rule in favor of any such
trustee, debtor in possession or creditor, reductions in the amount of such
payments could result.
The seller does not intend to file, and CFC has agreed that it will not
cause the seller to file, a voluntary application for relief under the
Bankruptcy Code or any similar applicable state law with respect to the seller
so long as the seller is solvent and does not foresee becoming insolvent.
If the RPA seller or the seller were to become a debtor in a bankruptcy
case, causing a Reinvestment Event or an Early Amortization Event to occur
with respect to the certificates of each Series, then, pursuant to the
Receivables Purchase Agreement, new receivables would no longer be transferred
to the seller and, pursuant to the Pooling and Servicing Agreement, only
collections on receivables already sold to the seller and transferred to the
trust would be available to be applied to pay interest accruing on the
certificates and to pay the principal amount of the certificates. If that
happens, the servicer must allocate all collections on Principal Receivables
to the oldest principal balance first. If the bankruptcy court were to alter
such allocation method, the rate of payment on the certificates might be
adversely affected. In addition, distributions in respect of principal on each
certificate would not be subject to any applicable Controlled Distribution
Amount.
The occurrence of certain events of bankruptcy, insolvency or
receivership with respect to the servicer will result in a Service Default.
The Service Default, in turn, may result in a Reinvestment Event or an Early
Amortization Event with respect to a series. If no other Service Default other
than the commencement of such bankruptcy or similar event exists, a
trustee-in-bankruptcy of the servicer may have the power to prevent either the
trustee or the certificateholders from appointing a successor servicer.
Payments made in respect of repurchases of receivables by CFC or the
seller pursuant to the Pooling and Servicing Agreement may be recoverable by
CFC or the seller, as debtor in possession, or by a creditor or a
trustee-in-bankruptcy of CFC or the seller as a preferential transfer from CFC
or the seller if such payments are made within one year prior to the filing of
a bankruptcy case in respect of CFC.
Neither USA nor CARCO intends to file, and CFC has agreed that it will
not cause USA or CARCO to file, a voluntary application for relief under the
Bankruptcy Code or any similar applicable state law with respect to USA or
CARCO so long as USA and CARCO is solvent and does not foresee becoming
insolvent.
CERTAIN TAX MATTERS
FEDERAL INCOME TAX CONSEQUENCES
A discussion of federal income tax consequences to holders of the
certificates is set forth below. This discussion does not purport to deal with
all aspects of federal income taxation that may be relevant to holders of the
certificates in light of their personal investment circumstances, nor to
certain types of holders subject to special treatment under the federal income
tax laws, for example, banks, life insurance companies and tax-exempt
organizations. Prospective investors are advised to consult their own tax
advisors with regard to the federal income tax consequences of holding and
disposing of the certificates, as well as the tax consequences arising under
the laws of any state, foreign country or other jurisdiction. This discussion
is based upon present provisions of the Internal Revenue Code of 1986 (the
"Code"), the regulations promulgated thereunder, and judicial or ruling
authority, all of which are subject to change, which change may be
retroactive. No ruling on any of the issues discussed below will be sought
from the IRS.
The discussion assumes that a certificate is issued in registered form,
has all payments denominated in U.S. dollars, has a term that exceeds one
year, and does not bear "contingent interest" as defined in Section 871(h)(4)
of the Code. Moreover, except as provided below, the discussion assumes that
the interest on the certificate 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 certificate, i.e.,
any excess of the principal amount of the certificate over its issue price,
does not exceed a de minimis amount, i.e., is less than 1/4% of its principal
amount multiplied by the number of full years until its maturity date, all
within the meaning of the OID regulations. If those conditions are not
satisfied, additional tax considerations will be disclosed in the applicable
prospectus supplement.
Treatment of the Certificates as Indebtedness of the Seller. The seller
and the holders of certificates offered hereby will express in the Pooling and
Servicing Agreement the intent that, for federal, state and local income and
franchise tax purposes and Michigan single business tax purposes, the
certificates will be indebtedness of the seller secured by the receivables and
any other trust assets allocable to the certificates. DCWR, by the acceptance
of the assignment of the Pooling and Servicing Agreement will agree, and each
Certificateholder, by the acceptance of a certificate, will agree to treat the
certificates as indebtedness of the seller for federal, state and local income
and franchise tax purposes and Michigan single business tax purposes. However,
the Pooling and Servicing Agreement generally refers to the transfer of the
receivables as a "sale" for non-tax purposes, and because different criteria
are used in determining the non-tax accounting treatment of the transaction,
the seller will treat the Pooling and Servicing Agreement, for certain non-tax
purposes, as effecting a transfer of an ownership interest in the receivables
and not as creating a debt obligation of the seller.
A basic premise of federal income tax law is that the economic substance
of a transaction generally determines the tax consequences. The form of a
transaction, while a relevant factor, is not conclusive evidence of its
economic substance. In appropriate circumstances, the courts have allowed
taxpayers, as well as the IRS, to treat a transaction in accordance with its
economic substance, as determined under federal income tax law, even though
the participants in the transaction have characterized it differently for
non-tax purposes.
The determination of whether the economic substance of a property
transfer is a sale or a loan secured by the transferred property has been made
by the IRS and the courts on the basis of numerous factors designed to
determine whether the transferor has relinquished, and the transferee has
obtained, substantial incidents of ownership in the property. Among those
factors, the primary factors examined are whether the transferee has the
opportunity to gain if the property increases in value, and has the risk of
loss if the property decreases in value. Based upon its analysis of such
factors, Brown & Wood LLP, special tax counsel to the seller and the trust
("Tax Counsel"), is of the opinion that for federal income tax purposes the
seller will properly be treated as the owner of the receivables and any other
trust assets allocable to the certificates and, accordingly, the certificates
will properly be characterized as indebtedness of the seller that is secured
by the receivables and such other assets.
Interest Income to Certificateholders. Assuming the certificates are
debt obligations for federal income tax purposes, they will not be considered
issued with OID, except as discussed below or in the applicable prospectus
supplement. Interest on the certificates will be taxable as ordinary interest
income when received by certificateholders utilizing the cash-basis method of
accounting and when accrued by certificateholders utilizing the accrual method
of accounting. Under the OID regulations, a holder of a certificate 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 Certificate. A certificateholder
who buys a certificate for less than its principal amount will be subject to
the "market discount" rules of the Code, and a certificateholder who buys a
certificate for more than its principal amount will be subject to the premium
amortization rules of the Code.
However, if any interest due on a series or class of certificates is not
paid in full on its scheduled payment date, or if the amount of interest
payable currently on a series or class is reduced because of a limitation
based on the average interest rate currently payable on the receivables,
certificates of that series or class will thereafter be considered to be
issued with OID. Moreover, even before such an event, the certificates of a
series or class would be considered to have OID from their date of issuance
unless, at the time of issuance, the likelihood of a late payment or
nonpayment of interest, or reduction in the amount of interest payable based
on the interest rate currently payable on the receivables, on the series or
class was considered a "remote contingency" under applicable Treasury
regulations.
The seller intends to take the position, based on the exception for
remote contingencies, that OID does not arise on a series or class of
certificates unless and until an event described in the first sentence of the
preceding paragraph occurs. However, if the Investor certificates of a series
or class were considered to have OID, either initially or subsequently, all
holders of certificates of that series or class would thereafter be required
to accrue OID into income at a rate equal to the full interest rate payable on
the certificates, probably determined without regard to any limitation based
upon the interest payable on the receivables, whether or not all or part of
the interest on the certificates was paid currently. Moreover, the holders
would be required to accrue any de minimis discount into income over the life
of the certificates rather than when principal is paid. As a result, holders
might be required to report taxable income prior to the receipt of cash
attributable to such income.
The trustee will be required to report annually to the IRS, and to each
certificateholder of record, the amount of interest paid on the certificates
and the amount of interest withheld for federal income taxes, if any, for each
calendar year, except as to exempt holders. Exempt holders are generally,
holders that are corporations, tax-exempt organizations, qualified pension and
profit-sharing trusts, individual retirement accounts, or nonresident aliens
who provide certification as to their status as nonresidents. Accordingly,
each nonexempt certificateholder will be required to provide, under penalties
of perjury, a certificate on IRS Form W-9 containing the holder's name,
address, federal taxpayer identification number and a statement that the
holder is not subject to backup withholding. Should a nonexempt
certificateholder fail to provide the required certification, the trustee, or
the Participants or Indirect Participants, will be required to withhold, or
cause to be withheld, 31% of the interest, and principal, otherwise payable to
the holder, and remit the withheld amounts to the IRS as a credit against the
holder's federal income tax liability.
Possible Classification of the Trust as a Partnership or Association. As
described above, it is the opinion of Tax Counsel that the certificates will
properly be characterized as debt of the seller for federal income tax
purposes. However, such opinion is not binding on the IRS and thus no
assurance can be given that such a characterization will prevail.
For example, if the IRS were to contend successfully that the
certificates were not debt of the seller for federal income tax purposes, the
trust might be classified for federal income tax purposes as a partnership, an
association taxable as a corporation or a "publicly traded partnership"
taxable as a corporation. If the certificates are treated as interests in such
a partnership, the partnership would in all likelihood be treated as a
"publicly traded partnership". A publicly traded partnership is, in general,
taxable as a corporation. If the partnership were nevertheless not taxable as
a corporation, because of an exception for an entity whose income is interest
income that is not derived in the conduct of a financial business, it would
not be subject to federal income tax. Rather, each item of income, gain, loss,
deduction and credit generated through the ownership of the receivables by the
partnership would be passed through to the partners in the partnership,
including the certificateholders, according to their respective interests in
the partnership.
The income reportable by the certificateholders as partners in such a
partnership could differ from the income reportable by the certificateholders
as holders of debt. However, except as provided below, it is not expected that
such differences would be material. If the certificateholders were treated as
partners, a cash basis certificateholder might be required to report income
when it accrues to the partnership rather than when it is received by the
certificateholder. Moreover, if the certificates are interests in a
partnership, an individual's share of expenses of the partnership would be
miscellaneous itemized deductions that in the aggregate are allowed only to
the extent they exceed two percent of the individual's adjusted gross income,
and are subject to certain other limitations, meaning that the individual
might be taxed on a greater amount of income than the stated interest on the
certificates. Finally, if any certificates are treated as equity interests in
a partnership in which other certificates are debt, all or part of a
tax-exempt investor's share of income from the certificates that are treated
as equity would be treated as unrelated debt-financed income under the Code
taxable to the investor.
If, alternatively, the trust were treated as either an association
taxable as a corporation or a "publicly traded partnership" taxable as a
corporation, the resulting entity would be subject to federal income taxes at
corporate tax rates on its taxable income generated by ownership of the
receivables. Moreover, distributions by the entity would probably not be
deductible in computing the entity's taxable income and all or part of
distributions to certificateholders would probably be treated as dividend
income to the certificateholders. Such an entity-level tax could result in
reduced distributions to certificateholders and the certificateholders could
be liable for a share of such a tax.
Because the seller will treat the certificates as indebtedness for
federal income tax purposes, the trustee, and Participants and Indirect
Participants, will not comply with the tax reporting requirements that would
apply under these alternative characterizations of the certificates.
Foreign Investors. Tax Counsel has given its opinion that the
certificates will properly be classified as debt of the seller for federal
income tax purposes. If the certificates are so treated:
o interest paid or accrued to a nonresident alien or foreign
corporation or partnership would be exempt from U.S.
withholding taxes , including backup withholding taxes.
However, the holder must comply with applicable identification
requirements and must not actually or constructively own 10% or
more of the voting stock of the seller and must not be a
controlled foreign corporation with respect to the seller.
Applicable identification requirements will be satisfied if
there is delivered to a securities clearing organization, or
bank or other financial institution that holds the certificates
on behalf of the customer in the ordinary course of its trade
or business
o IRS Form W-8 or W-8BEN signed under penalties of perjury by
the beneficial owner of the certificates stating that the
holder is not a U.S. person and providing the holder's name
and address,
o IRS Form 1001 or W-8BEN signed by the beneficial owner of
the certificates or the owner's agent claiming exemption
from withholding under an applicable tax treaty, or
o IRS Form 4224 or W-8ECI signed by the beneficial owner of
the certificates or the owner's agent claiming exemption
from withholding of tax on income connected with the
conduct of a trade or business in the United States.
Form W-8, Form 10001 and Form 4224 are effective until December 31,
2000. Form W-8BEN and W-8ECI are effective until the third
succeeding calendar year from the date the form is signed.
However, in any such case (x) the applicable form must be delivered
pursuant to applicable procedures and must be properly transmitted
to the United States entity otherwise required to withhold tax and
(y) none of the entities receiving the form may have actual
knowledge that the holder is a U.S. person or that any certification
on the form is false. Treasury Regulations published in the Federal
Register on October 14, 1997 (the "New Withholding Regulations")
modify these procedures for claiming exemption from withholding
taxes, effective for payments made after December 31, 2000;
o a holder of a certificate who is a nonresident alien or foreign
corporation will not be subject to United States federal income
tax on gain realized on the sale, exchange or redemption of the
certificate. However, (i) the gain must not be effectively
connected to a trade or business carried on by the holder in
the United States, (ii) in the case of a holder that is an
individual, such holder must not be present in the United
States for 183 days or more during the taxable year in which
the sale, exchange or redemption occurs and (iii) in the case
of gain representing accrued interest, the conditions described
in the first clause must be satisfied; and
o a certificate held by an individual who at the time of death is
a nonresident alien will not be subject to United States
federal estate tax as a result of the individual's death if,
immediately before his death, (i) the individual did not
actually or constructively own 10% or more of the voting stock
of the seller and (ii) the holding of the certificate was not
effectively connected with the conduct by the decedent of a
trade or business in the United States.
If the IRS were to contend successfully that the certificates are
interests in a partnership, not taxable as a corporation, a certificateholder
that is a nonresident alien or foreign corporation might be required to file a
U.S. individual or corporate income tax return and pay tax on its share of
partnership income at regular U.S. rates, including, in the case of a
corporation, the branch profits tax, and would be subject to withholding tax
on its share of partnership income. If the certificates are recharacterized as
interests in an association taxable as a corporation or a "publicly traded
partnership" taxable as a corporation, to the extent distributions on the
certificates were treated as dividends, a nonresident alien individual or
foreign corporation would generally be taxed on the gross amount of those
dividends, and subject to withholding, at a rate of 30% unless the rate were
reduced by an applicable treaty.
