<PAGE> 1
Pursuant to Rule 424(b)(3)
Registration No. 33-50285
PROSPECTUS SUPPLEMENT
(To Prospectus dated September 23, 1993)
$1,500,000,000
PREMIER AUTO TRUST 1994-3
$498,000,000 FLOATING RATE ASSET BACKED NOTES, CLASS A-2
$235,000,000 FLOATING RATE ASSET BACKED NOTES, CLASS A-3
$210,000,000 6.50% ASSET BACKED NOTES, CLASS A-4
$185,000,000 6.65% ASSET BACKED NOTES, CLASS A-5
$304,500,000 6.85% ASSET BACKED NOTES, CLASS A-6
$ 67,500,000 6.80% ASSET BACKED CERTIFICATES
CHRYSLER FINANCIAL CORPORATION, Seller
CHRYSLER CREDIT CORPORATION, Servicer
Premier Auto Trust 1994-3 (the "Trust") will be formed pursuant to an Amended
and Restated Trust Agreement to be dated as of June 1, 1994, among Chrysler
Financial Corporation (the "Seller"), Premier Auto Receivables Company, a
wholly-owned subsidiary of the Seller (the "Company"), and Chemical Bank
Delaware, as Owner Trustee. The Trust will issue $300,000,000 aggregate
principal amount of Class A-1 4.94% Asset Backed Notes (the "Class A-1 Notes"),
$498,000,000 aggregate principal amount of Class A-2 Floating Rate Asset Backed
Notes (the "Class A-2 Notes"), $235,000,000 aggregate principal amount of Class
A-3 Floating Rate Asset Backed Notes (the "Class A-3 Notes"), $210,000,000
aggregate principal amount of Class A-4 6.50% Asset Backed Notes (the "Class A-4
Notes"), $185,000,000 aggregate principal amount of Class A-5 6.65% Asset Backed
Notes (the "Class A-5 Notes") and $304,500,000 aggregate principal amount of
Class A-6 6.85% Asset Backed Notes (the "Class A-6 Notes" and, together with the
Class A-1 Notes,
(Cover continued on following page)
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THE NOTES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES REPRESENT BENEFICIAL
INTERESTS IN, THE TRUST ONLY AND DO NOT REPRESENT OBLIGATIONS OF OR INTERESTS IN
CHRYSLER FINANCIAL CORPORATION, CHRYSLER CREDIT CORPORATION, THE COMPANY OR ANY
OF THEIR RESPECTIVE AFFILIATES. NONE OF THE NOTES, THE CERTIFICATES OR THE
RECEIVABLES ARE INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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ORIGINAL PRICE TO UNDERWRITING PROCEEDS TO
PRINCIPAL AMOUNT PUBLIC(1) DISCOUNT THE SELLER(1)(2)
<S> <C> <C> <C> <C>
Per Class A-2 Note...................... $ 498,000,000 100.000000% .1625% 99.837500%
Per Class A-3 Note...................... $ 235,000,000 100.000000% .1875% 99.812500%
Per Class A-4 Note...................... $ 210,000,000 99.937500% .2250% 99.712500%
Per Class A-5 Note...................... $ 185,000,000 99.921875% .2500% 99.671875%
Per Class A-6 Note...................... $ 304,500,000 99.890625% .2750% 99.615625%
Per Certificate......................... $ 67,500,000 99.968750% .4000% 99.568750%
Total................................... $ 1,500,000,000 $1,499,370,078 $3,292,250 $1,496,077,828
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(1) Plus accrued interest, if any, from June 8, 1994.
(2) Before deducting expenses, estimated to be $1,050,000.
The Notes and the Certificates are offered subject to receipt and acceptance by
the Underwriters, to prior sale and to the Underwriters' right to reject any
order in whole or in part and to withdraw, cancel or modify the offer without
notice. It is expected that delivery of the Notes and the Certificates will be
made in book-entry form through the facilities of DTC, on or about June 8, 1994,
against payment therefor in immediately available funds.
SALOMON BROTHERS INC
MERRILL LYNCH & CO.
J.P. MORGAN SECURITIES INC.
The date of this Prospectus Supplement is May 25, 1994.
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(Continued from previous page)
the Class A-2 Notes, Class A-3 Notes, Class A-4 Notes and Class A-5 Notes, the
"Notes") pursuant to an Indenture to be dated as of June 1, 1994, between the
Trust and The Fuji Bank and Trust Company, as Indenture Trustee. The Class A-1
Notes are not being offered hereby. The Class A-2, Class A-3, Class A-4, Class
A-5 and Class A-6 Notes are collectively referred to herein as the "Offered
Notes". The Trust will also issue $67,500,000 aggregate principal amount of
6.80% Asset Backed Certificates (the "Certificates" and, together with the
Notes, the "Securities"). The assets of the Trust will consist of certain monies
on deposit in a trust account (the "Pre-Funding Account") to be established with
the Indenture Trustee which will be used by the Trust to purchase from the
Seller, from time to time on or before the Determination Date with respect to
the December 1994 Distribution Date, motor vehicle retail installment sale
contracts (the "Receivables") secured by the motor vehicles financed thereby.
The Notes will be secured by the assets of the Trust pursuant to the Indenture.
Interest on the Class A-1, Class A-4, Class A-5 and Class A-6 Notes will accrue
at the respective fixed per annum interest rates specified above. The per annum
rate of interest on the Class A-2 Notes for each monthly interest period will
equal the three-month Treasury Rate for each monthly interest period (as reset
on a weekly basis, as more fully described herein) plus 0.25%, subject to a
maximum rate of 11.00% per annum for such monthly interest period. The per annum
rate of interest on the Class A-3 Notes for each monthly interest period will
equal one-month LIBOR plus 0.125%, subject to a maximum rate of 11.00% per
annum. Interest on the Notes will generally be payable on the second day of each
month or, if any such day is not a Business Day, on the next succeeding Business
Day (each, a "Distribution Date"), commencing July 5, 1994. Principal of the
Notes will be payable on each Distribution Date to the extent described herein;
however, no principal payments will be made (i) on the Class A-2 Notes until the
Class A-1 Notes have been paid in full, (ii) on the Class A-3 Notes until the
Class A-2 Notes have been paid in full, (iii) on the Class A-4 Notes until the
Class A-3 Notes have been paid in full, (iv) on the Class A-5 Notes until the
Class A-4 Notes have been paid in full, or (v) on the Class A-6 Notes until the
Class A-5 Notes have been paid in full.
The Certificates will represent fractional undivided interests in the Trust.
Interest, to the extent of the Pass Through Rate specified above, will be
distributed to the Certificateholders on each Distribution Date. Principal, to
the extent described herein, will be distributed to the Certificateholders on
each Distribution Date commencing with the later of (i) the April 1995
Distribution Date and (ii) the second Distribution Date next succeeding the
Distribution Date on which the Class A-1 Notes were paid in full. Distributions
of principal and interest on the Certificates will be subordinated in priority
to payments due on the Notes as described herein. In addition, upon any
reduction or withdrawal by any Rating Agency of its rating of any class of
Notes, no distributions of principal on the Certificates will be made until all
the Notes have been paid in full, unless such rating has been restored.
Each class of the Notes and the Certificates will be payable in full on the
applicable final scheduled Distribution Date as set forth herein. However,
payment in full of a class of Notes or of the Certificates could occur earlier
than such dates as described herein. In addition, the Class A-6 Notes will be
subject to redemption in whole, but not in part, and the Certificates will be
subject to prepayment in whole, but not in part, on any Distribution Date on
which the Servicer exercises its option to purchase the Receivables. The
Servicer may purchase the Receivables when the aggregate principal balance of
the Receivables shall have declined to 10% or less of the initial aggregate
principal balance of the Receivables purchased by the Trust. The Notes will be
subject to partial mandatory redemption and the Certificates will be subject to
partial mandatory prepayment, at a premium described herein, in the event that
funds remain in the Pre-Funding Account at the end of the Funding Period (as
defined herein).
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "SPECIAL
CONSIDERATIONS" HEREIN AND IN THE ACCOMPANYING PROSPECTUS.
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT THE
OFFERING OF THE OFFERED NOTES AND THE CERTIFICATES. ADDITIONAL INFORMATION IS
CONTAINED IN THE PROSPECTUS, AND PROSPECTIVE INVESTORS ARE URGED TO READ BOTH
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE OFFERED
NOTES OR THE CERTIFICATES MAY NOT BE CONSUMMATED UNLESS THE PURCHASER HAS
RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. TO THE EXTENT ANY
STATEMENTS IN THIS PROSPECTUS SUPPLEMENT CONFLICT WITH STATEMENTS IN THE
PROSPECTUS, THE STATEMENTS IN THIS PROSPECTUS SUPPLEMENT SHALL CONTROL.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE OFFERED NOTES
AND THE CERTIFICATES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
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REPORTS TO SECURITYHOLDERS
Unless and until Definitive Notes or Definitive Certificates are issued,
monthly and annual unaudited reports containing information concerning the
Receivables will be prepared by the Servicer and sent on behalf of the Trust
only to Cede & Co. ("Cede"), as nominee of The Depository Trust Company ("DTC")
and registered holder of the Notes and the Certificates. See "Certain
Information Regarding the Securities -- Book-Entry Registration" and "-- Reports
to Securityholders" in the accompanying Prospectus (the "Prospectus"). Such
reports will not constitute financial statements prepared in accordance with
generally accepted accounting principles. The Seller, as originator of the
Trust, will file with the Securities and Exchange Commission (the "Commission")
such periodic reports as are required under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the rules and regulations of the Commission
thereunder.
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SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere herein and in the Prospectus. Certain
capitalized terms used herein are defined elsewhere in this Prospectus
Supplement on the pages indicated in the "Index of Terms" or, to the extent not
defined herein, have the meanings assigned to such terms in the Prospectus.
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Issuer........................... Premier Auto Trust 1994-3 (the "Trust" or the "Issuer"), a
Delaware business trust established pursuant to an Amended
and Restated Trust Agreement dated as of June 1, 1994 (as
amended and supplemented from time to time, the "Trust
Agreement"), among the Seller, the Owner Trustee and
Premier Auto Receivables Company, a wholly owned subsidiary
of the Seller (the "Company").
Seller........................... Chrysler Financial Corporation (the "Seller" or "CFC").
Servicer......................... Chrysler Credit Corporation (the "Servicer" or "CCC").
Indenture Trustee................ The Fuji Bank and Trust Company, as trustee under the
Indenture (the "Indenture Trustee").
Owner Trustee.................... Chemical Bank Delaware, as trustee under the Trust
Agreement (the "Owner Trustee").
The Notes........................ The Trust will issue Asset Backed Notes pursuant to an
Indenture to be dated as of June 1, 1994 (as amended and
supplemented from time to time, the "Indenture"), between
the Issuer and the Indenture Trustee, as follows: (i) Class
A-1 4.94% Asset Backed Notes (the "Class A-1 Notes") in the
aggregate initial principal amount of $300,000,000; (ii)
Class A-2 Floating Rate Asset Backed Notes (the "Class A-2
Notes") in the aggregate initial principal amount of
$498,000,000; (iii) Class A-3 Floating Rate Asset Backed
Notes (the "Class A-3 Notes") in the aggregate initial
principal amount of $235,000,000; (iv) Class A-4 6.50%
Asset Backed Notes (the "Class A-4 Notes") in the aggregate
initial principal amount of $210,000,000; (v) Class A-5
6.65% Asset Backed Notes (the "Class A-5 Notes") in the
aggregate initial principal amount of $185,000,000; and
(vi) Class A-6 6.85% Asset Backed Notes (the "Class A-6
Notes") in the aggregate initial principal amount of
$304,500,000. The Class A-1 Notes, Class A-2 Notes, Class
A-3 Notes, Class A-4 Notes, Class A-5 Notes and Class A-6
Notes are collectively referred to herein as the "Notes".
The Class A-1 Notes are not being offered hereby, and it is
expected that all of the Class A-1 Notes will be purchased
on June 8, 1994 (the "Closing Date") by CFC. The Class A-2,
Class A-3, Class A-4, Class A-5 and Class A-6 Notes are
collectively referred to herein as the "Offered Notes."
The Notes will be secured by the assets of the Trust
pursuant to the Indenture.
The Certificates................. The Trust will issue 6.80% Asset Backed Certificates (the
"Certificates" and, together with the Notes, the
"Securities") with an aggregate initial Certificate Balance
of $67,500,000. The Certificates will represent fractional
undivided interests in the Trust and will be issued
pursuant to the Trust Agreement.
The Receivables.................. After the Closing Date, the Seller will be obligated,
subject only to the availability thereof, to sell, and the
Trust will be obligated to purchase,
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pursuant to a Sale and Servicing Agreement to be dated as
of June 1, 1994 (as amended and supplemented from time to
time, the "Sale and Servicing Agreement"), among the Trust,
the Seller and the Servicer and subject to the satisfaction
of certain conditions set forth therein, Receivables from
time to time during the Funding Period having an aggregate
principal balance equal to approximately $1,800,000,000
(such amount being equal to the amount on deposit in the
Pre-Funding Account (the "Pre-Funded Amount") on the
Closing Date). The Seller will designate as a cutoff date
(each a "Cutoff Date") each date as of which Receivables
are conveyed to the Trust. It is expected that Receivables
will be conveyed to the Trust as frequently as daily on
dates specified by the Seller (each date on which
Receivables are conveyed to the Trust being referred to as
a "Transfer Date") occurring during the Funding Period. See
"Description of the Transfer and Servicing
Agreements -- Sale and Assignment of Receivables" herein.
The Receivables will be selected from the contracts owned
by the Seller based on the criteria specified in the Sale
and Servicing Agreement and described herein and in the
Prospectus. No Receivable will have a scheduled maturity
later than November 30, 1999 (the "Final Scheduled Maturity
Date").
Receivables conveyed to the Trust on different Transfer
Dates during the Funding Period may be originated by CCC
using different credit criteria, may be of a different
credit quality and seasoning, and may otherwise vary
significantly from Receivables previously originated by
CCC. See "Special Considerations -- The Receivables and the
Pre-Funding Account" and "The Receivables Pool" herein.
The "Pool Balance" at any time will represent the aggregate
principal balance of the Receivables at the end of the
preceding Collection Period, after giving effect to all
payments (other than Payaheads) received from Obligors,
Advances and Purchase Amounts to be remitted by the
Servicer or the Seller, as the case may be, all for such
Collection Period and all losses realized on Receivables
liquidated during such Collection Period.
Terms of the Notes............... The principal terms of the Notes will be as described
below:
A. Distribution Dates.......... Payments of interest and principal on the Notes will be
made on the second day of each month or, if any such day is
not a Business Day, on the next succeeding Business Day
(each, a "Distribution Date"), commencing July 5, 1994.
Each reference to a "Payment Date" in the Prospectus shall
refer to a Distribution Date herein. Payments will be made
to holders of record of the Notes (the "Noteholders") as of
the day immediately preceding such Distribution Date or, if
Definitive Notes are issued, as of the 15th day of the
preceding month (a "Record Date"). A "Business Day" is a
day other than a Saturday, a Sunday or a day on which
banking institutions or trust companies in the City of New
York are authorized by law, regulation or executive order
to be closed.
B. Interest Rates.............. The Class A-1 Notes will bear interest at the rate of 4.94%
per annum (the "Class A-1 Rate"), the Class A-4 Notes will
bear interest at the rate of 6.50% per annum (the "Class
A-4 Rate"), the Class A-5 Notes
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will bear interest at the rate of 6.65% per annum (the
"Class A-5 Rate") and the Class A-6 Notes will bear
interest at the rate of 6.85% per annum (the "Class A-6
Rate"). The per annum rate of interest with respect to the
Class A-2 Notes (the "Class A-2 Rate") for each Interest
Reset Period will be the Treasury Rate for such Interest
Reset Period, determined as provided in the Prospectus,
plus 0.25%; provided that the Class A-2 Rate shall not
exceed 11% per annum for any Floating Rate Interest Accrual
Period (as defined below). The Index Maturity in respect of
the calculation of the Treasury Rate shall be three months,
the Interest Reset Period for such calculation will be one
week and the Interest Reset Date will be Wednesday. The per
annum rate of interest with respect to the Class A-3 Notes
for each Interest Reset Period (the "Class A-3 Rate") will
equal LIBOR for such Interest Reset Period, determined as
provided in the Prospectus, plus 0.125%; provided that the
Class A-3 Rate shall not exceed 11% per annum. The Index
Maturity in respect of the calculation of LIBOR shall be
one month and the Interest Reset Period for such
calculation shall be the Floating Rate Interest Accrual
Period. See "Certain Information Regarding the Securities
-- Floating Rate Securities" in the Prospectus. The
interest rates for the various classes of Notes are
referred to herein as "Interest Rates". The Calculation
Agent with respect to the Class A-2 Notes and the Class A-3
Notes shall be the Indenture Trustee.
C. Interest.................... Interest on the outstanding principal amount of the Class
A-1 Notes, Class A-4 Notes, Class A-5 Notes and Class A-6
Notes will accrue at the Class A-1 Rate, Class A-4 Rate,
Class A-5 Rate and Class A-6 Rate, respectively, from the
Closing Date (in the case of the first Distribution Date)
or from the 2nd day of the month preceding the month of a
Distribution Date to and including the first day of the
month of such Distribution Date (each an "Interest Accrual
Period"). Interest on the outstanding principal amount of
the Class A-2 Notes and Class A-3 Notes will accrue at the
Class A-2 Rate and Class A-3 Rate, respectively, from the
Closing Date (in the case of the first Distribution Date)
or from the most recent Distribution Date on which interest
has been paid to but excluding the following Distribution
Date (each a "Floating Rate Interest Accrual Period").
Interest on the Notes for any Distribution Date due but not
paid on such Distribution Date will be due on the next
Distribution Date together with interest on such amount at
the applicable Interest Rate (to the extent lawful).
Interest on the Class A-1, Class A-4, Class A-5 and Class
A-6 Notes will be calculated on the basis of a 360-day year
consisting of twelve 30-day months. Interest on the Class
A-2 Notes will be calculated on the basis of the actual
number of days in each applicable Interest Reset Period
divided by 365 or 366, as applicable, and interest on the
Class A-3 Notes will be calculated on the basis of the
actual number of days in each applicable Interest Reset
Period divided by 360. See "Description of the Notes --
Payments of Interest".
D. Principal................... Principal of the Notes will be payable on each Distribution
Date in an amount equal to the Noteholders' Principal
Distributable Amount for the calendar month (the
"Collection Period") preceding such Distribution Date (in
the case of the first Distribution Date, the period from
and including the day after the Closing Date to and
including
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June 30, 1994) to the extent of funds available therefor.
Subject to the reconciliation methodology described below,
the "Noteholders' Principal Distributable Amount" will be
the sum of (i) the Noteholders' Percentage of the Regular
Principal Distribution Amount (such "Regular Principal
Distribution Amount" being the amount of principal paid or,
in certain circumstances, scheduled to be paid with respect
to the Receivables (exclusive of payaheads allocable to
principal that have not been applied as payments under the
related Receivables in such Collection Period and inclusive
of Payaheads allocable to principal that have been applied
as payments under the related Receivables in such
Collection Period) plus, in certain circumstances, the
principal balance of defaulted Receivables, as calculated
by the Servicer as described under "Description of the
Transfer and Servicing Agreements -- Distributions") plus
(ii) the portion, if any, of the Total Distribution Amount
for such Collection Period that remains after payment of
(a) the Servicing Fee, (b) the interest due on the Notes,
(c) the portion of the Regular Principal Distribution
Amount allocated to the Noteholders pursuant to clause (i),
(d) the interest due on the Certificates, (e) the portion
of the Regular Principal Distribution Amount distributed to
the Certificateholders as described below under
"Description of the Certificates -- Distributions of
Principal Payments", and (f) the amount, if any, required
to be deposited in the Reserve Account on such Distribution
Date (the "Accelerated Principal Distribution Amount").
On the Business Day immediately preceding each Distribution
Date (a "Determination Date"), the Indenture Trustee shall
determine the amount in the Collection Account available
for distribution on the related Distribution Date. Such
amount shall be allocated first to interest based on the
weighted average APR and Pool Balance of the Receivables as
of the first day of the related Collection Period, plus an
amount related to the investment earnings on amounts
contained in the Pre-Funding Account maintained with the
Indenture Trustee in accordance with the Sale and Servicing
Agreement, and then any remaining amount in the Collection
Account shall be allocated to principal. Payments to
Securityholders shall be made on each Distribution Date in
accordance with such allocations, with appropriate
adjustments from the prior period as described below. On
each Determination Date (other than the first Determination
Date), the Servicer will provide the Indenture Trustee with
certain information with respect to the Collection Period
related to the prior Distribution Date, and the amounts
allocated and distributed on the Distribution Date
preceding such Determination Date will be reconciled with
the information provided by the Servicer on such
Determination Date, amounts will be deposited in the
Reserve Account or held in the Collection Account, as
appropriate, and reports reflecting such reconciled amounts
will be forwarded to Securityholders. If, based on such
reconciliation, the amounts distributed to Securityholders
on account of principal on such preceding Distribution Date
were less than the amounts required to be so distributed
based on the reconciliation, the amount of such deficiency
shall be distributed to Securityholders on the next
succeeding Distribution Date. If amounts were distributed
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to Securityholders as principal in excess of amounts
allocable to principal based on such reconciliation, the
amount of such excess will be deducted from principal when
calculating principal distributable on the next succeeding
Distribution Date. The payment of principal as described
above is not expected to have a material effect on the
average life of any class of Securities. See "Description
of the Notes -- Payments of Principal" herein.
No principal payments will be made (i) on the Class A-2
Notes until the Class A-1 Notes have been paid in full;
(ii) on the Class A-3 Notes until the Class A-2 Notes have
been paid in full; (iii) on the Class A-4 Notes until the
Class A-3 Notes have been paid in full; (iv) on the Class
A-5 Notes until the Class A-4 Notes have been paid in full;
or (v) on the Class A-6 Notes until the Class A-5 Notes
have been paid in full.
The outstanding principal amount of the Class A-1 Notes, to
the extent not previously paid, will be payable on the
October 1995 Distribution Date (the "Class A-1 Final
Scheduled Distribution Date"); the outstanding principal
amount of the Class A-2 Notes, to the extent not previously
paid, will be payable on the September 1996 Distribution
Date (the "Class A-2 Final Scheduled Distribution Date");
the outstanding principal amount of the Class A-3 Notes, to
the extent not previously paid, will be payable on the
April 1997 Distribution Date (the "Class A-3 Final
Scheduled Distribution Date"); the outstanding principal
amount of the Class A-4 Notes, to the extent not previously
paid, will be payable on the November 1997 Distribution
Date (the "Class A-4 Final Scheduled Distribution Date");
the outstanding principal amount of the Class A-5 Notes, to
the extent not previously paid, will be payable on the
April 1998 Distribution Date (the "Class A-5 Final
Scheduled Distribution Date"); and the outstanding
principal amount of the Class A-6 Notes, to the extent not
previously paid, will be payable on the March 1999
Distribution Date (the "Class A-6 Final Scheduled
Distribution Date").
E. Optional Redemption......... The Class A-6 Notes will be redeemed in whole, but not in
part, on any Distribution Date on which the Servicer
exercises its option to purchase the Receivables, which can
occur after the Pool Balance declines to 10% or less of the
Initial Pool Balance (defined below), at a redemption price
equal to the unpaid principal amount of the Class A-6 Notes
plus accrued and unpaid interest thereon. See "Description
of the Notes -- Optional Redemption" herein. The "Initial
Pool Balance" as of any date will equal the aggregate
principal balances of all Receivables transferred to the
Trust on or prior to such date as of their respective
Cutoff Dates.
F. Mandatory Redemption........ A class or classes of Notes then outstanding will be
redeemed in part on the Distribution Date on or immediately
following the last day of the Funding Period in the event
that amounts remain on deposit in the Pre-Funding Account
after giving effect to the purchase of all Receivables,
including any such purchase on such date (a "Mandatory
Redemption"). If the amount on deposit in the Pre-Funding
Account is equal to $100,000 or less, then such amount will
be used to redeem the Class A-1 Notes up to an amount not
to exceed their outstanding balance, with any remaining
amount used to redeem the Class A-2
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Notes. If the amount on deposit in the Pre-Funding Account
is greater than $100,000, then such amount will be used to
redeem each class of Notes and the Certificates. The
aggregate principal amount of each class of Notes to be
redeemed will be an amount equal to such class' Pre-Funded
Percentage of the amount then on deposit in the Pre-Funding
Account. The "Pre-Funded Percentage" with respect to a
class of Notes or the Certificates is the percentage
derived from the fraction, the numerator of which is the
initial principal balance of such class of Notes or the
initial Certificate Balance, as the case may be, and the
denominator of which is the sum of the initial principal
balance of the Notes and the initial Certificate Balance.
A limited recourse mandatory prepayment premium (the "Note
Prepayment Premium") will be payable by the Trust to the
Noteholders pursuant to a Mandatory Redemption if the
amount on deposit in the Pre-Funding Account exceeds
$100,000. The Note Prepayment Premium for each of the Class
A-1, Class A-4, Class A-5 and Class A-6 Notes will equal
the excess, if any, discounted as described below, of (i)
the amount of interest that would accrue on such class'
portion of any remaining Pre-Funded Amount (the "Note
Prepayment Amount") at the Interest Rate borne by such
class of Notes during the period commencing on and
including the Distribution Date on which such Note
Prepayment Amount is required to be distributed to
Noteholders of such class to but excluding January 15,
1995, in the case of the Class A-1 Notes, September 30,
1996 in the case of the Class A-4 Notes, April 30, 1997, in
the case of the Class A-5 Notes and November 30, 1997, in
the case of the Class A-6 Notes, over (ii) the amount of
interest that would have accrued on the applicable Note
Prepayment Amount over the same period at a per annum rate
of interest equal to the bond equivalent yield to maturity
on the Determination Date preceding such Distribution Date
on the United States Treasury Bill due January 15, 1995, in
the case of the Class A-1 Notes, the 7.00% United States
Treasury Note due September 30, 1996, in the case of the
Class A-4 Notes, the 6.875% United States Treasury Note due
April 30, 1997, in the case of the Class A-5 Notes and the
6.00% United States Treasury Note due November 30, 1997, in
the case of the Class A-6 Notes. Such excess shall be
discounted to present value to such Distribution Date at
the applicable yield described in clause (ii) above. The
Note Prepayment Premium for the Class A-2 Notes will equal
the amount of interest that would have accrued on such
class' portion of any remaining Pre-Funded Amount (the
"Class A-2 Note Prepayment Amount") during the period
commencing on and including the Distribution Date on which
such Class A-2 Note Prepayment Amount is required to be
distributed to Noteholders of such class to but excluding
the August 1995 Distribution Date at an interest rate equal
to 0.25%, with such amount being discounted on a monthly
basis at a rate of interest equal to one-twelfth of the
Class A-2 Rate for the Floating Rate Interest Accrual
Period for the Distribution Date on which such Class A-2
Note Prepayment Amount is due. The Note Prepayment Premium
for the Class A-3 Notes will equal the amount of interest
that would have accrued on such class' portion of any
remaining Pre-Funded Amount (the "Class A-3 Note Prepayment
Amount") during the period
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commencing on and including the Distribution Date on which
such Class A-3 Note Prepayment Amount is required to be
distributed to Noteholders of such class to but excluding
the May 1996 Distribution Date, at an interest rate equal
to 0.125%, with such amount being discounted on a monthly
basis at a rate of interest equal to one-twelfth of the
one-month LIBOR rate. The Trust's obligation to pay the
Note Prepayment Premium shall be limited to funds which are
received from the Seller under the Sale and Servicing
Agreement as liquidated damages for the failure to deliver
Receivables having an aggregate principal amount equal to
the Pre-Funded Amount. No other assets of the Trust will be
available for the purpose of making such payment.
Terms of the Certificates........ The principal terms of the Certificates will be as
described below:
A. Distribution Dates.......... Distributions with respect to the Certificates will be made
on each Distribution Date, commencing July 5, 1994.
Distributions will be made to holders of record of the
Certificates (the "Certificateholders", and, together with
the Noteholders, the "Securityholders") as of the related
Record Date (which will be the 15th day of the preceding
month if Definitive Certificates are issued).
B. Pass Through Rate........... 6.80% per annum (the "Pass Through Rate").
C. Interest.................... On each Distribution Date, the Owner Trustee will
distribute pro rata to Certificateholders accrued interest
at the Pass Through Rate on the outstanding Certificate
Balance generally to the extent of funds available
following payment of the Servicing Fee and distributions in
respect of the Notes from the Total Distribution Amount and
the Reserve Account. Interest will be calculated on the
basis of a 360-day year consisting of twelve 30-day months.
Interest in respect of a Distribution Date will accrue from
the Closing Date (in the case of the first Distribution
Date) or from the 2nd day of the month preceding the month
of the Distribution Date to and including the first day of
the month of such Distribution Date.
D. Principal................... On each Distribution Date commencing with the later of (i)
the April 1995 Distribution Date and (ii) the second
Distribution Date next succeeding the Distribution Date on
which the Class A-1 Notes were paid in full, principal of
the Certificates will be payable in an amount generally
equal to the Certificateholders' Principal Distributable
Amount for the Collection Period preceding such
Distribution Date, to the extent of funds available
therefor following payment of the Servicing Fee and
payments of interest and principal in respect of the Notes
and the distribution of interest in respect of the
Certificates; provided, however, upon any reduction or
withdrawal by any Rating Agency of its rating of any class
of Notes, no distributions of principal on the Certificates
will be made until all the Notes have been paid in full,
unless such rating has been restored. The
Certificateholders' Principal Distributable Amount will be
based on the Certificateholders' Percentage of the Regular
Principal Distribution Amount, and will be calculated by
the Servicer in the manner described under "Description of
the Transfer and Servicing Agreements -- Distributions",
subject to the reconciliation methodology described therein
and above.
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The outstanding principal amount, if any, of the
Certificates will be payable in full on the December 1999
Distribution Date (the "Final Scheduled Distribution
Date").
E. Optional Prepayment......... If the Servicer exercises its option to purchase the
Receivables, which can occur after the Pool Balance
declines to 10% or less of the Initial Pool Balance, the
Certificateholders will receive an amount in respect of the
Certificates equal to the Certificate Balance together with
accrued interest at the Pass Through Rate, and the
Certificates will be retired. See "Description of the
Certificates -- Optional Prepayment" herein.
F. Mandatory Repurchase........ The Certificates will be prepaid, in part, pro rata on the
basis of their initial principal amounts, on the
Distribution Date on or immediately following the last day
of the Funding Period in the event that the amount on
deposit in the Pre-Funding Account after giving effect to
the purchase of all Receivables, including any such
purchase on such date (a "Mandatory Repurchase"), exceeds
$100,000. The aggregate principal amount of Certificates to
be prepaid will be an amount equal to the Certificates'
Pre-Funded Percentage of the amount then on deposit in the
Pre-Funding Account.