Backup Withholding. Certain certificateholders may be subject to backup
withholding at the rate of 31% with respect to interest paid on the
certificates if the certificateholder, upon issuance, fails to supply the
trustee or his broker with his taxpayer identification number, furnishes an
incorrect taxpayer identification number, fails to report interest, dividends
or other "reportable payments" (as defined in the Code) properly, or, under
certain circumstances, fails to provide the trustee or his broker with a
certified statement, under penalty of perjury, that he is not subject to
backup withholding.
The trustee will be required to report annually to the IRS, and to each
certificateholder of record, the amount of interest paid, and OID accrued, if
any, on the certificates, and the amount of interest withheld for U.S. federal
income taxes, if any, for each calendar year, except as to exempt holders.
Exempt holders are, generally, holders that are corporations, certain
tax-exempt organizations or nonresident aliens who provide certification as to
their status as nonresidents. As long as the only "certificateholder" of
record is Cede & Co., as nominee for DTC, certificateholders and the IRS will
receive tax and other information including the amount of interest paid on the
certificates owned from participants and indirect participants rather than
from the trustee. The trustee, however, will respond to requests for necessary
information to enable participants, indirect participants and certain other
persons to complete their reports. Each non-exempt certificateholder will be
required to provide, under penalty of perjury, a certificate on IRS Form W-9
containing his or her name, address, correct federal taxpayer identification
number and a statement that he or she is not subject to backup withholding.
Should a nonexempt certificateholder fail to provide the required
certification, the participants or indirect participants, or the paying agent,
will be required to withhold 31% of the interest, and principal, otherwise
payable to the holder, and remit the withheld amount to the IRS as a credit
against the holder's federal income tax liability.
The New Withholding Regulations generally will be effective for payments
made after December 31, 2000, subject to certain transition rules. The
discussion set forth above does not take the New Withholding Regulations into
account. Prospective non-U.S. persons who own certificates are strongly urged
to consult their own tax advisor with respect to the New Withholding
Regulations.
STATE AND LOCAL TAX CONSEQUENCES
The servicer will service and collect the receivables in Michigan. The
State of Michigan imposes a state individual income tax and a single business
tax which is based partially upon the net income of corporations, partnerships
and other entities doing business in the State of Michigan. This discussion is
based upon present provisions of Michigan statutes and the regulations
promulgated thereunder, and applicable judicial or ruling authority, all of
which are subject to change, which change may be retroactive. No ruling on any
of the issues discussed below will be sought from the Michigan Department of
Treasury.
If the certificates are treated as debt of the seller for federal income
tax purposes, in the opinion of Christopher A. Taravella, Esq., Vice President
and General Counsel of the seller, Michigan tax counsel to the seller and the
trust ("Michigan Tax Counsel"), this treatment will also apply for Michigan
tax purposes. Pursuant to this treatment, the trust will not be subject to the
Michigan single business tax and certificateholders not otherwise subject to
Michigan tax would not become subject to the tax solely because of their
ownership of the certificates. Certificateholders already subject to taxation
in Michigan, however, could be required to pay tax on the income generated
from ownership of these certificates.
In the alternative, if the trust is treated as a partnership, not
taxable as a corporation, for federal income tax purposes, in the opinion of
Michigan Tax Counsel, the same treatment should also apply for Michigan tax
purposes. In that case, the resulting constructive partnership should not be
treated as doing business in Michigan but rather should be treated as a
passive holder of investments and, as a result, should not be subject to the
Michigan single business tax, which, if applicable, could result in reduced
distributions to certificateholders. Certificateholders also should not be
subject to Michigan single business tax on the income received through the
partnership.
Under current law, certificateholders that are nonresidents of Michigan
and that are not otherwise subject to Michigan income tax should not be
subject to Michigan income tax on the income from the constructive
partnership. Under current law corporate certificateholders are not subject to
Michigan income tax. In any event, classification of the arrangement as a
"partnership" would not cause a certificateholder not otherwise subject to
taxation in Michigan to pay Michigan tax on income beyond that derived from
the certificates.
If the certificates are instead treated as ownership interests in an
association or "publicly traded partnership", the hypothetical entity should
not be subject to the Michigan single business tax, which, if applicable,
could result in reduced distributions to certificateholders. A
certificateholder not otherwise subject to tax in Michigan would not become
subject to Michigan tax as a result of its mere ownership of such an interest.
Because each state's income tax laws vary, it is impossible to predict
the income tax consequences to the certificateholders in all of the state
taxing jurisdictions in which they are already subject to tax.
Certificateholders are urged to consult their own tax advisors with respect to
state income and franchise taxes.
ERISA CONSIDERATIONS
GENERAL
Section 406 of ERISA and Section 4975 of the Code prohibit a pension,
profit-sharing or other employee benefit plan 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. A violation of these "prohibited transaction" rules may generate
excise tax and other liabilities under ERISA and the Code for such person. For
example, a prohibited transaction would arise, unless an exemption were
available, if the certificates of a series or class were viewed as debt of the
seller and the seller were a disqualified person or party in interest with
respect to a plan that acquired certificates of that series or class.
Moreover, additional prohibited transactions could arise if the assets
of the trust were deemed to constitute assets of any plan that owned
certificates. The Department of Labor ("DOL") has issued a final regulation
(the "Plan Assets Regulation") concerning the definition of what constitutes
the "plan assets" of an employee benefit plan subject to ERISA or the Code or
an individual retirement account ("IRA") (collectively referred to as "Benefit
Plans"). Under the Plan Assets Regulation the assets and properties of certain
corporations, partnerships and certain other entities in which a Benefit Plan
acquires an "equity interest" could be deemed to be assets of the Benefit Plan
in certain circumstances. Accordingly, if Benefit Plans purchase certificates,
the trust could be deemed to hold plan assets of such Benefit Plan unless one
of the exceptions under the Plan Assets Regulation is applicable to the trust.
The Plan Assets Regulation only applies to the purchase by a Benefit
Plan of an "equity interest" in an entity. Assuming that the certificates of a
series or class are equity interests, the Plan Assets Regulation contains an
exception that provides that if a Benefit Plan acquires a "publicly-offered
security", the issuer of the security is not deemed to hold plan assets. A
publicly-offered security is a security that is
o freely transferable,
o part of a class of securities that is owned by 100 or more
investors independent of the issuer and of one another and
o either is (A) part of a class of securities registered under
Section 12(b) or 12(g) of the Exchange Act or (B) sold to the plan as
part of an offering of securities to the public pursuant to an effective
registration statement under the Securities Act and the class of
securities of which such security is a part is registered under the
Exchange Act within 120 days, or such later time as may be allowed by the
Commission, after the end of the fiscal year of the issuer during which
the offering of such securities to the public occurred.
The certificates of each series and class must be separately tested
under, and may each meet, the criteria of publicly-offered securities as
described above. There are no restrictions imposed on the transfer of the
certificates. Such certificates will be sold as part of an offering pursuant
to an effective registration statement under the Securities Act, and may or
may not be timely registered under the Exchange Act. Based on information
provided by the underwriter or placement agent for certificates of any series
or class that will be registered under the Exchange Act, the seller will
notify the trustee as to whether or not certificates of the series or, if the
series consists of more than one class, each such class will be held by at
least 100 separately named persons at the conclusion of the offering, unless
the related prospectus supplement states otherwise. The seller will not
determine whether the 100-investor requirement of the exception for publicly
offered securities is satisfied as to the certificates of any series or class.
Prospective purchasers may obtain a copy of the notification described in the
third preceding sentence from the trustee at 101 Barclay Street, New York, New
York 10286.
If the certificates of any series or class fail to meet the criteria of
publicly-offered securities and the trust's assets are deemed to include
assets of Benefit Plans that are holders of the certificates, transactions
involving the trust and "parties in interest" or "disqualified persons" with
respect to the plans might be prohibited under Section 406 of ERISA and
Section 4975 of the Code unless an exemption is applicable. Thus, for example,
if a participant in any Benefit Plan is an obligor or guarantor of one of the
receivables, under DOL interpretations the purchase of the certificates by the
plan could constitute a prohibited transaction. There are a number of class
exemptions issued by the DOL that may apply in such event. However, even if
all of the conditions specified in the exemptions are satisfied, they would
probably not apply to all transactions involving the trust's assets.
In light of the foregoing, fiduciaries of a Benefit Plan considering the
purchase of certificates of any series or class should consult their own
counsel as to whether the assets of the trust which are represented by the
certificates would be considered plan assets, and the consequences that would
apply if the trust's assets were considered plan assets.
In addition, based on the reasoning of the United States Supreme Court's
decision in John Hancock Life Ins. Co. v. Harris Trust and Sav. Bank, 510 U.S.
86 (1993), under certain circumstances assets in the general account of an
insurance company may be deemed to be plan assets for certain purposes. Under
such reasoning a purchase of certificates with assets of an insurance
company's general account might be subject to the prohibited transaction rules
described above. Insurance companies investing assets of their general
accounts should also consider the potential effects of the enactment of
Section 401(c) of ERISA, Prohibited Transaction Exemption 95-60, and Labor
Department Regulation Section 2550.401c-1.
Unless the applicable prospectus supplement states otherwise, if the
certificates will not be timely registered under the Exchange Act, or if the
seller does not notify the trustee, as described above, that the certificates
of any particular series or class will be expected to be held by at least 100
persons, the certificates of the series or class, as the case may be, may not
be acquired by any Benefit Plan or by any entity investing assets that are
treated as assets of a Benefit Plan. Furthermore, in that case, the Pooling
and Servicing Agreement, the Series Supplement and each such certificate will
provide that each holder of such certificate shall be deemed to have
represented and warranted that it is not a Benefit Plan and is not purchasing
the certificate on behalf of a Benefit Plan or with assets that are treated as
assets of a Benefit Plan.
EXPERTS
The financial statements of the trust as of December 31, 1999 and 1998,
and for each of the years in the three-year period ended December 31, 1999,
have been incorporated by reference herein and in the registration statement
in reliance upon the report by KPMG LLP, independent certified public
accountants, incorporated herein by reference herein, and upon the authority
of said firm as experts in accounting and auditing.
PLAN OF DISTRIBUTION
The seller may sell certificates offered hereby in any of three ways:
o through underwriters or dealers;
o directly to one or more purchasers; or
o through agents.
The related prospectus supplement will set forth the terms of the
offering of any series certificates, including, without limitation
o the names of any underwriters,
o the purchase price of the certificates and the proceeds to the
seller from the sale,
o any underwriting discounts and other items constituting
underwriter's compensation,
o any initial public offering price and
o any discounts or concessions allowed or reallowed or paid to
dealers.
If the seller uses underwriters in a sale of any certificates of a
series, the certificates will be acquired by the underwriters for their own
account and may be resold from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices to be determined at the time of sale or at the time of
commitment therefor. The certificates may be offered to the public either
through underwriting syndicates represented by managing underwriters or by
underwriters without a syndicate. Unless otherwise set forth in the related
prospectus supplement, the obligations of the underwriters to purchase the
certificates will be subject to certain conditions precedent, and the
underwriters will be obligated to purchase all of such certificates if any of
the certificates are purchased. Any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers may be
changed from time to time.
Certificates of a series may also be offered and sold, if the related
prospectus supplement so states, in connection with a remarketing upon their
purchase, in accordance with a redemption or repayment pursuant to their
terms, by one or more firms ("remarketing firms") acting as principals for
their own accounts or as agents for the seller. The related prospectus
supplement will identify any remarketing firm and describe the terms of its
agreement, if any, with the seller and its compensation. Remarketing firms may
be deemed to be underwriters in connection with the certificates they
remarket.
Certificates may also be sold directly by the seller or through agents
designated by the seller from time to time. Any agent involved in the offer or
sale of certificates will be named, and any commissions payable by the seller
to the agent will be set forth, in the related prospectus supplement. Unless
otherwise indicated in the related prospectus supplement, any such agent will
act on a best efforts basis for the period of its appointment.
Each underwriting agreement and placement agreement will provide that
DCWR and CFC will indemnify the underwriters and agents, respectively, against
certain civil liabilities, including liabilities under the Securities Act, or
contribute to payments the several underwriters and agents, as applicable, may
be required to make in respect thereof.
The trust may, from time to time, invest the funds in its accounts in
Eligible Investments acquired from the underwriters, agents or the seller.
The place and time of delivery for a series of certificates will be set
forth in the prospectus supplement.
Until the distribution of the certificates 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 certificates. As an
exception to these rules, the underwriters are permitted to engage in certain
transactions that stabilize the price of those certificates. Such transactions
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of the certificates.
The underwriters may create a short position in the certificates being
offered by selling more offered certificates than are set forth on the cover
page of the related prospectus supplement. The underwriters may reduce that
short position by purchasing those offered certificates in the open market.
In general, purchases of a certificate for the purpose of stabilization
or to reduce a short position could cause the price of the certificate to be
higher than it might be in the absence of such purchases.
Neither CFC, DCWR 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 certificates of any
series. In addition, neither CFC, DCWR 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 certificates of a series are offered in the United Kingdom, each
underwriter and placement agent will represent and agree that
o it has not offered or sold, and will not offer or sell, any of
those certificates 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 of 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 MATTERS
Certain legal matters relating to the certificates will be passed upon
for DCWR by Brown & Wood LLP, New York, New York, and for any underwriters,
agents or dealers by the counsel named in the applicable prospectus
supplement, which may be Brown & Wood LLP. Certain federal income tax and
ERISA matters will be passed upon for DCWR and the trust by the counsel named
in the applicable prospectus supplement, which may also be Brown & Wood LLP.
Brown & Wood LLP from time to time represents Chrysler Financial Company
L.L.C. and its affiliates on other matters.