A limited recourse mandatory prepayment premium (the
"Certificate Prepayment Premium") will be payable by the
Trust to the Certificateholders at the time of any
prepayment of the Certificates pursuant to a Mandatory
Repurchase. The Certificate Prepayment Premium will equal
the excess, if any, discounted as described below, of (i)
the amount of interest that would accrue on the
Certificates' portion of any remaining Pre-Funded Amount
(the "Certificate Prepayment Amount") at the Pass Through
Rate during the period commencing on and including the
Distribution Date on which such Certificate Prepayment
Amount is required to be distributed to Certificateholders
to but excluding September 30, 1996 over (ii) the amount of
interest that would have accrued on such Certificate
Prepayment Amount over the same period at a per annum rate
of interest equal to the bond equivalent yield to maturity
on the Determination Date preceding such Distribution Date
on the 7.00% United States Treasury Note due September 30,
1996. Such excess shall be discounted to present value to
such Distribution Date at the yield described in clause
(ii) above. The Trust's obligation to pay the Certificate
Prepayment Premium shall be limited to funds which are
received from the Seller under the Sale and Servicing
Agreement as liquidated damages for the failure to deliver
Receivables during the Funding Period having an aggregate
principal amount equal to the Pre-Funded Amount. No other
assets of the Trust will be available for the purpose of
making such payment.
Pre-Funding Account.............. During the period (the "Funding Period") from and including
the Closing Date until the earliest of (a) the
Determination Date on which the amount on deposit in the
Pre-Funding Account is equal to $100,000 or less, (b) the
occurrence of an Event of Default under the Indenture or a
Servicer Default under the Sale and Servicing Agreement,
(c) the occurrence of certain events of insolvency with
respect to the Seller or the Servicer or (d) the
Determination Date with respect to the December 1994
Distribution Date, the Pre-Funded
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Amount will be maintained as an account in the name of the
Indenture Trustee (the "Pre-Funding Account"). The
Pre-Funded Amount will initially equal $1,800,000,000, and,
during the Funding Period, will be reduced by the amount
thereof used to purchase Receivables in accordance with the
Sale and Servicing Agreement and the amount thereof
deposited in the Reserve Account in connection with the
purchase of such Receivables. The Seller expects that the
Pre-Funded Amount will be reduced to $100,000 or less by
the September 1994 Distribution Date. Any Pre-Funded Amount
remaining at the end of the Funding Period will be payable
to the Certificateholders and Noteholders as described
above.
Reserve Account.................. The Reserve Account will be created with an initial deposit
by the Seller on the Closing Date of cash or Eligible
Investments having a value at least equal to the difference
between the anticipated investment earnings on the
Pre-Funded Amount and the weighted average interest expense
on the portion of the Notes and Certificates represented by
the Pre-Funded Amount. On each Transfer Date, cash or
Eligible Investments having a value approximately equal to
4.3% of the aggregate principal balance of the Receivables
conveyed to the Trust on such Transfer Date will be
withdrawn from the Pre-Funding Account from amounts
otherwise distributable to the Seller in connection with
the sale of such Receivables and deposited in the Reserve
Account. The amount initially deposited in the Reserve
Account by the Seller together with the aggregate amount
transferred from the Pre-Funding Account to the Reserve
Account on each Transfer Date is referred to as the
"Reserve Account Initial Deposit".
Certain amounts in the Reserve Account on any Distribution
Date (after giving effect to all distributions made on such
Distribution Date, as reconciled on such Distribution Date)
in excess of the Specified Reserve Account Balance for such
Distribution Date will be released to the Company (except
to the extent described under "Description of the Transfer
and Servicing Agreements -- Reserve Account"). Subject to
reduction as described below, the "Specified Reserve
Account Balance" with respect to any Distribution Date
generally will be equal to the sum of (i) 2.3% of the
Initial Pool Balance, plus an amount related to the
difference between anticipated investment earnings on the
outstanding Pre-Funded Amount and the weighted average
interest expense on the portion of the Notes and the
Certificates represented by the outstanding Pre-Funded
Amount and (ii) 2.0% of the Pool Balance on the first day
of the related Collection Period. However, with respect to
the portion of the Specified Reserve Account Balance set
forth in clause (i) above, so long as on any Distribution
Date (except the first Distribution Date) the sum of (x)
the outstanding principal balance of the Securities (after
giving effect to payments made on the prior Distribution
Date) and (y) the aggregate amount of Payaheads that have
been collected but not yet applied as payments under the
related Receivables as of the first day of the related
Collection Period is less than or equal to the sum of
96.25% of (a) the Pool Balance on the first day of the
related Collection Period and (b) the Pre-Funded Amount on
such day, then such portion of the Specified Reserve
Account Balance set forth in clause (i) above will be
reduced to 1.25% of the Initial Pool Balance. In addition,
so long as on any Distribution Date
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(except the first Distribution Date) the sum of (x) the
outstanding principal balance of the Securities (after
giving effect to payments made on the prior Distribution
Date) and (y) the aggregate amount of Payaheads that have
been collected but not yet applied as payments under the
related Receivables as of the first day of the related
Collection Period is less than or equal to the sum of
95.75% of (a) the Pool Balance on the first day of the
related Collection Period and (b) the Pre-Funded Amount on
such day, then such portion of the Specified Reserve
Account Balance set forth in clause (i) above will be
reduced to 0.75% of the Initial Pool Balance. With respect
to the portion of the Specified Reserve Account Balance set
forth in clause (ii) above, so long as on any Distribution
Date (except the first Distribution Date) the sum of (x)
the outstanding principal balance of the Securities (after
giving effect to payments made on the prior Distribution
Date) and (y) the aggregate amount of Payaheads that have
been collected but not yet applied as payments under the
related Receivables as of the first day of the related
Collection Period is less than or equal to the sum of
95.75% of (a) the Pool Balance on the first day of the
related Collection Period and (b) the Pre-Funded Amount on
such day, then the portion of the Specified Reserve Account
Balance set forth in clause (ii) above will be reduced to
an amount equal to the product of (I) the Pool Balance on
the first day of the related Collection Period and (II) the
percentage (which shall not be greater than 2.0% or less
than zero) equal to (X) the percentage derived from the
fraction, the numerator of which is the outstanding
principal balance of the Securities (after giving to
payments made on the prior Distribution Date) and the
denominator of which is such Pool Balance less (Y) 93.75%.
The Specified Reserve Account Balance is further subject to
adjustment in certain circumstances described herein. Funds
will be withdrawn from the Reserve Account up to the
Available Amount to the extent that the Total Distribution
Amount with respect to any Collection Period remaining
after the Servicing Fee is paid is less than the
Noteholders' Distributable Amount and will be deposited in
the Note Distribution Account for distribution to the
Noteholders on the related Distribution Date. In addition,
after giving effect to such withdrawal, funds will be
withdrawn from the Reserve Account up to the Available
Amount (as reduced by any withdrawal pursuant to the
preceding sentence) to the extent that the portion of the
Total Distribution Amount remaining after payment of the
Servicing Fee and the deposit of the Noteholders'
Distributable Amount in the Note Distribution Account is
less than the Certificateholders' Distributable Amount and
will be deposited in the Certificate Distribution Account
for distribution to the Certificateholders. If funds
applied in accordance with the preceding sentence are
insufficient to distribute the interest due on the
Certificates, subject to certain limitations, funds will be
withdrawn from the Reserve Account and applied to
distribute interest on the Certificates to the extent of
the Certificate Interest Reserve Amount. On each
Distribution Date, the Reserve Account will be reinstated
up to the Specified Reserve Account Balance to the extent
of the portion, if any, of the Total Distribution Amount
remaining after payment of the Servicing Fee, the deposit
of the Noteholders' Distributable Amount into the Note
Distribution Account and the deposit of the
Certificateholders' Distributable Amount into the Certif-
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icate Distribution Account and after giving effect to any
reconciliation on such Distribution Date in respect of the
distributions made on the preceding Distribution Date. The
Reserve Account will be maintained as an account in the
name of the Indenture Trustee.
Collection Account; Priority of
Payments......................... Except under certain conditions described herein or as
otherwise acceptable to each Rating Agency, the Servicer
will be required to remit collections received with respect
to the Receivables within two Business Days of receipt
thereof to one or more accounts in the name of the
Indenture Trustee (the "Collection Account"). Pursuant to
the Sale and Servicing Agreement, the Servicer will have
the revocable power to instruct the Indenture Trustee to
withdraw funds on deposit in the Collection Account and to
apply such funds on each Distribution Date to the following
(in the priority indicated): (i) the Servicing Fee for the
prior Collection Period and any overdue Servicing Fees to
the Servicer, (ii) the Noteholders' Interest Distributable
Amount and the Noteholders' Principal Distributable Amount
into the Note Distribution Account, (iii) the
Certificateholders' Interest Distributable Amount and,
commencing on the later of (a) the April 1995 Distribution
Date and (b) the second Distribution Date next succeeding
the Distribution Date on which the Class A-1 Notes were
paid in full, the Certificateholders' Principal
Distributable Amount into the Certificate Distribution
Account and (iv) the remaining balance, if any, to the
Reserve Account.
Tax Status....................... In the opinion of Brown & Wood, for federal income tax
purposes, the Notes will be characterized as debt, and the
Trust will not be characterized as an association (or a
publicly traded partnership) taxable as a corporation. In
the opinion of Allan L. Ronquillo, Esq., the same
characterizations will apply for Michigan income and single
business tax purposes. Each Noteholder, by the acceptance
of a Note, will agree to treat the Notes as indebtedness,
and each Certificateholder, by the acceptance of a
Certificate, will agree to treat the Trust as a partnership
in which the Certificateholders are partners for federal
income and Michigan income and single business tax
purposes. Alternative characterizations of the Trust and
the Certificates are possible, but would not result in
materially adverse tax consequences to Certificateholders.
See "Certain Federal Income Tax Consequences" and "Certain
State Tax Consequences" in the Prospectus for additional
information concerning the application of federal income
and Michigan tax laws to the Trust and the Securities.
ERISA Considerations............. Subject to the considerations discussed under "ERISA
Considerations" herein and in the Prospectus, the Notes are
eligible for purchase by employee benefit plans.
The Certificates may not be acquired by any employee
benefit plan subject to ERISA or Section 4975 of the Code
or by an individual retirement account. See "ERISA
Considerations" herein and in the Prospectus.
Rating of the Notes.............. It is a condition to the issuance of the Notes that they be
rated in the highest investment rating category by at least
two nationally recognized rating agencies. However, the
rating agencies do not evaluate, and the rating does not
address, the likelihood that the Note Prepayment
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Premium will be paid. There can be no assurance that a
rating will not be lowered or withdrawn by a rating agency
if circumstances so warrant.
Rating of the Certificates....... It is a condition of the issuance of the Certificates that
they be rated at least in the "AA" category or its
equivalent by at least two nationally recognized rating
agencies. However, the rating agencies do not evaluate, and
the rating does not address, the likelihood that the
Certificate Prepayment Premium will be paid. There can be
no assurance that a rating will not be lowered or withdrawn
by a rating agency if circumstances so warrant.
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SPECIAL CONSIDERATIONS
Limited Liquidity. There is currently no secondary market for the
Securities offered hereby. Each Underwriter currently intends to make a market
in the Securities offered hereby for which it is an Underwriter, but it is under
no obligation to do so. There can be no assurance that a secondary market will
develop or, if a secondary market does develop, that it will provide the
Securityholders with liquidity of investment or that it will continue for the
life of the Securities offered hereby.
The Receivables and the Pre-Funding Account. On the Closing Date, the
Seller will transfer to the Trust the $1,800,000,000 Pre-Funded Amount to be
deposited in the Pre-Funding Account. If the principal amount of eligible
Receivables originated by CCC during the Funding Period is less than the
Pre-Funded Amount, the Seller will have insufficient Receivables to sell to the
Trust on the Transfer Dates, thereby resulting in a prepayment of principal to
the Noteholders and the Certificateholders as described in the following
paragraph. See "Social, Economic and Other Factors" and "Trust's Relationship to
the Seller and Chrysler Credit Corporation; Financial Condition of Chrysler
Corporation" below. In addition, any conveyance of Receivables is subject to the
satisfaction, on or before the related Transfer Date, of the following
conditions precedent, among others: (i) each such Receivable must satisfy the
eligibility criteria specified in the Sale and Servicing Agreement (including
that such Receivable has not been repurchased by the Seller through the exercise
of optional redemption provisions contained in other securitization
transactions); (ii) the Seller will not have selected such Receivables in a
manner that it believes is adverse to the interests of the Noteholders or the
Certificateholders; (iii) as of the related Cutoff Date, the Receivables in the
Trust at that time, including the Receivables to be conveyed by the Seller as of
such Cutoff Date, will satisfy the parameters described under "The Receivables
Pool" herein and under "The Receivables Pools" in the Prospectus; (iv) the
applicable Reserve Account Initial Deposit for such Transfer Date shall have
been made; and (v) the Seller shall have executed and delivered to the Trust
(with a copy to the Indenture Trustee) a written assignment conveying such
Receivables to the Trust (including a schedule identifying such Receivables).
Moreover, any such conveyance of Receivables made during any given Collection
Period will also be subject to the satisfaction, on or about the fifteenth day
of the month following such Collection Period, of the following conditions
subsequent, among others: (a) the Seller will have delivered certain opinions of
counsel to the Owner Trustee, the Indenture Trustee and the Rating Agencies with
respect to the validity of the conveyance of all such Receivables conveyed
during such Collection Period; (b) the Trust and the Indenture Trustee shall
have received written confirmation from a firm of certified independent public
accountants that, as of the end of the preceding Collection Period, the
Receivables in the Trust at that time, including the Receivables conveyed by the
Seller during such Collection Period, satisfied the parameters described under
"The Receivables Pool" herein and under "The Receivable Pools" in the
Prospectus; and (c) each of the Rating Agencies shall have notified the Seller
in writing that, following the addition of all such Receivables, each class of
the Notes and the Certificates will be rated by the Rating Agencies in the same
rating category as they were rated by the Rating Agencies on the Closing Date.
The Seller will immediately repurchase any Receivable, at a price equal to the
Purchase Amount thereof, upon the failure of the Seller to satisfy any of the
foregoing conditions subsequent with respect thereto. Such confirmation of the
ratings of the Notes and the Certificates may depend on factors other than the
characteristics of any such Receivables, including the delinquency, repossession
and net loss experience on the automobile and light duty truck receivables in
the portfolio serviced by CCC.
To the extent that amounts on deposit in the Pre-Funding Account have not
been fully applied to the conveyance of Receivables to the Trust by the end of
the Funding Period and such amount exceeds $100,000, the Noteholders and the
Certificateholders will receive, on the Distribution Date on or immediately
following the last day of the Funding Period, a prepayment of principal in an
amount equal to the applicable Pre-Funded Percentage, in respect of a class of
the Notes or of the Certificates, of the Pre-Funded Amount remaining in the
Pre-Funding Account following the purchase of any Receivables on the related
Determination Date. If such remaining Pre-Funded Amount is equal to $100,000 or
less, the entire amount thereof will be paid as principal of the Class A-1 Notes
up to an amount not to exceed their outstanding balance, with any remaining
amount used to redeem the Class A-2 Notes. It is anticipated that the principal
amount of Receivables sold to
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the Trust will not be exactly equal to the amount on deposit in the Pre-Funding
Account and that therefore there will be at least a nominal amount of principal
prepaid to the Class A-1 Noteholders.
Each Receivable must satisfy the eligibility criteria specified in the Sale
and Servicing Agreement at the time of its addition. However, Receivables that
are conveyed to the Trust on later dates during the Funding Period may have been
originated by CCC using credit criteria different from those which were applied
to the Receivables conveyed to the Trust at earlier dates and may be of a
different credit quality and seasoning. In addition, an increasing percentage of
the Receivables may be Fixed Value Receivables or Receivables generated under
the Market Value Pricing program. Therefore, the characteristics of the entire
Receivables Pool included in the Trust may vary significantly as subsequent
Receivables are conveyed to the Trust from time to time during the Funding
Period. See "The Receivables Pool" herein and "The Receivables Pools" in the
Prospectus.
Social, Economic and Other Factors. The ability of CCC to generate
Receivables is largely dependent upon the level of retail sales of automobiles
and light duty trucks. The level of retail sales of automobiles and light duty
trucks may change as a result of a variety of social and economic factors.
Economic factors include interest rates, unemployment levels, the rate of
inflation and consumer perceptions of economic conditions generally. However,
the Seller is unable to determine and has no basis to predict whether or to what
extent economic or social factors will affect the level of vehicle sales.
Trust's Relationship to the Seller and Chrysler Credit Corporation;
Financial Condition of Chrysler Corporation. Neither the Seller nor CCC is
generally obligated to make any payments in respect of the Notes, the
Certificates or the Receivables. However, the ability of the Seller to convey
Receivables on Transfer Dates is completely dependent upon the generation of
additional receivables by CCC. The ability of CCC to generate receivables is in
turn dependent to a large extent on the sales of automobiles and light duty
trucks manufactured or distributed by Chrysler Corporation and its consolidated
subsidiaries ("Chrysler"). If, during the Funding Period, Chrysler were
temporarily or permanently no longer manufacturing or distributing vehicles, the
rate of sales of automobiles and light duty trucks manufactured by Chrysler
would decrease, adversely affecting the ability of the Seller to sell
Receivables to the Trust. The use of incentive programs (e.g., manufacturers'
rebate programs) may also affect retail sales. There can be no assurance,
therefore, that CCC will continue to generate receivables at the same rate as in
prior years. In addition, if CCC 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 Securityholders.
Chrysler reported earnings before income taxes and the cumulative effect of
changes in accounting principles of $1.5 billion for the first quarter of 1994,
compared with $880 million for the first quarter of 1993. The substantial
improvement in operating results in the first quarter of 1994 over the first
quarter of 1993 resulted from an increase in sales volume and pricing actions,
including lower per unit sales incentives, partially offset by increased
advertising and employee costs. Chrysler's worldwide factory car and truck sales
for the three months ended March 31, 1994 were 740,598 units, a 15 percent
increase from the first quarter of 1993. Combined U.S. and Canadian dealers'
days supply of vehicle inventory decreased to 50 days at March 31, 1994 from 63
days at December 31, 1993 and 64 days at March 31, 1993.
Chrysler's net earnings for the first quarter of 1994 were $938 million, or
$2.55 per common share, compared with a net loss of $4.4 billion, or $13.68 per
common share, in the first quarter of 1993. The net loss for the first quarter
of 1993 resulted from a charge of $4.7 billion, or $14.38 per common share, for
the cumulative effect of a change in accounting principle related to the
adoption of Statement of Financial Accounting Standards ("SFAS") No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions." First
quarter 1993 results also included a charge of $283 million, or $0.87 per common
share, for the cumulative effect of a change in accounting principle relating to
the adoption of SFAS No. 112, "Employers' Accounting for Postemployment
Benefits."
Chrysler reported earnings before income taxes and the cumulative effect of
changes in accounting principles of $3.8 billion in 1993, compared with $934
million in 1992. The earnings in 1993 included a gain on sales of automotive
assets and investments of $265 million. Earnings in 1992 included a gain on the
sale of an automotive investment of $142 million, a $101 million restructuring
charge related to the realignment of
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Chrysler's short-term vehicle rental subsidiaries and a $110 million charge for
a reduction to the estimated net realizable value of investments of Chrysler
Canada Ltd. and certain of its employee benefit plans in a real estate
investment concern. Excluding the effect of these items, Chrysler's pre-tax
earnings for 1993 and 1992 were $3.6 billion and $1.0 billion, respectively.
The improvement in 1993 over 1992 was primarily the result of a substantial
increase in unit sales volume, pricing actions, including significantly lower
per unit sales incentives, and an improved mix of higher-margin products,
partially offset by increased labor and benefit costs. Chrysler's worldwide
factory car and truck sales during 1993 increased 14 percent to 2,475,738 units,
from 2,175,447 units in 1992. U.S. and Canadian dealers' days supply of field
stock decreased to 63 days at December 31, 1993 from 72 days at December 31,
1992.
The net loss for 1993 was $2.6 billion, or $7.62 per common share, compared
with net earnings of $723 million, or $2.21 per common share for 1992. The net
loss for 1993 resulted from a charge of $4.68 billion, or $13.57 per common
share, for the cumulative effect of a change in accounting principle related to
the adoption of SFAS No. 106. Also included in the results for 1993 was a charge
of $283 million, or $0.82 per common share, for the cumulative effect of a
change in accounting principle relating to the adoption of SFAS No. 112. Net
earnings for 1992 included a $218 million, or $0.74 per common share, favorable
cumulative effect of a change in accounting principle relating to the adoption
of SFAS No. 109, "Accounting for Income Taxes".
During 1992 and 1993, Chrysler took various actions to strengthen its
financial condition, improve liquidity and add to its equity base in order to
ensure its ability to carry out its new product development and facility
modernization programs without significant interruption. In the second and third
quarters of 1993, Chrysler sold its remaining 50.3 million shares of Mitsubishi
Motors Corporation ("MMC") stock for net proceeds of $329 million and sold the
plastics operations of its Acustar division for net proceeds of $132 million. In
February 1993, Chrysler issued 52 million shares of common stock for net
proceeds of $1.95 billion. In 1992, Chrysler sold 43.6 million shares of MMC
stock for net proceeds of $215 million and issued 1.7 million shares of
convertible preferred stock for net proceeds of $836 million.
CFC's earnings before taxes were $75 million for the three months ended
March 31, 1994, which compares to $50 million for the first quarter of 1993,
before the cumulative effect of changes in accounting principles. The increase
in first quarter 1994 earnings before taxes and accounting changes resulted from
higher levels of automotive financing.
CFC's net earnings were $47 million for the three months ended March 31,
1994 compared to $7 million in the first quarter of 1993. Net earnings for the
three months ended March 31, 1993 included charges totalling $30 million from
the adoption of SFAS No. 106 and SFAS No. 112.
CFC reported net earnings of $129 million for 1993 compared to $231 million
for 1992. Accounting changes in 1993 and 1992 negatively impact net earnings
comparisons by $81 million. Net earnings for 1993 included a $30 million
after-tax charge from the adoption of SFAS No. 106 and SFAS No. 112, while 1992
net earnings included a $51 million favorable after-tax adjustment from the
adoption of SFAS No. 109.
CFC's earnings before the cumulative effect of changes in accounting
principles were $159 million for 1993 and $180 million for 1992. The decline in
earnings before accounting changes resulted largely from higher borrowing costs
incurred under CFC's revolving credit agreements.
Both Chrysler and CFC regained investment grade credit ratings in 1993. The
improved credit ratings reflect Chrysler's improved operating results, the
significant improvements in Chrysler's balance sheet (including its ability to
reduce its unfunded pension obligation and its outstanding debt), and CFC's
improved liquidity.
Chrysler 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 Chrysler and CFC reference is
made to such reports and other information which are available as described
under "Available Information" in the Prospectus.
S-18
<PAGE> 19
Subordination; Limited Assets. Distributions of interest and principal on
the Certificates will be subordinated in priority of payment to interest and
principal due on the Notes. Consequently, the Certificateholders will not
receive any distributions with respect to a Collection Period until the full
amount of interest on and principal of the Notes on such Distribution Date has
been deposited in the Note Distribution Account. The Certificateholders will not
receive any distributions of principal until the later to occur of (i) the
second Distribution Date next succeeding the Distribution Date on which the
Class A-1 Notes have been paid in full and (ii) the April 1995 Distribution
Date. Moreover, upon any reduction or withdrawal by any Rating Agency of its
rating of any class of Notes (see "-- Ratings of the Securities"), the
Certificateholders will not receive any distributions of principal until after
all the Notes have been paid in full, unless such rating has been restored.
The Trust will not have, nor is it permitted or expected to have, any
significant assets or sources of funds other than the Receivables, the
Pre-Funding Account and the Reserve Account. Holders of the Notes and the
Certificates must rely for repayment upon payments on the Receivables and, if
and to the extent available, amounts on deposit in the Pre-Funding Account and
the Reserve Account. The Pre-Funding Account will only be available during the
Funding Period and is designed solely to cover obligations of the Trust relating
to a portion of its funds not invested in Receivables and is not designed to
cover losses on the Receivables. Similarly, although funds in the Reserve
Account will be available on each Distribution Date to cover shortfalls in
distributions of interest and principal on the Notes and the Certificates,
amounts to be deposited in the Reserve Account are limited in amount. If the
Reserve Account is exhausted, the Trust will depend solely on current
distributions on the Receivables to make payments on the Notes and the
Certificates.
Ratings of the Securities. It is a condition to the issuance of each class
of the Notes and of the Certificates that each class of the Notes be rated in
the highest investment rating category, and the Certificates be rated at least
in the "AA" category or its equivalent, by at least two nationally recognized
rating agencies (the "Rating Agencies"). A rating is not a recommendation to
purchase, hold or sell Securities, inasmuch as such rating does not comment as
to market price or suitability for a particular investor. The ratings of the
Securities address the likelihood of the payment of principal and interest on
the Securities pursuant to their terms. However, the Rating Agencies do not
evaluate, and the ratings of the Securities do not address, the likelihood that
the Note Prepayment Premium or the Certificate Prepayment Premium will be paid.
There can be no assurance that a rating will remain for any given period of time
or that a rating will not be lowered or withdrawn entirely by a Rating Agency if
in its judgment circumstances in the future so warrant.
THE TRUST
GENERAL
The Issuer, Premier Auto Trust 1994-3, is a business trust formed under the
laws of the State of Delaware pursuant to the Trust Agreement for the
transactions described in this Prospectus Supplement. After its formation, the
Trust will not engage in any activity other than (i) acquiring, holding and
managing the Receivables and the other assets of the Trust and proceeds
therefrom, (ii) issuing the Notes and the Certificates, (iii) making payments on
the Notes and the Certificates and (iv) engaging in other activities that are
necessary, suitable or convenient to accomplish the foregoing or are incidental
thereto or connected therewith.
The Trust will initially be capitalized with equity equal to the
Certificate Balance of $67,500,000, excluding amounts deposited in the Reserve
Account. Certificates with an original principal balance of $675,000 will be
sold to the Company and the remaining equity interest will be sold to third
party investors that are expected to be unaffiliated with the Seller, the
Servicer or their affiliates or the Trust. The equity of the Trust, together
with the net proceeds from the sale of the Notes, will be used by the Trust to
fund the deposit of the Pre-Funded Amount and to purchase the Receivables from
the Seller pursuant to the Sale and Servicing Agreement.
If the protection provided to the investment of the Securityholders by the
Reserve Account is insufficient, the Trust will look only to the Obligors on the
Receivables and the proceeds from the repossession and sale of
S-19
<PAGE> 20
Financed Vehicles which secure defaulted Receivables. In such event, certain
factors, such as the Trust's not having first priority perfected security
interests in some of the Financed Vehicles, may affect the Trust's ability to
realize on the collateral securing the Receivables, and thus may reduce the
proceeds to be distributed to Securityholders with respect to the Securities.
See "Description of the Transfer and Servicing Agreements -- Distributions" and
"-- Reserve Account" herein and "Certain Legal Aspects of the Receivables" in
the Prospectus.
The Trust's principal offices are in Wilmington, Delaware, in care of
Chemical Bank Delaware, as Owner Trustee, at the address listed below under
"-- The Owner Trustee".
CAPITALIZATION OF THE TRUST
The following table illustrates the capitalization of the Trust as of the
Closing Date, as if the issuance and sale of the Notes and the Certificates had
taken place on such date:
<TABLE>
<S> <C>
Class A-1 Notes.................................... $ 300,000,000
Class A-2 Notes.................................... 498,000,000
Class A-3 Notes.................................... 235,000,000
Class A-4 Notes.................................... 210,000,000
Class A-5 Notes.................................... 185,000,000
Class A-6 Notes.................................... 304,500,000
Certificates....................................... 67,500,000
--------------
Total.................................... $1,800,000,000
--------------
--------------
</TABLE>
THE OWNER TRUSTEE
Chemical Bank Delaware is the Owner Trustee under the Trust Agreement.
Chemical Bank Delaware is a Delaware banking corporation and its principal
offices are located at 1201 Market Street, Wilmington, Delaware 19801. The
Seller and its affiliates may maintain normal commercial banking relations with
the Owner Trustee and its affiliates.
THE RECEIVABLES POOL
The pool of Receivables (the "Receivables Pool") will include Receivables
purchased on and following the Closing Date and included in the Receivables Pool
as of the applicable Cutoff Date.
The Receivables will be purchased by the Servicer from Dealers in the
ordinary course of business and will be selected from the Seller's portfolio for
inclusion in the Receivables Pool by several criteria, some of which are set
forth in the Prospectus under "The Receivables Pools," as well as the
requirement that each Receivable (i) has an outstanding gross balance of at
least $1,000 and (ii) as of the applicable Cutoff Date, will not be more than 90
days past due. As of the applicable Cutoff Date, no Obligor on any Receivable
will have been noted in the related records of the Servicer as being the subject
of a bankruptcy proceeding, and no Obligor on any Receivable will have financed
a Financed Vehicle under CCC's "New-Finance Buyer Plan" program. No selection
procedures believed by the Seller to be adverse to Securityholders will be used
in selecting the Receivables.
The obligation of the Trust to purchase Receivables on a Transfer Date will
be subject to the Receivables in the Trust, including the Receivables to be
conveyed to the Trust on such Transfer Date, meeting the following criteria: (i)
not more than 30% of the principal balances of the Receivables in the Trust will
represent vehicles financed at CCC's used vehicle rates; and (ii) the weighted
average APR of the Receivables in the Trust will not be less than 9.75%, unless
the Seller increases the Reserve Account Initial Deposit by certain specified
amounts. In addition, such obligation will be subject to the Receivables in the
Trust, including Receivables being conveyed to the Trust on such Transfer Date,
having a weighted average remaining term not greater than 56 months. Such
criteria will be based on the characteristics of all of the Receivables as of
the related Cutoff Date. In addition, no Receivable will be sold to the Trust,
if such
S-20
<PAGE> 21
Receivable has been repurchased by the Seller through the exercise of optional
redemption provisions contained in other securitization transactions.
Except for the criteria described in the preceding paragraphs, there will
be no additional required characteristics of the Receivables. Therefore, the
aggregate characteristics of the entire Receivables Pool, including the
composition of the Receivables, the distribution by annual percentage rate
("APR") and the geographic distribution, may vary significantly as subsequent
Receivables are conveyed to the Trust from time to time during the Funding
Period.
Set forth in the following tables is information concerning the
composition, distribution by APR and the geographic distribution of the
receivables conveyed by the Seller to Premier Auto Trust 1994-2. With respect to
Premier Auto Trust 1994-2, $881,532,692.18 of receivables were transferred to it
on May 4, 1994 and the remaining $618,466,857.00 of receivables were thereafter
transferred to it by May 24, 1994. This information is given for illustrative
purposes only. There is no assurance that the comparable statistical information
for the Receivables Pool will be similar to the statistical information
presented in the tables below. The Trust will not have any interest in the
receivables pool owned by Premier Auto Trust 1994-2.
PREMIER AUTO TRUST 1994-2
COMPOSITION OF THE RECEIVABLES POOL(1)
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AGGREGATE AVERAGE AVERAGE AVERAGE
APR OF PRINCIPAL NUMBER OF REMAINING ORIGINAL PRINCIPAL
RECEIVABLES BALANCE RECEIVABLES TERM TERM BALANCE
- ----------- ----------------- ----------- --------- -------- ----------
<S> <C> <C> <C> <C> <C>
10.46% $1,499,999,549.18 112,749 54.9 55.4 $13,303.88
</TABLE>
- ---------------
(1) The figures shown are summations or weighted averages of the receivables
pools, transferred from time to time, as of their respective cutoff dates.
PREMIER AUTO TRUST 1994-2
DISTRIBUTION BY APR OF THE RECEIVABLES POOL(1)
<TABLE>
<CAPTION>
PERCENT OF
AGGREGATE
NUMBER OF AGGREGATE PRINCIPAL
APR RANGE RECEIVABLES PRINCIPAL BALANCE BALANCE(2)
- -------------------------------------------------------- ----------- ----------------- ----------
<S> <C> <C> <C>
0.00% - 5.00%......................................... 1,942 $ 25,764,455.34 1.7%
5.01% - 6.00%......................................... 452 6,456,088.58 0.4
6.01% - 7.00%......................................... 3,939 58,629,097.69 3.9
7.01% - 8.00%......................................... 17,841 257,003,864.76 17.1
8.01% - 9.00%......................................... 17,921 267,681,683.68 17.8
9.01% - 10.00%......................................... 17,055 238,296,333.63 15.9
10.01% - 11.00%......................................... 14,187 187,439,140.33 12.5
11.01% - 12.00%......................................... 7,639 98,737,378.93 6.6
12.01% - 13.00%......................................... 6,620 81,022,585.41 5.4
13.01% - 14.00%......................................... 5,275 62,688,454.51 4.2
14.01% - 15.00%......................................... 5,006 57,480,842.89 3.8
15.01% - 16.00%......................................... 3,929 45,217,891.69 3.0
16.01% - 17.00%......................................... 4,645 55,835,520.54 3.7
17.01% - 18.00%......................................... 3,413 36,670,804.54 2.4
Greater than 18.00%..................................... 2,885 21,075,406.66 1.4
----------- ----------------- ----------
112,749 $1,499,999,549.18 100.0%
----------- ----------------- ----------
----------- ----------------- ----------
</TABLE>
- ---------------
(1) The figures shown are summations or weighted averages of the receivables
pools, transferred from time to time, as of their respective cutoff dates.
(2) Percentages may not add to 100.0% because of rounding.
S-21
<PAGE> 22
PREMIER AUTO TRUST 1994-2
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES POOL(1)
<TABLE>
<CAPTION>
PERCENT OF AGGREGATE
STATE(3) PRINCIPAL BALANCE(2)
- --------------------------- ---------------------
<S> <C>
Alabama.................... 0.6%
Alaska..................... 0.2
Arizona.................... 2.3
Arkansas................... 2.5
California................. 7.4
Colorado................... 0.9
Connecticut................ 1.8
Delaware................... 0.2
District of Columbia....... 0.0
Florida.................... 4.2
Georgia.................... 2.7
Hawaii..................... 0.2
Idaho...................... 0.3
Illinois................... 3.0
Indiana.................... 1.3
Iowa....................... 1.0
Kansas..................... 1.3
Kentucky................... 1.3
Louisiana.................. 2.9
Maine...................... 0.8
Maryland................... 3.9
Massachusetts.............. 3.6
Michigan................... 6.0
Minnesota.................. 1.3
Mississippi................ 0.6
Missouri................... 1.9
<CAPTION>
PERCENT OF AGGREGATE
STATE(3) PRINCIPAL BALANCE(2)
- --------------------------- ---------------------
<S> <C>
Montana.................... 0.1%
Nebraska................... 0.4
Nevada..................... 0.4
New Hampshire.............. 2.3
New Jersey................. 4.6
New Mexico................. 0.5
New York................... 6.1
North Carolina............. 2.2
North Dakota............... 0.1
Ohio....................... 0.6
Oklahoma................... 1.4
Oregon..................... 0.6
Pennsylvania............... 6.3
Rhode Island............... 0.3
South Carolina............. 1.8
South Dakota............... 0.0
Tennessee.................. 2.8
Texas...................... 11.1
Utah....................... 0.2
Vermont.................... 0.5
Virginia................... 2.8
Washington................. 1.0
West Virginia.............. 0.3
Wisconsin.................. 1.1
Wyoming.................... 0.0
------
100.0%
------
------
</TABLE>
- ---------------
(1) The figures shown are summations or weighted averages of the receivables
pools, transferred from time to time, as of their respective cutoff dates.
(2) Percentages may not add to 100.0% because of rounding.
(3) Based on physical addresses of the dealers originating the receivables.
For the receivables conveyed to Premier Auto Trust 1994-2, approximately
83.9% of the aggregate principal balance of the receivables, constituting 77.2%
of the number of such receivables, represented vehicles financed at CCC's new
vehicle rates, which apply to new and certain previously owned vehicles; the
remainder represented vehicles financed at CCC's used vehicle rates.
Approximately 77.5% of the aggregate principal balance of the receivables
conveyed to Premier Auto Trust 1994-2 represented financing of vehicles
manufactured or distributed by Chrysler.
By aggregate principal balance, approximately 86.6% of the receivables
conveyed to Premier Auto Trust 1994-2 were Precomputed Receivables and 13.4% of
such receivables were Simple Interest Receivables. Approximately 8.1% of the
receivables were Fixed Value Receivables. See "The Receivables Pools" in the
Prospectus for a further description of the characteristics of Precomputed
Receivables, Simple Interest Receivables and Fixed Value Receivables.
S-22
<PAGE> 23
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES
Set forth below is certain information concerning the experience of the
Seller and its United States subsidiaries pertaining to retail new and used
automobile and light duty truck receivables, including those previously sold
which CCC continues to service. It is expected that the Receivables will be
originated on average more recently than were, on average, the automobile and
light duty truck receivables in the portfolio serviced by CCC. CCC began
originating Fixed Value Receivables in July 1991. There can be no assurance that
the delinquency, repossession and net loss experience on the Receivables will be
comparable to that set forth below.
DELINQUENCY EXPERIENCE(1)
<TABLE>
<CAPTION>
AT MARCH 31, AT DECEMBER 31,
-------------------------------------------- --------------------------------------------
1994 1993 1993 1992
-------------------- -------------------- -------------------- --------------------
NUMBER NUMBER NUMBER NUMBER
OF OF OF OF
CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT
--------- ------- --------- ------- --------- ------- --------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Portfolio............... 1,376,504 $14,805 1,334,554 $12,103 1,352,218 $14,116 1,344,799 $12,082
Period of Delinquency
31-60 Days............ 13,699 $ 135 11,503 $ 98 16,350 $ 153 15,964 $ 134
61 Days or More....... 1,224 13 980 10 1,383 15 1,376 13
--------- ------- --------- ------- --------- ------- --------- -------
Total Delinquencies..... 14,923 $ 148 12,483 $ 108 17,733 $ 168 17,340 $ 147
Total Delinquencies
as a Percent of
the Portfolio......... 1.08% 1.00% 0.94% 0.89% 1.31% 1.19% 1.29% 1.22%
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31,
--------------------------------------------------------------------
1991 1990 1989(2)
-------------------- -------------------- --------------------
NUMBER NUMBER NUMBER
OF OF OF
CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT
--------- ------- --------- ------- --------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Portfolio................................. 1,437,451 $11,994 1,622,834 $13,545 1,756,185 $14,134
Period of Delinquency
31-60 Days.............................. 21,025 $ 180 23,278 $ 206 19,096 $ 174
61 Days or More......................... 2,048 20 2,496 25 2,439 24
--------- ------- --------- ------- --------- -------
Total Delinquencies....................... 23,073 $ 200 25,774 $ 231 21,535 $ 198
Total Delinquencies as a Percent of
the Portfolio........................... 1.61% 1.67% 1.59% 1.71% 1.23% 1.40%
</TABLE>
- ---------------
(1) All amounts and percentages are based on the gross amount scheduled to be
paid on each contract, including unearned finance and other charges. The
information in the table includes an immaterial amount of retail
installment sale contracts on vehicles other than automobiles and light
duty trucks and includes previously sold contracts which CCC continues to
service.
(2) In 1990 the method by which delinquencies are calculated was changed.
Previously, an account was considered delinquent if more than $9.99 was
past due. Under the current method, an account is considered delinquent if
10% or more of the scheduled payment is past due. As a result,
delinquencies reported at December 31, 1989 are not directly comparable to
those reported in later periods.
S-23
<PAGE> 24
CREDIT LOSS/REPOSSESSION EXPERIENCE(1)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
--------------------- ---------------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
Average Amount Outstanding
During the Period........ $14,424 $12,066 $12,882 $11,818 $12,709 $13,410 $14,585
Average Number of Contracts
Outstanding During the
Period................... 1,363,028 1,339,223 1,341,084 1,382,898 1,517,178 1,696,175 1,814,040
Percent of Contracts
Acquired During the
Period with Recourse to
the Dealer............... 17.6% 16.7% 16.2% 15.8% 21.7% 22.7% 26.8%
Repossessions as a Percent
of Average Number of
Contracts
Outstanding(2)........... 2.12% 2.21% 2.15% 2.31% 2.63% 2.33% 2.21%
Net Losses as a Percent of
Liquidations(3)(4)....... 1.09% 1.23% 1.13% 1.46% 1.99% 1.61% 1.49%
Net Losses as a Percent of
Average Amount
Outstanding(2)(3)........ 0.58% 0.74% 0.63% 0.83% 1.06% 0.87% 0.75%
</TABLE>
- ---------------
(1) Except as indicated, all amounts and percentages are based on the gross
amount scheduled to be paid on each contract, including unearned finance
and other charges. The information in the table includes an immaterial
amount of retail installment sales contracts on vehicles other than
automobiles and light duty trucks and includes previously sold contracts
that CCC continues to service.
(2) Percentages have been annualized for the three months ended March 31, 1994
and 1993 and are not necessarily indicative of the experience for the year.
(3) Net losses are equal to the aggregate of net balances of all contracts which
are determined to be uncollectible in the period, less any recoveries on
contracts charged off in the period or any prior periods, excluding any
losses resulting from repossession expenses but including any losses
resulting from the failure to recover commissions to dealers with respect
to contracts that are prepaid or charged off.
(4) Liquidations represent a reduction in the outstanding balances of the
contracts as a result of monthly cash payments and charge-offs.
The net loss figures above reflect the fact that the Seller had recourse to
Dealers on a portion of its retail installment sale contracts. No prediction can
be made as to what portion, if any, of the Receivables will have the benefit of
recourse to Dealers. The Seller applies underwriting standards to the purchase
of contracts without regard to whether recourse to Dealers is provided. Based on
its experience, the Seller believes that there is no material difference between
the rates of delinquency and repossession on contracts with recourse against
Dealers as compared to contracts without recourse against Dealers. However, the
net loss experience of contracts without recourse against Dealers is higher than
that of contracts with recourse against Dealers because, under its recourse
obligation, the Dealer is responsible to the Seller for payment of the unpaid
balance of the contract, provided that the Seller repossesses the vehicle from
the retail buyer and returns it to the Dealer within a specified time. In the
event of a Dealer's bankruptcy, a bankruptcy trustee might attempt to
characterize recourse sales of contracts as loans to the Dealer secured by the
contracts. Such an attempt, if successful, could result in payment delays or
losses on the affected Receivables.
S-24
<PAGE> 25
THE SELLER AND THE SERVICER
Information regarding the Seller and the Servicer is set forth under "The
Seller and the Servicer" in the Prospectus. In addition, as of March 31, 1994,
the Seller had nearly 3,100 employees and was servicing approximately 2.4
million accounts, representing $29.8 billion in finance receivables managed, and
the Servicer provided financing services to automobile dealers and their
customers through 86 branches in the United States. In the first quarter of
1994, the Seller and CCC financed or leased approximately 207,000 vehicles at
retail, including approximately 137,000 new Chrysler passenger cars and light
duty trucks representing 24% of Chrysler's U.S. retail and fleet deliveries. The
Seller and CCC also financed at wholesale approximately 423,000 new Chrysler
passenger cars and light duty trucks representing 71% of Chrysler's U.S. factory
unit sales for the quarter ended March 31, 1994. Wholesale vehicle financing
accounted for 74% of the total U.S. automotive financing volume of the Seller
and CCC in the first three months of 1994 and represented 14% of gross
automotive finance receivables outstanding in the U.S. at March 31, 1994.
WEIGHTED AVERAGE LIFE OF THE SECURITIES
Information regarding certain maturity and prepayment considerations with
respect to the Securities is set forth under "Weighted Average Life of the
Securities" in the Prospectus. No principal payments will be made on the Class
A-2 Notes until all Class A-1 Notes have been paid in full; no principal
payments will be made on the Class A-3 Notes until all Class A-2 Notes have been
paid in full; no principal payments will be made on the Class A-4 Notes until
all Class A-3 Notes have been paid in full; no principal payments will be made
on the Class A-5 Notes until all Class A-4 Notes have been paid in full; and no
principal payments will be made on the Class A-6 Notes until all Class A-5 Notes
have been paid in full. In addition, no principal payments on the Certificates
will be made until the later of (i) the April 1995 Distribution Date and (ii)
the second Distribution Date next succeeding the Distribution Date on which the
Class A-1 Notes were paid in full. See "Description of the Notes -- Payments of
Principal" and "Description of the Certificates -- Distributions of Principal
Payments" herein. As the rate of payment of principal of each class of Notes and
the Certificates depends primarily on the rate of payment (including
prepayments) of the principal balance of the Receivables, final payment of any
class of the Notes and the final distribution in respect of the Certificates
could occur significantly earlier than the respective Final Scheduled
Distribution Dates. In addition, the rate of payment of principal of each class
of Notes will be affected by the amounts of the Accelerated Principal
Distribution Amounts, which will in turn be affected by the levels of the Class
A-2 and Class A-3 Rates. Securityholders will bear the risk of being able to
reinvest principal payments on the Securities at yields at least equal to the
yields on their respective Securities.
S-25
<PAGE> 26
DESCRIPTION OF THE NOTES
GENERAL
The Notes will be issued pursuant to the terms of the Indenture, a form of
which has been filed as an exhibit to the Registration Statement. A copy of the
Indenture will be filed with the Commission following the issuance of the
Securities. The following summary describes certain terms of the Notes and the
Indenture. The summary does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of the Notes and
the Indenture. The following summary supplements, and to the extent inconsistent
therewith, replaces the description of the general terms and provisions of the
Notes of any given series and the related Indenture set forth in the Prospectus,
to which description reference is hereby made. The Fuji Bank and Trust Company,
a New York banking corporation, will be the Indenture Trustee under the
Indenture.
PAYMENTS OF INTEREST
Each of the Class A-1 Notes, the Class A-4 Notes, the Class A-5 Notes and
the Class A-6 Notes will constitute Fixed Rate Securities, as such term is
defined under "Certain Information Regarding the Securities -- Fixed Rate
Securities" in the Prospectus. The Class A-2 Notes and the Class A-3 Notes will
constitute Floating Rate Securities, as such term is defined under "Certain
Information Regarding the Securities -- Floating Rate Securities" in the
Prospectus. Interest on the principal balances of the classes of the Notes will
accrue at the respective per annum Interest Rates and will be payable to the
Noteholders monthly on each Distribution Date, commencing July 5, 1994. Interest
on the outstanding principal amount of the Class A-1 Notes, Class A-4 Notes,
Class A-5 Notes and Class A-6 Notes will accrue at the Class A-1 Rate, Class A-4
Rate, Class A-5 Rate and Class A-6 Rate, respectively, from the Closing Date (in
the case of the first Distribution Date) or from the 2nd day of the month
preceding the month of a Distribution Date to and including the first day of the
month of the Distribution Date (each an "Interest Accrual Period"). Interest on
the outstanding principal amount of the Class A-2 Notes and the Class A-3 Notes
will accrue at the Class A-2 Rate and the Class A-3 Rate, respectively, from the
Closing Date (in the case of the first Distribution Date) or from the most
recent Distribution Date on which interest has been paid to but excluding the
following Distribution Date (each a "Floating Rate Interest Accrual Period").
Interest on the Class A-1, Class A-4, Class A-5 and Class A-6 Notes will be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
Interest on the Class A-2 Notes will be calculated on the basis of the actual
number of days in each applicable Interest Reset Period divided by 365 or 366,
as applicable, and interest on the Class A-3 Notes will be calculated on the
basis of the actual number of days in each applicable Interest Reset Period
divided by 360. Interest accrued as of any Distribution Date but not paid on
such Distribution Date will be due on the next Distribution Date, together with
interest on such amount at the applicable Interest Rate (to the extent lawful).
With respect to the Class A-2 Rate, the Index Maturity for the calculation of
the Treasury Rate will be three months, the Interest Reset Period for such
calculation will be one week and the Interest Reset Date will be Wednesday. With
respect to the Class A-3 Rate, the Index Maturity for LIBOR will be one month
and the Interest Reset Period for such calculation will be the Floating Rate
Interest Accrual Period. See "Certain Information Regarding the Securities --
Floating Rate Securities" in the Prospectus. Interest payments on the Notes will
generally be derived from the Total Distribution Amount remaining after the
payment of the Servicing Fee and from the Reserve Account. See "Description of
the Transfer and Servicing Agreements -- Distributions" and "-- Reserve Account"
herein.
Interest payments to all classes of Noteholders will have the same
priority. Under certain circumstances, the amount available for interest
payments could be less than the amount of interest payable on the Notes on any
Distribution Date, in which case each class of Noteholders will receive their
ratable share (based upon the aggregate amount of interest due to such class of
Noteholders) of the aggregate amount available to be distributed in respect of
interest on the Notes.
PAYMENTS OF PRINCIPAL
Principal payments will be made to the Noteholders on each Distribution
Date in an amount generally equal to the sum of (i) the Noteholders' Percentage
of the amount (such amount being the "Regular Principal Distribution Amount")
equal to the sum of principal payments received with respect to the Receivables
during the preceding Collection Period or, in certain cases, scheduled to be
paid during such
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Collection Period (exclusive of Payaheads allocable to principal that have not
been applied as payments under the related Receivables in such Collection Period
and inclusive of Payaheads allocable to principal that have been applied as
payments under the related Receivables in such Collection Period) plus the
principal balances of defaulted Receivables written off in respect of such
Collection Period, subject to certain limitations and the reconciliation
methodology described below under "Description of the Transfer and Servicing
Agreements -- Distributions", plus (ii) the portion, if any, of the Total
Distribution Amount for such Collection Period that remains after payment of (a)
the Servicing Fee, (b) the Noteholders' Interest Distributable Amount, (c) the
portion of the Regular Principal Distribution Amount allocated to the
Noteholders pursuant to clause (i), (d) the Certificateholders' Interest
Distributable Amount, (e) the portion of the Regular Principal Distribution
Amount distributed to Certificateholders as described under "Description of the
Certificates -- Distributions of Principal Payments" and (f) the amount, if any,
required to be deposited in the Reserve Account on such Distribution Date (the
"Accelerated Principal Distribution Amount"). Principal payments on the Notes
will generally be derived from the Total Distribution Amount and the amount, if
any, in the Reserve Account up to the Available Amount remaining after the
payment of the Servicing Fee and the Noteholders' Interest Distributable Amount
and, in the case of the Accelerated Principal Distribution Amount, the
Certificateholders' Distributable Amount and the amount, if any, required to be
deposited into the Reserve Account. See "Description of the Transfer and
Servicing Agreements -- Distributions" and "-- Reserve Account" herein.
On the Business Day immediately preceding each Distribution Date (a
"Determination Date"), the Indenture Trustee shall determine the amount in the
Collection Account available for distribution on the related Distribution Date
(excluding amounts retained in the Collection Account from prior periods, as
described below). Such amount shall be allocated first to interest based on the
weighted average APR and Pool Balance of the Receivables as of the first day of
the related Collection Period, plus an amount related to the investment earnings
on amounts contained in the Pre-Funding Account maintained with the Indenture
Trustee in accordance with the Sale and Servicing Agreement, and then any
remaining amount in the Collection Account shall be allocated to principal.
Payments to Securityholders shall be made on each Distribution Date in
accordance with such allocations, with appropriate adjustments from the prior
period as described below, together with a payment notice setting forth the
amount of such payment allocable to interest and the amount allocable to
principal, including, separately stated, the amount attributable to any
adjustment from the prior period. On each Determination Date (other than the
first Determination Date), the Servicer will provide the Indenture Trustee with
certain information with respect to the Collection Period related to the prior
Distribution Date. On such current Determination Date, (i) the amounts so
allocated and distributed on the preceding Distribution Date will be reconciled
with the information provided by the Servicer on the preceding Determination
Date, (ii) amounts will be deposited in the Reserve Account or held in the
Collection Account, as appropriate, and (iii) reports reflecting such reconciled
amounts will be forwarded to Securityholders. If, based on such reconciliation,
the amounts distributed to Securityholders on account of principal on the
preceding Distribution Date were less than the amounts required to be so
distributed based on the reconciliation, the amount of such deficiency shall be
retained in the Collection Account for distribution to Securityholders on such
current Distribution Date. If amounts were distributed to holders as principal
in excess of amounts allocable to principal based on such reconciliation, the
amount of such excess will be deducted from principal when calculating principal
distributable on such current Distribution Date. The payment of principal as
described above is not expected to have a material effect on the average life of
any class of Securities.
On each Distribution Date, principal payments on the Notes will be applied
in the following order of priority: (i) to the principal balance of the Class
A-1 Notes until the principal balance of the Class A-1 Notes is reduced to zero;
(ii) to the principal balance of the Class A-2 Notes until the principal balance
of the Class A-2 Notes is reduced to zero; (iii) to the principal balance of the
Class A-3 Notes until the principal balance of the Class A-3 Notes is reduced to
zero; (iv) to the principal balance of the Class A-4 Notes until the principal
balance of the Class A-4 Notes is reduced to zero; (v) to the principal balance
of the Class A-5 Notes until the principal balance of the Class A-5 Notes is
reduced to zero; and (vi) to the principal balance of the Class A-6 Notes until
the principal balance of the Class A-6 Notes is reduced to zero. It is expected
that all of the Class A-1 Notes, which are not being offered hereby, will be
purchased by CFC, which may
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hold or later resell such Notes. The principal balance of the Class A-1 Notes,
to the extent not previously paid, will be due on the Class A-1 Final Scheduled
Distribution Date; the principal balance of the Class A-2 Notes, to the extent
not previously paid, will be due on the Class A-2 Final Scheduled Distribution
Date; the principal balance of the Class A-3 Notes, to the extent not previously
paid, will be due on the Class A-3 Final Scheduled Distribution Date; the
principal balance of the Class A-4 Notes, to the extent not previously paid,
will be due on the Class A-4 Final Scheduled Distribution Date; the principal
balance of the Class A-5 Notes, to the extent not previously paid, will be due
on the Class A-5 Final Scheduled Distribution Date; and the principal balance of
the Class A-6 Notes, to the extent not previously paid, will be due on the Class
A-6 Final Scheduled Distribution Date. The actual date on which the aggregate
outstanding principal amount of any class of Notes is paid may be earlier than
the respective Final Scheduled Distribution Dates set forth above based on a
variety of factors, including those described under "Weighted Average Life of
the Securities" herein and in the Prospectus.
MANDATORY REDEMPTION
A class or classes of Notes will be redeemed in part on the Distribution
Date on or immediately following the last day of the Funding Period in the event
that amounts remain on deposit in the Pre-Funding Account after giving effect to
the purchase of all Receivables, including any such purchase on such date (a
"Mandatory Redemption"). If the amount on deposit in the Pre-Funding Account is
less than or equal to $100,000, then such amount will be used to redeem the
Class A-1 Notes up to an amount not to exceed their outstanding balance and then
to redeem the Class A-2 Notes. If the amount on deposit in the Pre-Funding
Account is greater than $100,000, then such amount will be used to redeem each
class of Notes and the Certificates, and the aggregate principal amount of each
class of Notes to be redeemed will be an amount equal to such class's Pre-Funded
Percentage of the amount then on deposit in the Pre-Funding Account.
The Note Prepayment Premium will be payable by the Trust to the Noteholders
pursuant to a Mandatory Redemption if the amount on deposit in the Pre-Funding
Account exceeds $100,000. The Note Prepayment Premium for each of the Class A-1
Notes, the Class A-4 Notes, the Class A-5 Notes and the Class A-6 Notes will
equal the excess, if any, discounted as described below, of (i) the amount of
interest that would accrue on such class' Pre-Funded Percentage of any remaining
Pre-Funded Amount (the "Note Prepayment Amount") at the Interest Rate borne by
such class of Notes during the period commencing on and including the
Distribution Date on which such Note Prepayment Amount is required to be
distributed to the Noteholders of such class to but excluding January 15, 1994,
in the case of the Class A-1 Notes, September 30, 1996, in the case of the Class
A-4 Notes, April 30, 1997, in the case of the Class A-5 Notes and November 30,
1997, in the case of the Class A-6 Notes, over (ii) the amount of interest that
would have accrued on the applicable Note Prepayment Amount over the same period
at a per annum rate of interest equal to the bond equivalent yield to maturity
on the Determination Date preceding such Distribution Date on the United States
Treasury Bill due January 15, 1995, in the case of the Class A-1 Notes, the
7.00% United States Treasury Note due September 30, 1996, in the case of the
Class A-4 Notes, the 6.875% United States Treasury Note due April 30, 1997, in
the case of the Class A-5 Notes, and the 6.00% United States Treasury Note due
November 30, 1997, in the case of the Class A-6 Notes. Such excess shall be
discounted to present value to such Distribution Date at the applicable yield
described in clause (ii) above. The Note Prepayment Premium for the Class A-2
Notes will equal the amount of interest that would have accrued on such class'
Pre-Funded Percentage of any remaining Pre-Funded Amount (the "Class A-2 Note
Prepayment Amount") during the period commencing on and including the
Distribution Date on which such Class A-2 Note Prepayment Amount is required to
be distributed to the Noteholders of such Class to but excluding the August 1995
Distribution Date at an interest rate equal to 0.25% with such amount being
discounted on a monthly basis at a rate of interest equal to one-twelfth of the
Class A-2 Rate for the Floating Rate Interest Accrual Period for the
Distribution Date on which such Class A-2 Note Prepayment Amount is due. The
Note Prepayment Premium for the Class A-3 Notes will equal the amount of
interest that would have accrued on such class' portion of any remaining
Pre-Funded Amount (the "Class A-3 Note Prepayment Amount") during the period
commencing on and including the Distribution Date on which such Class A-3 Note
Prepayment Amount is required to be distributed to Noteholders of such class to
but excluding the May 1996 Distribution Date, at an interest rate equal to
0.125%, with such amount being discounted on a monthly basis at a rate of
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interest equal to one-twelfth of the one-month LIBOR rate. The Trust's
obligation to pay the Note Prepayment Premium shall be limited to funds which
are received from the Seller under the Sale and Servicing Agreement as
liquidated damages for the failure to deliver Receivables. No other assets of
the Trust will be available for the purpose of making such payment.
OPTIONAL REDEMPTION
The Class A-6 Notes will be redeemed in whole, but not in part, on any
Distribution Date after all the other classes of Notes have been paid in full on
which the Servicer exercises its option to purchase the Receivables. The
Servicer may purchase the Receivables when the Pool Balance shall have declined
to 10% or less of the Initial Pool Balance, as described in the Prospectus under
"Description of the Transfer and Servicing Agreements -- Termination". The
redemption price of the Class A-6 Notes will be equal to the unpaid principal
amount of such Notes plus accrued and unpaid interest thereon (the "Redemption
Price").
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the terms of the Trust
Agreement, a form of which has been filed as an exhibit to the Registration
Statement. A copy of the Trust Agreement will be filed with the Commission
following the issuance of the Securities. The following summary describes
certain terms of the Certificates and the Trust Agreement. The summary does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, all the provisions of the Certificates and the Trust Agreement.
The following summary supplements, and to the extent inconsistent therewith
replaces, the description of the general terms and provisions of the
Certificates of any given series and the related Trust Agreement set forth in
the Prospectus, to which description reference is hereby made.
DISTRIBUTIONS OF INTEREST INCOME
On each Distribution Date, commencing July 5, 1994, the Certificateholders
will be entitled to distributions in an amount equal to the amount of interest
that would accrue on the Certificate Balance at the Pass Through Rate. The
Certificates will constitute Fixed Rate Securities, as such term is defined
under "Certain Information Regarding the Securities -- Fixed Rate Securities" in
the Prospectus. Interest in respect of a Distribution Date will accrue from the
Closing Date (in the case of the first Distribution Date) or from the 2nd day of
the month preceding the month of the Distribution Date to and including the
first day of the month of such Distribution Date. Interest distributions due for
any Distribution Date but not distributed on such Distribution Date will be due
on the next Distribution Date increased by an amount equal to interest on such
amount at the Pass Through Rate (to the extent lawful). Interest distributions
with respect to the Certificates will generally be funded from the portion of
the Total Distribution Amount and the funds in the Reserve Account remaining
after the distribution of the Servicing Fee and the Noteholders' Distributable
Amount. See "Description of the Transfer and Servicing
Agreements -- Distributions" and "-- Reserve Account" herein.
DISTRIBUTIONS OF PRINCIPAL PAYMENTS
Certificateholders will be entitled to distributions on each Distribution
Date, commencing with the later of (i) the April 1995 Distribution Date and (ii)
the second Distribution Date next succeeding the Distribution Date on which the
Class A-1 Notes were paid in full, in an amount generally equal to the
Certificateholders' Percentage of the Regular Principal Distribution Amount.
Distributions with respect to principal payments will generally be funded from
the portion of the Total Distribution Amount and funds in the Reserve Account
remaining after the distribution of the Servicing Fee, the Noteholders'
Distributable Amount and the Certificateholders' Interest Distributable Amount.
See "Description of the Transfer and Servicing Agreements -- Distributions" and
"-- Reserve Account". However, upon any reduction or withdrawal by any Rating
Agency of its rating of any class of Notes, then, with respect to each
Distribution Date thereafter, the Certificateholders will not receive any
distributions of principal until all the Notes have been paid in full, unless
such rating has been restored. There can be no assurance that a rating will
remain for a given period of
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time or that a rating will not be lowered or withdrawn entirely by a Rating
Agency if in its judgment circumstances in the future so warrant.
MANDATORY REPURCHASE
Cash distributions to Certificateholders will be made, on a pro rata basis,
on the Distribution Date on or immediately following the last day of the Funding
Period in the event that the amount on deposit in the Pre-Funding Account after
giving effect to the purchase of all Receivables, including any such purchase on
such date (a "Mandatory Repurchase") exceeds $100,000. The aggregate principal
amount of the Certificates to be repurchased will be an amount equal to the
Certificates' Pre-Funded Percentage of the amount then on deposit in the
Pre-Funding Account.
The Certificate Prepayment Premium will be payable by the Trust to the
Certificateholders at the time of any prepayment of the Certificates pursuant to
a Mandatory Repurchase. The Certificate Prepayment Premium for the Certificates
will equal the excess, if any, discounted as described below, of (i) the amount
of interest that would accrue on the Certificates' share of any remaining
Pre-Funded Amount (the "Certificate Prepayment Amount") at the Pass Through Rate
during the period commencing on and including the Distribution Date on which
such Certificate Prepayment Amount is required to be distributed to
Certificateholders to but excluding September 30, 1996 over (ii) the amount of
interest that would have accrued on such Certificate Prepayment Amount over the
same period at a per annum rate of interest equal to the bond equivalent yield
to maturity on the Determination Date preceding such Distribution Date on the
7.00% United States Treasury Note due on September 30, 1996. Such excess shall
be discounted to present value to such Distribution Date at the yield described
in clause (ii) above. The Trust's obligation to pay the Certificate Prepayment
Premium shall be limited to funds that are received from the Seller under the
Sale and Servicing Agreement as liquidated damages for the failure to deliver
Receivables. No other assets of the Trust will be available for the purpose of
making such payment.