<PAGE>
INDEX OF PRINCIPAL TERMS
Term Page
A
Accounts...........................................24
Accumulation Period................................27
Addition Date......................................38
Additional Accounts................................43
Additional Cut-Off Date............................38
Adjusted Invested Amount...........................52
Adjustment Payment.................................57
Auction Vehicles...................................19
Automatic Additional Accounts......................44
Automatic Removal Date.............................47
Automatic Removed Accounts.........................47
Available Subordinated Amount......................55
B
Bankruptcy Code....................................73
Benefit Plans......................................80
C
CARCO..............................................16
CCC................................................18
Certificateholder..................................15
Certificateholders' Interest.......................26
certificates........................................6
CFC.................................................6
CFC Corp...........................................18
Citibank...........................................30
Clearstream........................................30
Code...............................................74
Collateral Security................................37
Collection Account.................................49
Commission..........................................2
Controlled Amortization Period.....................28
Controlled Deposit Amount..........................28
Cooperative........................................33
D
DaimlerChrysler.....................................6
DCWR................................................6
Dealer Overconcentrations..........................43
Dealer Trouble.....................................22
Dealers............................................24
Defaulted Amount...................................57
Defaulted Receivables..............................56
Definitive Certificates............................34
Depository.........................................26
Designated Accounts................................45
Designated Balance.................................45
Designated receivables.............................46
Determination Date.................................39
Distribution Date Statement........................65
DOL................................................79
E
Early Amortization Event...........................59
Early Amortization Period..........................29
Eligible Account...................................40
Eligible Dealer....................................41
Eligible Deposit Account...........................49
Eligible Institution...............................49
Eligible Investments...............................49
Eligible Portfolio.................................24
Eligible Receivable................................41
Enhancements.......................................55
Euroclear..........................................33
Euroclear Operator.................................33
Euroclear Participants.............................32
Excess Funded Amount...............................50
Excess Funding Account.............................50
Excess Principal Collections.......................53
Excluded Series....................................48
F
finance hold.......................................19
Fleet Receivables..................................17
Foreign Agency Depositaries........................30
Fully Reinvested Date..............................60
H
Holders............................................34
I
Indirect Participants..............................31
Ineligible Receivables.............................39
Initial Cut-Off Date............................6, 17
Initial Invested Amount............................52
Insolvency Laws....................................16
Installment Balance Amount.........................43
Interest Funding Account...........................27
Investor Default Amount............................57
IRA................................................80
M
Michigan Tax Counsel...............................78
Miscellaneous Payments.............................52
Monthly Payment Rate...............................47
Monthly Servicing Fee..............................63
Moody's............................................49
Morgan.............................................30
N
New Issuances......................................60
New Vehicles.......................................19
O
OID................................................74
OID regulations....................................74
Overconcentration Amount...........................43
P
Paired Series......................................48
Participants.......................................31
Plan Assets Regulation.............................79
Pool Balance.......................................35
Pooling and Servicing Agreement....................26
Prime Rate.........................................21
Principal Funding Account..........................28
Principal Shortfalls...............................53
Principal Terms....................................36
R
Rating Agency......................................15
Registration Statement..............................2
Reinvestment Event.................................58
Reinvestment Period................................28
Remarketing firms..................................82
Removal and Repurchase Date........................46
Removal Commencement Date..........................45
Removal Date.......................................45
Removal Notice.....................................45
Removed Account....................................46
Repurchased receivables............................47
Required Participation Amount......................44
Required Participation Percentage..................45
RPA seller.........................................68
S
Securities Act......................................2
Seller's Certificate...............................35
Seller's Participation Amount......................39
Series Allocable Defaulted Amount..................51
Series Allocable Interest Collections..............51
Series Allocable Miscellaneous Payments............51
Series Allocable Principal Collections.............51
Series Allocation Percentage.......................52
Series Cut-off Date................................27
Series Issuance Date...............................38
Series Termination Date............................60
Service Default....................................64
Service Transfer...................................64
servicer...........................................64
Servicing Fee......................................63
Servicing Fee Rate.................................63
Special Payment Date...............................29
Standard & Poor's..................................49
Supplemental Certificate...........................35
T
Tax Counsel........................................75
Tax Opinion........................................37
Terms and Conditions...............................33
Transfer Date......................................38
Transfer Deposit Amount............................39
Trust Adjusted Invested Amount.....................52
trust Available Subordinated Amount................39
U
U.S. Wholesale Portfolio...........................19
Unallocated Principal Collections..................53
USA................................................15
Used Vehicles......................................19
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT
AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered
certificates (the "Global Securities") will be available only in book-entry
form. Unless a prospectus supplement for a Series states otherwise, investors
in the Global Securities may hold Global Securities through any of DTC
Clearstream or Euroclear. The Global Securities will be tradeable as home
market instruments in both the European and U.S. domestic markets. Initial
settlement and all secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities
through Clearstream 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 Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between Clearstream or Euroclear and DTC
participants holding Global Securities will be effected on a
delivery-against-payment basis through Citibank, N.A. ("Citibank") and Morgan
Guaranty trust Company of New York ("Morgan") as the respective depositaries
of Clearstream and Euroclear and as participants in DTC.
Non-U.S. holders of Global Securities will be exempt from U.S.
withholding taxes if those holders meet certain requirements and deliver
appropriate U.S. tax documents to the securities clearing organizations or
their participants.
Initial Settlement
All Global Securities will be held in book-entry form by DTC in the name
of Cede Co. as nominee of DTC. Investors' interests in the Global Securities
will be represented through financial institutions acting on their behalf as
direct and indirect participants in DTC. As a result, Clearstream and
Euroclear will hold positions on behalf of their participants through their
respective depositaries, Citibank and Morgan, which in turn will hold such
positions in accounts as participants of DTC.
Investors electing to hold their Global Securities through DTC will
follow the settlement practices applicable to securities previously issued by
the trust. Investor securities custody accounts will be credited with their
holdings against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Clearstream
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. Global Securities will be credited to
the securities custody accounts on the settlement date against payment 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 where both the purchaser's and seller's
accounts are located 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 securities
previously issued by the trust in same-day funds.
Trading between Clearstream and/or participants. Secondary market
trading between Clearstream participants and/or Euroclear participants will be
settled using the procedures applicable to conventional eurobonds in same-day
funds.
Trading between DTC seller and Clearstream or Euroclear purchaser. When
Global Securities are to be transferred from the account of a DTC participant
to the account of a Clearstream participant or a Euroclear participant the
purchaser will send instructions to Clearstream or Euroclear through a
participant at least one business day prior to settlement. Clearstream or
Euroclear will instruct Citibank or Morgan, respectively, as the case may be,
to receive the Global Securities against payment. Payment will include
interest accrued on the Global Securities from and including the last coupon
payment date to and excluding the settlement date. For transactions settling
on the 31st day of the month, payment will include interest accrued to and
excluding the first day of the following month. Payment will then be made by
Citibank or Morgan to the DTC participant's account against delivery of the
Global Securities. After settlement has been completed, the Global Securities
will be credited to the respective clearing system and by the clearing system,
in accordance with its usual procedures, to the Clearstream participant's or
Euroclear participant's account. The Global Securities credit will appear the
next day, European time, and the cash debit will be back-valued to, and the
interest on the Global 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
Clearstream or Euroclear cash debit will be valued instead as of the actual
settlement date.
Clearstream 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 preposition
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Clearstream or Euroclear. Under
this approach, they may take on credit exposure to Clearstream or Euroclear
until the Global Securities are credited to their accounts one day later.
As an alternative, if Clearstream or Euroclear has extended a line of
credit to them, participants can elect not to preposition funds and allow that
credit line to be drawn upon to finance settlement. Under this procedure,
Clearstream participants or Euroclear participants purchasing Global
Securities would incur overdraft charges for one day, assuming they cleared
the overdraft when the Global Securities were credited to their accounts.
However, interest on the Global Securities would accrue from the value date.
Therefore, in many cases the investment income on the Global 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 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 Global Securities
to Citibank or Morgan for the benefit of Clearstream 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 Clearstream or Euroclear seller and DTC purchaser. Due
to time zone differences in their favor, Clearstream and Euroclear
participants may employ their customary procedures for transactions in which
Global Securities are to be transferred by the respective clearing system,
through Citibank or Morgan, to a DTC participant. The seller will send
instructions to Clearstream or Euroclear through a participant at least one
business day prior to settlement. In these cases, Clearstream or Euroclear
will instruct Citibank or Morgan, as appropriate, to deliver the bonds to the
DTC participant's account against payment. Payment will include interest
accrued on the Global Securities from and including the last coupon payment
date to and excluding the settlement date. For transactions settling on the
31st day of the month, payment will include interest accrued to and excluding
the first day of the following month. The payment will then be reflected in
the account of the Clearstream participant or Euroclear participant the
following day, and receipt of the cash proceeds in the Clearstream 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
Clearstream or Euroclear participant have a line of credit with its respective
clearing system and elect to be in debit 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 Clearstream or Euroclear participant's account would instead be valued
as of the actual settlement date.
Finally, day traders that use Clearstream or Euroclear and that purchase
Global Securities from DTC participants for delivery to Clearstream
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 Clearstream or Euroclear for one day, until
the purchase side of the day trade is reflected in their
Clearstream or Euroclear accounts, in accordance with the
clearing system's customary procedures;
o borrowing the Global Securities in the U.S. from a DTC
participant no later than one day prior to settlement, which
would give the Global Securities enough time to be reflected in
their Clearstream 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 Clearstream participant or Euroclear participant.
Certain U.S. Federal Income Tax Documentation Requirements
A holder of Global Securities holding securities through Clearstream 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 the holder takes one of the following steps to obtain an
exemption or reduced tax rate:
o Exemption for non-U.S. persons (Form W-8). Non-U.S.
persons that are beneficial owners can obtain a complete
exemption from the withholding tax by filing a signed Form
W-8 (Certificate of Foreign Status).
o Exemption for non-U.S. persons 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).
o Exemption or reduced rate for non-U.S. persons resident in
treaty countries (Form 1001). Non-U.S. persons that are
beneficial owners 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 or his agent.
o 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 (Request for Taxpayer Identification
Number and Certification).
o U.S. Federal Income Tax Reporting Procedure. The Global
Security holder, or in the case of a Form 1001 or a Form
4224 filer, his agent, files by submitting the appropriate
form to the person through whom he holds, which is 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.
This summary does not deal with all aspects of federal income tax
withholding that may be relevant to foreign holders of these Global
Securities. Investors are advised to consult their own tax advisors for
specific tax advice concerning their holding and disposing of these Global
Securities.
<PAGE>
<TABLE>
<CAPTION>
============================================================ ============================================================
<S> <C>
DAIMLERCHRYSLER
No dealer, salesman or other person has been
authorized to give any information or to make any
representations, other than those contained in the
CARCO prospectus or prospectus supplement. Any such CARCO
information Auto Loan or any such representatives are Auto Loan
not authorized by the Master trust seller or by the Master trust
underwriters. Do not rely on any such information or any
such representations.
$[ ]
We only intend the prospectus supplement to be an [Floating Rate][ %] Auto Loan
offer to sell or a solicitation of any offer to buy the Asset Backed certificates,
offered securities if: [Series 200_-_],
due [ ]
o used in jurisdictions in which such offer
or solicitation is authorized,
o the person making such offer or solicitation DAIMLERCHRYSLER WHOLESALE
is qualified to do so, and RECEIVABLES LLC
Seller
o such offer or solicitation is made to anyone
to whom it is lawful to make such offer or CHRYSLER FINANCIAL COMPANY L.L.C.
solicitation. Servicer
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 PROSPECTUS SUPPLEMENT
the obligation of dealers to deliver the prospectus
supplement when acting as underwriters or when selling
their unsold allotments or subscriptions. -------------------------
[underwriters]
============================================================ ============================================================
</TABLE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Set forth below is an estimate of the amount of fees and expenses
(other than underwriting discounts and commissions) to be incurred in
connection with the issuance and distribution of the Certificates.
<TABLE>
<CAPTION>
<S> <C>
SEC Filing Fee................................................ $278
Trustee's Fees and Expenses (including counsel fees).......... $11,000
Accounting Fees and Expenses.................................. $10,000
Legal Fees and Expenses....................................... $10,000
Printing and Engraving Expenses............................... $15,000
Rating Agency Fees............................................ $94,000
Miscellaneous................................................. $6,000
Total.................................................... $147,000
</TABLE>
Item 15. Indemnification of Directors and Officers.
DaimlerChrysler Corporation (parent of Chrysler Financial Company
L.L.C. and therefore the indirect parent of the Registrant) and U.S. Auto
Receivables Company, the sole member of the Registrant, are incorporated under
Delaware law. Section 145 of the Delaware General Corporation Law provides
that a Delaware corporation may indemnify any persons, including officers and
directors, who are, or are threatened to be made, parties to any threatened,
pending or completed legal action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of such corporation), by reason of the fact that such person was an
officer or director of such corporation, or is or was serving at the request
of such corporation as a director, officer, employee or agent of another
corporation or enterprise. The indemnity may include expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding, provided such officer or director acted in good faith and in a
manner he reasonably believed to be in or not opposed to the corporation's
best interests and, for criminal proceedings, had no reasonable cause to
believe that his conduct was illegal. A Delaware corporation may indemnify
officers and directors in an action by or in the right of the corporation
under the same conditions, except that no indemnification is permitted without
judicial approval if the officer or director is adjudged to be liable to the
corporation. Where an officer or director is successful on the merits or
otherwise in the defense of any action referred to above, the corporation must
indemnify him against the expenses which such officer or director actually and
reasonably incurred.
Section B of Article VIII of the Certificate of Incorporation of
DaimlerChrysler Corporation, the indirect parent of the Registrant, provides,
in effect, that, subject to certain limited exceptions, DaimlerChrysler
Corporation will indemnify the officers and directors of DaimlerChrysler
Corporation or its subsidiaries to the extent permitted by Delaware law. In
addition, DaimlerChrysler Corporation maintains insurance providing for
payment, subject to certain exceptions, on behalf of officers and directors of
DaimlerChrysler Corporation and its subsidiaries of money damages incurred as
a result of legal actions instituted against them in their capacities as such
officers or directors.
Chrysler Financial Company L.L.C. is formed under Michigan law.
Section 408 of the Michigan Limited Liability Company Act provides, in effect,
that a Michigan limited liability company may indemnify and hold harmless a
manager from and against any and all losses, expenses, claims, and demands
sustained by reason of any acts or omissions or alleged acts or omissions as a
manager, including judgments, settlements, penalties, fines, or expenses
incurred in a proceeding to which the person is a party or threatened to be
made a party because he or she is or was a manager, to the extent provided for
in an operating agreement or contract, except that the company may not
indemnify any person for liability caused by the receipt of a financial
benefit by a manager to which the manager is not entitled, a manager or member
voting or assenting to a distribution in violation of an operating agreement
or Section 404 of the Michigan Limited Liability Company Act without complying
with certain requirements, or a person committing a knowing violation of law.
Article VII of the By-Laws of U.S. Auto Receivables Company provides,
in effect, that, subject to certain exceptions, such Registrant will indemnify
its officers and directors to the extent that they acted in good faith and in
a manner reasonably believed to be in the best interests of the Registrant.
The Registrant itself does not have officers or directors at this
time. Section 8.2 of the Registrant's Limited Liability Company Agreement
indemnifies each member, employee or agent of the Registrant against expenses,
judgments and amounts paid in settlement actually and reasonably incurred by
such person in connection with actions, suits or proceedings by reason of such
person being a member, employee or agent of the Registrant.
Item 16. Exhibits:
1.1 -- Form of Underwriting Agreement with respect to the Certificates is
incorporated by reference from Exhibit 1.1 of the Registrant's
Registration Statement on Form S-3 (File No. 333-38873).
3.1 -- Certificate of Formation of the Registrant.
3.2 -- Limited Liability Company Agreement of the Registrant.
4.1 -- Form of Pooling and Servicing Agreement among the Registrant, the
Servicer and the Trustee is incorporated by reference from Exhibit
4.1 of the Registrant's Registration Statement on Form S-1 (File No.
33-41177).
4.2 -- First Amendment to the Pooling and Servicing Agreement is incorporated
by reference from Exhibit 4.2 of the Registrant's Registration
Statement on Form S-1 (File No. 33-52990).
4.3 -- Second Amendment to the Pooling and Servicing Agreement is incorporated
by reference from Exhibit 4.3 of the Registrant's Registration
Statement on Form S-1 (File No. 33-70144).
4.4 -- Third Amendment to the Pooling and Servicing Agreement.
4.5 -- Form of Series Supplement to the Pooling and Servicing Agreement,
including the form of the Certificates and the Form of Servicing
Report, is incorporated by reference from Exhibit 4.4 of the
Registrant's Registration Statement on Form S-3 (File No. 333-38873).
4.6 -- Form of Remarketing Agreement, including the Form of Remarketing
and Settlement Procedures, is incorporated by reference from Exhibit
4.5 of the Registrant's Registration Statement on Form S-3 (File No.
333-38873).
5.1 -- Opinion of Brown & Wood LLP with respect to certain matters involving
the Certificates.
8.1 -- Opinion of Brown & Wood LLP with respect to federal tax matters.
8.2 -- Opinion of Christopher A. Taravella, Esq. with respect to tax matters
under Michigan law and the Certificates.
23.1-- Consent of Christopher A. Taravella, Esq. (included in opinion filed as
Exhibit 8.2).
23.2-- Consent of Brown & Wood LLP (included in opinions filed as Exhibits 5.1
and 8.1).
23.3-- Consent of KPMG LLP.
24.1-- Power of Attorney.
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, 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) 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 in Item 15 herein, 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 the Securities Act of 1933, as amended, and will be
governed by the final adjudication of such issue.
(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 information omitted in reliance on Rule 430A: The
undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, as amended, the information omitted from the
form of prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus filed
by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under
the Securities Act of 1933, as amended, shall be deemed to be part of
this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, as amended, each post-effective amendment
that contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Southfield, State of Michigan, on
the 25th day of May, 2000.
DAIMLERCHRYSLER WHOLESALE RECEIVABLES LLC,
By U.S. AUTO RECEIVABLES COMPANY, its sole member
By /s/ DARRELL L. DAVIS
-------------------------------------
Darrell L. Davis
President
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 of U.S. Auto Receivables
Company:
/s/ DARRELL L. DAVIS President May 25, 2000
- -------------------------------------------
Darrell L. Davis
Principal financial officer of U.S. Auto Receivables
Company:
/s/ MICHAEL MUEHLBAYER Vice President May 25, 2000
- -------------------------------------------
Michael Muehlbayer
Principal accounting officer of U.S. Auto
Receivables Company:
/s/ D.H. OLSEN Vice President May 25, 2000
- ------------------------------------------- and Controller
D.H. Olsen
<PAGE>
Board of Directors of U.S. Auto Receivables Company:
/s/ D.H. Olsen* Director May 25, 2000
- -------------------------------------------
D.H. Olsen
/s/ D.L. DAVIS* Director May 25, 2000
- -------------------------------------------
D.L. Davis
/s/ M.A. KICKHAM* Director May 25, 2000
- -------------------------------------------
M.A. Kickham
/s/ J.A. SELLGREN* Director May 25, 2000
- -------------------------------------------
J.A. Sellgren
*By /s/ B.C. BABBISH
---------------------------------------
B.C. Babbish
Attorney-in-Fact
May 25, 2000
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
1.1 -- Form of Underwriting Agreement with respect to the Certificates is
incorporated by reference from Exhibit 1.1 of the Registrant's
Registration Statement on Form S-3 (File No. 333-38873).
3.1 -- Certificate of Formation of the Registrant.
3.2 -- Limited Liability Company Agreement of the Registrant.
4.1 -- Form of Pooling and Servicing Agreement among the Registrant, the
Servicer and the Trustee is incorporated by reference from Exhibit
4.1 of the Registrant's Registration Statement on Form S-1 (File No.
33-41177).
4.2 -- First Amendment to the Pooling and Servicing Agreement is
incorporated by reference from Exhibit 4.2 of the Registrant's
Registration Statement on Form S-1 (File No. 33-52990).
4.3 -- Second Amendment to the Pooling and Servicing Agreement is
incorporated by reference from Exhibit 4.3 of the Registrant's
Registration Statement on Form S-1 (File No. 33-70144).
4.4 -- Third Amendment to the Pooling and Servicing Agreement.
4.5 -- Form of Series Supplement to the Pooling and Servicing Agreement,
including the form of the Certificates and the Form of Servicing
Report, is incorporated by reference from Exhibit 4.4 of the
Registrant's Registration Statement on Form S-3 (File No. 333-38873).
4.6 -- Form of Remarketing Agreement, including the Form of Remarketing and
Settlement Procedures, is incorporated by reference from Exhibit 4.5
of the Registrant's Registration Statement on Form S-3 (File No.
333-38873).
5.1 -- Opinion of Brown & Wood LLP with respect to certain matters involving
the Certificates.
8.1 -- Opinion of Brown & Wood LLP with respect to federal tax matters.
8.2 -- Opinion of Christopher A. Taravella, Esq. with respect to tax matters
under Michigan law and the Certificates.
23.1-- Consent of Christopher A. Taravella, Esq. (included in opinion filed
as Exhibit 8.2).
23.2-- Consent of Brown & Wood LLP (included in opinions filed as Exhibits
5.1 and 8.1).
23.3-- Consent of KPMG LLP.
24.1-- Power of Attorney.
Exhibit 3.1
CERTIFICATE OF FORMATION
OF
DAIMLERCHRYSLER WHOLESALE RECEIVABLES LLC
This Certificate of Formation of DaimlerChrysler Wholesale
Receivables LLC (the "LLC"), dated as of February 24, 2000, is being duly
executed and filed by James G. Leyden, Jr., as an authorized person, to form a
limited liability company under the Delaware Limited Liability Company Act (6
Del.C. Section 18-101, et seq.).
- ------ -- ---
FIRST. The name of the limited liability company formed hereby
is DaimlerChrysler Wholesale Receivables LLC.
SECOND. The address of the registered office of the LLC in
the State of Delaware is c/o The Corporation Trust Company, Corporate Trust
Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801.
THIRD. The name and address of the registered agent for
service of process on the LLC in the State of Delaware is The Corporation
Trust Company, Corporate Trust Center, 1209 Orange Street, Wilmington, New
Castle County, Delaware 19801.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate of Formation as of the date first above written.
/s/ James G. Leyden, Jr.
------------------------------
Name: James G. Leyden, Jr.
Authorized Person
Exhibit 3.2
LIMITED LIABILITY COMPANY AGREEMENT
of
DaimlerChrysler Wholesale Receivables L.L.C.
The undersigned, U.S. Auto Receivables Company, a Delaware corporation
(the "Member"), hereby adopts this Limited Liability Company Agreement (the
"Agreement") as of the 29th day of February, 2000, in connection with the
formation of DaimlerChrysler Wholesale Receivables L.L.C., a limited liability
company (the "Company"). Definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to
the masculine as well as to the feminine and neuter genders of such terms.
Each Independent Director joins in the execution of the Agreement and agrees
to be bound by its terms.
WHEREAS, the Member has caused the Company to be formed by the filing of
the Certificate of Formation with the State of Delaware on January , 2000 and
desires to provide certain terms for the governance of the Company and the
conduct of its business.
NOW, THEREFORE, the Member declares as follows:
1. Organization of Company.
1.1 Formation. The Member hereby forms a limited liability company
pursuant to the provisions of the Act and this Agreement.
1.2 Name and Office. The name of the Company shall be DaimlerChrysler
Wholesale Receivables L.L.C., and its office shall be located at 27777
Franklin Road, Southfield, Michigan 48034 or such other place as the Member
may determine from time to time.
1.3 Duration. The Company shall continue in existence perpetually, unless
the Company shall be sooner dissolved and its affairs wound up in accordance
with this Agreement. The existence of the Company as a separate legal entity
shall continue until the cancellation of its Certificate of Formation in
accordance with the Act.
1.4 Registered Office and Resident Agent. The Company's initial
registered office shall be at the office of its resident agent at Corporation
Trust Center, 1209 Orange Street, Wilmington, Delaware, and the name of its
initial resident agent at such address shall be The Corporation Trust Company.
The registered office and resident agent may be changed from time to time in
accordance with the Act. If the resident agent shall ever resign, the Company
shall promptly appoint a successor.
1.5 Authorization. The Company by or through the Member on behalf of the
Company may enter into and perform any and all business and all documents,
agreements, certificates, or financing statements contemplated thereby or
related thereto, all without any further act, vote or approval of any other
person, notwithstanding any other provision of this Agreement, the Act or
applicable law, rule or regulation. The foregoing authorization shall not be
deemed a restriction on the powers of the Member to enter into other
agreements on behalf of the Company.
2. Definitions.
As used in this Agreement, the following terms shall have the following
meanings:
The "Act" means the Delaware Limited Liability Company Act, as amended
from time to time.
"Adjusted Deficit Capital Account Balance" means, with respect to any
Member, the deficit balance, if any, in such Member's capital account as of
the end of the relevant Company Fiscal Year, (1) increased by any amounts
which such Member is obligated to restore under Treasury Regulation Section
1.704-1(b)(2)(ii)(c), plus an amount equal to such Member's share of Company
Minimum Gain and such Member's share of Member Nonrecourse Debt Minimum Gain
and (2) decreased by the items described in Treasury Regulation Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6).
"Affiliate" means any person which directly or indirectly through one or
more intermediaries controls, is controlled by, or is under common control
with the Member.
"Agreement" means this Limited Liability Company Agreement of the Company
and any amendments adopted in accordance with this Agreement and the Act.
The "Articles" means the Certificate of Formation of the Company,
including any restatements or amendments, which are filed with the Secretary
of State of the State of Delaware.
"Bankruptcy" means, with respect to any person, if such person (i) makes
an assignment for the benefit of creditors, (ii) files a voluntary petition in
bankruptcy, (iii) is adjudged a bankrupt or insolvent, or has entered against
it an order for relief, in any bankruptcy or insolvency proceedings, (iv)
files a petition or answer seeking for itself any reorganization, arrangement,
composition, readjustment, liquidation or similar relief under any statute,
law or regulation, (v) files an answer or other pleading admitting or failing
to contest the material allegations of a petition filed against it in any
proceeding of this nature, (vi) seeks, consents to or acquiesces in the
appointment of a trustee, reciever or liquidator of the person or of all or
any substantial part of its properties, or (vii) if 120 days after the
commencement of any proceeding against the person seeking reorganization,
arrangement, composition, readjustment, liquidation or similar relief under
any stature, law or regulation, if the proceeding has not been dismissed, or
if within 90 days after the appointment without such person's consent or
acquiescence of a trustee, receiver or liquidator of such person or of all or
any substantial part of its properties, the appointment is not vacated or
stayed, or within 90 days after the expiration of any such stay, the
appointment is not vacated. With respect to a Member, the foregoing definition
of "Bankruptcy" is intended to replace and shall supersede and replace the
definition of "Bankruptcy" set forth in Section 18-101(1) and 18-304 of the
Act.
"Book Value" means with respect to any asset, the asset's adjusted basis
for federal income tax purposes, except as follows:
(a) the initial Book Value of any asset contributed (or deemed
contributed) to the Company shall be such asset's gross fair market
value at the time of such contribution;
(b) the Book Value of all Company assets shall be adjusted to equal
their respective gross fair market values at the times specified in
Treasury Regulations under Code Section 704(b) if the Company so
elects; and
(c) if the Book Value of an asset has been determined pursuant to clause
(a) or (b), such Book Value shall thereafter be adjusted by the
Depreciation taken into account with respect to such asset for
purposes of computing Profits and Losses.
"Capital Accounts" shall have the meaning set forth in Section 7.1 of
this Agreement.
"Capital Contributions" means the amount of all cash or the agreed upon
value of other property of services contributed to the Company.