OPTIONAL PREPAYMENT
If the Servicer exercises its option to purchase the Receivables when the
Pool Balance declines to 10% or less of the Initial Pool Balance,
Certificateholders will receive an amount in respect of the Certificates equal
to the outstanding Certificate Balance together with accrued interest at the
Pass Through Rate, which distribution shall effect early retirement of the
Certificates. See "Description of the Transfer and Servicing
Agreements -- Termination" in the Prospectus.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of the Sale and Servicing
Agreement, the Administration Agreement and the Trust Agreement (collectively,
the "Transfer and Servicing Agreements"). Forms of the Transfer and Servicing
Agreements have been filed as exhibits to the Registration Statement. A copy of
the Transfer and Servicing Agreements will be filed with the Commission
following the issuance of the Securities. The summary does not purport to be
complete and is subject to, and qualified in its entirety by reference to, all
the provisions of the Transfer and Servicing Agreements. The following summary
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of the Transfer and Servicing Agreements set
forth in the Prospectus, to which description reference is hereby made.
SALE AND ASSIGNMENT OF RECEIVABLES
During the Funding Period, pursuant to the Sale and Servicing Agreement,
the Seller will be obligated to sell to the Trust Receivables having an
aggregate principal balance equal to approximately $1,800,000,000 (such amount
being equal to the initial Pre-Funded Amount) to the extent that such
Receivables are available.
During the Funding Period, on each Transfer Date, subject to the conditions
described below, the Seller will sell and assign to the Trust, without recourse,
the Seller's entire interest in the Receivables designated by
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the Seller as of the related Cutoff Date and identified in a schedule attached
to an assignment relating to such Receivables executed on such date by the
Seller. Upon the conveyance of the Receivables to the Trust on a Transfer Date,
(i) the Pool Balance will increase in an amount equal to the aggregate principal
balances of such Receivables, (ii) an amount equal to 4.3% of the aggregate
principal balances of such Receivables will be withdrawn from the Pre-Funding
Account and will be deposited in the Reserve Account and (iii) an amount equal
to the excess of the aggregate principal balances of such Receivables over the
amount described in clause (ii) will be withdrawn from the Pre-Funding Account
and paid to the Seller.
Any conveyance of Receivables is subject to the satisfaction, on or before
the related Transfer Date, of the following conditions precedent, among others:
(i) each such Receivable must satisfy the eligibility criteria specified in the
Sale and Servicing Agreement (including that such Receivable has not been
repurchased by the Seller through the exercise of optional redemption provisions
contained in other securitization transactions); (ii) the Seller will not have
selected such Receivables in a manner that it believes is adverse to the
interests of the Noteholders or the Certificateholders; (iii) as of the related
Cutoff Date, the Receivables, including any Receivables conveyed by the Seller
as of such Cutoff Date, satisfy the criteria described under "The Receivables
Pool" herein and "The Receivables Pools" in the Prospectus; (iv) the applicable
Reserve Account Initial Deposit for such Transfer Date shall have been made; and
(v) the Seller shall have executed and delivered to the Trust (with a copy to
the Indenture Trustee) a written assignment conveying such Receivables to the
Trust (including a schedule identifying such Receivables). Moreover, any such
conveyance of Receivables made during any given Collection Period will also be
subject to the satisfaction, on or before the fifteenth day of the month
following the end of such Collection Period, of the following conditions
subsequent, among others: (i) the Seller will have delivered certain opinions of
counsel to the Owner Trustee, the Indenture Trustee and the Rating Agencies with
respect to the validity of the conveyance of all such Receivables conveyed
during such Collection Period; (ii) the Trust and the Indenture Trustee shall
have received written confirmation from a firm of certified independent public
accountants that, as of the end of the preceding Collection Period, the
Receivables in the Trust at that time, including the Receivables conveyed by the
Seller during each Collection Period, satisfied the parameters described under
"The Receivables Pool" herein and "The Receivables Pools" in the Prospectus; and
(iii) each of the Rating Agencies shall have notified the Seller in writing
that, following the addition of all such Receivables, each class of the Notes
and the Certificates will be rated by the Rating Agencies in the same rating
category as they were rated by the Rating Agencies on the Closing Date. The
Seller will immediately repurchase any Receivable, at a price equal to the
Purchase Amount thereof, upon the failure of the Seller to satisfy any of the
foregoing conditions subsequent with respect thereto.
Receivables conveyed to the Trust may have been originated by CCC using
credit criteria different from those which were applied to Receivables, or other
receivables, originated previously by CCC. See "Special Considerations -- The
Receivables and the Pre-Funding Account" and "The Receivables Pool" herein.
ACCOUNTS
No Payahead Account will be established in relation to the Trust, and early
payments by Obligors on Precomputed Receivables will instead be deposited
directly to the Collection Account and included in the Total Distribution Amount
for the following Distribution Date. All other Accounts referred to under
"Description of the Transfer and Servicing Agreements -- Accounts" in the
Prospectus, as well as the Pre-Funding Account and the Reserve Account, will be
established by the Servicer and maintained with the Indenture Trustee in the
name of the Indenture Trustee on behalf of the Noteholders and the
Certificateholders.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicing Fee Rate with respect to the Servicing Fee for the Servicer
will be 1.00% per annum of the Pool Balance as of the first day of the related
Collection Period. The Servicing Fee (together with any portion of the Servicing
Fee that remains unpaid from prior Distribution Dates) will be paid on each
Distribution Date solely to the extent of the Interest Distribution Amount, as
calculated on the related Determination
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Date, subject to reconciliation on the subsequent Distribution Date. See
"Description of the Transfer and Servicing Agreements -- Servicing Compensation
and Payment of Expenses" in the Prospectus.
DISTRIBUTIONS
Deposits to Collection Account. On or before each Distribution Date, the
Servicer will cause all collections and other amounts constituting the Total
Distribution Amount to be deposited into the Collection Account. The "Total
Distribution Amount" for a Distribution Date shall be the sum of the Interest
Distribution Amount and the Regular Principal Distribution Amount (other than
the portion thereof attributable to Realized Losses). "Realized Losses" means
the excess of the principal balance of any Liquidated Receivable over
Liquidation Proceeds to the extent allocable to principal.
The "Interest Distribution Amount" will generally be the sum of the
following amounts with respect to the preceding Collection Period: (i) that
portion of all collections on the Receivables (including Payaheads) allocable to
interest plus that portion of Payaheads allocable to principal; (ii) all
proceeds of the liquidation of defaulted Receivables ("Liquidated Receivables"),
net of expenses incurred by the Servicer in connection with such liquidation and
any amounts required by law to be remitted to the Obligor on such Liquidated
Receivables ("Liquidation Proceeds"), to the extent attributable to interest due
thereon in accordance with the Servicer's customary servicing procedures, and
all recoveries in respect of Liquidated Receivables which were written off in
prior Collection Periods; (iii) all Advances made by the Servicer of interest
due on the Receivables; (iv) the Purchase Amount of each Receivable that was
repurchased by the Seller or purchased by the Servicer under an obligation which
arose during the related Collection Period, to the extent attributable to
accrued interest thereon; and (v) Investment Earnings for such Distribution
Date. The Interest Distribution Amount shall be determined on the related
Determination Date based on the methodology described under "Description of the
Notes -- Payments of Principal" and shall be reconciled on the subsequent
Distribution Date.
The "Regular Principal Distribution Amount" will generally be the sum of
the following amounts with respect to the preceding Collection Period: (i) that
portion of all collections on the Receivables allocable to principal (exclusive
of Payaheads allocable to principal that have not been applied as payments under
the related Receivables in such Collection Period and inclusive of Payaheads
allocable to principal that have been applied as payments under the related
Receivables in such Collection Period); (ii) all Liquidation Proceeds
attributable to the principal amount of Receivables which became Liquidated
Receivables during such Collection Period in accordance with the Servicer's
customary servicing procedures, plus the amount of Realized Losses with respect
to such Liquidated Receivables; (iii) all Precomputed Advances made by the
Servicer of principal due on the Precomputed Receivables; (iv) to the extent
attributable to principal, the Purchase Amount received with respect to each
Receivable repurchased by the Seller or purchased by the Servicer under an
obligation which arose during the related Collection Period; (v) partial
prepayments relating to refunds of extended warranty protection plan costs or of
physical damage, credit life or disability insurance policy premiums, but only
if such costs or premiums were financed by the respective Obligor as of the date
of the original contract; and (vi) on the Final Scheduled Distribution Date, any
amounts advanced by the Servicer with respect to principal on the Receivables.
The Regular Principal Distribution Amount shall be determined on the related
Determination Date based on the methodology described under "Description of the
Notes -- Payments of Principal" and shall be reconciled on the subsequent
Distribution Date.
The Interest Distribution Amount and the Regular Principal Distribution
Amount on any Distribution Date, as reconciled on the subsequent Distribution
Date, shall exclude the following:
(i) amounts received on Precomputed Receivables to the extent that the
Servicer has previously made an unreimbursed Precomputed Advance;
(ii) Liquidation Proceeds with respect to a particular Precomputed
Receivable to the extent of any unreimbursed Precomputed Advances thereon;
(iii) all payments and proceeds (including Liquidation Proceeds) of
any Receivables, the Purchase Amount of which has been included in the
Total Distribution Amount, in a prior Collection Period;
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(iv) amounts received in respect of interest on Simple Interest
Receivables during the preceding Collection Period in excess of the amount
of interest that would have been due during the Collection Period on Simple
Interest Receivables at their respective APRs (assuming that a payment is
received on each Simple Interest Receivable on the due date thereof);
(v) Liquidation Proceeds with respect to a Simple Interest Receivable
attributable to accrued and unpaid interest thereon (but not including
interest for the then current Collection Period) but only to the extent of
any unreimbursed Simple Interest Advances; and
(vi) amounts released from the Pre-Funding Account.
Deposits to the Distribution Accounts. On each Distribution Date, the
Servicer shall allocate amounts on deposit in the Collection Account as
described under "Description of the Notes -- Payments of Principal" above and
shall instruct the Indenture Trustee to make the following deposits and
distributions, to the extent of the amount then on deposit in the Collection
Account, in the following order of priority:
(i) to the Servicer, from the Interest Distribution Amount (as so
allocated), the Servicing Fee and all unpaid Servicing Fees from prior
Collection Periods;
(ii) to the Note Distribution Account, from the Total Distribution
Amount remaining after the application of clause (i), the Noteholders'
Interest Distributable Amount;
(iii) to the Note Distribution Account, from the Total Distribution
Amount remaining after the application of clauses (i) and (ii), the
Noteholders' Principal Distributable Amount;
(iv) to the Certificate Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (i) through
(iii), the Certificateholders' Interest Distributable Amount; and
(v) to the Certificate Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (i) through
(iv), the Certificateholders' Principal Distributable Amount.
On each Determination Date (other than the first Determination Date), the
Servicer will provide the Indenture Trustee with certain information with
respect to the Collection Period related to the prior Distribution Date,
including the amount of aggregate collections on the Receivables, the aggregate
amount of Receivables which were written off, the aggregate Advances to be made
by the Servicer and the aggregate Purchase Amount of Receivables to be
repurchased by the Seller or to be purchased by the Servicer.
The Servicer will also provide the Indenture Trustee with a reconciliation
statement, reconciling the amounts shown in such information and the amounts
distributed to Securityholders on the immediately preceding Distribution Date.
The Servicer will instruct the Indenture Trustee to make the required deposits
to the Reserve Account, release to the Company any funds due to the Company, and
forward to the Securityholders a reconciliation report reflecting the allocation
of the payments made on such preceding Distribution Date and any adjustments
required by such reconciliation. If on such Distribution Date amounts were
distributed to Securityholders on account of principal in excess of the amount
required to be distributed, the amount of principal distributable to the
Securityholders on the next following Distribution Date shall be reduced by the
amount of such excess. If on such Distribution Date amounts distributed to the
Securityholders on account of principal were less than the amount required to be
distributed, the amount of such deficiency shall be retained in the Collection
Account and added to principal distributable to the Securityholders on the next
following Distribution Date.
For purposes hereof, the following terms shall have the following meanings,
as reconciled on each Distribution Date:
"Noteholders' Distributable Amount" means, with respect to any
Distribution Date, the sum of the Noteholders' Principal Distributable
Amount and the Noteholders' Interest Distributable Amount.
"Noteholders' Interest Distributable Amount" means, with respect to
any Distribution Date, the sum of the Noteholders' Monthly Interest
Distributable Amount for such Distribution Date and the Noteholders'
Interest Carryover Shortfall for such Distribution Date.
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"Noteholders' Monthly Interest Distributable Amount" means, with
respect to any Distribution Date, interest accrued for the related Interest
Accrual Period or Floating Rate Interest Accrual Period, as applicable, on
each class of Notes at the respective Interest Rate for such class on the
outstanding principal balance of the Notes of such class on the immediately
preceding Distribution Date, after giving effect to all payments of
principal to the Noteholders of such class on or prior to such Distribution
Date (or, in the case of the first Distribution Date, on the Closing Date).
"Noteholders' Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess of the Noteholders' Monthly Interest
Distributable Amount for the preceding Distribution Date and any
outstanding Noteholders' Interest Carryover Shortfall on such preceding
Distribution Date, over the amount in respect of interest that is actually
deposited in the Note Distribution Account on such preceding Distribution
Date, plus interest on the amount of interest due but not paid to
Noteholders on the preceding Distribution Date, to the extent permitted by
law, at the respective Interest Rates borne by each class of the Notes for
the related Interest Accrual Period or Floating Rate Interest Accrual
Period, as applicable.
"Noteholders' Principal Distributable Amount" means, with respect to
any Distribution Date, the sum of the Noteholders' Monthly Principal
Distributable Amount for such Distribution Date and the Noteholders'
Principal Carryover Shortfall as of the close of the preceding Distribution
Date; provided, however, that the Noteholders' Principal Distributable
Amount shall not exceed the outstanding principal balance of the Notes; and
provided, further, that (i) the Noteholders' Principal Distributable Amount
on the Class A-1 Final Scheduled Distribution Date shall not be less than
the Amount that is necessary (after giving effect to other amounts to be
deposited in the Note Distribution Account on such Distribution Date and
allocable to principal) to reduce the outstanding principal balance of the
Class A-1 Notes to zero; (ii) the Noteholders' Principal Distributable
Amount on the Class A-2 Final Scheduled Distribution Date shall not be less
than the amount that is necessary (after giving effect to other amounts to
be deposited in the Note Distribution Account on such Distribution Date and
allocable to principal) to reduce the outstanding principal balance of the
Class A-2 Notes to zero; (iii) on the Class A-3 Final Scheduled
Distribution Date the Noteholders' Principal Distributable Amount shall not
be less than the amount that is necessary (after giving effect to other
amounts to be deposited in the Note Distribution Account on such
Distribution Date and allocable to principal) to reduce the outstanding
principal balance of the Class A-3 Notes to zero; (iv) on the Class A-4
Final Scheduled Distribution Date the Noteholders' Principal Distributable
Amount shall not be less than the amount that is necessary (after giving
effect to other amounts to be deposited in the Note Distribution Account on
such Distribution Date and allocable to principal) to reduce the
outstanding principal balance of the Class A-4 Notes to zero; (v) on the
Class A-5 Final Scheduled Distribution Date the Noteholders' Principal
Distributable Amount shall not be less than the amount that is necessary
(after giving effect to other amounts to be deposited in the Note
Distribution Account on such Distribution Date and allocable to principal)
to reduce the outstanding principal balance of the Class A-5 Notes to zero;
and (vi) on the Class A-6 Final Scheduled Distribution Date, the
Noteholders' Principal Distributable Amount shall not be less than the
amount that is necessary (after giving effect to the other amounts to be
deposited in the Note Distribution Account on such Distribution Date and
allocable to principal) to reduce the outstanding principal balance of the
Class A-6 Notes to zero.
"Noteholders' Monthly Principal Distributable Amount" means, with
respect to any Distribution Date, the sum of (i) the Noteholders'
Percentage of the Regular Principal Distribution Amount and (ii) the
Accelerated Principal Distribution Amount.
"Noteholders' Percentage" means (i) for each Distribution Date to and
including the later to occur of (x) the Distribution Date next succeeding
the Distribution Date on which the principal balance of the Class A-1 Notes
is reduced to zero and (y) the March 1995 Distribution Date, 100%, (ii) for
each Distribution Date thereafter to and including the Distribution Date on
which the principal balance of the Class A-6 Notes is reduced to zero, the
percentage equivalent of a fraction, the numerator of which is the
outstanding principal balance of the Notes on the Distribution Date
immediately preceding the
S-34
<PAGE> 35
Distribution Date for which the Noteholders' Percentage is being calculated
(after giving effect to all distributions made on such immediately
preceding Distribution Date) and the denominator of which is the Pool
Balance on the last day of the Collection Period second preceding the
Distribution Date for which the Noteholders' Percentage is being
calculated; provided, however, upon any reduction or withdrawal by any
Rating Agency of its rating of any class of Notes, then, with respect to
each Distribution Date thereafter until the principal balance of all the
Notes is paid in full or such rating is restored, the Noteholders'
Percentage shall mean 100%, and (iii) zero for each Distribution Date
thereafter.
"Noteholders' Principal Carryover Shortfall" means, as of the close of
any Distribution Date, the excess of the Noteholders' Monthly Principal
Distributable Amount and any outstanding Noteholders' Principal Carryover
Shortfall from the preceding Distribution Date over the amount in respect
of principal that is actually deposited in the Note Distribution Account.
"Certificateholders' Distributable Amount" means, with respect to any
Distribution Date, the sum of the Certificateholders' Principal
Distributable Amount and the Certificateholders' Interest Distributable
Amount.
"Certificateholders' Interest Distributable Amount" means, with
respect to any Distribution Date, the sum of the Certificateholders'
Monthly Interest Distributable Amount for such Distribution Date and the
Certificateholders' Interest Carryover Shortfall for such Distribution
Date.
"Certificateholders' Monthly Interest Distributable Amount" means,
with respect to any Distribution Date, 30 days of interest (or, in the case
of the first Distribution Date, interest accrued from and including the
Closing Date to but excluding such Distribution Date) at the Pass Through
Rate on the Certificate Balance on the immediately preceding Distribution
Date, after giving effect to all payments allocable to the reduction of the
Certificate Balance made on or prior to such Distribution Date (or, in the
case of the first Distribution Date, on the Closing Date).
"Certificateholders' Interest Carryover Shortfall" means, with respect
to any Distribution Date, the excess of the Certificateholders' Monthly
Interest Distributable Amount for the preceding Distribution Date and any
outstanding Certificateholders' Interest Carryover Shortfall on such
preceding Distribution Date, over the amount in respect of interest that is
actually deposited in the Certificate Distribution Account on such
preceding Distribution Date, plus interest on such excess, to the extent
permitted by law, at the Pass Through Rate for the related Interest Accrual
Period.
"Certificateholders' Principal Distributable Amount" means, with
respect to any Distribution Date, the sum of the Certificateholders'
Monthly Principal Distributable Amount for such Distribution Date and the
Certificateholders' Principal Carryover Shortfall as of the close of the
preceding Distribution Date; provided, however, that the
Certificateholders' Principal Distributable Amount shall not exceed the
Certificate Balance. In addition, on the Final Scheduled Distribution Date,
the principal required to be deposited into the Certificate Distribution
Account will include the lesser of (a) (i) any scheduled payments of
principal due and remaining unpaid on each Precomputed Receivable and (ii)
any principal due and remaining unpaid on each Simple Interest Receivable,
in each case, in the Trust as of the Final Scheduled Maturity Date or (b)
the portion of the amount required to be advanced under clause (a) above
that is necessary (after giving effect to the other amounts to be deposited
in the Certificate Distribution Account on such Distribution Date and
allocable to principal) to reduce the Certificate Balance to zero, and, in
the case of clauses (a) and (b), remaining after any required distribution
in respect of the Notes.
"Certificateholders' Monthly Principal Distributable Amount" means,
with respect to any Distribution Date, the Certificateholders' Percentage
of the Regular Principal Distribution Amount.
"Certificateholders' Percentage" means (i) for each Distribution Date
to and including the later to occur of (x) the Distribution Date next
succeeding the Distribution Date on which the principal balance of the
Class A-1 Notes is reduced to zero and (y) the March 1995 Distribution
Date, zero, and (ii) for
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<PAGE> 36
each Distribution Date thereafter to and including the Distribution Date on
which the principal balance of the Certificates is reduced to zero, the
percentage equivalent of a fraction, the numerator of which is the
outstanding principal balance of the Certificates on the Distribution Date
immediately preceding the Distribution Date for which the
Certificateholders' Percentage is being calculated (after giving effect to
all distributions made on such immediately preceding Distribution Date) and
the denominator of which is the Pool Balance on the last day of the
Collection Period second preceding the Distribution Date for which the
Certificateholders' Percentage is being calculated; provided, however, upon
any reduction or withdrawal by any Rating Agency of its rating of any class
of Notes, then, with respect to each Distribution Date thereafter until the
principal balance of all the Notes is paid in full or such rating is
restored, the Certificateholders' Percentage shall mean zero.
"Certificateholders' Principal Carryover Shortfall" means, as of the
close of any Distribution Date, the excess of the Certificateholders'
Monthly Principal Distributable Amount and any outstanding
Certificateholders' Principal Carryover Shortfall from the preceding
Distribution Date, over the amount in respect of principal that is actually
deposited in the Certificate Distribution Account.
"Certificate Balance" equals, initially, $67,500,000 and, thereafter,
equals the initial Certificate Balance, reduced by all amounts allocable to
principal previously distributed to Certificateholders.
On each Distribution Date, all amounts on deposit in the Note Distribution
Account (other than Investment Earnings) will be generally paid in the following
order of priority:
(i) to the applicable Noteholders, accrued and unpaid interest on the
outstanding principal balance of the applicable class of Notes at the
applicable Interest Rate;
(ii) the Noteholders' Principal Distributable Amount in the following
order of priority:
(a) to the Class A-1 Noteholders in reduction of principal until
the principal balance of the Class A-1 Notes has been reduced to zero;
(b) to the Class A-2 Noteholders in reduction of principal until
the principal balance of the Class A-2 Notes has been reduced to zero;
and
(c) to the Class A-3 Noteholders in reduction of principal until
the principal balance of the Class A-3 Notes has been reduced to zero;
(d) to the Class A-4 Noteholders in reduction of principal until
the principal balance of the Class A-4 Notes has been reduced to zero;
(e) to the Class A-5 Noteholders in reduction of principal until
the principal balance of the Class A-5 Notes has been reduced to zero;
and
(f) to the Class A-6 Noteholders in reduction of principal until
the principal balance of the Class A-6 Notes has been reduced to zero.
On each Distribution Date, all amounts on deposit in the Certificate
Distribution Account will be distributed to the Certificateholders.
RESERVE ACCOUNT
The rights of the Certificateholders to receive distributions with respect
to the Receivables generally will be subordinated to the rights of the
Noteholders in the event of defaults and delinquencies on the Receivables as
provided in the Sale and Servicing Agreement. The protection afforded to the
Noteholders through subordination will be effected both by the preferential
right of the Noteholders to receive current distributions with respect to the
Receivables and by the establishment of the Reserve Account. The Reserve Account
will be created with a deposit initially by the Seller on the Closing Date and
thereafter with deposits from funds in the Pre-Funding Account that would
otherwise be payable to the Seller on each Transfer Date (such deposits,
collectively, the "Reserve Account Initial Deposit"). The initial deposit by the
Seller on the Closing Date will also include the amount described in clause (a)
of the following paragraph.
Subject to reduction as hereafter described, the "Specified Reserve Account
Balance" with respect to any Distribution Date means the sum of (i) the sum of
(a) an amount related to the difference between anticipated investment earnings
on the outstanding Pre-Funded Amount and the weighted average interest
S-36
<PAGE> 37
expense on the portion of the Notes and the Certificates represented by the
outstanding Pre-Funded Amount and (b) 2.3% of the Initial Pool Balance; and (ii)
2.0% of the Pool Balance on the first day of the related Collection Period.
However, with respect to the portion of the Specified Reserve Account Balance
set forth in clause (i) above, so long as on any Distribution Date (except the
first Distribution Date) the sum of (x) the outstanding principal balance of the
Securities (after giving effect to payments made on the prior Distribution Date)
and (y) the aggregate amount of Payaheads that have been collected but not yet
applied as payments under the related Receivables as of the first day of the
related Collection Period is less than or equal to the sum of 96.25% of (a) the
Pool Balance on the first day of the related Collection Period and (b) the Pre-
Funded Amount on such day, then the portion of the Specified Reserve Account
Balance set forth in clause (i) above will be reduced to 1.25% of the Initial
Pool Balance. In addition, so long as on any Distribution Date (except the first
Distribution Date) the sum of (x) the outstanding principal balance of the
Securities (after giving effect to payments made on the prior Distribution Date)
and (y) the aggregate amount of Payaheads that have been collected but not yet
applied as payments under the related Receivables as of the first day of the
related Collection Period is less than or equal to the sum of 95.75% of (a) the
Pool Balance on the first day of the related Collection Period and (b) the
Pre-Funded Amount on such day, then such portion of the Specified Reserve
Account Balance set forth in clause (ii) above will be reduced to 0.75% of the
Initial Pool Balance. With respect to the portion of the Specified Reserve
Account Balance set forth in clause (ii) above, so long as on any Distribution
Date (except the first Distribution Date) the sum of (x) the outstanding
principal balance of the Securities (after giving effect to payments made on the
prior Distribution Date) and (y) the aggregate amount of Payaheads that have
been collected but not yet applied as payments under the related Receivables as
of the first day of the related Collection Period is less than or equal to the
sum of 95.75% of (a) the Pool Balance on the first day of the related Collection
Period and (b) the Pre-Funded Amount on such day, then the portion of the
Specified Reserve Account Balance set forth in clause (ii) above will be reduced
to an amount equal to the product of (I) the Pool Balance on the first day of
the related Collection Period and (II) the percentage (which shall not be
greater than 2.0% or less than zero) equal to (X) the percentage derived from
the fraction, the numerator of which is the outstanding principal balance of the
Securities (after giving to payments made on the prior Distribution Date) and
the denominator of which is such Pool Balance less (Y) 93.75%. The portion of
the Specified Reserve Account Balance specified in clause (ii) above may be
invested in motor vehicle installment sale contracts originated by the Seller
and secured by the motor vehicles financed thereby that are not included in the
Pool Balance.
The Specified Reserve Account Balance would also be increased to the extent
that the Receivables in the Trust on a Transfer Date, including the Receivables
to be conveyed to the Trust on such Transfer Date, have a weighted average APR
of less than 9.75%. See "The Receivables Pool" herein. In addition, subject to
certain limitations, the Seller has the option to increase the Specified Reserve
Account Balance in connection with any addition of Receivables.
If the amount on deposit in the Reserve Account on any Distribution Date
(after giving effect to all deposits therein or other withdrawals therefrom on
such Distribution Date) is greater than the Specified Reserve Account Balance
for such Distribution Date, except as described below and subject to certain
limitations, the Servicer shall instruct the Indenture Trustee to distribute
such excess to the Company. Upon any distribution to the Company of amounts from
the Reserve Account, neither the Noteholders nor the Certificateholders will
have any rights in, or claims to, such amounts. Subsequent to any reduction or
withdrawal by any Rating Agency of its rating of any class of Notes, unless such
rating has been restored, any such excess released from the Reserve Account on a
Distribution Date will be deposited in the Note Distribution Account for payment
to Noteholders as an accelerated payment of principal on such Distribution Date.
Amounts held from time to time in the Reserve Account will continue to be
held for the benefit of Noteholders and Certificateholders. On each Distribution
Date, and after giving effect to the reconciliation on such Distribution Date,
funds will be withdrawn from the Reserve Account up to the Available Amount to
the extent that the Total Distribution Amount (after the payment of the
Servicing Fee) with respect to any Collection Period is less than the
Noteholders' Distributable Amount and will be deposited in the Note Distribution
Account. In addition, after giving effect to such withdrawal, funds will be
withdrawn from the
S-37
<PAGE> 38
Reserve Account up to the Available Amount (as reduced by any withdrawal
pursuant to the preceding sentence) to the extent that the portion of the Total
Distribution Amount remaining after the payment of the Servicing Fee and the
deposit of the Noteholders' Distributable Amount in the Note Distribution
Account is less than the Certificateholders' Distributable Amount and will be
deposited in the Certificate Distribution Account. If funds applied in
accordance with the preceding sentence are insufficient to distribute interest
due on the Certificates, subject to certain limitations, funds will be withdrawn
from the Reserve Account and applied to distribute interest due on the
Certificates to the extent of the Certificate Interest Reserve Amount. On each
Distribution Date, the Reserve Account will be reinstated up to the Specified
Reserve Account Balance to the extent of the portion, if any, of the Total
Distribution Amount remaining after payment of the Servicing Fee, the deposit of
the Noteholders' Distributable Amount into the Note Distribution Account and the
deposit of the Certificateholders' Distributable Amount into the Certificate
Distribution Account.
"Available Amount" means, with respect to any Distribution Date, the amount
of funds on deposit in the Reserve Account on such Distribution Date (other than
Investment Earnings) less the Certificate Interest Reserve Amount with respect
to such Distribution Date, in each case, before giving effect to any reduction
thereto on such Distribution Date.
"Certificate Interest Reserve Amount" means, the lesser of (i) $1,530,000
less the amount of any application of the Certificate Interest Reserve Amount to
pay interest on the Certificates on any prior Distribution Date and (ii) 2.26%
of the Certificate Balance on such Distribution Date (before giving effect to
any reduction thereof on such Distribution Date); provided, however, that the
Certificate Interest Reserve Amount shall be zero subsequent to any reduction by
any Rating Agency to less than "A-" or its equivalent, or withdrawal by any
Rating Agency, of its rating of any class of Notes, unless such rating has been
restored.
If on any Distribution Date the entire Noteholders' Distributable Amount
for such Distribution Date (after giving effect to any amounts withdrawn from
the Reserve Account) is not deposited in the Note Distribution Account, the
Certificateholders generally will not receive any distributions other than
those, if any, in respect of interest made from the Certificate Interest Reserve
Amount.
After the payment in full, or the provision for such payment, of (i) all
accrued and unpaid interest on the Securities and (ii) the outstanding principal
balance of the Securities, any funds remaining on deposit in the Reserve
Account, subject to certain limitations, will be paid to the Company.
The subordination of the Certificates and the Reserve Account are intended
to enhance the likelihood of receipt by Noteholders of the full amount of
principal and interest due them and to decrease the likelihood that the
Noteholders will experience losses. In addition, the Reserve Account is intended
to enhance the likelihood of receipt by Certificateholders of the full amount of
principal and interest due them and to decrease the likelihood that the
Certificateholders will experience losses. However, in certain circumstances,
the Reserve Account could be depleted. If the amount required to be withdrawn
from the Reserve Account to cover shortfalls in collections on the Receivables
exceeds the amount of available cash in the Reserve Account, Noteholders or
Certificateholders could incur losses or a temporary shortfall in the amounts
distributed to the Noteholders or the Certificateholders could result, which
could, in turn, increase the average life of the Notes or the Certificates.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
On January 27, 1994, the Internal Revenue Service issued final regulations
("final OID regulations") relating to original issue discount ("OID"), which are
effective for debt instruments issued on or after April 3, 1994. The discussion
under "Certain Federal Income Tax Consequences -- Tax Consequences to Holders of
the Notes -- OID, Indexed Securities, etc." in the Prospectus applies with
respect to both the final and the proposed OID regulations.