The "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Company Minimum Gain" means an amount determined in accordance with
Treasury Regulation Section 1.704-2(d) for partnership minimum gain by
computing, with respect to each nonrecourse liability of the Company (as
defined in Treasury Regulation Section 1.752-1(a)(2)), the amount of gain (of
whatever character), if any, that would be realized by the Company if (in a
taxable transaction) it disposed of property subject to such liability in full
satisfaction thereof, and by then aggregating the amounts so computed.
"Depreciation" means for each Fiscal Year of the Company or other period,
an amount equal to the depreciation, amortization or other cost recovery
deduction allowable under the Code with respect to an asset for such year or
other period, except that if the Book Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning of such year
or other period, Depreciation shall be an amount which bears the same ratio to
such beginning Book Value as the federal income tax depreciation, amortization
or other cost recovery deduction for such year or other period bears to such
beginning adjusted tax basis; provided, however, that if the federal income
tax depreciation, amortization or other cost recovery deduction for such year
is zero, Depreciation shall be determined with reference to such beginning
Book Value using any reasonable method selected by the Majority Interest.
The "Fiscal Year" of the Company, and its taxable year for Federal income
tax purposes, shall be the calendar year.
"Independent Director" means an individual who (i) either is not the
beneficial owner at the time of such individual's appointment as an
Independent Director or at any time thereafter while serving as an Independent
Director of more than 100 shares in the aggregate of all classes of common
stock of DaimlerChrysler AG Corporation ("DCAG"), its subsidiaries and
Affiliates , and (ii) is not at such time, and shall not have been at any time
during the preceding five years, a director, officer, employee or Affiliate of
DCAG or of any of its subsidiaries or Affiliates or of a Major Creditor of
DCAG; provided; however, that for purposes of this definition, an individual
shall not be deemed to be not independent solely because such person acts as
an Independent Director of DCAG or any of its subsidiaries or Affiliates in
accordance with the provisions of DCAG's or such subsidiary's or Affiliate's
certificate of incorporation, charter, by-laws or other agreement requiring
DCAG or such subsidiary or Affiliate to maintain one or more Independent
Directors. The term "Major Creditor" shall mean a financial institution to
which DCAG has outstanding indebtedness for borrowed money in a sufficiently
large amount as would reasonably be expected to influence adversely the
judgment of the proposed Independent Director with respect to the interests of
the Company when the Company's interests are adverse to those of DCAG.
"Independent Member" means a member of the Company that is a special
purpose corporation formed pursuant to a charter or certificate of
incorporation that (i) limits its business purposes and activities and (ii)
requires the consent of two or more Independent Directors before such
corporation may (A) institute proceedings to have itself or the Company
adjudicated a bankrupt or insolvent; consent to the institution of bankruptcy
or insolvency proceedings against it or the Company; file a petition seeking,
or consent to, such corporation's or the Company's reorganization or relief
under any applicable federal or state law relating to bankruptcy; consent to
the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of such corporation or the Company or a substantial
part of either's property; make any assignment for the benefit of its or the
Company's creditors, admit in writing its inability to pay its or the
Company's debts generally as they become due, or take any corporate action in
furtherance of any such action or (B) institute, or join in any institution,
against any entity in which such corporation holds an ownership interest any
bankruptcy, insolvency, liquidation, reorganization or arrangement proceedings
or other proceedings under any United States federal or state bankruptcy or
similar law.
"Majority Interest" or "Majority of the Members" means those Members
holding more than 50% of the Membership Percentages.
"Majority of the Remaining Members" means those Members holding more than
50% of the Membership Percentages and more than 50% of the Capital Account
balances of the Members.
"Managers" are the persons that may be designated from time to time by
the Members to perform such functions for the Company as may be determined
from time to time by the Members or by the Articles.
"Member Nonrecourse Debt" shall have the meaning, and be determined in
the same manner as, partner nonrecourse debt pursuant to Treasury Regulation
Section 1.704-2(b)(4).
"Member Nonrecourse Debt Minimum Gain" means the amount, with respect to
each Member Nonrecourse Debt, equal to the Company Minimum Gain that would
result if such Member Nonrecourse Debt were treated as a nonrecourse liability
of the Company, determined in the same manner as partner nonrecourse debt
minimum gain in accordance with Treasury Regulation Section 1.704-2(I)(3).
"Member Nonrecourse Deductions" shall have the meaning, and be determined
in the same manner as, partner nonrecourse deductions pursuant to Treasury
Regulation Section 1.704-2(I)(2).
"Members" means U. S. Auto Receivables Company and any other person
designated as such in Exhibit A, each in its capacity as a "member" of the
Company within the meaning of the Act; provided, however, the term "Member"
shall not include Special Member. Any reference to a Member shall, unless the
context clearly requires otherwise, include a reference to its predecessor and
successor (other than a mere assignee not made a substitute Member) in
interest.
"Membership Percentages" means the Members' respective limited liability
company interests in the Company as set forth in Exhibit A.
"Nonrecourse Deductions" shall have the meaning set forth in Treasury
Regulation Section 1.704-2(c).
"person" shall have the meaning assigned to such term in the Act.
"Profits and Losses" means the Company's taxable income or loss for each
Fiscal Year (or other period) determined in accordance with the accounting
methods followed by the Company for federal income tax purposes (for this
purpose all items of income, gain, loss or deduction required to be separately
stated pursuant to Code Section 703(a)(1) shall be included in taxable income
or loss) as determined by the independent certified public accountants
employed by the Company, with the following adjustments:
(a) any income of the Company that is exempt from federal income tax
and not otherwise taken into account in computing Profits and Losses shall be
added to such taxable income or loss;
(b) any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures under Code
Section 704(b) and not otherwise taken into account in computing Profits and
Losses shall be subtracted from such taxable income or loss;
(c) in the event the Book Value of any Company asset is adjusted,
the amount of such adjustment shall be taken into account as gain or loss from
the disposition of such asset for purposes of computing Profits or Losses;
(d) any gain or loss resulting from any disposition of Company
property with respect to which gain or loss is recognized for federal income
tax purposes shall be computed by reference to the Book Value of such property
rather than its adjusted tax basis;
(e) in lieu of the depreciation, amortization and other cost
recovery deductions taken into account in computing taxable income or loss,
there shall be taken into account Depreciation for such Fiscal Year or other
period; and
(f) notwithstanding the foregoing, any items which are specially
allocated pursuant to Section 7.4 shall not be taken into account in computing
Profits and Losses.
"Special Member" means, upon such person's admission to the Company as a
member of the Company pursuant to Section 9.4, a person acting as Independent
Director, in such person's capacity as a member of the Company. A Special
Member shall only have the rights and duties expressly set forth in this
Agreement.
All references to statutory provisions shall be deemed to include
reference to corresponding provisions of subsequent law.
3. Purposes. The purposes for which the Company is formed are:
(a) to acquire, own, hold, service, sell, assign, pledge, finance,
refinance and otherwise deal with from time to time (motor vehicle wholesale
inventory loans or sales contracts secured by, among other things, new or used
motor vehicles (the "Contracts");
(b) to acquire, own, hold, service, sell, assign, pledge, finance,
refinance and otherwise deal with collateral securing the Contracts, related
insurance policies, related agreements with affiliates, agreements with motor
vehicle dealers and other originators or servicers of Contracts and any
proceeds or further rights associated therewith;
(c) to sell, assign, pledge or otherwise transfer Contracts, rights and
properties referred to in paragraph (2) above, Certificates and notes to
trusts originated by the Company or one of its affiliates (each a "Trust") or
to affiliates of the Company;
(d) to authorize, sell and deliver or participate in the issuance of one
or more series or classes of participation certificates or other evidences of
interest ("Certificates") or one or more series or classes of bonds, notes or
other evidences of indebtedness ("Notes"), in either case issued by Trusts;
(e) to acquire Certificates or Notes or other property of a Trust,
including remainder interests in collateral or reserve accounts;
(f) to issue, authorize, sell and deliver Notes secured or collateralized
by Contracts, Certificates or Notes;
(g) to hold, and to enjoy all of the rights and privileges as a holder
of, any Certificates or Notes;
(h) to negotiate, authorize, execute, deliver or assume or perform the
obligations under any agreement, instrument or document relating to the
activities set forth in clauses (a) through (g) above, including but not
limited to any trust agreement, sale and servicing agreement, pooling and
servicing agreement, indenture, reimbursement agreement, credit support
agreement, receivables purchase agreement, indemnification agreement,
placement agreement or underwriting agreement; and
(i) to engage in any activity and to exercise any powers permitted to
limited liability companies under the laws of the State of Delaware that are
related or incidental to the foregoing and necessary, convenient or advisable
to accomplish the foregoing.
The Company shall have the authority to do all things necessary or
convenient to accomplish its purposes and to operate its business, including
all powers granted by the Act. The Company's business shall be limited to the
purposes set forth in this Agreement. No Member need afford the Company or any
Member the opportunity of investing or otherwise participating in any other
enterprise, regardless of whether such enterprises, but for this sentence,
would be deemed an opportunity of the Company. Moreover, nothing in this
Agreement shall prohibit any Member from engaging in any other business
activity, whether or not competitive with, similar to, or within the scope of
the activities conducted by or on behalf of the Company.
4. Capital Contributions; Borrowings.
4.1 Initial Contributions of Members. The Member shall make the Capital
Contributions set forth next to their name in Exhibit A upon the formation of
the Company. No interest shall accrue on any Capital Contribution made to the
Company.
4.2 Additional Capital Contributions. The Member shall not be obligated
to make additional capital contributions except upon the consent of all the
Members.
4.3 Resignation. No Member shall be entitled to be repaid any portion of
its Capital Account or resign from the Company without the consent of all of
the Members or as otherwise provided in this Agreement.
4.4 Borrowings. The Company may borrow sums to be used for any of the
business purposes described in this Agreement; provided, however, that any
such borrowing shall require the prior approval of a Majority Interest of the
Members , shall not be prohibited by the Articles, any applicable law,
regulation or agreement, shall be subordinated in interest to all CARCO Auto
Loan Master Trust Series Certificateholders, and any unpaid borrowing shall
not represent a claim against the Company or CARCO Auto Loan Master Trust. Any
Member may advance such sums to the Company as approved in writing by a
Majority Interest. Any amounts borrowed from a Member shall not constitute a
contribution to the capital of the Company but shall constitute a debt of the
Company which shall be repaid before any distributions to the Members.
4.5 Additional Members. No additional Members shall be admitted to the
Company without the unanimous consent of the existing Members.
5. Management.
5.1 Powers of the Members.
(a) The Company shall be managed by its Members. Subject to the
other provisions of this Section 5 and Section 6, each Member shall have the
authority, on behalf of the Company, to do all things appropriate to the
accomplishment of the purposes of the Company, including (but not limited to):
(1) acquiring and selling, assigning and transferring installment obligations,
leases, retail installment sales contracts, inventory loans, promissory notes,
security agreements and receivables, (2) disbursing Company funds for Company
purposes; (3) investing and reinvesting Company funds; (4) executing
contracts, notes, mortgages and other writings; (5) employing attorneys,
accountants, managers or other agents, which may include Affiliates of the
Company; (6) paying all Company obligations; (7) performing all ministerial
acts and duties relating to the payment of all indebtedness, taxes and
assessments due or to become due with regard to any property of the Company;
(8) purchasing and maintaining insurance on behalf of the Company against any
liability or expense asserted against or incurred by the Company; (9)
transacting the Company's business under an assumed name or name other than
its name as set forth in the Certificate of Formation and filing a certificate
of assumed name in any applicable jurisdiction; (10) appointing any Member or
other person as agent for service of process on the Company as required by the
law of any state in which the Company transacts business; (11) commencing,
prosecuting or defending any proceeding in the Company's name; and (12) doing
such other acts as may facilitate the Company's exercise of its powers,
provided, however, that all such acts shall fall within the business purposes
of the Company as set forth in this Agreement.
(b) Notwithstanding anything in this Agreement to the contrary, the
Company shall at all times have at least one Independent Member, which may be
the sole Member, and no action of the type described in Section 6 shall occur
without the consent of each such Independent Member.
(c) The Members, acting by Majority Interest and by a written
instrument, may from time to time delegate all or any of their powers or
duties hereunder (except as provided in Section 6) to one or more Members. Any
Member may by written instrument delegate any of its powers and duties (except
as provided in Section 6) to any other Member, in which event any exercise or
performance of such powers or duties by such Member shall be treated as the
action of the delegating Member as well as the acting Member.
(d) Each Member irrevocably appoints the other Members as its
attorney-in-fact on its behalf and in its stead to execute, swear to and file
the Certificate of Formation and any amendment or revocation of the
Certificate of Formation and to execute, sign any Member's name to, swear to
and file any writing, and to give any notice which may be required by any rule
or law and which may be appropriate in order to effect any action by or on
behalf of the Company or the Members taken as provided in this Agreement or
which may be necessary or appropriate to correct any errors or omissions. This
power of attorney is coupled with an interest and shall not be revoked by the
act of any Member. This power of attorney shall survive (i) the subsequent
dissolution or incapacity of the appointing Member and (ii) an assignment by
any Member of its interest in the Company; provided, however, that where a
Member's entire interest is assigned to an assignee who becomes a substitute
Member in its stead this power shall survive for the sole purpose of enabling
such Member to effect such substitution. Each Member shall provide 7-days?
prior written notice of actions to be taken as attorney-in-fact on behalf of
another Member and the acting Member shall be authorized to take such actions
unless the other Member objects in writing within the 7-day notice period.
(e) James G. Leyden, Jr. is hereby designated as an "authorized
person" within the meaning of the Act, and has executed, delivered and filed
the Certificate of Formation of the Company with the Secretary of State of the
State of Delaware. Upon the filing of the Certificate of Formation with the
Secretary of State of the State of Delaware, his powers as an "authorized
person" ceased, and the Member thereupon became the designated "authorized
person" and shall continue as the designated "authorized person" within the
meaning of the Act. The Member shall execute, deliver and file any other
certificates (and any amendments and/or restatements thereof) necessary for
the Company to qualify to do business in Michigan and in any other
jurisdiction in which the Company may wish to conduct business. A copy of the
Certificate of Formation or amendments will be provided to each Member upon
his written request to the Company.
(f) Subject to the other provisions of this Section 5 and Section 6,
the Members shall have full power to act for and to bind the Company to the
extent provided by Delaware law and this Agreement. Every contract, note,
mortgage, lease, deed or other instrument executed by any Member shall be
conclusive evidence that at the time of execution, this Company was then in
existence, that this Agreement had not theretofore been terminated or amended
in any manner and that the execution and delivery of such instrument was duly
authorized by the Members.
(g) U. S. Auto Receivables Company and any successor member shall
act as "tax matters partner" of the Company, as defined in Code Section
6231(a)(7).
5.2 Limitations on Powers. Notwithstanding the foregoing and any other
provision contained in this Agreement to the contrary, no act shall be taken,
sum expended, decision made, obligation incurred or power exercised by any
Member on behalf of the Company without prior written notice to all Members
outlining the proposed action followed by the written consent of a Majority
Interest of the Members with respect to: (a) any mortgage, grant of security
interest, pledge or encumbrance of any asset of the Company; (b) any merger of
the Company with another entity; (c) a transaction involving an actual or
potential conflict of interest between a Member and the Company; (d) any
change in the character of the business and affairs of the Company; (e) the
commission of any act which would make it impossible for the Company to carry
on its ordinary business and affairs; or (f) any act that would contravene any
provision of the Certificate of Formation or this Agreement or the Act.
5.3 Self Dealing. Any Member and any Affiliate of a Member may deal with
the Company, directly or indirectly, as vendor, purchaser, employee, agent or
otherwise. No contract or other act of the Company shall be voidable or
affected in any manner by the fact that a Member or his Affiliate is directly
or indirectly interested in such contract or other act apart from his interest
as a Member, nor shall any Member or his Affiliate be accountable to the
Company or the other Members in respect of any profits directly or indirectly
realized by him by reason of such contract or other act, and such interested
Member shall be eligible to vote or take any other action as a Member in
respect of such contract or other act as it would be entitled were he or his
Affiliate not interested therein. Notwithstanding the foregoing provisions of
this Section 5.3, (a) any direct or indirect interest of a Member or Affiliate
of a Member in any contract or other act, other than his interest as a Member,
shall be disclosed to all other Members, (b) such contract or other act shall
be approved by a Majority Interest of the Members unless the same is
specifically authorized herein, and (c) the Members shall not receive or hold
any property of the Company as collateral security in respect of any claim
against the Company.
5.4 Standard of Care; Liability. Each Member shall discharge his duties
in good faith, with the care an ordinarily prudent person in a like position
would exercise under similar circumstances, and in a manner he reasonably
believes to be in the best interests of the Company. A Member shall not be
liable for monetary damages to the Company for any breach of any such duties
except for receipt of a financial benefit to which the Member is not entitled,
voting for or assenting to a distribution to Members in violation of this
Agreement or the Act, or a knowing violation of the law.
5.5 Compensation. The Company shall reimburse a Member for any reasonable
out-of-pocket expenses incurred by the Member on behalf of the Company,
provided, however, the Member shall not have any recourse against the Company
for such expenses until all CARCO Auto Loan Master Trust Series
Certificateholders are paid in full and, in addition, any unpaid expense shall
not represent a claim against the Company or CARCO Auto Loan Master Trust. In
addition, any Member may receive reasonable compensation for any specific
services rendered to the Company as approved by the Majority Interest.
5.6 Meetings of Members. All Members shall be entitled to vote on any
matter submitted to a vote of the Members. Unless a greater vote is required
by the Act or this Agreement, the affirmative vote of a Majority Interest of
all the Members entitled to vote on such matter shall be required. Meetings of
Members for the transaction of such business as may properly come before the
Members may be held at such place, on such date and at such time as the
Majority Interest shall determine. Special meetings of Members for any proper
purpose or purposes may be called at any time by the holders of at least
twenty-five percent (25%) of the Membership Percentages of all Members. The
Company shall deliver or mail written notice stating the date, time, place and
purposes of any meeting to each Member entitled to vote at the meeting. Such
notice shall be given not less than ten (10) nor more than sixty (60) days
before the date of the meeting.
5.7 Consent. Any action required or permitted to be taken at an annual or
special meeting of the Members may be taken without a meeting and without
prior notice, if 100% of the Members unanimously consent, in writing, to take
the proposed action. Every written consent shall bear the date of consent in
lieu of meeting and the signature of each Member who signs the consent.
6. Power to Institute Bankruptcy or Insolvency Proceedings.
6.1 Unanimous Vote Required. Notwithstanding any other provision of this
Agreement and any provision of law that otherwise so empowers the Company, the
Company shall not, and no Member or other person on behalf of the Company
shall, without the prior vote or written consent of 100% of the Members of the
Company, including each Independent Member and with respect to each
Independent Member, two or more of its Independent Directors, institute
proceedings to be adjudicated a bankrupt or insolvent, or consent to the
institution of bankruptcy or insolvency proceedings against it, or file a
petition seeking, or consent to, reorganization or relief under any applicable
federal or state law relating to bankruptcy, or consent to the appointment of
a receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Company or a substantial part of its property, or make any
assignment for the benefit of creditors, or admit in writing its inability to
pay its debts generally as they become due, or take any corporate action in
furtherance of any such action.
6.2 Voting on Bankruptcy or Insolvency. All Members, including each
Independent Member, shall be entitled to vote on any proposal of the type
described in Section 6.1. The affirmative vote of 100% of all the Members,
including each Independent Member, entitled to vote on such a proposal shall
be required for such a proposal to be adopted.
7. Capital Accounts; Profits and Losses; Distributions.
7.1 Capital Accounts. A capital account shall be maintained for each
Member, to which contributions, Profits and any items of income and gain under
Section 7.4 shall be credited and against which distributions and Losses and
any items of deduction and loss under Section 7.4 shall be charged. Capital
accounts shall be maintained in accordance with the accounting principles of
Code Section 704 and the regulations thereunder.
7.2 Allocation of Profits and Losses.
(a) The Profits and Losses of the Company shall be determined as of
the end of each Fiscal Year of the Company and, except as provided in Section
7.4, shall be allocated among the Members in proportion to their respective
Membership Percentages.
(b) If there is an addition, withdrawal or substitution of, or any
other change in the interest of, any Member during the period covered by an
allocation, then subject to any agreement between the persons affected, the
Profits and Losses for the period shall be allocated among the varying
interests consistent with the provisions of Code Section 706(d) and any
regulations promulgated thereunder. If Code Section 706(d) or any regulation
thereunder allows alternative methods of allocation, the Majority Interest
shall determine which alternative methods to use in allocating Profits and
Losses among the varying interests.
7.3 Distributions.
(a) The Company shall distribute to the Members from time to time
such sums as the Majority Interest determines to be available for distribution
and not required to provide for current or anticipated Company needs. Except
as provided in Section 10, all distributions shall be made to the Members in
proportion to their respective Membership Percentages on the date of the
distribution.
(b) No distributions shall be declared and paid unless the
distribution is made in accordance with the Act and, after the distribution is
made, the Company would be able to pay its debts as they become due in the
usual course of business and the assets of the Company are in excess of the
sum of: (I) the Company's liabilities, plus (ii) the amount that would be
needed to satisfy the preferential rights of other Members upon dissolution
that are superior to the rights of the Members receiving the distribution. No
Member shall have the status of a creditor of the Company with respect to any
distribution.
7.4 Other Allocations. Notwithstanding the foregoing provisions of this
Section 7 or any other provision of this Agreement, the following provisions
shall apply:
(a) Compliance With Treasury Regulations. It is anticipated that the
Company may eventually be treated as a partnership for federal income tax
purposes and, accordingly, the partnership tax provisions of the Code shall
apply to the Company and its Members. It is the intent of the Members that
each Member's distributive share of income, gain, loss, deduction, or credit
(or item thereof) shall be determined and allocated in accordance with this
Section 7 to the fullest extent permitted by Section 704(b) of the Code. In
order to preserve and protect the determinations and allocations provided for
in this Section 7, the Majority Interest is authorized and directed to
allocate income, gain, loss, deduction, or credit (or item thereof) arising in
any year differently than otherwise provided for in this Section 7 to the
extent that allocation of income, gain, loss, deduction, or credit (or item
thereof) in the manner provided for in this Section 7 would cause the
determinations and allocations of each Member's distributive share of income,
gain, loss, deduction, or credit (or item thereof) not to be permitted by
Section 704(b) of the Code and Treasury Regulations promulgated thereunder.
Any allocation made pursuant to this Section 7.4 shall be deemed to be a
complete substitute for any allocation otherwise provided for in this Section
7 and no amendment of this Agreement or approval of any Member shall be
required. The terms used in this Section 7 shall have the same meaning as in
such Treasury Regulations.
(b) Only Required Modifications. In making any allocation (the "new
allocation") under Section 7.4, the Majority Interest is authorized to act
only after having been advised by the Company's accountants that, under
Section 704(b) of the Code and the Treasury Regulations thereunder (i) the new
allocation is necessary, and (ii) the new allocation is the minimum
modification of the allocations otherwise provided for in this Section 7
necessary in order to assure that, either in the then current year or in any
preceding year, each Member's distributive share of income, gain, loss,
deduction, or credit (or item thereof) is determined and allocated in
accordance with this Section 7 to the fullest extent permitted by Section
704(b) of the Code and the Treasury Regulations thereunder.
(c) Minimum Gain Chargeback Attributable to Decrease in Company
Minimum Gain. If there is a net decrease in Company Minimum Gain during a
Company Fiscal Year so that an allocation is required by Treasury Regulation
Section 1.704-2(f), then each Member shall be specially allocated items of
income and gain for such year (and, if necessary, subsequent years) equal to
such Member's share of the net decrease in Company Minimum Gain as determined
by Treasury Regulation Section 1.704-2(g)(2). Such special allocation shall
satisfy the requirements of Treasury Regulation Section 1.704-2(f), or the
corresponding provisions of subsequently adopted Treasury Regulations, in
order that the allocations provided for in this Section 7 will be recognized
for federal income tax purposes.
(d) Minimum Gain Chargeback Attributable to Decrease in Member
Nonrecourse Debt Minimum Gain. If there is a net decrease in the Member
Nonrecourse Debt Minimum Gain during any Fiscal Year, any Member who has a
share of such Member Nonrecourse Debt Minimum Gain (as determined in the same
manner as partner nonrecourse debt minimum gain under Treasury Regulation
Section 1.704-2(i)(5)) shall be specially allocated items of income or gain
for such year (and, if necessary, subsequent Fiscal Years) equal to such
Member's share of the net decrease in the Member Nonrecourse Debt Minimum Gain
in the manner and to the extent required by Treasury Regulation Section
1.704-2(i)(4).
(e) Qualified Income Offset. If a Member unexpectedly receives an
adjustment, allocation, or distribution described in Treasury Regulation
Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), any of which causes or increases
an Adjusted Deficit Capital Account Balance in such Member's capital account,
then he will be specially allocated items of income and gain in an amount and
manner sufficient to eliminate such deficit balance created or increased by
such adjustment, allocation, or distribution as quickly as possible.
(f) Gross Income Allocation. If a Member has an Adjusted Deficit
Capital Account Balance at the end of a Company taxable year, such Member
shall be allocated items of income and gain in the amount of such Adjusted
Deficit Capital Account Balance as quickly as possible in order to eliminate
it.
(g) Allocation of Nonrecourse Deductions. Nonrecourse Deductions
shall be allocated among the Members in proportion to their respective
Membership Percentages.
(h) Allocation of Member Nonrecourse Deductions. Any Member
Nonrecourse Deductions shall be allocated to the Member who bears the economic
risk of loss with respect to the Member Nonrecourse Debt to which such Member
Nonrecourse Deductions are attributable in accordance with Treasury Regulation
Section 1.704-2(i)(1).
(i) Curative Allocations. If the Company is required by Section
7.4(a),(c),(d),(e),(f),(g), or (h) to make any new allocation in a manner
other than as provided for in this Section 7 without regard thereto, then the
Majority Interest is authorized and directed, insofar as it is permitted to do
so by Section 704(b) of the Code, to allocate income, gain, loss, deduction,
or credit (or item thereof) arising in the current Fiscal Year (or subsequent
Fiscal Years, if necessary) in such manner so as to bring the proportions of
income, gain, loss, deduction, or credit (or item thereof) allocated to the
Members as nearly as possible to the proportion otherwise contemplated by this
Section 7 without regard thereto; provided, however, that Nonrecourse
Deductions shall not be taken into account except to the extent that there has
been a reduction in Company Minimum Gain and Member Nonrecourse Deductions
shall not be taken into account except to the extent that there has been a
reduction in Member Minimum Gain; and provided, further that such Nonrecourse
Deductions and Member Nonrecourse Deductions shall not in any event be taken
into account to the extent that the Majority Interest reasonably determines
that such allocations are likely to be offset by subsequent allocations
pursuant to Section 7.4(c) or (d).
(j) Advice of Accountants. Allocations made by the Majority Interest
under this Section 7.4 in reliance upon the advice of the Company's
accountants shall be deemed to be made pursuant to any fiduciary obligation to
the Company and the Members.
(k) Section 754 Election. To the extent an adjustment to the
adjusted tax basis of any Company asset pursuant to Code Section 734(b) or
Code Section 743(b) is required to be taken into account pursuant to
Regulations Section 1.704-1(b)(2)(iv)(m) in determining capital accounts, the
amount of such adjustment to the capital accounts shall be treated as an item
of gain (if the adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis), and such gain or loss shall be specially
allocated to the Members in a manner consistent with the manner in which their
capital accounts are required to be adjusted pursuant to such Section of the
Regulations.
(l) Imputed Interest. If any Member makes a loan to the Company, or
the Company makes a loan to any Member, and interest in excess of the amount
actually payable is imputed under Code Sections 7872, 483, or 1271 through
1288 or corresponding provisions of subsequent Federal income tax law, then
any item of income or expense attributable to any such imputed interest shall
be allocated solely to the Member who made or received the loan and shall be
credited or charged to his capital account, as appropriate.