Prospective purchasers should see "Certain Federal Income Tax Consequences"
and "Certain State Tax Consequences" in the Prospectus for a discussion of the
application of certain federal income and Michigan tax laws to the Trust and the
Securities.
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<PAGE> 39
ERISA CONSIDERATIONS
THE NOTES
The Notes may be purchased by an employee benefit plan or an individual
retirement account (a "Plan") subject to ERISA or Section 4975 of the Code. A
fiduciary of a Plan must determine that the purchase of a Note is consistent
with its fiduciary duties under ERISA and does not result in a nonexempt
prohibited transaction as defined in Section 406 of ERISA or Section 4975 of the
Code. For additional information regarding treatment of the Notes under ERISA,
see "ERISA Considerations" in the Prospectus.
The Notes may not be purchased with the assets of a Plan if the Seller, the
Servicer, the Indenture Trustee, the Owner Trustee or any of their affiliates
(a) has investment or administrative discretion with respect to such Plan
assets; (b) has authority or responsibility to give, or regularly gives,
investment advice with respect to such Plan assets, for a fee and pursuant to an
agreement or understanding that such advice (i) will serve as a primary basis
for investment decisions with respect to such Plan assets and (ii) will be based
on the particular investment needs for such Plan; or (c) is an employer
maintaining or contributing to such Plan.
THE CERTIFICATES
The Certificates may not be acquired by (a) an employee benefit plan (as
defined in Section 3(3) of ERISA) that is subject to the provisions of Title I
of ERISA, (b) a plan described in Section 4975(e)(1) of the Code (other than a
governmental plan described in Section 4975(g)(2) of the Code) or (c) any entity
whose underlying assets include plan assets by reason of a plan's investment in
the entity or which uses plan assets to acquire Certificates. By its acceptance
of a Certificate, each Certificateholder will be deemed to have represented and
warranted that it is not subject to the foregoing limitation. In this regard,
purchasers that are insurance companies should consult with their counsel with
respect to the recent United States Supreme Court case interpreting the
fiduciary responsibility rules of ERISA, John Hancock Mutual Life Insurance Co.
v. Harris Bank and Trust (decided December 12, 1993). In John Hancock, the
Supreme court ruled that assets held in an insurance company's general account
may be deemed to be "plan assets" for ERISA purposes under certain
circumstances. Prospective purchasers should determine whether the decision
affects their ability to make purchases of the Certificates. For additional
information regarding treatment of the Certificates under ERISA, see "ERISA
Considerations" in the Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in a Note Underwriting
Agreement (the "Note Underwriting Agreement"), the Seller has agreed to cause
the Trust to sell to each of the Underwriters named below (collectively, the
"Note Underwriters"), and each of the Note Underwriters has severally agreed to
purchase, the principal amount of the Offered Notes set forth opposite its name
below:
CLASS A-2 NOTES
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
------------
<S> <C>
Salomon Brothers Inc .......................................................... $166,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.......................................................... 166,000,000
J.P. Morgan Securities Inc. ................................................... 166,000,000
------------
Total................................................................ $498,000,000
------------
------------
</TABLE>
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<PAGE> 40
CLASS A-3 NOTES
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
------------
<S> <C>
Salomon Brothers Inc .......................................................... $ 78,350,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.......................................................... 78,325,000
J.P. Morgan Securities Inc. ................................................... 78,325,000
------------
Total................................................................ $235,000,000
------------
------------
</TABLE>
CLASS A-4 NOTES
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
------------
<S> <C>
Salomon Brothers Inc .......................................................... $ 70,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.......................................................... 70,000,000
J.P. Morgan Securities Inc. ................................................... 70,000,000
------------
Total................................................................ $210,000,000
------------
------------
</TABLE>
CLASS A-5 NOTES
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
------------
<S> <C>
Salomon Brothers Inc .......................................................... $ 61,700,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.......................................................... 61,650,000
J.P. Morgan Securities Inc. ................................................... 61,650,000
------------
Total................................................................ $185,000,000
------------
------------
</TABLE>
CLASS A-6 NOTES
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
------------
<S> <C>
Salomon Brothers Inc .......................................................... $101,500,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.......................................................... 101,500,000
J.P. Morgan Securities Inc. ................................................... 101,500,000
------------
Total................................................................ $304,500,000
------------
------------
</TABLE>
The Seller has been advised by the Note Underwriters that they propose
initially to offer the Offered Notes to the public at the prices set forth
herein, and to certain dealers at such prices less the initial concession not in
excess of 0.120% per Class A-2 Note, 0.140% per Class A-3 Note, 0.175% per Class
A-4 Note, 0.190% per Class A-5 Note and 0.220% per Class A-6 Note. The Note
Underwriters may allow and such dealers may reallow a concession not in excess
of 0.100% per Class A-2 Note, 0.120% per Class A-3 Note, 0.155% per Class A-4
Note, 0.160% per Class A-5 Note and 0.195% per Class A-6 Note to certain other
dealers. After the initial public offering of the Offered Notes, the public
offering price and such concessions may be changed.
Subject to the terms and conditions set forth in a Certificate Underwriting
Agreement (the "Certificate Underwriting Agreement"), the Seller has agreed to
cause the Trust to sell to each of the Underwriters named below (the
"Certificate Underwriters" and, together with the Note Underwriters, the
"Underwriters"), and
S-40
<PAGE> 41
each of the Certificate Underwriters has severally agreed to purchase, the
principal amount of Certificates set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL
CERTIFICATE UNDERWRITERS AMOUNT
- ------------------------ -------------
<S> <C>
Salomon Brothers Inc ........................................................... $22,500,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated........................................................... 22,500,000
J.P. Morgan Securities Inc. .................................................... 22,500,000
-----------
Total................................................................. $67,500,000
-----------
-----------
</TABLE>
The Seller has been advised by the Certificate Underwriters that they
propose initially to offer the Certificates to the public at the price set forth
herein, and to certain dealers at such price less the initial concession not in
excess of 0.300% per Certificate. The Certificate Underwriters may allow and
such dealers may reallow a concession not in excess of 0.255% per Certificate to
certain other dealers. After the initial public offering of the Certificates,
the public offering price and such concessions may be changed.
LEGAL OPINIONS
In addition to the legal opinions described in the Prospectus, certain
legal matters relating to the Offered Notes and the Certificates will be passed
upon for the Underwriters and certain federal income tax and other matters will
be passed upon for the Trust by Brown & Wood. Brown & Wood may from time to time
render legal services to Chrysler Financial Corporation and its affiliates.
S-41
<PAGE> 42
INDEX OF TERMS
<TABLE>
<S> <C>
Accelerated Principal Distribution Amount............................................ S-7
APR.................................................................................. S-21
Available Amount..................................................................... S-38
Business Day......................................................................... S-5
Calculation Agent.................................................................... S-6
CCC.................................................................................. S-4
Cede................................................................................. S-3
Certificate Balance.................................................................. S-36
Certificate Interest Reserve Amount.................................................. S-38
Certificate Prepayment Amount........................................................ S-11
Certificate Prepayment Premium....................................................... S-11
Certificate Underwriters............................................................. S-40
Certificate Underwriting Agreement................................................... S-40
Certificateholders................................................................... S-10
Certificateholders' Distributable Amount............................................. S-35
Certificateholders' Interest Carryover Shortfall..................................... S-35
Certificateholders' Interest Distributable Amount.................................... S-35
Certificateholders' Monthly Interest Distributable Amount............................ S-35
Certificateholders' Monthly Principal Distributable Amount........................... S-35
Certificateholders' Percentage....................................................... S-35
Certificateholders' Principal Carryover Shortfall.................................... S-36
Certificateholders' Principal Distributable Amount................................... S-35
Certificates......................................................................... S-4
CFC.................................................................................. S-4
Chrysler............................................................................. S-17
Class A-1 Final Scheduled Distribution Date.......................................... S-8
Class A-1 Notes...................................................................... S-4
Class A-1 Rate....................................................................... S-5
Class A-2 Final Scheduled Distribution Date.......................................... S-8
Class A-2 Note Prepayment Amount..................................................... S-9
Class A-2 Notes...................................................................... S-4
Class A-2 Rate....................................................................... S-6
Class A-3 Final Scheduled Distribution Date.......................................... S-8
Class A-3 Note Prepayment Amount..................................................... S-9
Class A-3 Notes...................................................................... S-4
Class A-3 Rate....................................................................... S-6
Class A-4 Notes...................................................................... S-4
Class A-4 Percentage................................................................. S-8
Class A-4 Rate....................................................................... S-6
Class A-5 Final Scheduled Distribution Date.......................................... S-8
Class A-5 Notes...................................................................... S-4
Class A-5 Rate....................................................................... S-6
Class A-6 Final Scheduled Distribution Date.......................................... S-8
Class A-6 Notes...................................................................... S-4
Class A-6 Rate....................................................................... S-6
Closing Date......................................................................... S-4
Collection Account................................................................... S-13
Collection Period.................................................................... S-6
Commission........................................................................... S-3
Company.............................................................................. S-4
Cutoff Date.......................................................................... S-5
Determination Date................................................................... S-7
Distribution Date.................................................................... S-5
DTC.................................................................................. S-3
Exchange Act......................................................................... S-3
Final Scheduled Distribution Date.................................................... S-10
Final Scheduled Maturity Date........................................................ S-5
</TABLE>
S-42
<PAGE> 43
<TABLE>
<S> <C>
Floating Rate Interest Accrual Period................................................ S-6
Funding Period....................................................................... S-11
Indenture............................................................................ S-4
Indenture Trustee.................................................................... S-4
Interest Accrual Period.............................................................. S-6
Interest Distribution Amount......................................................... S-32
Interest Rates....................................................................... S-6
Interest Reset Period................................................................ S-6
Issuer............................................................................... S-4
Liquidated Receivables............................................................... S-32
Liquidation Proceeds................................................................. S-32
Mandatory Redemption................................................................. S-8
Mandatory Repurchase................................................................. S-10
MMC.................................................................................. S-18
Note Prepayment Amount............................................................... S-9
Note Prepayment Premium.............................................................. S-9
Note Underwriters.................................................................... S-39
Note Underwriting Agreement.......................................................... S-39
Noteholders.......................................................................... S-5
Noteholders' Distributable Amount.................................................... S-33
Noteholders' Interest Carryover Shortfall............................................ S-34
Noteholders' Interest Distributable Amount........................................... S-33
Noteholders' Monthly Interest Distributable Amount................................... S-34
Noteholders' Monthly Principal Distributable Amount.................................. S-34
Noteholders' Percentage.............................................................. S-34
Noteholders' Principal Carryover Shortfall........................................... S-35
Noteholders' Principal Distributable Amount.......................................... S-34
Notes................................................................................ S-4
Offered Notes........................................................................ S-4
Owner Trustee........................................................................ S-4
Pass Through Rate.................................................................... S-10
Plan................................................................................. S-39
Pool Balance......................................................................... S-5
Pre-Funded Amount.................................................................... S-5
Pre-Funded Percentage................................................................ S-9
Pre-Funding Account.................................................................. S-11
Prospectus........................................................................... S-3
Rating Agencies...................................................................... S-19
Realized Losses...................................................................... S-32
Receivables.......................................................................... S-2
Receivables Pool..................................................................... S-20
Record Date.......................................................................... S-5
Redemption Price..................................................................... S-29
Regular Principal Distribution Amount................................................ S-32
Reserve Account...................................................................... S-12
Reserve Account Initial Deposit...................................................... S-12
Sale and Servicing Agreement......................................................... S-4
Securities........................................................................... S-4
Securityholders...................................................................... S-10
Seller............................................................................... S-4
Servicer............................................................................. S-4
SFAS................................................................................. S-17
Specified Reserve Account Balance.................................................... S-12
Total Distribution Amount............................................................ S-32
Transfer and Servicing Agreements.................................................... S-30
Trust................................................................................ S-4
Trust Agreement...................................................................... S-4
Underwriters......................................................................... S-40
</TABLE>
S-43
<PAGE> 44
PROSPECTUS
PREMIER AUTO TRUSTS
ASSET BACKED NOTES
ASSET BACKED CERTIFICATES
---------------------
CHRYSLER FINANCIAL CORPORATION
Seller
CHRYSLER CREDIT CORPORATION
Servicer
---------------------
The Asset Backed Notes (the "Notes") and the Asset Backed Certificates (the
"Certificates" and, together with the Notes, the "Securities") described herein
may be sold from time to time in one or more series, in amounts, at prices and
on terms to be determined at the time of sale and to be set forth in a
supplement to this Prospectus (a "Prospectus Supplement"). Each series of
Securities, which will include one or more classes of Notes and one or more
classes of Certificates, will be issued by a trust to be formed with respect to
such series (each, a "Trust"). Each Trust will be formed pursuant to a Trust
Agreement to be entered into among Chrysler Financial Corporation, as Seller
(the "Seller"), a wholly owned subsidiary of the Seller specified in the related
Prospectus Supplement (the "Company"), and the Owner Trustee specified in the
related Prospectus Supplement (the "Owner Trustee"). The Notes of each series
will be issued and secured pursuant to an Indenture between the Trust and the
Indenture Trustee specified in the related Prospectus Supplement (the "Indenture
Trustee") and will represent indebtedness of the related Trust. The Certificates
of a series will represent fractional undivided interests in the related Trust.
The property of each Trust will include a pool of motor vehicle retail
installment sale contracts secured by new or used automobiles and light duty
trucks (the "Receivables"), certain monies due or received thereunder on and
after the applicable Cutoff Date set forth in the related Prospectus Supplement,
security interests in the vehicles financed thereby and certain other property,
all as described herein and in the related Prospectus Supplement. In addition,
if so specified in the related Prospectus Supplement, the property of the Trust
will include monies on deposit in a trust account (the "Pre-Funding Account") to
be established with the Indenture Trustee, which will be used to purchase
additional motor vehicle retail installment sale contracts (the "Subsequent
Receivables") from the Seller from time to time during the Funding Period
specified in the related Prospectus Supplement.
Except as otherwise provided in the related Prospectus Supplement, each
class of Securities of any series will represent the right to receive a
specified amount of payments of principal and interest on the related
Receivables, at the rates, on the dates and in the manner described herein and
in the related Prospectus Supplement. The right of each class of Securities to
receive payments may be senior or subordinate to the rights of one or more of
the other classes of such series. Distributions on Certificates of a series may
be subordinated in priority to payments due on the related Notes to the extent
described herein and in the related Prospectus Supplement. A series may include
one or more classes of Notes and Certificates which differ as to the timing and
priority of payment, interest rate or amount of distributions in respect of
principal or interest or both. A series may include one or more classes of Notes
or Certificates entitled to distributions in respect of principal with
disproportionate, nominal or no interest distributions, or to interest
distributions, with disproportionate, nominal or no distributions in respect of
principal. The rate of payment in respect of principal of the Notes and
distributions in respect of the Certificate Balance of the Certificates of any
class will depend on the priority of payment of such class and the rate and
timing of payments (including prepayments, defaults, liquidations and
repurchases of Receivables) on the related Receivables. A rate of payment lower
or higher than that anticipated may affect the weighted average life of each
class of Securities in the manner described herein and in the related Prospectus
Supplement.
EXCEPT AS OTHERWISE SPECIFIED IN THE RELATED PROSPECTUS SUPPLEMENT, THE
NOTES OF A GIVEN SERIES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES OF SUCH
SERIES REPRESENT BENEFICIAL INTERESTS IN, THE RELATED TRUST ONLY AND DO NOT
REPRESENT OBLIGATIONS OF OR INTERESTS IN, AND ARE NOT GUARANTEED OR INSURED BY,
CHRYSLER FINANCIAL CORPORATION, CHRYSLER CREDIT CORPORATION, THE APPLICABLE
COMPANY OR ANY OF THEIR RESPECTIVE AFFILIATES. PROSPECTIVE INVESTORS SHOULD
CONSIDER THE FACTORS SET FORTH UNDER "SPECIAL CONSIDERATIONS" HEREIN AND IN THE
RELATED PROSPECTUS SUPPLEMENT.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Retain this Prospectus for future reference. This Prospectus may not be
used to consummate sales of Securities offered hereby unless
accompanied by a Prospectus Supplement.
---------------------
The date of this Prospectus is September 23, 1993.
<PAGE> 45
AVAILABLE INFORMATION
The Seller, as originator of each Trust, has filed with the Securities and
Exchange Commission (the "Commission") a Registration Statement (together with
all amendments and exhibits thereto, referred to herein as the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Notes and the Certificates offered pursuant to this
Prospectus. For further information, reference is made to the Registration
Statement which may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549;
and at the Commission's regional offices at 500 West Madison Street, 14th Floor,
Chicago, Illinois 60661 and Seven World Trade Center, New York, New York 10048.
Copies of the Registration Statement may be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed by the Seller, as originator of any Trust, pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended, subsequent to the date of this Prospectus and prior to the termination
of the offering of the Securities shall be deemed to be incorporated by
reference in this Prospectus. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any subsequently filed document which also is
or is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Seller will provide without charge to each person, including any
beneficial owner of Securities, to whom a copy of this Prospectus is delivered,
on the written or oral request of any such person, a copy of any or all of the
documents incorporated herein or in any related Prospectus Supplement by
reference, except the exhibits to such documents (unless such exhibits are
specifically incorporated by reference in such documents). Requests for such
copies should be directed to Secretary, Chrysler Financial Corporation, 27777
Franklin Road, Southfield, Michigan 48034-8286 (Telephone: 313-948-3060).
2
<PAGE> 46
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus and by reference to
the information with respect to the Securities of any series contained in the
related Prospectus Supplement to be prepared and delivered in connection with
the offering of such Securities. Certain capitalized terms used in this summary
are defined elsewhere in this Prospectus on the pages indicated in the "Index of
Terms".
<TABLE>
<S> <C>
Issuer................. With respect to each series of Securities, the Trust to be formed
pursuant to a Trust Agreement (as amended and supplemented from time
to time, a "Trust Agreement") among the Seller, the Company for such
Trust and the Owner Trustee for such Trust (the "Trust" or the
"Issuer").
Seller................. Chrysler Financial Corporation (the "Seller").
Servicer............... Chrysler Credit Corporation (the "Servicer" or "CCC").
Indenture Trustee...... With respect to each series of Securities, the Indenture Trustee
specified in the related Prospectus Supplement.
Owner Trustee.......... With respect to each series of Securities, the Owner Trustee
specified in the related Prospectus Supplement.
The Notes.............. Each series of Securities will include one or more classes of Notes,
which will be issued pursuant to an Indenture between the Trust and
the Indenture Trustee (as amended and supplemented from time to
time, an "Indenture").
Unless otherwise specified in the related Prospectus Supplement,
Notes will be available for purchase in denominations of $1,000 and
integral multiples thereof and will be available in book-entry form
only. Unless otherwise specified in the related Prospectus
Supplement, Noteholders will be able to receive Definitive Notes
only in the limited circumstances described herein or in the related
Prospectus Supplement. See "Certain Information Regarding the
Securities -- Definitive Securities".
Unless otherwise specified in the related Prospectus Supplement,
each class of Notes will have a stated principal amount and will
bear interest at a specified rate or rates (with respect to each
class of Notes, the "Interest Rate"). Each class of Notes may have a
different Interest Rate, which may be a fixed, variable or
adjustable Interest Rate, or any combination of the foregoing. The
related Prospectus Supplement will specify the Interest Rate for
each class of Notes, or the method for determining the Interest
Rate.
With respect to a series that includes two or more classes of Notes,
each class may differ as to the timing and priority of payments,
seniority, allocations of losses, Interest Rate or amount of
payments of principal or interest, or payments of principal or
interest in respect of any such class or classes may or may not be
made upon the occurrence of specified events or on the basis of
collections from designated portions of the Receivables Pool.
In addition, a series may include one or more classes of Notes
("Strip Notes") entitled to (i) principal payments with
disproportionate, nominal or no interest payments or (ii) interest
payments with disproportionate, nominal or no principal payments.
If the Servicer exercises its option to purchase the Receivables of
a Trust (or, if not, and if and to the extent provided in the
related Prospectus Supplement, if satisfactory bids for the purchase
of such Receivables are received), in the
</TABLE>
3
<PAGE> 47
<TABLE>
<S> <C>
manner and on the respective terms and conditions described under
"Description of the Transfer and Servicing
Agreements -- Termination", the outstanding Notes will be redeemed
as set forth in the related Prospectus Supplement. In addition, if
the related Prospectus Supplement provides that the property of a
Trust will include a Pre-Funding Account (as such term is defined in
the related Prospectus Supplement, the "Pre-Funding Account"), the
outstanding Notes will be subject to partial redemption on or
immediately following the end of the Funding Period (as such term is
defined in the related Prospectus Supplement, the "Funding Period")
in an amount and manner specified in the related Prospectus
Supplement. In the event of such partial redemption, the Notehold-
ers may be entitled to receive a prepayment premium from the Trust,
in the amount and to the extent provided in the related Prospectus
Supplement.
The Certificates....... Each series of Securities will include one or more classes of
Certificates, which will be issued pursuant to a Trust Agreement.
Unless otherwise specified in the related Prospectus Supplement,
Certificates will be available for purchase in a minimum
denomination of $20,000 and in integral multiples of $1,000 in
excess thereof and will be available in book-entry form only. Unless
otherwise specified in the related Prospectus Supplement, Certifi-
cateholders will be able to receive Definitive Certificates only in
the limited circumstances described herein or in the related
Prospectus Supplement. See "Certain Information Regarding the
Securities -- Definitive Securities".
Unless otherwise specified in the related Prospectus Supplement,
each class of Certificates will have a stated Certificate Balance
specified in the related Prospectus Supplement (the "Certificate
Balance") and will accrue interest on such Certificate Balance at a
specified rate (with respect to each class of Certificates, the
"Pass Through Rate"). Each class of Certificates may have a
different Pass Through Rate, which may be a fixed, variable or
adjustable Pass Through Rate, or any combination of the foregoing.
The related Prospectus Supplement will specify the Pass Through Rate
for each class of Certificates or the method for determining the
Pass Through Rate.
With respect to a series that includes two or more classes of
Certificates, each class may differ as to timing and priority of
distributions, seniority, allocations of losses, Pass Through Rate
or amount of distributions in respect of principal or interest, or
distributions in respect of principal or interest in respect of any
such class or classes may or may not be made upon the occurrence of
specified events or on the basis of collections from designated
portions of the Receivables Pool. In addition, a series may include
one or more classes of Certificates ("Strip Certificates") entitled
to (i) distributions in respect of principal with disproportionate,
nominal or no interest distributions or (ii) interest distributions
with disproportionate, nominal or no distributions in respect of
principal.
To the extent specified in the related Prospectus Supplement,
distributions in respect of the Certificates may be subordinated in
priority of payment to payments on the Notes.
If the Servicer exercises its option to purchase the Receivables of
a Trust (or, if not, and if and to the extent provided in the
related Prospectus Supplement, if satisfactory bids for the purchase
of such Receivables are received), in the manner and on the
respective terms and conditions described under "Description of the
Transfer and Servicing Agreements -- Termination",
Certificateholders will receive as a prepayment an amount in respect
of the Certificates as specified in the related Prospectus
Supplement. In addition, if the related Prospectus
</TABLE>
4
<PAGE> 48
<TABLE>
<S> <C>
Supplement provides that the property of a Trust will include a
Pre-Funding Account, Certificateholders will receive a partial
prepayment of principal on or immediately following the end of the
Funding Period in an amount and manner specified in the related
Prospectus Supplement. In the event of such partial prepayment, the
Certificateholders may be entitled to receive a prepayment premium
from the Trust, in the amount and to the extent provided in the
related Prospectus Supplement.
The Trust Property..... The property of each Trust will include a pool of motor vehicle
retail installment sale contracts secured by new or used automobiles
or light duty trucks (the "Receivables"), including rights to
receive certain payments made with respect to such Receivables,
security interests in the vehicles financed thereby (the "Financed
Vehicles"), certain accounts and the proceeds thereof and any
proceeds from claims on certain related insurance policies. On the
Closing Date specified in the related Prospectus Supplement with
respect to a Trust, the Seller will, if so specified in such
Prospectus Supplement, sell Receivables (the "Initial Receivables")
having an aggregate principal balance specified in the related
Prospectus Supplement as of a date specified therein (the "Initial
Cutoff Date") to such Trust pursuant to a Sale and Servicing
Agreement among the Seller, the Servicer and the Trust (as amended
and supplemented from time to time, a "Sale and Servicing
Agreement"). The property of each Trust will also include amounts on
deposit in certain trust accounts, including the related Collection
Account, any Pre-Funding Account, any Reserve Account and any other
account identified in the applicable Prospectus Supplement.
To the extent provided in the related Prospectus Supplement, the
Seller will be obligated (subject only to the availability thereof)
to sell, and the related Trust will be obligated to purchase
(subject to the satisfaction of certain conditions described in the
applicable Sale and Servicing Agreement), additional Receivables
(the "Subsequent Receivables") from time to time (as frequently as
daily) during the Funding Period specified in the related Prospectus
Supplement having an aggregate principal balance approximately equal
to the amount on deposit in the Pre-Funding Account (the "Pre-Funded
Amount") on such Closing Date.
The Receivables arise or will arise from loans originated by motor
vehicle dealers (the "Dealers") and purchased by CCC pursuant to
agreements with the Dealers for subsequent sale to the Seller. The
Receivables for any given Receivables Pool will be selected from the
contracts owned by the Seller based on the criteria specified in the
applicable Sale and Servicing Agreement and described herein and in
the related Prospectus Supplement.
Credit and Cash Flow
Enhancement............ If and to the extent specified in the related Prospectus Supplement,
credit enhancement with respect to a Trust or any class or classes
of Securities may include any one or more of the following:
subordination of one or more other classes of Securities, a Reserve
Account, over-collateralization, letters of credit, credit or
liquidity facilities, surety bonds, guaranteed investment contracts,
swaps or other interest rate protection agreements, repurchase
obligations, other agreements with respect to third party payments
or other support, cash deposits or other arrangements. Unless
otherwise specified in the related Prospectus Supplement, any form
of credit enhancement will have certain limitations and exclusions
from coverage thereunder, which will be described in the related
Prospectus Supplement.
</TABLE>
5
<PAGE> 49
<TABLE>
<S> <C>
Reserve Account........ Unless otherwise specified in the related Prospectus Supplement, a
Reserve Account will be created for each Trust with an initial
deposit by the Seller of cash or certain investments having a value
equal to the amount specified in the related Prospectus Supplement.
To the extent specified in the related Prospectus Supplement, funds
in the Reserve Account will thereafter be supplemented by the
deposit of amounts remaining on any Distribution Date or Payment
Date after making all other distributions required on such date and
any amounts deposited from time to time from the Pre-Funding Account
in connection with the purchase of Subsequent Receivables. Amounts
in the Reserve Account will be available to cover shortfalls in
amounts due to the holders of those classes of Securities specified
in the related Prospectus Supplement in the manner and under the
circumstances specified therein. The related Prospectus Supplement
will also specify to whom and the manner and circumstances under
which amounts on deposit in the Reserve Account (after giving effect
to all other required distributions to be made by the applicable
Trust) in excess of the Specified Reserve Account Balance (as
defined in the related Prospectus Supplement) will be distributed.
Transfer and Servicing
Agreements............. With respect to each Trust, the Seller will sell the related
Receivables to such Trust pursuant to a Sale and Servicing
Agreement. The rights and benefits of such Trust under the Sale and
Servicing Agreement will be assigned to the Indenture Trustee as
collateral for the Notes of the related series. The Servicer will
agree with such Trust to be responsible for servicing, managing,
maintaining custody of and making collections on the Receivables.
CCC will undertake certain administrative duties with respect to
such Trust under an Administration Agreement.
Unless otherwise specified in the related Prospectus Supplement, the
Servicer will advance scheduled payments under each Precomputed
Receivable which shall not have been timely made (a "Precomputed
Advance"), to the extent that the Servicer, in its sole discretion,
expects to recoup the Precomputed Advance from subsequent payments
on or with respect to such Receivable or from other Precomputed
Receivables. With respect to Simple Interest Receivables, the
Servicer shall advance any interest shortfall (a "Simple Interest
Advance" and, together with a Precomputed Advance, an "Advance").
The Servicer shall be entitled to reimbursement of Advances from
subsequent payments on or with respect to the Receivables to the
extent described herein and in the related Prospectus Supplement.
Unless otherwise provided in the related Prospectus Supplement, the
Seller will be obligated to repurchase any Receivable if the
interest of the applicable Trust in such Receivable is materially
adversely affected by a breach of any representation or warranty
made by the Seller with respect to the Receivable, if the breach has
not been cured following the discovery by or notice to the Seller of
the breach.
Unless otherwise provided in the related Prospectus Supplement, the
Servicer will be obligated to purchase or make Advances with respect
to any Receivable if, among other things, it extends the date for
final payment by the Obligor of such Receivable beyond the
applicable Final Scheduled Maturity Date (as defined in the related
Prospectus Supplement, the "Final Scheduled Maturity Date"), changes
the annual percentage rate ("APR") or amount of a scheduled payment
of such Receivable or fails to maintain a perfected security
interest in the related Financed Vehicle.
</TABLE>
6
<PAGE> 50
<TABLE>
<S> <C>
Unless otherwise specified in the related Prospectus Supplement, the
Servicer will be entitled to receive a fee for servicing the
Receivables of each Trust equal to a specified percentage of the
aggregate principal balance of the related Receivables Pool, as set
forth in the related Prospectus Supplement, plus certain late fees,
prepayment charges and other administrative fees or similar charges.
See "Description of the Transfer and Servicing
Agreements -- Servicing Compensation and Payment of Expenses" herein
and in the related Prospectus Supplement.
Certain Legal Aspects
of the Receivables;
Repurchase
Obligations............ In connection with the sale of Receivables to a Trust, security
interests in the Financed Vehicles securing such Receivables will be
assigned by the Seller to such Trust. Due to administrative burden
and expense, the certificates of title to the Financed Vehicles will
not be amended to reflect the assignment to such Trust. In the
absence of such an amendment, such Trust may not have a perfected
security interest in the Financed Vehicles securing the Receivables
in some states. Unless otherwise specified in the related Prospectus
Supplement, the Seller will be obligated to repurchase any
Receivable sold to a Trust as to which a first perfected security
interest in the name of the Seller in the Financed Vehicle securing
such Receivable shall not exist as of the date such Receivable is
purchased by such Trust, if such breach shall materially adversely
affect the interest of such Trust in such Receivable and if such
failure or breach shall not have been cured by the last day of the
second (or, if the Seller elects, the first) month following the
discovery by or notice to the Seller of such breach. If such Trust
does not have a perfected security interest in a Financed Vehicle,
its ability to realize on such Financed Vehicle in the event of a
default may be adversely affected. To the extent the security
interest is perfected, such Trust will have a prior claim over
subsequent purchasers of such Financed Vehicles and holders of
subsequently perfected security interests. However, as against liens
for repairs of Financed Vehicles or for taxes unpaid by an Obligor
under a Receivable, or because of fraud or negligence, such Trust
could lose the priority of its security interest or its security
interest in Financed Vehicles. Neither the Seller nor the Servicer
will have any obligation to repurchase a Receivable as to which any
of the aforementioned occurrences result in a Trust's losing the
priority of its security interest or its security interest in such
Financed Vehicle after the Closing Date.
Federal and state consumer protection laws impose requirements upon
creditors in connection with extensions of credit and collections of
retail installment loans, and certain of these laws make an assignee
of such a loan liable to the obligor thereon for any violation by
the lender. Unless otherwise specified in the related Prospectus
Supplement, the Seller will be obligated to repurchase any Receiva-
ble which fails to comply with such requirements.
Tax Status............. Upon the issuance of each series of Securities, except as otherwise
provided in the related Prospectus Supplement, (a) Federal Tax
Counsel to the applicable Trust will deliver an opinion to the
effect that, for federal income tax purposes: (i) the Notes of such
series will be characterized as debt and (ii) such Trust will not be
characterized as an association (or a publicly traded partnership)
taxable as a corporation and (b) Michigan Tax Counsel to such Trust
will deliver an opinion to the effect that the same
characterizations would apply for Michigan income and single
business tax purposes as for federal income tax purposes. Each
Noteholder, by the acceptance of a Note of a given series, will
agree to treat such
</TABLE>
7
<PAGE> 51
<TABLE>
<S> <C>
Note as indebtedness, and each Certificateholder, by the acceptance
of a Certificate of a given series, will agree to treat the related
Trust as a partnership in which such Certificateholder is a partner
for federal income and Michigan income and single business tax
purposes. Alternative characterizations of such Trust and such
Certificates are possible, but would not result in materially
adverse tax consequences to Certificateholders. See "Certain Federal
Income Tax Consequences" and "Certain State Tax Consequences" for
additional information concerning the application of federal and
Michigan tax laws.
ERISA Considerations... Subject to the considerations discussed under "ERISA Considerations"
herein and in the related Prospectus Supplement, and unless
otherwise specified therein, the Notes of each series are eligible
for purchase by employee benefit plans.
Unless otherwise specified in the related Prospectus Supplement, the
Certificates of any series may not be acquired by any employee
benefit plan subject to the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), or by any individual retirement
account. See "ERISA Considerations" herein and in the related
Prospectus Supplement.
</TABLE>
8
<PAGE> 52
SPECIAL CONSIDERATIONS
Certain Legal Aspects -- Security Interests in Financed Vehicles. In
connection with the sale of Receivables to a Trust, security interests in the
Financed Vehicles securing such Receivables will be assigned by the Seller to
such Trust simultaneously with the sale of such Receivables to such Trust. Due
to administrative burden and expense, the certificates of title to the Financed
Vehicles will not be amended to reflect the assignment to the Trust. In the
absence of such an amendment, such Trust may not have a perfected security
interest in the Financed Vehicles securing the Receivables in some states.
Unless otherwise provided in the related Prospectus Supplement, the Seller will
be obligated to repurchase any Receivable sold to such Trust as to which a
perfected security interest in the name of the Seller in the Financed Vehicle
securing such Receivable shall not exist as of the date such Receivable is
transferred to such Trust, if such breach shall materially adversely affect the
interest of such Trust in such Receivable and if such failure or breach shall
not have been cured by the last day of the second (or, if the Seller elects, the
first) month following the discovery by or notice to the Seller of such breach.
If such Trust does not have a perfected security interest in a Financed Vehicle,
its ability to realize on such Financed Vehicle in the event of a default may be
adversely affected. To the extent the security interest is perfected, such Trust
will have a prior claim over subsequent purchasers of such Financed Vehicles and
holders of subsequently perfected security interests. However, as against liens
for repairs of Financed Vehicles or for taxes unpaid by an Obligor under a
Receivable, or through fraud or negligence, such Trust could lose the priority
of its security interest or its security interest in a Financed Vehicle. Neither
the Seller nor the Servicer will have any obligation to repurchase a Receivable
as to which any of the aforementioned occurrences result in such Trust's losing
the priority of its security interest or its security interest in such Financed
Vehicle after the date such security interest was conveyed to such Trust.
Federal and state consumer protection laws impose requirements upon creditors in
connection with extensions of credit and collections of retail installment loans
and certain of these laws make an assignee of such a loan (such as such Trust)
liable to the obligor thereon for any violation by the lender. Unless otherwise
specified in the related Prospectus Supplement, the Seller will be obligated to
repurchase any Receivable which fails to comply with such requirements.
Certain Legal Aspects -- Bankruptcy Considerations. The Seller will
warrant to each Trust in the related Sale and Servicing Agreement that the sale
of the Receivables by the Seller to such Trust is a valid sale of the
Receivables to such Trust. Notwithstanding the foregoing, if the Seller were to
become a debtor in a bankruptcy case and a creditor or trustee-in-bankruptcy of
such debtor or such debtor itself were to take the position that the sale of
Receivables to such Trust should instead be treated as a pledge of such
Receivables to secure a borrowing of such debtor, delays in payments of
collections of Receivables to the related Securityholders could occur or (should
the court rule in favor of any such trustee, debtor or creditor) reductions in
the amounts of such payments could result. If the transfer of Receivables to a
Trust is treated as a pledge instead of a sale, a tax or government lien on the
property of the Seller arising before the transfer of a Receivable to such Trust
may have priority over such Trust's interest in such Receivable. If the
transactions contemplated herein are treated as a sale, the Receivables would
not be part of the Seller's bankruptcy estate and would not be available to the
Seller's creditors.
If an Insolvency Event with respect to the Company (which will be, unless
otherwise specified in the related Prospectus Supplement, a wholly owned
subsidiary of the Seller, as set forth in such Prospectus Supplement) of a given
Trust occurs, the Indenture Trustee for such Trust will promptly sell, dispose
of or otherwise liquidate the related Receivables in a commercially reasonable
manner on commercially reasonable terms, except under certain limited
circumstances. The proceeds from any such sale, disposition or liquidation of
Receivables will be treated as collections on the Receivables and deposited in
the Collection Account of such Trust. If the proceeds from the liquidation of
the Receivables and any amounts on deposit in the Reserve Account, the Note
Distribution Account and the Certificate Distribution Account with respect to
any Trust and any amounts available from any credit enhancement, if any, are not
sufficient to pay the Notes and Certificates of the related series in full, the
amount of principal returned to Noteholders or Certificateholders will be
reduced and Noteholders and Certificateholders will incur a loss. See
"Description of the Transfer and Servicing Agreements -- Insolvency Event".
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Recent Developments. The U.S. Court of Appeals for the Tenth Circuit in
its decision in Octagon Gas Systems, Inc. v. Rimmer (In re Meridian Reserve,
Inc.) (decided May 27, 1993) concluded (noting that its position is in contrast
to that taken by another court) that accounts receivable sold by the debtor
prior to the filing for bankruptcy remain property of the debtor's bankruptcy
estate. The Seller will warrant in each Sale and Servicing Agreement that the
sale of Receivables to the related Trust is a valid sale of such Receivables to
such Trust. For a discussion of certain consequences of characterization of a
transaction as a sale or a pledge, see "-- Certain Legal Aspects -- Bankruptcy
Considerations" above.
Trust's Relationship to the Seller, Chrysler Credit Corporation and their
Affiliates. None of the Seller, CCC or Chrysler Corporation ("Chrysler") or
their affiliates is generally obligated to make any payments in respect of the
Notes, the Certificates or the Receivables of a given Trust.
However, in connection with the sale of Receivables by the Seller to a
given Trust, the Seller will make representations and warranties with respect to
the characteristics of such Receivables and, in certain circumstances, the
Seller may be required to repurchase Receivables with respect to which such
representations and warranties have been breached. See "Description of the
Transfer and Servicing Agreements -- Sale and Assignment of Receivables". In
addition, under certain circumstances, the Servicer may be required to purchase
Receivables. See "Description of the Transfer and Servicing
Agreements -- Servicing Procedures". Moreover, if CCC 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
Securityholders.
The related Prospectus Supplement may set forth certain additional
information regarding the Seller, CCC and Chrysler. In addition, the Seller and
Chrysler are subject to the information requirements of the Exchange Act and in
accordance therewith file reports and other information with the Commission. For
further information regarding the Seller and Chrysler, reference is made to such
reports and other information, which are available as described under "Available
Information".
Subordination; Limited Assets. To the extent specified in the related
Prospectus Supplement, distributions of interest and principal on the
Certificates of a series may be subordinated in priority of payment to interest
and principal due on the Notes of such series. Moreover, each Trust will not
have, nor is it permitted or expected to have, any significant assets or sources
of funds other than the Receivables and, to the extent provided in the related
Prospectus Supplement, a Pre-Funding Account, a Reserve Account and any other
credit enhancement. The Notes of any series will represent obligations solely
of, and the Certificates of such series will represent interests solely in, the
related Trust and neither the Notes nor the Certificates of any such series will
be insured or guaranteed by the Seller, the Servicer, the applicable Owner
Trustee, the applicable Indenture Trustee or any other person or entity.
Consequently, holders of the Securities of any series must rely for repayment
upon payments on the related Receivables and, if and to the extent available,
amounts on deposit in the Pre-Funding Account (if any), the Reserve Account (if
any) and any other credit enhancement, all as specified in the related
Prospectus Supplement.
Maturity and Prepayment Considerations. All the Receivables are prepayable
at any time. (For this purpose the term "prepayments" includes prepayments in
full, partial prepayments (including those related to rebates of extended
warranty contract costs and insurance premiums) and liquidations due to default,
as well as receipts of proceeds from physical damage, credit life and disability
insurance policies and certain other Receivables repurchased for administrative
reasons.) The rate of prepayments on the Receivables may be influenced by a
variety of economic, social and other factors, including the fact that an
Obligor generally may not sell or transfer the Financed Vehicle securing a
Receivable without the consent of the Seller. The rate of prepayment on the
Receivables may also be influenced by the structure of the loan. In addition,
under certain circumstances, the Seller will be obligated to repurchase
Receivables pursuant to a Sale and Servicing Agreement as a result of breaches
of representations and warranties and, under certain circumstances, the Servicer
will be obligated to purchase Receivables pursuant to such Sale and Servicing
Agreement as a result of breaches of certain covenants. See "Description of the
Transfer and Servicing Agreements -- Sale and Assignment of Receivables". Any
reinvestment risks resulting from a faster or slower incidence of prepayment of
Receivables held by a given Trust will be borne entirely by the Securityholders
of the related series of Securities. See also "Description of the Transfer and
Servicing Agreements -- Termination" regarding the
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Servicer's option to purchase the Receivables of a given Receivables Pool and
"-- Insolvency Event" regarding the sale of the Receivables if an Insolvency
Event with respect to the applicable Company occurs.
Risk of Commingling. With respect to each Trust, the Servicer will deposit
all payments on the related Receivables (from whatever source) and all proceeds
of such Receivables collected during each Collection Period into the Collection
Account of such Trust within two business days of receipt thereof. However, in
the event that CCC satisfies certain requirements for monthly or less frequent
remittances and the Rating Agencies (as such term is defined in the related
Prospectus Supplement, the "Rating Agencies") affirm their ratings of the
related Securities at the initial level, then for so long as CCC is the Servicer
and provided that (i) there exists no Servicer Default and (ii) each other
condition to making such monthly or less frequent deposits as may be specified
by the Rating Agencies and described in the related Prospectus Supplement is
satisfied, the Servicer will not be required to deposit such amounts into the
Collection Account of such Trust until on or before the business day preceding
each Distribution Date. The Servicer will deposit the aggregate Purchase Amount
of Receivables purchased by the Servicer into the applicable Collection Account
on or before the business day preceding each Distribution Date. Pending deposit
into such Collection Account, collections may be invested by the Servicer at its
own risk and for its own benefit and will not be segregated from funds of the
Servicer. If the Servicer were unable to remit such funds, the applicable
Securityholders might incur a loss. To the extent set forth in the related
Prospectus Supplement, the Servicer may, in order to satisfy the requirements
described above, obtain a letter of credit or other security for the benefit of
the related Trust to secure timely remittances of collections on the related
Receivables and payment of the aggregate Purchase Amount with respect to
Receivables purchased by the Servicer.
Servicer Default. Unless otherwise provided in the related Prospectus
Supplement with respect to a given series of Securities, in the event a Servicer
Default occurs, the Indenture Trustee or the Noteholders with respect to such
series, as described under "Description of the Transfer and Servicing
Agreements -- Rights upon Servicer Default", may remove the Servicer without the
consent of the Owner Trustee or any of the Certificateholders with respect to
such series. The Owner Trustee or the Certificateholders with respect to such
series will not have the ability to remove the Servicer if a Servicer Default
occurs. In addition, the Noteholders of such series have the ability, with
certain specified exceptions, to waive defaults by the Servicer, including
defaults that could materially adversely affect the Certificateholders of such
series. See "Description of the Transfer and Servicing Agreements -- Waiver of
Past Defaults".
Book-Entry Registration. Each class of the Notes and the Certificates of a
given series will be initially represented by one or more certificates
registered in the name of Cede & Co. ("Cede"), or any other nominee for DTC set
forth in the related Prospectus Supplement (Cede, or such other nominee, "DTC's
Nominee"), and will not be registered in the names of the holders of the
Securities of such series or their nominees. Because of this, unless and until
Definitive Securities for such series are issued, holders of such Securities
will not be recognized by the applicable Indenture Trustee or Owner Trustee as
"Noteholders", "Certificateholders" or "Securityholders", as the case may be (as
such terms are used herein or in the related Indenture and Trust Agreement, as
the case may be). Hence, until Definitive Securities are issued, holders of such
Securities will only be able to exercise the rights of Securityholders
indirectly through DTC and its participating organizations. See "Certain
Information Regarding the Securities -- Book-Entry Registration" and
"-- Definitive Securities".
THE TRUSTS
With respect to each series of Securities, the Seller will establish a
separate Trust pursuant to the respective Trust Agreement for the transactions
described herein and in the related Prospectus Supplement. The property of each
Trust will include a pool (a "Receivables Pool") of motor vehicle retail
installment sales contracts (and, with respect to Fixed Value Receivables (as
defined below), the right to certain payments on retail installment sale
contracts) between dealers (the "Dealers") and purchasers (the "Obligors") of
new and used automobiles or light duty trucks and all payments due thereunder on
and after the applicable Cutoff Date (as such term is defined in the related
Prospectus Supplement, a "Cutoff Date") (in the case of Precomputed Receivables)
and all payments received thereunder on and after the applicable Cutoff Date (in
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the case of Simple Interest Receivables). The Receivables of each Receivables
Pool were or will be originated by the Dealers and purchased by CCC pursuant to
agreements with Dealers ("Dealer Agreements") for subsequent sale to the Seller.
Such Receivables will continue to be serviced by the Servicer and evidence
indirect financing made available by the Seller to the Obligors. On the
applicable Closing Date, after the issuance of the Notes and the Certificates of
a given series, the Seller will sell the Initial Receivables of the applicable
Receivables Pool to the Trust. To the extent so provided in the related
Prospectus Supplement, Subsequent Receivables will be conveyed to the Trust as
frequently as daily during the Funding Period. Any Subsequent Receivables so
conveyed will also be assets of the applicable Trust, subject to the prior
rights of the related Indenture Trustee and the Noteholders therein. The
property of each Trust will also include (i) such amounts as from time to time
may be held in separate trust accounts established and maintained pursuant to
the related Sale and Servicing Agreement and the proceeds of such accounts, as
described herein and in the related Prospectus Supplement; (ii) security
interests in the Financed Vehicles and any other interest of the Seller in such
Financed Vehicles; (iii) the rights to proceeds from claims on certain physical
damage, credit life and disability insurance policies covering the Financed
Vehicles or the Obligors, as the case may be; (iv) the interest of the Seller in
any proceeds from recourse to Dealers on Receivables or Financed Vehicles with
respect to which the Servicer has determined that eventual repayment in full is
unlikely; (v) any property that shall have secured a Receivable and that shall
have been acquired by the applicable Trust; and (vi) any and all proceeds of the
foregoing. To the extent specified in the related Prospectus Supplement, a
Pre-Funding Account, a Reserve Account or other form of credit enhancement may
be a part of the property of any given Trust or may be held by the Owner Trustee
or the Indenture Trustee for the benefit of holders of the related Securities.
Additionally, pursuant to contracts between the Servicer and the Dealers, the
Dealers have an obligation after origination to repurchase Receivables as to
which Dealers have made certain misrepresentations.
The Servicer will continue to service the Receivables held by each Trust
and will receive fees for such services. See "Description of the Transfer and
Servicing Agreements -- Servicing Compensation and Payment of Expenses" herein
and in the related Prospectus Supplement. To facilitate the servicing of the
Receivables, the Seller and each Owner Trustee will authorize the Servicer to
retain physical possession of the Receivables held by each Trust and other
documents relating thereto as custodian for each such Trust. Due to the
administrative burden and expense, the certificates of title to the Financed
Vehicles will not be amended to reflect the sale and assignment of the security
interest in the Financed Vehicles to each Trust. In the absence of such an
amendment, any Trust may not have a perfected security interest in the Financed
Vehicles in all states. See "Certain Legal Aspects of the Receivables" and
"Description of the Transfer and Servicing Agreements -- Sale and Assignment of
Receivables".
If the protection provided to Noteholders of a given series by the
subordination of the related Certificates and by the Reserve Account, if any, or
other credit enhancement for such series or the protection provided to
Certificateholders by such Reserve Account or other credit enhancement is
insufficient, such Noteholders or Certificateholders, as the case may be, would
have to look principally to the Obligors on the related Receivables, the
proceeds from the repossession and sale of Financed Vehicles which secure
defaulted Receivables and the proceeds from any recourse against Dealers with
respect to such Receivables. In such event, certain factors, such as the
applicable Trust's not having perfected security interests in the Financed
Vehicles in all states, may affect the Servicer's ability to repossess and sell
the collateral securing the Receivables, and thus may reduce the proceeds to be
distributed to the holders of the Securities of such series. See "Description of
the Transfer and Servicing Agreements -- Distributions", "-- Credit and Cash
Flow Enhancement" and "Certain Legal Aspects of the Receivables".
The principal offices of each Trust and the related Owner Trustee will be
specified in the applicable Prospectus Supplement.
THE OWNER TRUSTEE
The Owner Trustee for each Trust will be specified in the related
Prospectus Supplement. The Owner Trustee's liability in connection with the
issuance and sale of the related Securities is limited solely to the express
obligations of such Owner Trustee set forth in the related Trust Agreement and
the Sale and Servicing
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Agreement. An Owner Trustee may resign at any time, in which event the Servicer,
or its successor, will be obligated to appoint a successor trustee. The
Administrator of a Trust may also remove the Owner Trustee if the Owner Trustee
ceases to be eligible to continue as Owner Trustee under the related Trust
Agreement or if the Owner Trustee becomes insolvent. In such circumstances, the
Administrator will be obligated to appoint a successor trustee. Any resignation
or removal of an Owner Trustee and appointment of a successor trustee will not
become effective until acceptance of the appointment by the successor trustee.
THE RECEIVABLES POOLS
GENERAL
The Receivables in each Receivables Pool have been or will be purchased by
the Servicer from Dealers in the ordinary course of business through its
branches located in the United States. Most of the Dealers sell products
manufactured and/or distributed by Chrysler. The retail installment sale
contracts are purchased pursuant to the Dealer Agreements. The Servicer
purchases contracts in accordance with its credit standards which are based upon
the vehicle buyer's ability and willingness to repay the obligation as well as
the value of the vehicle being financed. The Servicer sells on a daily basis all
retail installment sale contracts that it acquires to the Seller pursuant to an
intercompany agreement.
CCC introduced in 1991 a program to provide Dealers with the opportunity to
be more competitive in setting the APR extended to an Obligor on a retail
installment sale contract based upon credit scoring and transaction
characteristics (such program is referred to herein as "Market Value Pricing").
Although there can be no assurance that such will be the case, the Seller has
been informed by the Servicer that the Servicer believes that retail installment
sale contracts originated pursuant to the Market Value Pricing program may on
average have lower APRs but have fewer losses and delinquencies than the
automobile and light duty truck receivables in the portfolio serviced by CCC
prior to the introduction of the Market Value Pricing Program.
The Receivables to be held by each Trust will be selected from the Seller's
portfolio for inclusion in a Receivables Pool by several criteria, including
that, unless otherwise provided in the related Prospectus Supplement, each
Receivable (i) is secured by a new or used vehicle, (ii) was originated in the
United States, (iii) provides for level monthly payments (except for the last
payment, which may be minimally different from the level payments or which, in
the case of Fixed Value Receivables, may be a final fixed value payment) that
fully amortize the amount financed over its original term to maturity, (iv) is a
Precomputed Receivable or a Simple Interest Receivable and (v) satisfies the
other criteria, if any, set forth in the related Prospectus Supplement. No
selection procedures believed by the Seller to be adverse to the Securityholders
of any series were or will be used in selecting the related Receivables.
"Precomputed Receivables" consist of either (i) monthly actuarial
receivables ("Actuarial Receivables") or (ii) receivables that provide for
allocation of payments according to the "sum of periodic balances" or "sum of
monthly payments" method, similar to the "Rule of 78's" ("Rule of 78's
Receivables"). An Actuarial Receivable provides for amortization of the loan
over a series of fixed level payment monthly installments. Each monthly
installment, including the monthly installment representing the final payment on
the Receivable, consists of an amount of interest equal to 1/12 of the APR of
the loan multiplied by the unpaid principal balance of the loan, and an amount
of principal equal to the remainder of the monthly payment. A Rule of 78's
Receivable provides for the payment by the obligor of a specified total amount
of payments, payable in equal monthly installments on each due date, which total
represents the principal amount financed and add-on interest in an amount
calculated on the stated APR for the term of the receivable. The rate at which
such amount of add-on interest is earned and, correspondingly, the amount of
each fixed monthly payment allocated to reduction of the outstanding principal
are calculated in accordance with the "Rule of 78's".
"Fixed Value Receivables" are monthly receivables originated under CCC's
Gold Key Plus program and secured by new automobiles or light duty trucks with a
final payment which is greater than the scheduled monthly payments. A Fixed
Value Receivable provides for amortization of the loan over a series of fixed
level payment monthly installments like an Actuarial Receivable, but also
requires a final fixed value payment due
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after payment of such monthly installments which may be satisfied by (i) payment
in full in cash of such amount, (ii) transfer of the vehicle to CCC provided
certain conditions are satisfied or (iii) refinancing the fixed value payment in
accordance with certain conditions. With respect to Fixed Value Receivables,
unless otherwise provided in the related Prospectus Supplement, only the
principal and interest payments due prior to the final fixed value payment and
not the final fixed value payment will be included initially in a given Trust;
the final fixed value payment will be sold by the Seller to the applicable
Company. However, such Company in the future will have the option to transfer
the final fixed value payments with respect to the related Fixed Value
Receivables retained by such Company to such Trust and to cause such Trust to
issue certificates representing interests in such final fixed value payments or
indebtedness secured by such final fixed value payments.
"Simple Interest Receivables" are receivables that provide for the
amortization of the amount financed under each receivable over a series of fixed
level monthly payments. However, unlike the monthly payment under an Actuarial
Receivable, each monthly payment consists of an installment of interest which is
calculated on the basis of the outstanding principal balance of the receivable
multiplied by the stated APR and further multiplied by the period elapsed (as a
fraction of a calendar year) since the preceding payment of interest was made.
As payments are received under a Simple Interest Receivable, the amount received
is applied first to interest accrued to the date of payment and the balance is
applied to reduce the unpaid principal balance. Accordingly, if an obligor pays
a fixed monthly installment before its scheduled due date, the portion of the
payment allocable to interest for the period since the preceding payment was
made will be less than it would have been had the payment been made as
scheduled, and the portion of the payment applied to reduce the unpaid principal
balance will be correspondingly greater. Conversely, if an obligor pays a fixed
monthly installment after its scheduled due date, the portion of the payment
allocable to interest for the period since the preceding payment was made will
be greater than it would have been had the payment been made as scheduled, and
the portion of the payment applied to reduce the unpaid principal balance will
be correspondingly less. In either case, the obligor pays a fixed monthly
installment until the final scheduled payment date, at which time the amount of
the final installment is increased or decreased as necessary to repay the then
outstanding principal balance.
In the event of the prepayment in full (voluntarily or by acceleration) of
a Rule of 78's Receivable, under the terms of the contract, a "refund" or
"rebate" will be made to the obligor of the portion of the total amount of
payments then due and payable under the contract allocable to "unearned" add-on
interest, calculated in accordance with a method equivalent to the Rule of 78's.
If an Actuarial Receivable is prepaid in full, with minor variations based upon
state law, the Actuarial Receivable requires that the rebate be calculated on
the basis of a constant interest rate. If a Simple Interest Receivable is
prepaid, rather than receive a rebate, the obligor is required to pay interest
only to the date of prepayment. The amount of a rebate under a Rule of 78's
Receivable generally will be less than the amount of a rebate on an Actuarial
Receivable and generally will be less than the remaining scheduled payments of
interest that would have been due under a Simple Interest Receivable for which
all payments were made on schedule.
Unless otherwise provided in the related Prospectus Supplement, each Trust
will account for the Rule of 78's Receivables as if such Receivables were
Actuarial Receivables. Amounts received upon prepayment in full of a Rule of
78's Receivable in excess of the then outstanding principal balance of such
Receivable and accrued interest thereon (calculated pursuant to the actuarial
method) will not be paid to the Noteholders or passed through to the
Certificateholders of the applicable series but will be paid to the Servicer as
additional servicing compensation.
Information with respect to each Receivables Pool will be set forth in the
related Prospectus Supplement, including, to the extent appropriate, the
composition, the distribution by APR and by the states of origination, the
portion of such Receivables Pool consisting of Precomputed Receivables and of
Simple Interest Receivables and the portion of such Receivables Pool secured by
new vehicles and by used vehicles.
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DELINQUENCIES, REPOSSESSIONS AND NET LOSSES
Certain information concerning the experience of the Seller and its United
States subsidiaries pertaining to delinquencies, repossessions and net losses
with respect to new and used retail automobile and light duty truck receivables
(including receivables previously sold which CCC continues to service) will be
set forth in each Prospectus Supplement. There can be no assurance that the
delinquency, repossession and net loss experience on any Receivables Pool will
be comparable to prior experience or to such information.
WEIGHTED AVERAGE LIFE OF THE SECURITIES
The weighted average life of the Notes and the Certificates of any series
will generally be influenced by the rate at which the principal balances of the
related Receivables are paid, which payment may be in the form of scheduled
amortization or prepayments. (For this purpose, the term "prepayments" includes
prepayments in full, partial prepayments (including those related to rebates of
extended warranty contract costs and insurance premiums), liquidations due to
default, as well as receipts of proceeds from physical damage, credit life and
disability insurance policies and certain other Receivables repurchased by the
Seller or the Servicer for administrative reasons.) All of the Receivables are
prepayable at any time without penalty to the Obligor. The rate of prepayment of
automotive receivables is influenced by a variety of economic, social and other
factors, including the fact that an Obligor generally may not sell or transfer
the Financed Vehicle securing a Receivable without the consent of the Seller.
The rate of prepayment on the Receivables may also be influenced by the
structure of the loan. In addition, under certain circumstances, the Seller will
be obligated to repurchase Receivables from a given Trust pursuant to the
related Sale and Servicing Agreement as a result of breaches of representations
and warranties and the Servicer will be obligated to purchase Receivables from
such Trust pursuant to such Sale and Servicing Agreement as a result of breaches
of certain covenants. See "Description of the Transfer and Servicing
Agreements -- Sale and Assignment of Receivables" and "-- Servicing Procedures".
See also "Description of the Transfer and Servicing Agreements -- Termination"
regarding the Servicer's option to purchase the Receivables from a given Trust
and "-- Insolvency Event" regarding the sale of the Receivables if an Insolvency
Event with respect to the Company of a given Trust occurs.
In light of the above considerations, there can be no assurance as to the
amount of principal payments to be made on the Notes or the Certificates of a
given series on each Payment Date or Distribution Date, as applicable, since
such amount will depend, in part, on the amount of principal collected on the
related Receivables Pool during the applicable Collection Period. Any
reinvestment risks resulting from a faster or slower incidence of prepayment of
Receivables will be borne entirely by the Noteholders and the Certificateholders
of a given series. The related Prospectus Supplement may set forth certain
additional information with respect to the maturity and prepayment
considerations applicable to the particular Receivables Pool and the related
series of Securities.
POOL FACTORS AND TRADING INFORMATION
The "Note Pool Factor" for each class of Notes will be a seven-digit
decimal which the Servicer will compute prior to each distribution with respect
to such class of Notes indicating the remaining outstanding principal balance of
such class of Notes, as of the applicable Payment Date (after giving effect to
payments to be made on such Payment Date), as a fraction of the initial
outstanding principal balance of such class of Notes. The "Certificate Pool
Factor" for each class of Certificates will be a seven-digit decimal which the
Servicer will compute prior to each distribution with respect to such class of
Certificates indicating the remaining Certificate Balance of such class of
Certificates, as of the applicable Distribution Date (after giving effect to
distributions to be made on such Distribution Date), as a fraction of the
initial Certificate Balance of such class of Certificates. Each Note Pool Factor
and each Certificate Pool Factor will initially be 1.0000000 and thereafter will
decline to reflect reductions in the outstanding principal balance of the
applicable class of Notes, or the reduction of the Certificate Balance of the
applicable class of Certificates, as the case may be. A Noteholder's portion of
the aggregate outstanding principal balance of the related class of Notes is the
product of (i) the original denomination of such Noteholder's Note and (ii) the
applicable Note Pool Factor. A
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Certificateholder's portion of the aggregate outstanding Certificate Balance for
the related class of Certificates is the product of (a) the original
denomination of such Certificateholder's Certificate and (b) the applicable
Certificate Pool Factor.
Unless otherwise provided in the related Prospectus Supplement with respect
to each Trust, the Noteholders will receive reports on or about each Payment
Date concerning payments received on the Receivables, the Pool Balance (as such
term is defined in the related Prospectus Supplement, the "Pool Balance"), each
Note Pool Factor and various other items of information, and the
Certificateholders will receive reports on or about each Distribution Date
concerning payments received on the Receivables, the Pool Balance, each
Certificate Pool Factor and various other items of information. In addition,
Securityholders of record during any calendar year will be furnished information
for tax reporting purposes not later than the latest date permitted by law. See
"Certain Information Regarding the Securities -- Reports to Securityholders".
USE OF PROCEEDS
Unless otherwise provided in the related Prospectus Supplement, the net
proceeds from the sale of the Securities of a given series will be applied by
the applicable Trust (i) to the purchase of the Receivables from the Seller,
(ii) to make the initial deposit into the Reserve Account, if any, and (iii) to
make the deposit of the Pre-Funded Amount into the Pre-Funding Account, if any.
Unless otherwise specified in the related Prospectus Supplement, the Seller will
use that portion of such net proceeds paid to it with respect to any such Trust
for general corporate purposes.
THE SELLER AND THE SERVICER
THE SELLER
The Seller is a financial services organization, all of the common stock of
which is owned by Chrysler. The Seller, a Michigan corporation, is the
continuing corporation resulting from a merger on June 1, 1967, of a financial
services subsidiary of Chrysler into a newly acquired, previously nonaffiliated
finance company incorporated in 1926. The Seller is engaged in automotive
retail, wholesale and fleet financing, servicing commercial leases and loans,
secured small business financing, and property, casualty and other insurance and
automotive dealership facility development and management. The Seller's business
is substantially dependent upon the operations of Chrysler. In particular, lower
levels of production and sale of Chrysler's automotive products could result in
a reduction in the level of finance and insurance operations of the Seller. See
"Special Considerations -- Trust's Relationship to the Seller and Chrysler
Credit Corporation, Financial Condition of Chrysler Corporation" in the related
Prospectus Supplement. The related Prospectus Supplement will set forth certain
additional information with respect to the Seller. The Seller's executive
offices are located at 27777 Franklin Road, Southfield, Michigan 48034-8286, and
its telephone number is (313) 948-3060.