(m) Contributed Property. Income, gain, loss or deduction with
respect to any property contributed by a Member shall, solely for tax
purposes, be allocated among the Members, to the extent required by Code
Section 704(c) and the regulations thereunder, to take account of the
variation between the adjusted tax basis of such property and its Book Value
at the time of contribution to the Company. If the Book Value of any Company
property is adjusted as provided in Treasury Regulation Section
1.704-1(b)(2)(iv), subsequent allocations of income, gain, loss and deduction
and the Book Value of such property shall be adjusted as provided in Code
Section 704(c) and the regulations thereunder. If Code Section 704(c) and the
regulations thereunder allow alternative methods of making such acquired
allocations, the Majority Interest shall determine which alternative method to
use.
7.5 Share of Excess Nonrecourse Liabilities. For purposes of calculating
the Members' share of "excess nonrecourse liabilities" of the Company (within
the meaning of Treasury Regulation Section 1.752-3(a)(3)), the Members intend
that they be considered as sharing profits of the Company in proportion to
their respective Membership Percentages.
8. Exculpation of Liability; Indemnification.
8.1 Limitation of Liability. Except as provided by the Act or expressly
assumed, a person who is a Member shall not be liable for the acts, debts or
liabilities of the Company solely by reason of being a member of the Company.
8.2 Indemnification. To the fullest extent permitted by law, the Company
hereby indemnifies each Member, employee or agent of the Company, who was or
is a party or is threatened to be made a party to a threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
or investigative, and whether formal or informal (other than an action by or
in the right of the Company) by reason of the fact that such person is or was
a Member, employee or agent of the Company against expenses (including
reasonable attorneys' fees), judgments, penalties, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection with
the action, suit or proceeding, provided, however, that such indemnification
of the expenses is subordinated to the amounts owing CARCO Auto Loan Master
Trust Series Certificateholders and will not represent a claim against the
Company or CARCO Auto Loan Master Trust and will only be made out of the
assets of the Company and no Member shall be liable for such indemnification.
9. Term of Company.
9.1 Commencement. The term of the Company shall commence upon the filing
of the Certificate of Formation with the Delaware Secretary of State.
9.2 Dissolution. The Company shall be dissolved and its affairs wound up
upon the occurrence of any of the following events:
(a) By the written consent of all of the Members; or
(b) Upon entry of a decree of judicial dissolution; or
(c) The termination of the legal existence of the last remaining
member of the Company or the occurrence of any other event
which terminates the continued membership of the last remaining
member of the Company in the Company unless the business of the
Company is continued in a manner permitted by this Agreement or
the Act. Upon the occurrence of any event that causes the last
remaining member of the Company to cease to be a member of the
Company, to the fullest extent permitted by law, the personal
representative of such member is hereby authorized to, and
shall, within 90 days after the occurrence of the event that
terminated the continued memberhsip of such member in the
Company, agree in writing (i) to continue the Company and (ii)
to the admission of the personal representative or its nominee
or designeee, as the case may be, as a substitute member of the
Company, effective as of the occurrence of the event that
terminated the continued membership of the last remaining
member of the Company in the Company.
9.3 Bankruptcy. Notwithstanding any other provision of this
Agreement, the Bankruptcy of the Member or a Special Member shall not cause
the Member or Special Member, respectively, to cease to be a member of the
Company and upon the occurrence of such an event, the business of the Company
shall continue without dissolution.
9.4 Special Members. Upon the occurrence of any event that causes
there to be no members of the Company, each person acting as an Independent
Director shall, without any action of any Person and simultaneously with the
last Member ceasing to be a member of the Company, automatically be admitted
to the Company as a Special Member and shall continue the Company without
dissolution. No Special Member may resign from the Company or transfer its
rights as Special Member unless (i) a successor Special Member has been
admitted to the Company as Special Member by executing a counterpart to this
Agreement, and (ii) such successor has also accepted its appointment as an
Independent Director: provided , however, the Special Members shall
automatically cease to be members of the Company upon the admission to the
Company of a substitute Member. Each Special Member shall be a member of the
Company that has no interest in the profits, losses and capital of the Company
and has no right to receive any distributions of the Company assets. Pursuant
to Section 18-301 of the Act, a Special Member shall not be required to make
any capital contributions to the Company and shall not receive a limited
liability company interest in the Company. A Special Member, in its capacity
as Special Member, may not bind the Company. Except as required by any
mandatory provision of the Act, each Special Member, in its capacity as
Special Member, shall have no right to vote on, approve or otherwise consent
to any action by, or matter relating to, the Company, including, without
limitations, the merger, consolidation or conversion of the Company. In order
to implement the admission to the Company of each Special Member, each
Independent Member shall cause each person acting as an Independent Director
to execute a counterpart to this Agreement. Prior to its admission to the
Company as Special Member, each person acting as an Independent Director shall
not be a member of the Company.
10. Distribution of Assets. Upon dissolution of the Company, the Company
shall cease carrying on its business and affairs and shall commence winding up
of the Company's business and affairs and complete the winding up as soon as
practicable. The Company's affairs shall be concluded by a Member or Members
selected in writing by the Majority Interest. The assets of the Company may be
liquidated or distributed in kind, as determined by the Majority Interest, and
the same shall first be applied to the payment of, or to a reserve for the
payment of, the Company's liabilities (including such provision for contingent
conditional or unmatured liabilities known to the Company) and then to the
Members in accordance with their respective positive Capital Accounts after
allocations pursuant to Sections 7.2 and 7.4 for the current Fiscal Year. If
the assets of the Company shall not be sufficient to pay all of the
liabilities of the Company, to the fullest extent permitted by law, no assets
of the Company may be sold or disposed of without the written consent of all
of the holders of outstanding securities issued by CARCO Auto Loan Master
Trust and any trust formed in the future in respect of a transaction to which
the Company is a party. If Company assets are distributed in kind, the assets
so distributed shall be valued at their current fair market values and the
unrealized appreciation or depreciation in value of the assets shall be
allocated to the Members' Capital Accounts in the manner described in Sections
7.2 and 7.4 as if such assets had been sold, and such assets shall then be
distributed to the Members in accordance with their respective positive
capital accounts as so adjusted. To the extent that Company assets cannot
either be sold without undue loss or readily divided for distribution in kind
to the Members, then the Company may, as determined by the Majority Interest,
convey those assets to a trust or other suitable holding entity established
for the benefit of the Members in order to permit the assets to be sold
without undue loss and the proceeds thereof distributed to the Members at a
future date. The legal form of the holding entity, the identity of the trustee
or other fiduciary, and the terms of its governing instrument shall be
determined by the Majority Interest.
11. Restriction on Transfers of Interests.
11.1 No Transfers Permitted. No Independent Member may assign, pledge or
otherwise transfer his interest in the Company in whole or part except to
another Independent Member, and upon approval by all the other Members. Any
attempt by an Independent Member to transfer his interest to anyone but
another Independent Member shall be null and void. There are no transfer
restrictions with respect to Members other than Independent Members. If a
Member transfers its limited liability company interest in the Company
pursuant to this Section 11.1, the transferee shall be admitted to the Company
as a member of the Company upon (I) its execution of an instrument signifying
its agreement to be bound by the terms and conditions of this Agreement, which
instrument may be a counterpart signature page to this Agreement, and (ii) its
designation as a Member in Exhibit A. If a Member transfers all of its limited
liability company interest in the Company pursuant to this Section 11.1, such
admission shall be deemed effective immediately prior to the transfer and,
immediately following such admission, the transferor Member shall cease to be
a member of the Company.
12. Investment Representation. The Members represent to each other and to
the Company that they are acquiring their respective limited liability company
interests in the Company for their own accounts, and without a view to selling
or pledging them.
13. Amendments.
This Agreement may be amended only by written agreement of all the
Members. The Company shall not, without the prior written consent of each
Trustee under any Agreement and of each nationally recognized rating agency
that has rated any Certificates or Notes issued and outstanding pursuant to an
Agreement, amend, alter, change or repeal the definition of Independent
Member, the definition of Special Member, or Section 3, Article 6 or this
Section 13. Subject to the foregoing limitation, the Company reserves the
right to amend, alter, change or repeal any provision contained in this
Agreement or the Articles in the manner now or hereafter prescribed by
statute, and all rights conferred upon Members herein are granted subject to
this reservation.
14. Miscellaneous Provisions.
14.1 Institution of Bankruptcy Proceedings. The Company shall not without
the consent of all its Members, including each Independent Member, institute
against, or join in any institution against, any entity in which the Company
holds an ownership interest, any bankruptcy, insolvency, liquidation,
reorganization or arrangement proceedings or other proceedings under any
United States, federal or state bankruptcy or similar law. When acting on
matters subject to a vote of the Members under this Agreement, the Members
shall to the fullest extent permitted by law, including Section 18-1101(c) of
the Act, take into account the interests of the creditors of the Company as
well as that of the Members.
The Company shall not, without the prior written consent of each
nationally recognized rating agency which has an outstanding rating in effect
with respect to Notes or Certificates that are issued and outstanding pursuant
to an Agreement, amend, alter, change or repeal this Section 14.1.
14.2 Books of Account; Reports. (a) The Company shall keep true and
complete books of account and records of all Company transactions. The books
of account and records shall be kept at the principal office of the Company.
The Company shall maintain at such office (i) a list of names and addresses of
all Members; (ii) a copy of the Articles together with executed copies of all
powers of attorney, if any, pursuant to which the Articles have been executed;
(iii) copies of the Company's federal, state and local income tax returns and
reports for the three most recent years; (iv) copies of the Company's current
Agreement; and (v) copies of the financial statements of the Company for the
three most recent years. Such Company records shall be available to any Member
or his designated representative during ordinary business hours at the
reasonable request and expense of such Member.
(b) The Company will use its best efforts to furnish, or cause to be
furnished, to Members the following items on the date indicated:
(1) an annual report consisting of an income statement for the
prior year and a balance sheet as of the year ended.
(2) such other information concerning the Company and the
property of the Company as may be appropriate in order to make full and fair
disclosure to the members of the current financial and operating conditions of
the Company - as required.
(3) member information tax returns.
14.3 Bank Accounts and Investment of Funds. All funds of the Company
shall be deposited in its name in such checking accounts, savings accounts,
time deposits, or certificates of deposit or shall be invested in such other
manner, as shall be designated by the Majority Interest from time to time.
Withdrawals shall be made upon such signature or signatures as the Majority
Interest may designate.
14.4 Accounting Decisions. All decisions as to accounting matters, except
as specifically provided to the contrary herein, shall be made by the Majority
Interest in accordance with generally accepted accounting principles
consistently applied. Such decisions shall be acceptable to the accountants
retained by the Company, and the Majority Interest may rely upon the advice of
the accountants as to whether such decisions are in accordance with generally
accepted accounting principles.
14.5 Federal Income Tax Elections. The Company shall, to the extent
permitted by applicable law and regulations and upon obtaining any necessary
approval of the Commissioner of Internal Revenue, elect to use such methods of
depreciation, and make all other Federal income tax elections in such manner,
as the Majority Interest determines to be most favorable to the Members. The
Majority Interest may rely upon the advice of the accountants retained by the
Company as to the availability and effect of all such elections.
14.6 Entire Agreement. This Agreement constitutes the entire Agreement
between the parties and may be modified only as provided herein. No
representations or oral or implied agreements have been made by any party
hereto or his agent, and no party to this Agreement relies upon any
representation or agreement not set forth herein. This Agreement supersedes
any and all other agreements, either oral or written, by and among the Company
and its Members.
14.7 Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed to have been duly given if
physically delivered, telephonically transmitted by telecopier or other
similar means, one (1) day after having been delivered to a delivery courier
for next day delivery, with proof of delivery to the recipient received by the
courier in the form of a signature of recipient, or three (3) days after
having been deposited in the United States mail, as certified mail with return
receipt requested and with postage prepaid, addressed to the Members at the
addresses listed in Exhibit A. The addresses and other information so
indicated for any Member may be changed by written notice.
14.8 Further Execution. Upon request of the Company from time to time,
the Members shall execute and swear to or acknowledge any amended Articles and
any other writing which may be required by any rule or law or which may be
appropriate to the effecting of any action by or on behalf of the Company or
the Members which has been taken in accordance with the provisions of this
Agreement.
14.9 Binding Effect. This Agreement shall be binding upon and shall inure
to the benefit of the parties, their successors and permitted assigns. None of
the provisions of this Agreement shall be construed as for the benefit of or
as enforceable by any creditor of the Company or the Members or any other
person not a party to this Agreement.
14.10 Severability. The invalidity or unenforceability of any provision
of this Agreement in a particular respect shall not affect the validity and
enforceability of any other provision of this Agreement or of the same
provision in any other respect.
14.11 Captions. All captions are for convenience only, do not form a
substantive part of this Agreement and shall not restrict or enlarge any
substantive provisions of this Agreement.
14.12 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one instrument. The Company shall have custody of the counterparts
executed in the aggregate by all Members.
14.13 Delaware Law to Control. The validity and interpretation of, and
the sufficiency of performance under, this Agreement shall be governed by
Delaware law, without regard to principal of conflict of laws.
14.14 Binding Agreement. Notwithstanding any other provision of this
Agreement, the Member agrees that this Agreement constitutes a legal, valid
and binding agreement of the Member, and is enforceable against the Member by
the Independent Directors, in accordance with its terms. In addition, the
Independent Directors shall be intended beneficiaries of the Agreement.
14.15 Effectiveness. Pursuant to Section 18-201(d) of the Act, this
Agreement shall be effective as of February 29, 2000.
The parties have executed this Agreement effective as of the date first
above written.
<PAGE>
DaimlerChrysler Wholesale Receivables L.L.C.
EXHIBIT A
Members Capital Membership
Name and Address Contributions Percentages
U.S. Auto Receivables Company
27777 Franklin Road
Southfield, Michigan 48034 $50,000 100%
------- ----
Total $50,000 100%
======= ====
<PAGE>
DaimlerChrysler Wholesale Receivables L.L.C.
Member Signature Page
U.S. AUTO RECEIVABLES COMPANY
By: /s/ Byron C. Babbish
---------------------------
Name: Byron C. Babbish
Title: Assistant Secretary
STATE OF MICHIGAN )
) SS.