The Seller will warrant to each Trust in the related Sale and Servicing
Agreement that the sale of the applicable Receivables by the Seller to such
Trust is a valid sale of such Receivables to such Trust. In addition, the Seller
and such Trust will treat the transactions described herein and in the related
Prospectus Supplement as a sale of such Receivables to such Trust and the Seller
will take all actions that are required to perfect the Trust's ownership
interest in such Receivables. Notwithstanding the foregoing, if the Seller were
to become a debtor in a bankruptcy case and a creditor or trustee in bankruptcy
of such debtor or such debtor itself were to take the position that the sale of
Receivables to a Trust should instead be treated as a pledge of such Receivables
to secure a borrowing of such debtor, then delays in payments of collections of
such Receivables 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 a Trust is treated as a pledge instead
of a sale, a tax or government lien on the property of the Seller arising before
the transfer of Receivables to such Trust may have priority over such Trust's
interest in such Receivables. If the transactions contemplated herein are
treated as a sale, the Receivables would not be part of the Seller's bankruptcy
estate and would not be available to the Seller's creditors.
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THE SERVICER
CCC, a wholly owned subsidiary of the Seller, provides retail, wholesale
and lease financing services to automobile dealers and their customers
throughout the United States. The related Prospectus Supplement will set forth
certain additional information with respect to the Servicer.
DESCRIPTION OF THE NOTES
GENERAL
With respect to each Trust, one or more classes of Notes of a given series
will be issued pursuant to the terms of an Indenture, a form of which has been
filed as an exhibit to the Registration Statement of which this Prospectus forms
a part. The following summary does not purport to be complete and is subject to,
and is qualified in its entirety by reference to, all the provisions of the
Notes and the Indenture.
Unless otherwise specified in the related Prospectus Supplement, each class
of Notes will initially be represented by one or more Notes, in each case
registered in the name of the nominee of DTC (together with any successor
depository selected by the Trust, the "Depository") except as set forth below.
Unless otherwise specified in the related Prospectus Supplement, the Notes will
be available for purchase in denominations of $1,000 and integral multiples
thereof in book-entry form only. The Seller has been informed by DTC that DTC's
nominee will be Cede, unless another nominee is specified in the related
Prospectus Supplement. Accordingly, such nominee is expected to be the holder of
record of the Notes of each class. Unless and until Definitive Notes are issued
under the limited circumstances described herein or in the related Prospectus
Supplement, no Noteholder will be entitled to receive a physical certificate
representing a Note. All references herein and in the related Prospectus
Supplement to actions by Noteholders refer to actions taken by DTC upon
instructions from its participating organizations (the "Participants") and all
references herein and in the related Prospectus Supplement to distributions,
notices, reports and statements to Noteholders refer to distributions, notices,
reports and statements to DTC or its nominee, as the registered holder of the
Notes, as the case may be, for distribution to Noteholders in accordance with
DTC's procedures with respect thereto. See "Certain Information Regarding the
Securities -- Book-Entry Registration" and "-- Definitive Securities".
PRINCIPAL AND INTEREST ON THE NOTES
The timing and priority of payment, seniority, allocations of losses,
Interest Rate and amount of or method of determining payments of principal and
interest on each class of Notes of a given series will be described in the
related Prospectus Supplement. The right of holders of any class of Notes to
receive payments of principal and interest may be senior or subordinate to the
rights of holders of any other class or classes of Notes of such series, as
described in the related Prospectus Supplement. Unless otherwise provided in the
related Prospectus Supplement, payments of interest on the Notes of such series
will be made prior to payments of principal thereon. To the extent provided in
the related Prospectus Supplement, a series may include one or more classes of
Strip Notes entitled to (i) principal payments with disproportionate, nominal or
no interest payments or (ii) interest payments with disproportionate, nominal or
no principal payments. Each class of Notes may have a different Interest Rate,
which may be a fixed, variable or adjustable Interest Rate (and which may be
zero for certain classes of Strip Notes), or any combination of the foregoing.
The related Prospectus Supplement will specify the Interest Rate for each class
of Notes of a given series or the method for determining such Interest Rate. See
also "Certain Information Regarding the Securities -- Fixed Rate Securities" and
"-- Floating Rate Securities". One or more classes of Notes of a series may be
redeemable in whole or in part under the circumstances specified in the related
Prospectus Supplement, including at the end of the Funding Period (if any) or as
a result of the Servicer's exercising its option to purchase the related
Receivables Pool.
To the extent specified in any Prospectus Supplement, one or more classes
of Notes of a given series may have fixed principal payment schedules, as set
forth in such Prospectus Supplement; Noteholders of such Notes would be entitled
to receive as payments of principal on any given Payment Date the applicable
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amounts set forth on such schedule with respect to such Notes, in the manner and
to the extent set forth in the related Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, payments
to Noteholders of all classes within a series in respect of interest will have
the same priority. Under certain circumstances, the amount available for such
payments could be less than the amount of interest payable on the Notes on any
of the dates specified for payments in the related Prospectus Supplement (each,
a "Payment Date", which may be the same date as each Distribution Date as
specified in the related Prospectus Supplement), in which case each class of
Noteholders will receive its ratable share (based upon the aggregate amount of
interest due to such class of Noteholders) of the aggregate amount available to
be distributed in respect of interest on the Notes of such series. See
"Description of the Transfer and Servicing Agreements -- Distributions" and
"-- Credit and Cash Flow Enhancement".
In the case of a series of Notes which includes two or more classes of
Notes, the sequential order and priority of payment in respect of principal and
interest, and any schedule or formula or other provisions applicable to the
determination thereof, of each such class will be set forth in the related
Prospectus Supplement. Payments in respect of principal and interest of any
class of Notes will be made on a pro rata basis among all the Noteholders of
such class.
THE INDENTURE
Modification of Indenture. With respect to each Trust, with the consent of
the holders of a majority of the outstanding Notes of the related series, the
Trust and the Indenture Trustee may execute a supplemental indenture to add
provisions to, change in any manner or eliminate any provisions of, the related
Indenture, or modify (except as provided below) in any manner the rights of the
related Noteholders.
Unless otherwise specified in the related Prospectus Supplement with
respect to a series of Notes, without the consent of the holder of each such
outstanding Note affected thereby, however, no supplemental indenture will: (i)
change the due date of any installment of principal of or interest on any such
Note or reduce the principal amount thereof, the interest rate specified thereon
or the redemption price with respect thereto or change any place of payment
where or the coin or currency in which any such Note or any interest thereon is
payable; (ii) impair the right to institute suit for the enforcement of certain
provisions of the related Indenture regarding payment; (iii) reduce the
percentage of the aggregate amount of the outstanding Notes of such series, the
consent of the holders of which is required for any such supplemental indenture
or the consent of the holders of which is required for any waiver of compliance
with certain provisions of the related Indenture or of certain defaults
thereunder and their consequences as provided for in such Indenture; (iv) modify
or alter the provisions of the related Indenture regarding the voting of Notes
held by the applicable Trust, any other obligor on such Notes, the Seller or an
affiliate of any of them; (v) reduce the percentage of the aggregate outstanding
amount of such Notes, the consent of the holders of which is required to direct
the related Indenture Trustee to sell or liquidate the Receivables if the
proceeds of such sale would be insufficient to pay the principal amount and
accrued but unpaid interest on the outstanding Notes of such series; (vi)
decrease the percentage of the aggregate principal amount of such Notes required
to amend the sections of the related Indenture which specify the applicable
percentage of aggregate principal amount of the Notes of such series necessary
to amend such Indenture or certain other related agreements; or (vii) permit the
creation of any lien ranking prior to or on a parity with the lien of the
related Indenture with respect to any of the collateral for such Notes or,
except as otherwise permitted or contemplated in such Indenture, terminate the
lien of such Indenture on any such collateral or deprive the holder of any such
Note of the security afforded by the lien of such Indenture.
Unless otherwise provided in the applicable Prospectus Supplement, the
Trust and the applicable Indenture Trustee may also enter into supplemental
indentures, without obtaining the consent of the Noteholders of the related
series, for the purpose of, among other things, adding any provisions to or
changing in any manner or eliminating any of the provisions of the related
Indenture or of modifying in any manner the rights of such Noteholders; provided
that such action will not materially and adversely affect the interest of any
such Noteholder.
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Events of Default; Rights upon Event of Default. With respect to the Notes
of a given series, unless otherwise specified in the related Prospectus
Supplement, "Events of Default" under the related Indenture will consist of: (i)
a default for five days or more in the payment of any interest on any such Note;
(ii) a default in the payment of the principal of or any installment of the
principal of any such Note when the same becomes due and payable; (iii) a
default in the observance or performance of any covenant or agreement of the
applicable Trust made in the related Indenture and the continuation of any such
default for a period of 30 days after notice thereof is given to such Trust by
the applicable Indenture Trustee or to such Trust and such Indenture Trustee by
the holders of at least 25% in principal amount of such Notes then outstanding;
(iv) any representation or warranty made by such Trust in the related Indenture
or in any certificate delivered pursuant thereto or in connection therewith
having been incorrect in a material respect as of the time made, and such breach
not having been cured within 30 days after notice thereof is given to such Trust
by the applicable Indenture Trustee or to such Trust and such Indenture Trustee
by the holders of at least 25% in principal amount of such Notes then
outstanding; or (v) certain events of bankruptcy, insolvency, receivership or
liquidation of the applicable Trust. However, the amount of principal required
to be paid to Noteholders of such series under the related Indenture will
generally be limited to amounts available to be deposited in the applicable Note
Distribution Account. Therefore, unless otherwise specified in the related
Prospectus Supplement, the failure to pay principal on a class of Notes
generally will not result in the occurrence of an Event of Default until the
final scheduled Payment Date for such class of Notes.
If an Event of Default should occur and be continuing with respect to the
Notes of any series, the related Indenture Trustee or holders of a majority in
principal amount of such Notes then outstanding may declare the principal of
such Notes to be immediately due and payable. Unless otherwise specified in the
related Prospectus Supplement, such declaration may, under certain
circumstances, be rescinded by the holders of a majority in principal amount of
such Notes then outstanding.
If the Notes of any series are due and payable following an Event of
Default with respect thereto, the related Indenture Trustee may institute
proceedings to collect amounts due or foreclose on Trust property, exercise
remedies as a secured party, sell the related Receivables or elect to have the
applicable Trust maintain possession of such Receivables and continue to apply
collections on such Receivables as if there had been no declaration of
acceleration. Unless otherwise specified in the related Prospectus Supplement,
however, such Indenture Trustee is prohibited from selling the related
Receivables following an Event of Default, other than a default in the payment
of any principal of or a default for five days or more in the payment of any
interest on any Note of such series, unless (i) the holders of all such
outstanding Notes consent to such sale, (ii) the proceeds of such sale are
sufficient to pay in full the principal of and the accrued interest on such
outstanding Notes at the date of such sale or (iii) such Indenture Trustee
determines that the proceeds of Receivables would not be sufficient on an
ongoing basis to make all payments on such Notes as such payments would have
become due if such obligations had not been declared due and payable, and such
Indenture Trustee obtains the consent of the holders of 66 2/3% of the aggregate
outstanding amount of such Notes.
Subject to the provisions of the applicable Indenture relating to the
duties of the related Indenture Trustee, if an Event of Default occurs and is
continuing with respect to a series of Notes, such Indenture Trustee will be
under no obligation to exercise any of the rights or powers under such Indenture
at the request or direction of any of the holders of such Notes, if such
Indenture Trustee reasonably believes it will not be adequately indemnified
against the costs, expenses and liabilities which might be incurred by it in
complying with such request. Subject to the provisions for indemnification and
certain limitations contained in the related Indenture, the holders of a
majority in principal amount of the outstanding Notes of a given series will
have the right to direct the time, method and place of conducting any proceeding
or any remedy available to the applicable Indenture Trustee, and the holders of
a majority in principal amount of such Notes then outstanding may, in certain
cases, waive any default with respect thereto, except a default in the payment
of principal or interest or a default in respect of a covenant or provision of
such Indenture that cannot be modified without the waiver or consent of all the
holders of such outstanding Notes.
Unless otherwise specified in the related Prospectus Supplement, no holder
of a Note of any series will have the right to institute any proceeding with
respect to the related Indenture, unless (i) such holder
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previously has given to the applicable Indenture Trustee written notice of a
continuing Event of Default, (ii) the holders of not less than 25% in principal
amount of the outstanding Notes of such series have made written request to such
Indenture Trustee to institute such proceeding in its own name as Indenture
Trustee, (iii) such holder or holders have offered such Indenture Trustee
reasonable indemnity, (iv) such Indenture Trustee has for 60 days failed to
institute such proceeding and (v) no direction inconsistent with such written
request has been given to such Indenture Trustee during such 60-day period by
the holders of a majority in principal amount of such outstanding Notes.
In addition, each Indenture Trustee and the related Noteholders, by
accepting the related Notes, will covenant that they will not at any time
institute against the applicable Trust any bankruptcy, reorganization or other
proceeding under any federal or state bankruptcy or similar law.
With respect to any Trust, neither the related Indenture Trustee nor the
related Owner Trustee in its individual capacity, nor any holder of a
Certificate representing an ownership interest in such Trust nor any of their
respective owners, beneficiaries, agents, officers, directors, employees,
affiliates, successors or assigns will, in the absence of an express agreement
to the contrary, be personally liable for the payment of the principal of or
interest on the related Notes or for the agreements of such Trust contained in
the applicable Indenture.
Certain Covenants. Each Indenture will provide that the related Trust may
not consolidate with or merge into any other entity, unless (i) the entity
formed by or surviving such consolidation or merger is organized under the laws
of the United States, any state or the District of Columbia, (ii) such entity
expressly assumes such Trust's obligation to make due and punctual payments upon
the Notes of the related series and the performance or observance of every
agreement and covenant of such Trust under the Indenture, (iii) no Event of
Default shall have occurred and be continuing immediately after such merger or
consolidation, (iv) such Trust has been advised that the rating of the Notes or
the Certificates of such series then in effect would not be reduced or withdrawn
by the Rating Agencies as a result of such merger or consolidation and (v) such
Trust has received an opinion of counsel to the effect that such consolidation
or merger would have no material adverse tax consequence to the Trust or to any
related Noteholder or Certificateholder.
Each Trust will not, among other things, (i) except as expressly permitted
by the applicable Indenture, the applicable Transfer and Servicing Agreements or
certain related documents with respect to such Trust (collectively, the "Related
Documents"), sell, transfer, exchange or otherwise dispose of any of the assets
of such Trust, (ii) claim any credit on or make any deduction from the principal
and interest payable in respect of the Notes of the related series (other than
amounts withheld under the Code or applicable state law) or assert any claim
against any present or former holder of such Notes because of the payment of
taxes levied or assessed upon such Trust, (iii) dissolve or liquidate in whole
or in part, (iv) permit the validity or effectiveness of the related Indenture
to be impaired or permit any person to be released from any covenants or
obligations with respect to such Notes under such Indenture except as may be
expressly permitted thereby or (v) permit any lien, charge, excise, claim,
security interest, mortgage or other encumbrance to be created on or extend to
or otherwise arise upon or burden the assets of such Trust or any part thereof,
or any interest therein or the proceeds thereof.
No Trust may engage in any activity other than as specified under the
section of the related Prospectus Supplement entitled "The Trust". No Trust will
incur, assume or guarantee any indebtedness other than indebtedness incurred
pursuant to the related Notes and the related Indenture, pursuant to any
Advances made to it by the Servicer or otherwise in accordance with the Related
Documents.
Annual Compliance Statement. Each Trust will be required to file annually
with the related Indenture Trustee a written statement as to the fulfillment of
its obligations under the Indenture.
Indenture Trustee's Annual Report. The Indenture Trustee for each Trust
will be required to mail each year to all related Noteholders a brief report
relating to its eligibility and qualification to continue as Indenture Trustee
under the related Indenture, any amounts advanced by it under the Indenture, the
amount, interest rate and maturity date of certain indebtedness owing by such
Trust to the applicable Indenture Trustee in its individual capacity, the
property and funds physically held by such Indenture Trustee as such and any
action taken by it that materially affects the related Notes and that has not
been previously reported.
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Satisfaction and Discharge of Indenture. An Indenture will be discharged
with respect to the collateral securing the related Notes upon the delivery to
the related Indenture Trustee for cancellation of all such Notes or, with
certain limitations, upon deposit with such Indenture Trustee of funds
sufficient for the payment in full of all such Notes.
THE INDENTURE TRUSTEE
The Indenture Trustee for a series of Notes will be specified in the
related Prospectus Supplement. The Indenture Trustee for any series may resign
at any time, in which event the Issuer will be obligated to appoint a successor
trustee for such series. The Issuer may also remove any such Indenture Trustee
if such Indenture Trustee ceases to be eligible to continue as such under the
related Indenture or if such Indenture Trustee becomes insolvent. In such
circumstances, the Issuer will be obligated to appoint a successor trustee for
the applicable series of Notes. Any resignation or removal of the Indenture
Trustee and appointment of a successor trustee for any series of Notes does not
become effective until acceptance of the appointment by the successor trustee
for such series.
DESCRIPTION OF THE CERTIFICATES
GENERAL
With respect to each Trust, one or more classes of Certificates of a given
series will be issued pursuant to the terms of a Trust Agreement, a form of
which has been filed as an exhibit to the Registration Statement of which this
Prospectus forms a part. The following summary does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, all the
provisions of the Certificates and the Trust Agreement.
Unless otherwise specified in the related Prospectus Supplement and except
for the Certificates of a given series purchased by the applicable Company, each
class of Certificates will initially be represented by a single Certificate
registered in the name of the Depository, except as set forth below. Unless
otherwise specified in the related Prospectus Supplement and except for the
Certificates of a given series purchased by the applicable Company, the
Certificates will be available for purchase in minimum denominations of $20,000
and integral multiples of $1,000 in excess thereof in book-entry form only. The
Seller has been informed by DTC that DTC's nominee will be Cede, unless another
nominee is specified in the related Prospectus Supplement. Accordingly, such
nominee is expected to be the holder of record of the Certificates of any series
that are not purchased by the related Company. Unless and until Definitive
Certificates are issued under the limited circumstances described herein or in
the related Prospectus Supplement, no Certificateholder (other than the
applicable Company) will be entitled to receive a physical certificate
representing a Certificate. All references herein and in the related Prospectus
Supplement to actions by Certificateholders refer to actions taken by DTC upon
instructions from the Participants and all references herein and in the related
Prospectus Supplement to distributions, notices, reports and statements to
Certificateholders refer to distributions, notices, reports and statements to
DTC or its nominee, as the registered holder of the Certificates, as the case
may be, for distribution to Certificateholders in accordance with DTC's
procedures with respect thereto. See "Certain Information Regarding the
Securities -- Book-Entry Registration" and "-- Definitive Securities".
Certificates of a given series owned by the applicable Company or its affiliates
will be entitled to equal and proportionate benefits under the applicable Trust
Agreement, except that such Certificates will be deemed not to be outstanding
for the purpose of determining whether the requisite percentage of
Certificateholders have given any request, demand, authorization, direction,
notice, consent or other action under the Related Documents (other than the
commencement by the related Trust of a voluntary proceeding in bankruptcy as
described under "Description of the Transfer and Servicing
Agreements -- Insolvency Event").
DISTRIBUTIONS OF PRINCIPAL AND INTEREST
The timing and priority of distributions, seniority, allocations of losses,
Pass Through Rate and amount of or method of determining distributions with
respect to principal and interest of each class of Certificates of a given
series will be described in the related Prospectus Supplement. Distributions of
interest on such Certificates will be made on the dates specified in the related
Prospectus Supplement (each, a "Distribution
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Date") and will be made prior to distributions with respect to principal of such
Certificates. To the extent provided in the related Prospectus Supplement, a
series may include one or more classes of Strip Certificates entitled to (i)
distributions in respect of principal with disproportionate, nominal or no
interest distributions or (ii) interest distributions with disproportionate,
nominal or no distributions in respect of principal. Each class of Certificates
may have a different Pass Through Rate, which may be a fixed, variable or
adjustable Pass Through Rate (and which may be zero for certain classes of Strip
Certificates) or any combination of the foregoing. The related Prospectus
Supplement will specify the Pass Through Rate for each class of Certificates of
a given series or the method for determining such Pass Through Rate. See also
"Certain Information Regarding the Securities -- Fixed Rate Securities" and
"-- Floating Rate Securities". Unless otherwise provided in the related
Prospectus Supplement, distributions in respect of the Certificates of a given
series may be subordinate to payments in respect of the Notes of such series as
more fully described in the related Prospectus Supplement. Distributions in
respect of interest on and principal of any class of Certificates will be made
on a pro rata basis among all the Certificateholders of such class.
In the case of a series of Certificates which includes two or more classes
of Certificates, the timing, sequential order, priority of payment or amount of
distributions in respect of interest and principal, and any schedule or formula
or other provisions applicable to the determination thereof, of each such class
shall be as set forth in the related Prospectus Supplement.
CERTAIN INFORMATION REGARDING THE SECURITIES
FIXED RATE SECURITIES
Each class of Securities (other than certain classes of Strip Notes or
Strip Certificates) may bear interest at a fixed rate per annum ("Fixed Rate
Securities") or at a variable or adjustable rate per annum ("Floating Rate
Securities"), as more fully described below and in the applicable Prospectus
Supplement. Each class of Fixed Rate Securities will bear interest at the
applicable per annum Interest Rate or Pass Through Rate, as the case may be,
specified in the applicable Prospectus Supplement. Unless otherwise set forth in
the applicable Prospectus Supplement, interest on each class of Fixed Rate
Securities will be computed on the basis of a 360-day year of twelve 30-day
months. See "Description of the Notes -- Principal and Interest on the Notes"
and "Description of the Certificates -- Distributions of Principal and
Interest".
FLOATING RATE SECURITIES
Each class of Floating Rate Securities will bear interest for each
applicable Interest Reset Period (as such term is defined in the related
Prospectus Supplement with respect to a class of Floating Rate Securities, the
"Interest Reset Period") at a rate per annum determined by reference to an
interest rate basis (the "Base Rate"), plus or minus the Spread, if any, or
multiplied by the Spread Multiplier, if any, in each case as specified in the
related Prospectus Supplement. The "Spread" is the number of basis points (one
basis point equals one one-hundredth of a percentage point) that may be
specified in the applicable Prospectus Supplement as being applicable to such
class, and the "Spread Multiplier" is the percentage that may be specified in
the applicable Prospectus Supplement as being applicable to such class.
The applicable Prospectus Supplement will designate one of the following
Base Rates as applicable to a given Floating Rate Security: (i) LIBOR (a "LIBOR
Security"), (ii) the Commercial Paper Rate (a "Commercial Paper Rate Security"),
(iii) the Treasury Rate (a "Treasury Rate Security"), (iv) the Federal Funds
Rate (a "Federal Funds Rate Security"), (v) the CD Rate (a "CD Rate Security")
or (vi) such other Base Rate as is set forth in such Prospectus Supplement. The
"Index Maturity" for any class of Floating Rate Securities is the period of
maturity of the instrument or obligation from which the Base Rate is calculated.
"H.15(519)" means the publication entitled "Statistical Release H.15(519),
Selected Interest Rates", or any successor publication, published by the Board
of Governors of the Federal Reserve System. "Composite Quotations" means the
daily statistical release entitled "Composite 3:30 p.m. Quotations for U.S.
Government Securities" published by the Federal Reserve Bank of New York.
"Interest Reset Date" will be the first day of the applicable Interest Reset
Period, or such other day as may be specified in the related Prospectus
Supplement with respect to a class of Floating Rate Securities.
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As specified in the applicable Prospectus Supplement, Floating Rate
Securities of a given class may also have either or both of the following (in
each case expressed as a rate per annum): (i) a maximum limitation, or ceiling,
on the rate at which interest may accrue during any interest period and (ii) a
minimum limitation, or floor, on the rate at which interest may accrue during
any interest period. In addition to any maximum interest rate that may be
applicable to any class of Floating Rate Securities, the interest rate
applicable to any class of Floating Rate Securities will in no event be higher
than the maximum rate permitted by applicable law, as the same may be modified
by United States law of general application.
Each Trust with respect to which a class of Floating Rate Securities will
be issued will appoint, and enter into agreements with, a calculation agent
(each, a "Calculation Agent") to calculate interest rates on each such class of
Floating Rate Securities issued with respect thereto. The applicable Prospectus
Supplement will set forth the identity of the Calculation Agent for each such
class of Floating Rate Securities of a given series, which may be either the
related Owner Trustee or Indenture Trustee with respect to such series. All
determinations of interest by the Calculation Agent shall, in the absence of
manifest error, be conclusive for all purposes and binding on the holders of
Floating Rate Securities of a given class. Unless otherwise specified in the
applicable Prospectus Supplement, all percentages resulting from any calculation
of the rate of interest on a Floating Rate Security will be rounded, if
necessary, to the nearest 1/100,000 of 1% (.0000001), with five one-millionths
of a percentage point rounded upward.
CD Rate Securities. Each CD Rate Security will bear interest for each
Interest Reset Period at the interest rate calculated with reference to the CD
Rate and the Spread or Spread Multiplier, if any, specified in such Security and
in the applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, the "CD
Rate" for each Interest Reset Period shall be the rate as of the second business
day prior to the Interest Reset Date for such Interest Reset Period (a "CD Rate
Determination Date") for negotiable certificates of deposit having the Index
Maturity designated in the applicable Prospectus Supplement as published in
H.15(519) under the heading "CDs (Secondary Market)". In the event that such
rate is not published prior to 3:00 p.m., New York City time, on the Calculation
Date (as defined below) pertaining to such CD Rate Determination Date, then the
"CD Rate" for such Interest Reset Period will be the rate on such CD Rate
Determination Date for negotiable certificates of deposit of the Index Maturity
designated in the applicable Prospectus Supplement as published in Composite
Quotations under the heading "Certificates of Deposit". If by 3:00 p.m., New
York City time, on such Calculation Date such rate is not yet published in
either H.15(519) or Composite Quotations, then the "CD Rate" for such Interest
Reset Period will be calculated by the Calculation Agent for such CD Rate
Security and will be the arithmetic mean of the secondary market offered rates
as of 10:00 a.m., New York City time, on such CD Rate Determination Date, of
three leading nonbank dealers in negotiable U.S. dollar certificates of deposit
in The City of New York selected by the Calculation Agent for such CD Rate
Security for negotiable certificates of deposit of major United States money
center banks of the highest credit standing (in the market for negotiable
certificates of deposit) with a remaining maturity closest to the Index Maturity
designated in the related Prospectus Supplement in a denomination of $5,000,000;
provided, however, that if the dealers selected as aforesaid by such Calculation
Agent are not quoting offered rates as mentioned in this sentence, the "CD Rate"
for such Interest Reset Period will be the same as the CD Rate for the
immediately preceding Interest Reset Period.
The "Calculation Date" pertaining to any CD Rate Determination Date shall
be the first to occur of (a) the tenth calendar day after such CD Rate
Determination Date or, if such day is not a business day, the next succeeding
business day or (b) the second business day preceding the date any payment is
required to be made for any period following the applicable Interest Reset Date.
Commercial Paper Rate Securities. Each Commercial Paper Rate Security will
bear interest for each Interest Reset Period at the interest rate calculated
with reference to the Commercial Paper Rate and the Spread or Spread Multiplier,
if any, specified in such Security and in the applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, the
"Commercial Paper Rate" for each Interest Reset Period will be determined by the
Calculation Agent for such Commercial Paper Rate Security as of the second
business day prior to the Interest Reset Date for such Interest Reset Period (a
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"Commercial Paper Rate Determination Date") and shall be the Money Market Yield
(as defined below) on such Commercial Paper Rate Determination Date of the rate
for commercial paper having the Index Maturity specified in the applicable
Prospectus Supplement, as such rate shall be published in H.15(519) under the
heading "Commercial Paper". In the event that such rate is not published prior
to 3:00 p.m., New York City time, on the Calculation Date (as defined below)
pertaining to such Commercial Paper Rate Determination Date, then the
"Commercial Paper Rate" for such Interest Reset Period shall be the Money Market
Yield on such Commercial Paper Rate Determination Date of the rate for
commercial paper of the specified Index Maturity as published in Composite
Quotations under the heading "Commercial Paper". If by 3:00 p.m., New York City
time, on such Calculation Date such rate is not yet published in either
H.15(519) or Composite Quotations, then the "Commercial Paper Rate" for such
Interest Reset Period shall be the Money Market Yield of the arithmetic mean of
the offered rates, as of 11:00 a.m., New York City time, on such Commercial
Paper Rate Determination Date of three leading dealers of commercial paper in
The City of New York selected by the Calculation Agent for such Commercial Paper
Rate Security for commercial paper of the specified Index Maturity placed for an
industrial issuer whose bonds are rated "AA" or the equivalent by a nationally
recognized rating agency; provided, however, that if the dealers selected as
aforesaid by such Calculation Agent are not quoting offered rates as mentioned
in this sentence, the "Commercial Paper Rate" for such Interest Reset Period
will be the same as the Commercial Paper Rate for the immediately preceding
Interest Reset Period.
"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
D X 360
Money Market Yield = -------------- X 100
360 - (D X M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the specified Index Maturity.
The "Calculation Date" pertaining to any Commercial Paper Rate
Determination Date shall be the first to occur of (a) the tenth calendar day
after such Commercial Paper Rate Determination Date or, if such day is not a
business day, the next succeeding business day or (b) the second business day
preceding the date any payment is required to be made for any period following
the applicable Interest Reset Date.
Federal Funds Rate Securities. Each Federal Funds Rate Security will bear
interest for each Interest Reset Period at the interest rate calculated with
reference to the Federal Funds Rate and the Spread or Spread Multiplier, if any,
specified in such Security and in the applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, the
"Federal Funds Rate" for each Interest Reset Period shall be the effective rate
on the Interest Reset Date for such Interest Reset Period (a "Federal Funds Rate
Determination Date") for Federal Funds as published in H.15(519) under the
heading "Federal Funds (Effective)". In the event that such rate is not
published prior to 3:00 p.m., New York City time, on the Calculation Date (as
defined below) pertaining to such Federal Funds Rate Determination Date, the
"Federal Funds Rate" for such Interest Reset Period shall be the rate on such
Federal Funds Rate Determination Date as published in Composite Quotations under
the heading "Federal Funds/Effective Rate". If by 3:00 p.m., New York City time,
on such Calculation Date such rate is not yet published in either H.15(519) or
Composite Quotations, then the "Federal Funds Rate" for such Interest Reset
Period shall be the rate on such Federal Funds Rate Determination Date made
publicly available by the Federal Reserve Bank of New York which is equivalent
to the rate which appears in H.15(519) under the heading "Federal Funds
(Effective)"; provided, however, that if such rate is not made publicly
available by the Federal Reserve Bank of New York by 3:00 p.m., New York City
time, on such Calculation Date, the "Federal Funds Rate" for such Interest Reset
Period will be the same as the Federal Funds Rate in effect for the immediately
preceding Interest Reset Period. In the case of a Federal Funds Rate Security
that resets daily, the interest rate on such Security for the period from and
including a Monday to but excluding the succeeding Monday will be reset by the
Calculation Agent for such Security on such second Monday (or, if not a business
day, on the next succeeding business day) to a rate equal to the average of the
Federal Funds Rates in effect with respect to each such day in such week.