COUNTY OF OAKLAND )
The foregoing instrument was subscribed and sworn to before me on
February 29, 2000 by:
/s/ Cynthia A. Orchard
----------------------
INDEPENDENT DIRECTORS/SPECIAL MEMBERS:
/s/ M.A. Kickham
-----------------------
/s/ J.A. Sellgren
-----------------------
Exhibit 4.4
AMENDMENT NO. 3 TO POOLING AND SERVICING AGREEMENT
This Amendment No. 3, dated as of November 1, 1999 (the "Amendment")
among U.S. Auto Receivables Company, as Seller, Chrysler Financial Company
L.L.C., as Servicer, and The Bank of New York, as Trustee.
WHEREAS, the parties hereto are parties to the Pooling and Servicing
Agreement dated as of May 31, 1991, Chrysler Auto Receivables Company, as
Seller, Chrysler Credit Corporation, as Servicer, and Manufacturers and
Traders Company, as Trustee, as amended by the First Amendment dated August 8,
1991 and the Second Amendment dated as of September 21, 1993 (as amended, the
"Pooling and Servicing Agreement");
WHEREAS, the Pooling and Servicing Agreement was assigned by Chrysler
Auto Receivables Company to U.S. Auto Receivables Company pursuant to an
Assignment and Assumption Agreement dated as of August 8, 1991;
WHEREAS, Manufacturers and Traders Company was replaced by The Bank
of New York as Trustee pursuant to an Agreement of Resignation, Appointment
and Acceptance dated as of August 23, 1996;
WHEREAS, Chrysler Credit Corporation has been succeeded by Chrysler
Financial Corporation, which has been succeeded by Chrysler Financial Company
L.L.C.;
WHEREAS, the parties hereto desire to amend the Pooling and Servicing
Agreement pursuant to Section 13.01 (a) and have received the opinion of
counsel required by Section 13.01(a) of the Pooling and Servicing Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. Amendment of Section 4.03(b). Section 4.03(b) of the
Pooling and Servicing Agreement is hereby amended by deleting the phrase "not
later than 12:00 noon , New York City time, on the Business Day immediately
preceding the Distribution Date," in Section 4.03(b) and inserting in lieu
thereof the phrase "not later than 11:00 A.M., New York City time, on the
Distribution Date".
Section 2. Effect of Amendment. The effective date of this Amendment
shall be November 1, 1999. Except as modified and expressly amended by this
Amendment, the Pooling and Servicing Agreement is in all respects ratified and
confirmed, and all terms, provisions and conditions thereof shall be and
remain in full force and effect. On and after the effective date hereof, all
references in the Pooling and Servicing Agreement to "this Agreement",
"hereto", "hereof", "hereunder" or words of like import refer to the Pooling
and Servicing Agreement as amended by this Amendment.
Section 3. Binding Effect. The provisions of this Amendment shall be
binding upon and inure to the benefit of the respective successors and assigns
of the parties hereto, and all such provisions shall inure to the benefit of
the Indenture Trustee and the related Certificateholders.
Section 4. Governing Law. This Amendment shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions thereof.
Section 5. Counterparts. This Amendment may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original, but all of which together shall constitute but one and the same
instrument.
Section 6. Section Headings. The section headings herein are for
convenience of reference only, and shall not limit or otherwise affect the
meaning hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective officers as of the day and year first
above written.
U.S. AUTO RECEIVABLES COMPANY,
Seller
By: /s/ Byron C. Babbish
------------------------------
Name: Byron C. Babbish
------------------------------
Title: Assistant Secretary
------------------------------
CHRYSLER FINANCIAL COMPANY L.L.C.,
Servicer
By: /s/ Byron C. Babbish
------------------------------
Name: Byron C. Babbish
------------------------------
Title: Assistant Secretary
------------------------------
THE BANK OF NEW YORK,
Trustee
By: /s/ Kelly A. Sheahan
------------------------------
Name: Kelly A. Sheahan
------------------------------
Title: Vice President
------------------------------
Exhibit 5.1
[Letterhead of Brown & Wood LLP]
May 25, 2000
DaimlerChrysler Wholesale Receivables LLC
27777 Franklin Road
Southfield, Michigan 48034
Re: DaimlerChrysler Wholesale Receivables LLC
Registration Statement on Form S-3
------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel for you in connection with the
Registration Statement on Form S-3 (the "Registration Statement"), filed with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Act"), for the registration under the Act of $501,000,000
aggregate principal amount of asset backed certificates (the "Certificates").
As described in the Registration Statement, the Certificates will be issued
from time to time in one or more series with one or more classes by CARCO Auto
Loan Master Trust (the "Trust"), which was formed pursuant to a Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement") among the
Registrant, as assignee, Chrysler Financial Company L.L.C. (as a successor by
merger), as servicer, and The Bank of New York, as successor trustee.
We have made such investigation of law as we deemed appropriate and
have examined the proceedings heretofore taken and are familiar with the
procedures proposed to be taken by the Registrant in connection with the
authorization, issuance and sale of the Certificates.
Based on the foregoing, we are of the opinion that:
1. When a supplement to the Pooling and Servicing Agreement
providing for the issuance of a series of Certificates has been duly
authorized by all necessary action and has been duly executed and delivered,
the Pooling and Servicing Agreement and such supplement will constitute valid
and binding obligations of the Registrant enforceable in accordance with its
terms, subject to applicable bankruptcy, reorganization, insolvency and
similar laws affecting creditors' rights generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law); and
2. When such Certificates have been duly executed and
delivered and sold and paid for as described in the Registration Statement,
such Certificates will be validly issued and will be entitled to the benefits
provided by the Pooling and Servicing Agreement.
In rendering the foregoing opinions, we have assumed the accuracy and
truthfulness of all public records regarding the Registrant and of all
certifications, documents and other proceedings examined by us that have been
executed or certified by officials of the Registrant acting within the scope
of their official capacities and have not verified the accuracy or
truthfulness thereof. We have also assumed the genuineness of the signatures
appearing upon such public records, certifications, documents and proceedings.
In addition, we have assumed that each supplement to the Pooling and Servicing
Agreement and the related Certificates, as applicable, will be executed and
delivered in substantially the form filed as exhibits to the Registration
Statement with such changes acceptable to us, and that such Certificates will
be sold as described in the Registration Statement. We express no opinion as
to the laws of any jurisdiction other than the laws of the State of New York
and the federal laws of the United States of America.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the heading
"Legal Matters" in the Prospectus forming a part of the Registration
Statement, without implying or admitting that we are "experts" within the
meaning of the Act or the rules and regulations of the Securities and Exchange
Commission issued thereunder, with respect to any part of the Registration
Statement, including this exhibit.
Very truly yours,
/s/ Brown & Wood LLP
Exhibit 8.1
[Letterhead of Brown & Wood LLP]
May 25, 2000
DaimlerChrysler Wholesale Receivables LLC
27777 Franklin Road
Southfield, Michigan 48034
Re: DaimlerChrysler Wholesale Receivables LLC
Registration Statement on Form S-3
-----------------------------------------
Ladies and Gentlemen:
We have acted as special federal tax counsel in respect of the CARCO
Auto Loan Master Trust (the "Trust") in connection with the filing by
DaimlerChrysler Wholesale Receivables LLC, a Delaware limited liability
company (the "Registrant"), of a Registration Statement on Form S-3 (such
registration statement, together with the exhibits and any amendments thereto
as of the date hereof, the "Registration Statement") with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act") for the registration under the Act of asset backed
certificates (the "Certificates") in an aggregate principal amount of up to
$501,000,000. As described in the Registration Statement, the Certificates
will be issued from time to time in one or more series with one or more
classes, with each series being issued by the Trust, which was formed by the
Registrant pursuant to a Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement") among the Registrant, as assignee, Chrysler Financial
Company L.L.C. (as a successor by merger), as servicer, and The Bank of New
York, as successor trustee.
We have advised the Registrant with respect to certain federal income
tax consequences of the proposed issuance of the Certificates. This advice is
summarized under the headings "Summary--Tax Status" and "Certain Tax
Matters--Federal Income Tax Consequences" in the Prospectus and "Summary of
Series Terms--Tax Status" in the Prospectus Supplement, all a part of the
Registration Statement. Such description does not purport to discuss all
possible federal income tax ramifications of the proposed issuance, but with
respect to those federal income tax consequences that are discussed, in our
opinion, the description is accurate in all material respects.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and to a reference to this firm (as special federal tax
counsel to DaimlerChrysler Wholesale Receivables LLC and the Trust) under the
heading "Certain Tax Matters--Federal Income Tax Consequences" in the
Prospectus forming a part of the Registration Statement, without implying or
admitting that we are "experts" within the meaning of the Act or the rules and
regulations of the Commission issued thereunder, with respect to any part of
the Registration Statement, including this exhibit.
Very truly yours,
/s/ Brown & Wood LLP
Exhibit 8.2
May 24, 2000
Chrysler Financial Company L.L.C.
27777 Franklin Road
Southfield, Michigan 48034
U.S. Auto Receivables Company
27777 Franklin Road
Southfield, Michigan 48034
Ladies and Gentlemen:
Re: Registration Statement on Form S-3
to register Asset Backed Certificates
to be issued by CARCO Auto Loan Master Trust
(the "Registration Statement")
--------------------------------------------
I am Vice President and General Counsel of Chrysler Financial Company
L.L.C., a Michigan limited liability company, as servicer (the "Servicer") and
of U. S. Auto Receivables Company, a Delaware corporation, the member of
DaimlerChrysler Wholesale Receivables LLC, a Delaware limited liability
company, as seller (the "Seller"), in connection with the above-captioned
Registration Statement, filed by the Seller with the Securities and Exchange
Commission in connection with the registration by the Seller of Asset Backed
Certificates (the "Certificates") representing interests in CARCO Auto Loan
Master Trust (the "Trust") in an aggregate principal amount of $501,000,000.
As described in the Registration Statement, the Certificates will be issued
from time to time by the Trust in series ("Series"). With respect to each
Series, the Certificates will be issued pursuant to a supplement to the
Pooling and Servicing Agreement and the Certificates will be sold from time to
time pursuant to certain underwriting agreements (the "Underwriting
Agreements") between the Seller and various underwriters named therein.
I, or members of my staff upon whom I am relying, have examined and
relied upon the Registration Statement and, in each case as filed with the
Registration Statement, the form of Pooling and Servicing Agreement and
supplements thereto, including the forms of Certificates, and the form of
Underwriting Agreement (collectively, the "Operative Documents"). In addition,
I, or members of my staff upon whom I am relying, have examined and considered
executed originals or counterparts, or certified or other copies identified to
my satisfaction as being true copies of such certificates, instruments,
documents, and other corporate records of the Seller, and matters of fact and
law as we deem necessary for the purposes of this opinion. Capitalized terms
not otherwise defined herein have the meanings assigned to them in the
Registration Statement.
In my examination we have assumed the genuineness of all signatures,
the authenticity of all documents submitted as originals, the conformity to
original documents of all documents submitted as certified or photostatic
copies, and the authenticity of the originals of such documents. As to any
facts material to the opinions expressed herein which were not independently
established or verified, we have relied upon statements and representations of
officers and other representatives of the Seller and others.
I hereby confirm that the statements set forth in the Prospectus
forming a part of the Registration Statement under the caption "Certain Tax
Matters - State and Local Tax Consequences" accurately describe the material
Michigan tax consequences to holders of the Certificates.
I am admitted to the State Bar of Michigan and I express no opinion
as to the laws of any other jurisdiction except the laws of the State of
Michigan and the federal law of the United States. I do not purport to be an
expert on, or to express any opinion herein concerning, the laws of any other
jurisdiction or the effect under the law of the State of Michigan or the
federal law of the United States of the law of any other jurisdiction.
I consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to me in the Prospectus included
in the Registration Statement without implying or admitting that I am an
"expert" within the meaning of the Securities Act of 1933, as amended, or the
rules and regulations of the Commission issued thereunder, with respect to any
part of the Registration Statement. This opinion is given as of the date
hereof and I undertake no obligation to notify you of any changes in law or
fact occurring after the date hereof. This opinion is for the sole benefit of
the addressees and is not to be used, circulated, quoted, relied upon, or
otherwise referred to for any other purpose without my express permission.
This opinion is limited to the matters stated herein and no opinion is implied
or may be inferred beyond the matters expressly stated herein.
Very truly yours,
/s/ Christopher A. Taravella
Christopher A. Taravella
Vice President and
General Counsel
Exhibit 23.3
The Board of Directors
Chrysler Financial Company L.L.C.:
We consent to the use of our report incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG LLP
Detroit, Michigan
May 25, 2000
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors of
U.S. Auto Receivables Company, the Member of DaimlerChrysler Wholesale
Receivables LLC, hereby severally constitutes and appoints CHRISTOPHER A.
TARAVELLA, BYRON C. BABBISH and SILVIA M. KLEER, or any one or more of them,
to be his agents, proxies and attorneys-in-fact, to sign and execute in his
name, place and stead and on his behalf as a director of U.S. Auto Receivables
Company and as the Member of DaimlerChrysler Wholesale Receivables LLC, and
to file with the Securities and Exchange Commission, the Registration
Statement of CARCO Auto Loan Master Trust on Form S-3, registering under the
Securities Act of 1933, as amended, auto loan asset backed securities and any
and all further amendments (including any pre- and post-effective amendments)
to such Registration Statement, and to file all exhibits thereto and other
documents in connection therewith, granting unto said attorneys-in-fact and
agents and each of them, full power and authority to do and perform each and
every act and thing required to be done that may be necessary or desirable,
hereby approving, ratifying and confirming all that the aforesaid agents,
proxies and attorneys-in-fact do, or that any one of them does or causes to be
done, on his behalf pursuant to this Power of Attorney.
<PAGE>
IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of
this 25th day of May, 2000.
/s/ D. H. Olsen /s/ D. L. Davis
- -------------------------- ----------------
D. H. Olsen D. L. Davis
/s/ M. A. Kickham /s/ J. A. Sellgren
- ------------------------- ------------------
M. A. Kickham J. A. Sellgren