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The "Calculation Date" pertaining to any Federal Funds Rate Determination
Date shall be the next succeeding business day.
LIBOR Securities. Each LIBOR Security will bear interest for each Interest
Reset Period at the interest rate calculated with reference to LIBOR and the
Spread or Spread Multiplier, if any, specified in such Security and in the
applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, with
respect to LIBOR indexed to the offered rates for U.S. dollar deposits, "LIBOR"
for each Interest Reset Period will be determined by the Calculation Agent for
any LIBOR Security as follows:
(i) On the second London Banking Day prior to the Interest Reset Date
for such Interest Reset Period (a "LIBOR Determination Date"), the
Calculation Agent for such LIBOR Security will determine the arithmetic
mean of the offered rates for deposits in U.S. dollars for the period of
the Index Maturity specified in the applicable Prospectus Supplement,
commencing on such Interest Reset Date, which appear on the Reuters Screen
LIBO Page at approximately 11:00 a.m., London time, on such LIBOR
Determination Date. For purposes of calculating LIBOR, "London Banking Day"
means any business day on which dealings in deposits in United States
dollars are transacted in the London interbank market and "Reuters Screen
LIBO Page" means the display designated as page "LIBO" on the Reuters
Monitor Money Rates Service (or such other page as may replace the LIBO
page on that service for the purpose of displaying London interbank offered
rates of major banks). If at least two such offered rates appear on the
Reuters Screen LIBO Page, "LIBOR" for such Interest Reset Period will be
the arithmetic mean of such offered rates as determined by the Calculation
Agent for such LIBOR Security.
(ii) If fewer than two offered rates appear on the Reuters Screen LIBO
Page on such LIBOR Determination Date, the Calculation Agent for such LIBOR
Security will request the principal London offices of each of four major
banks in the London interbank market selected by such Calculation Agent to
provide such Calculation Agent with its offered quotations for deposits in
U.S. dollars for the period of the specified Index Maturity, commencing on
such Interest Reset Date, to prime banks in the London interbank market at
approximately 11:00 a.m., London time, on such LIBOR Determination Date and
in a principal amount equal to an amount of not less than $1,000,000 that
is representative of a single transaction in such market at such time. If
at least two such quotations are provided, "LIBOR" for such Interest Reset
Period will be the arithmetic mean of such quotations. If fewer than two
such quotations are provided, "LIBOR" for such Interest Reset Period will
be the arithmetic mean of rates quoted by three major banks in The City of
New York selected by the Calculation Agent for such LIBOR Security at
approximately 11:00 a.m., New York City time, on such LIBOR Determination
Date for loans in U.S. dollars to leading European banks, for the period of
the specified Index Maturity, commencing on such Interest Reset Date, and
in a principal amount equal to an amount of not less than $1,000,000 that
is representative of a single transaction in such market at such time;
provided, however, that if the banks selected as aforesaid by such
Calculation Agent are not quoting rates as mentioned in this sentence,
"LIBOR" for such Interest Reset Period will be the same as LIBOR for the
immediately preceding Interest Reset Period.
Treasury Rate Securities. Each Treasury Rate Security will bear interest
for each Interest Reset Period at the interest rate calculated with reference to
the Treasury Rate and the Spread or Spread Multiplier, if any, specified in such
Security and in the applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, the
"Treasury Rate" for each Interest Period will be the rate for the auction held
on the Treasury Rate Determination Date (as defined below) for such Interest
Reset Period of direct obligations of the United States ("Treasury bills")
having the Index Maturity specified in the applicable Prospectus Supplement, as
such rate shall be published in H.15(519) under the heading "U.S. Government
Securities -- Treasury bills -- auction average (investment)" or, in the event
that such rate is not published prior to 3:00 p.m., New York City time, on the
Calculation Date (as defined below) pertaining to such Treasury Rate
Determination Date, the auction average rate (expressed as a bond equivalent on
the basis of a year of 365 or 366 days, as applicable, and
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applied on a daily basis) on such Treasury Rate Determination Date as otherwise
announced by the United States Department of the Treasury. In the event that the
results of the auction of Treasury bills having the specified Index Maturity are
not published or reported as provided above by 3:00 p.m., New York City time, on
such Calculation Date, or if no such auction is held on such Treasury Rate
Determination Date, then the "Treasury Rate" for such Interest Reset Period
shall be calculated by the Calculation Agent for such Treasury Rate Security and
shall be the yield to maturity (expressed as a bond equivalent on the basis of a
year of 365 or 366 days, as applicable, and applied on a daily basis) of the
arithmetic mean of the secondary market bid rates, as of approximately 3:30
p.m., New York City time, on such Treasury Rate Determination Date, of three
leading primary United States government securities dealers selected by such
Calculation Agent for the issue of Treasury bills with a remaining maturity
closest to the specified Index Maturity; provided, however, that if the dealers
selected as aforesaid by such Calculation Agent are not quoting bid rates as
mentioned in this sentence, then the "Treasury Rate" for such Interest Reset
Period will be the same as the Treasury Rate for the immediately preceding
Interest Reset Period.
The "Treasury Rate Determination Date" for each Interest Reset Period will
be the day of the week in which the Interest Reset Date for such Interest Reset
Period falls on which Treasury bills would normally be auctioned. Treasury bills
are normally sold at auction on Monday of each week, unless that day is a legal
holiday, in which case the auction is normally held on the following Tuesday,
except that such auction may be held on the preceding Friday. If, as the result
of a legal holiday, an auction is so held on the preceding Friday, such Friday
will be the Treasury Rate Determination Date pertaining to the Interest Reset
Period commencing in the next succeeding week. If an auction date shall fall on
any day that would otherwise be an Interest Reset Date for a Treasury Rate
Security, then such Interest Reset Date shall instead be the business day
immediately following such auction date.
The "Calculation Date" pertaining to any Treasury Rate Determination Date
shall be the first to occur of (a) the tenth calendar day after such Treasury
Rate Determination Date or, if such a day is not a business day, the next
succeeding business day or (b) the second business day preceding the date any
payment is required to be made for any period following the applicable Interest
Reset Date.
INDEXED SECURITIES
To the extent so specified in any Prospectus Supplement, any class of
Securities of a given series may consist of Securities ("Indexed Securities") in
which the principal amount payable at the final scheduled Payment Date or
Distribution Date, as the case may be, for such class (the "Indexed Principal
Amount") is determined by reference to a measure (the "Index") which will be
related to (i) the difference in the rate of exchange between United States
dollars and a currency or composite currency (the "Indexed Currency") specified
in the applicable Prospectus Supplement (such Indexed Securities, "Currency
Indexed Securities"); (ii) the difference in the price of a specified commodity
(the "Indexed Commodity") on specified dates (such Indexed Securities,
"Commodity Indexed Securities"); or (iii) the difference in the level of a
specified stock index (the "Stock Index"), which may be based on U.S. or foreign
stocks, on specified dates (such Indexed Securities, "Stock Indexed
Securities"); or (iv) such other objective price or economic measures as are
described in the applicable Prospectus Supplement. The manner of determining the
Indexed Principal Amount of an Indexed Security and historical and other
information concerning the Indexed Currency, the Indexed Commodity, the Stock
Index or other price or economic measures used in such determination will be set
forth in the applicable Prospectus Supplement, together with information
concerning tax consequences to the holders of such Indexed Securities.
If the determination of the Indexed Principal Amount of an Indexed Security
is based on an Index calculated or announced by a third party and such third
party either suspends the calculation or announcement of such Index or changes
the basis upon which such Index is calculated (other than changes consistent
with policies in effect at the time such Indexed Security was issued and
permitted changes described in the applicable Prospectus Supplement), then such
Index shall be calculated for purposes of such Indexed Security by an
independent calculation agent named in the applicable Prospectus Supplement on
the same basis, and subject to the same conditions and controls, as applied to
the original third party. If for any reason such Index cannot be calculated on
the same basis and subject to the same conditions and controls as applied to the
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original third party, then the Indexed Principal Amount of such Indexed Security
shall be calculated in the manner set forth in the applicable Prospectus
Supplement. Any determination of such independent calculation agent shall in the
absence of manifest error be binding on all parties.
Unless otherwise specified in the applicable Prospectus Supplement,
interest on an Indexed Security will be payable based on the amount designated
in the applicable Prospectus Supplement as the "Face Amount" of such Indexed
Security. The applicable Prospectus Supplement will describe whether the
principal amount of the related Indexed Security, if any, that would be payable
upon redemption or repayment prior to the applicable final scheduled Payment
Date or Distribution Date, as the case may be, will be the Face Amount of such
Indexed Security, the Indexed Principal Amount of such Indexed Security at the
time of redemption or repayment or another amount described in such Prospectus
Supplement.
BOOK-ENTRY REGISTRATION
DTC is a limited purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York UCC and a "clearing agency"
registered pursuant to Section 17A of the Exchange Act. DTC was created to hold
securities for its Participants and to facilitate the clearance and settlement
of securities transactions between Participants through electronic book-entries,
thereby eliminating the need for physical movement of certificates. Participants
include securities brokers and dealers, banks, trust companies and clearing
corporations. Indirect access to the DTC system also is available to others such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly
("Indirect Participants").
Unless otherwise specified in the related Prospectus Supplement,
Securityholders that are not Participants or Indirect Participants but desire to
purchase, sell or otherwise transfer ownership of, or other interests in,
Securities may do so only through Participants and Indirect Participants. In
addition, Securityholders will receive all distributions of principal and
interest from the related Indenture Trustee or the related Owner Trustee, as
applicable (the "Applicable Trustee"), through Participants. Under a book-entry
format, Securityholders may experience some delay in their receipt of payments,
since such payments will be forwarded by the Applicable Trustee to DTC's
Nominee. DTC will forward such payments to its Participants, which thereafter
will forward them to Indirect Participants or Securityholders. Except for the
applicable Company with respect to any series of Securities, it is anticipated
that the only "Securityholder", "Noteholder" and "Certificateholder" will be
DTC's Nominee. Noteholders will not be recognized by each Indenture Trustee as
Noteholders, as such term is used in each Indenture, and Noteholders will be
permitted to exercise the rights of Noteholders only indirectly through DTC and
its Participants. Similarly, Certificateholders will not be recognized by each
Owner Trustee as Certificateholders as such term is used in each Trust
Agreement, and Certificateholders will be permitted to exercise the rights of
Certificateholders only indirectly through DTC and its Participants.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of
Securities among Participants on whose behalf it acts with respect to the
Securities and to receive and transmit distributions of principal of, and
interest on, the Securities. Participants and Indirect Participants with which
Securityholders have accounts with respect to the Securities similarly are
required to make book-entry transfers and receive and transmit such payments on
behalf of their respective Securityholders. Accordingly, although
Securityholders will not possess Securities, the Rules provide a mechanism by
which Participants will receive payments and will be able to transfer their
interests.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a
Securityholder to pledge Securities to persons or entities that do not
participate in the DTC system, or to otherwise act with respect to such
Securities, may be limited due to the lack of a physical certificate for such
Securities.
DTC has advised the Seller that it will take any action permitted to be
taken by a Noteholder under the related Indenture or a Certificateholder under
the related Trust Agreement only at the direction of one or
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more Participants to whose accounts with DTC the applicable Notes or
Certificates are credited. DTC may take conflicting actions with respect to
other undivided interests to the extent that such actions are taken on behalf of
Participants whose holdings include such undivided interests.
Except as required by law, neither the Administrator, the applicable Owner
Trustee nor the applicable Indenture Trustee will have any liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests of the Securities of any series held by DTC's Nominee, or
for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
DEFINITIVE SECURITIES
Unless otherwise specified in the related Prospectus Supplement, the Notes
and the Certificates of a given series will be issued in fully registered,
certificated form ("Definitive Notes" and "Definitive Certificates",
respectively, and collectively referred to herein as "Definitive Securities") to
Noteholders or Certificateholders or their respective nominees, rather than to
DTC or its nominee, only if (i) the related Administrator advises the Applicable
Trustee in writing that DTC is no longer willing or able to discharge properly
its responsibilities as depository with respect to such Securities and the
Administrator is unable to locate a qualified successor, (ii) the Administrator,
at its option, elects to terminate the book-entry system through DTC or (iii)
after the occurrence of an Event of Default or a Servicer Default with respect
to such Securities, holders representing at least a majority of the outstanding
principal amount of the Notes or the Certificates, as the case may be, of such
series advise the Applicable Trustee through DTC in writing that the
continuation of a book-entry system through DTC (or a successor thereto) with
respect to such Notes or Certificates is no longer in the best interest of the
holders of such Securities.
Upon the occurrence of any event described in the immediately preceding
paragraph, the Applicable Trustee will be required to notify all applicable
Securityholders of a given series through Participants of the availability of
Definitive Securities. Upon surrender by DTC of the definitive certificates
representing the corresponding Securities and receipt of instructions for
re-registration, the Applicable Trustee will reissue such Securities as
Definitive Securities to such Securityholders.
Distributions of principal of, and interest on, such Definitive Securities
will thereafter be made by the Applicable Trustee in accordance with the
procedures set forth in the related Indenture or the related Trust Agreement, as
applicable, directly to holders of Definitive Securities in whose names the
Definitive Securities were registered at the close of business on the applicable
Record Date specified for such Securities in the related Prospectus Supplement.
Such distributions will be made by check mailed to the address of such holder as
it appears on the register maintained by the Applicable Trustee. The final
payment on any such Definitive Security, however, will be made only upon
presentation and surrender of such Definitive Security at the office or agency
specified in the notice of final distribution to the applicable Securityholders.
Definitive Securities will be transferable and exchangeable at the offices
of the Applicable Trustee or of a registrar named in a notice delivered to
holders of Definitive Securities. No service charge will be imposed for any
registration of transfer or exchange, but the Applicable Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge
imposed in connection therewith.
LIST OF SECURITYHOLDERS
Unless otherwise specified in the related Prospectus Supplement with
respect to the Notes of any series, three or more holders of the Notes of such
series or one or more holders of such Notes evidencing not less than 25% of the
aggregate outstanding principal balance of such Notes may, by written request to
the related Indenture Trustee, obtain access to the list of all Noteholders
maintained by such Indenture Trustee for the purpose of communicating with other
Noteholders with respect to their rights under the related Indenture or under
such Notes. Such Indenture Trustee may elect not to afford the requesting
Noteholders access to the list of Noteholders if it agrees to mail the desired
communication or proxy, on behalf of and at the expense of the requesting
Noteholders, to all Noteholders of such series.
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Unless otherwise specified in the related Prospectus Supplement with
respect to the Certificates of any series, three or more holders of the
Certificates of such series or one or more holders of such Certificates
evidencing not less than 25% of the Certificate Balance of such Certificates
may, by written request to the related Owner Trustee, obtain access to the list
of all Certificateholders maintained by such Owner Trustee for the purpose of
communicating with other Certificateholders with respect to their rights under
the related Trust Agreement or under such Certificates.
REPORTS TO SECURITYHOLDERS
With respect to each series of Securities, on or prior to each Payment
Date, the Servicer will prepare and provide to the related Indenture Trustee a
statement to be delivered to the related Noteholders on such Payment Date and,
on or prior to each Distribution Date, the Servicer will prepare and provide to
the related Owner Trustee a statement to be delivered to the related
Certificateholders. With respect to each series of Securities, each such
statement to be delivered to Noteholders will include (to the extent applicable)
the following information (and any other information so specified in the related
Prospectus Supplement) as to the Notes of such series with respect to such
Payment Date or the period since the previous Payment Date, as applicable, and
each such statement to be delivered to Certificateholders will include (to the
extent applicable) the following information (and any other information so
specified in the related Prospectus Supplement) as to the Certificates of such
series with respect to such Distribution Date or the period since the previous
Distribution Date, as applicable:
(i) the amount of the distribution allocable to principal of each
class to such Notes and to the Certificate Balance of each class of such
Certificates;
(ii) the amount of the distribution allocable to interest on or with
respect to each class of Securities of such series;
(iii) the Pool Balance as of the close of business on the last day of
the preceding Collection Period;
(iv) the aggregate outstanding principal balance and the Note Pool
Factor for each class of such Notes, and the Certificate Balance and the
Certificate Pool Factor for each class of such Certificates, each after
giving effect to all payments reported under clause (i) above on such date;
(v) the amount of the Servicing Fee paid to the Servicer with respect
to the related Collection Period or Collection Periods, as the case may be;
(vi) the Interest Rate or Pass Through Rate for the next period for
any class of Notes or Certificates of such series with variable or
adjustable rates;
(vii) the amount of the aggregate realized losses, if any, for such
Collection Period;
(viii) the Noteholders' Interest Carryover Shortfall, the Noteholders'
Principal Carryover Shortfall, the Certificateholders' Interest Carryover
Shortfall and the Certificateholders' Principal Carryover Shortfall (each
as defined in the related Prospectus Supplement), if any, in each case as
applicable to each class of Securities, and the change in such amounts from
the preceding statement;
(ix) the aggregate Purchase Amounts for receivables, if any, that were
repurchased in such Collection Period;
(x) the balance of the Reserve Account (if any) on such date, after
giving effect to changes therein on such date;
(xi) for each such date during the Funding Period (if any), the
remaining Pre-Funded Amount; and
(xii) for the first such date that is on or immediately following the
end of the Funding Period (if any), the amount of any remaining Pre-Funded
Amount that has not been used to fund the purchase of Subsequent
Receivables and is being passed through as payments of principal on the
Securities of such series.
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Each amount set forth pursuant to subclauses (i), (ii), (v) and (viii) with
respect to the Notes or the Certificates of any series will be expressed as a
dollar amount per $1,000 of the initial principal balance of such Notes or the
initial Certificate Balance of such Certificates, as applicable.
Within the prescribed period of time for tax reporting purposes after the
end of each calendar year during the term of each Trust, the Applicable Trustee
will mail to each person who at any time during such calendar year has been a
Securityholder with respect to such Trust and received any payment thereon a
statement containing certain information for the purposes of such
Securityholder's preparation of federal income tax returns. See "Certain Federal
Income Tax Consequences".
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of each Sale and Servicing
Agreement pursuant to which a Trust will purchase Receivables from the Seller
and the Servicer will agree to service such Receivables, each Trust Agreement
pursuant to which a Trust will be created and Certificates will be issued and
each Administration Agreement pursuant to which CCC will undertake certain
administrative duties with respect to a Trust (collectively, the "Transfer and
Servicing Agreements"). Forms of the Transfer and Servicing Agreements have been
filed as exhibits to the Registration Statement of which this Prospectus forms a
part. This summary does not purport to be complete and is subject to, and
qualified in its entirety by reference to, all the provisions of the Transfer
and Servicing Agreements.
SALE AND ASSIGNMENT OF RECEIVABLES
On the Closing Date specified with respect to any given Trust in the
related Prospectus Supplement (the "Closing Date"), the Seller will, if so
specified in such Prospectus Supplement, transfer and assign to the applicable
Owner Trustee, without recourse, its entire interest in the Initial Receivables
of the related Receivables Pool, including its security interests in the related
Financed Vehicles, pursuant to a Sale and Servicing Agreement. Each such
Receivable will be identified in a schedule appearing as an exhibit to such Sale
and Servicing Agreement (a "Schedule of Receivables"). The applicable Owner
Trustee will, concurrently with such transfer and assignment, execute and
deliver the related Notes and Certificates. Unless otherwise provided in the
related Prospectus Supplement, the net proceeds received from the sale of the
Certificates and the Notes of a given series will be applied to the purchase of
the related Receivables from the Seller and, to the extent specified in the
related Prospectus Supplement, to the deposit of the Pre-Funded Amount into the
Pre-Funding Account. The related Prospectus Supplement for a given Trust will
specify whether, and the terms, conditions and manner under which, Subsequent
Receivables will be sold by the Seller to the applicable Trust from time to time
during the Funding Period on each date specified as a transfer date in the
related Prospectus Supplement (each, a "Subsequent Transfer Date").
In each Sale and Servicing Agreement, the Seller will represent and warrant
to the applicable Trust, among other things, that: (i) the information provided
in the related Schedule of Receivables is correct in all material respects; (ii)
the Obligor on each related Receivable is required to maintain physical damage
insurance covering the Financed Vehicle in accordance with the Seller's normal
requirements; (iii) as of the applicable Closing Date or the applicable
Subsequent Transfer Date, if any, to the best of its knowledge, the related
Receivables are free and clear of all security interests, liens, charges and
encumbrances and no offsets, defenses or counterclaims have been asserted or
threatened; (iv) as of the Closing Date or the applicable Subsequent Transfer
Date, if any, each of such Receivables is or will be secured by a first
perfected security interest in favor of the Seller in the Financed Vehicle; (v)
each related Receivable, at the time it was originated, complied and, as of the
Closing Date or the applicable Subsequent Transfer Date, if any, complies in all
material respects with applicable federal and state laws, including, without
limitation, consumer credit, truth in lending, equal credit opportunity and
disclosure laws; and (vi) any other representations and warranties that may be
set forth in the related Prospectus Supplement.
Unless otherwise provided in the related Prospectus Supplement, as of the
last day of the second (or, if the Seller elects, the first) month following the
discovery by or notice to the Seller of a breach of any representation or
warranty of the Seller that materially and adversely affects the interests of
the related Trust
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in any Receivable, the Seller, unless the breach is cured, will repurchase such
Receivable from such Trust at a price equal to the unpaid principal balance owed
by the Obligor thereof plus interest thereon at the respective APR to the last
day of the month of repurchase (the "Purchase Amount"). The repurchase
obligation constitutes the sole remedy available to the Noteholders, the
Indenture Trustee, the Certificateholders or the Owner Trustee in respect of
such Trust for any such uncured breach.
Pursuant to each Sale and Servicing Agreement, to assure uniform quality in
servicing the Receivables and to reduce administrative costs, the Seller and
each Trust will designate the Servicer as custodian to maintain possession, as
such Trust's agent, of the related motor vehicle retail installment sale
contracts and any other documents relating to the Receivables. The Seller's and
the Servicer's accounting records and computer systems will reflect the sale and
assignment of the related Receivables to the applicable Trust, and Uniform
Commercial Code ("UCC") financing statements reflecting such sale and assignment
will be filed.
ACCOUNTS
With respect to each Trust, the Servicer will establish and maintain with
the related Indenture Trustee one or more accounts, in the name of the Indenture
Trustee on behalf of the related Noteholders and Certificateholders, into which
all payments made on or with respect to the related Receivables will be
deposited (the "Collection Account"). The Servicer will establish and maintain
with such Indenture Trustee an account, in the name of such Indenture Trustee on
behalf of such Noteholders, into which amounts released from the Collection
Account and any Pre-Funding Account, Reserve Account or other credit enhancement
for payment to such Noteholders will be deposited and from which all
distributions to such Noteholders will be made (the "Note Distribution
Account"). The Servicer will establish and maintain with the related Owner
Trustee an account, in the name of such Owner Trustee on behalf of such
Certificateholders, into which amounts released from the Collection Account and
any Pre-Funding Account, Reserve Account or other credit enhancement for
distribution to such Certificateholders will be deposited and from which all
distributions to such Certificateholders will be made (the "Certificate
Distribution Account"). Unless otherwise provided in the related Prospectus
Supplement, the Servicer will establish for each series an additional account
(the "Payahead Account"), in the name of the related Indenture Trustee, into
which, to the extent required by the Sale and Servicing Agreement, early
payments by or on behalf of Obligors on Precomputed Receivables will be
deposited until such time as the payment becomes due. Until such time as
payments are transferred from the Payahead Account to the Collection Account,
they will not constitute collected interest or collected principal and will not
be available for distribution to the applicable Noteholders or
Certificateholders. The Payahead Account will initially be maintained with the
applicable Indenture Trustee.
Any other accounts to be established with respect to a Trust, including any
Pre-Funding Account or any Reserve Account, will be described in the related
Prospectus Supplement.
For any series of Securities, funds in the Collection Account, the Note
Distribution Account and any Pre-Funding Account, Reserve Account and other
accounts identified as such in the related Prospectus Supplement (collectively,
the "Trust Accounts") will be invested as provided in the related Sale and
Servicing Agreement in Eligible Investments. "Eligible Investments" are
generally limited to investments acceptable to the Rating Agencies rating such
Securities as being consistent with the rating of such Securities. Except as
described below or in the related Prospectus Supplement, Eligible Investments
are limited to obligations or securities that mature on or before the date of
the next distribution or, in the case of the Note Distribution Account, the date
of the next distribution of such series. However, to the extent permitted by the
Rating Agencies, funds in any Reserve Account may be invested in securities that
will not mature prior to the date of the next distribution with respect to such
Notes and will not be sold to meet any shortfalls. Thus, the amount of cash in
any Reserve Account at any time may be less than the balance of the Reserve
Account. If the amount required to be withdrawn from any Reserve Account to
cover shortfalls in collections on the related Receivables (as provided in the
related Prospectus Supplement) exceeds the amount of cash in the Reserve
Account, a temporary shortfall in the amounts distributed to the related
Noteholders or Certificateholders could result, which could, in turn, increase
the average life of the Notes or the Certificates of such series. Except as
otherwise specified in the related Prospectus Supplement, investment earnings on
funds deposited in
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the Trust Accounts, net of losses and investment expenses (collectively,
"Investment Earnings"), shall be deposited in the applicable Collection Account
on each Distribution Date or Payment Date and shall be treated as collections of
interest on the related Receivables.
The Trust Accounts will be maintained as Eligible Deposit Accounts.
"Eligible Deposit Account" means either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate trust
department of a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), having corporate trust powers and
acting as trustee for funds deposited in such account, so long as any of the
securities of such depository institution have a credit rating from each Rating
Agency in one of its generic rating categories which signifies investment grade.
"Eligible Institution" means, with respect to a Trust, (a) the corporate trust
department of the related Indenture Trustee or the related Owner Trustee, as
applicable, or (b) a depository institution organized under the laws of the
United States of America or any one of the states thereof or the District of
Columbia (or any domestic branch of a foreign bank), (i) which has either (A) a
long-term unsecured debt rating acceptable to the Rating Agencies or (B) a
short-term unsecured debt rating or certificate of deposit rating acceptable to
the Rating Agencies and (ii) whose deposits are insured by the FDIC.
SERVICING PROCEDURES
The Servicer will make reasonable efforts to collect all payments due with
respect to the Receivables held by any Trust and will, consistent with the
related Sale and Servicing Agreement, follow such collection procedures as it
follows with respect to comparable motor vehicle retail installment sale
contracts it services for itself or others. Consistent with its normal
procedures, the Servicer may, in its discretion, arrange with the Obligor on a
Receivable to extend or modify the payment schedule, but no such arrangement
will, for purposes of any Sale and Servicing Agreement, modify the original due
dates or the amount of the scheduled payments or extend the final payment date
of any Receivable beyond the Final Scheduled Maturity Date (as such term is
defined with respect to any Receivables Pool in the related Prospectus
Supplement). Some of such arrangements may result in the Servicer purchasing the
Receivable for the Purchase Amount, while others may result in the Servicer
making Advances. The Servicer may sell the Financed Vehicle securing the
respective Receivable at public or private sale, or take any other action
permitted by applicable law. See "Certain Legal Aspects of the Receivables".
COLLECTIONS
With respect to each Trust, the Servicer will deposit all payments on the
related Receivables (from whatever source) and all proceeds of such Receivables
collected during each collection period specified in the related Prospectus
Supplement (each, a "Collection Period") into the related Collection Account
within two business days after receipt thereof. However, at any time that and
for so long as (i) CCC is the Servicer, (ii) there exists no Servicer Default
and (iii) each other condition to making deposits less frequently than daily as
may be specified by the Rating Agencies or set forth in the related Prospectus
Supplement is satisfied, the Servicer will not be required to deposit such
amounts into the Collection Account until on or before the applicable
Distribution Date or Payment Date. Pending deposit into the Collection Account,
collections may be invested by the Servicer at its own risk and for its own
benefit and will not be segregated from its own funds. If the Servicer were
unable to remit such funds, Securityholders might incur a loss. To the extent
set forth in the related Prospectus Supplement, the Servicer may, in order to
satisfy the requirements described above, obtain a letter of credit or other
security for the benefit of the related Trust to secure timely remittances of
collections on the related Receivables and payment of the aggregate Purchase
Amount with respect to Receivables purchased by the Servicer.
Collections on a Precomputed Receivable made during a Collection Period
shall be applied first to repay any outstanding Precomputed Advances made by the
Servicer with respect to such Receivable (as described below), and to the extent
that collections on a Precomputed Receivable during a Collection Period exceed
the outstanding Precomputed Advances, the collections shall then be applied to
the scheduled payment on such Receivable. If any collections remaining after the
scheduled payment is made are insufficient to prepay the
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Precomputed Receivable in full, then generally such remaining collections (the
"Payaheads") shall be transferred to and kept in the Payahead Account, until
such later Collection Period as the collections may be retransferred to the
Collection Account and applied either to the scheduled payment or to prepay such
Receivable in full.
ADVANCES
Unless otherwise provided in the related Prospectus Supplement, to the
extent the collections of interest and principal on a Precomputed Receivable
with respect to a Collection Period fall short of the respective scheduled
payment, the Servicer will make a Precomputed Advance of the shortfall. The
Servicer will be obligated to make a Precomputed Advance on a Precomputed
Receivable only to the extent that the Servicer, in its sole discretion, expects
to recoup such advance from subsequent collections or recoveries on such
Receivable or other Precomputed Receivables in the related Receivables Pool. The
Servicer will deposit the Precomputed Advance in the applicable Collection
Account on or before the business day preceding the applicable Distribution Date
or Payment Date. The Servicer will recoup its Precomputed Advance from
subsequent payments by or on behalf of the respective Obligor or from insurance
or liquidation proceeds with respect to the Receivable and will release its
right to reimbursement in conjunction with its purchase of the Receivable as
Servicer, or, upon the determination that reimbursement from the preceding
sources is unlikely, will recoup its Precomputed Advance from any collections
made on other Precomputed Receivables in the related Receivables Pool.
Unless otherwise provided in the related Prospectus Supplement, on or
before the business day prior to each applicable Distribution Date or Payment
Date, the Servicer shall deposit into the related Collection Account as a Simple
Interest Advance an amount equal to the amount of interest that would have been
due on the related Simple Interest Receivables at their respective APRs for the
related Collection Period (assuming that such Simple Interest Receivables are
paid on their respective due dates) minus the amount of interest actually
received on such Simple Interest Receivables during the related Collection
Period. If such calculation results in a negative number, an amount equal to
such amount shall be paid to the Servicer in reimbursement of outstanding Simple
Interest Advances. In addition, in the event that a Simple Interest Receivable
becomes a Liquidated Receivable (as such term is defined in the related
Prospectus Supplement), the amount of accrued and unpaid interest thereon (but
not including interest for the then current Collection Period) shall be
withdrawn from the Collection Account and paid to the Servicer in reimbursement
of outstanding Simple Interest Advances. No advances of principal will be made
with respect to Simple Interest Receivables. As used herein, "Advances" means
both Precomputed Advances and Simple Interest Advances.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Unless otherwise specified in the Prospectus Supplement with respect to any
Trust, the Servicer will be entitled to receive the Servicing Fee for each
Collection Period in an amount equal to specified percentage per annum (as set
forth in the related Prospectus Supplement, the "Servicing Fee Rate") of the
Pool Balance as of the first day of the related Collection Period (the
"Servicing Fee"). The Servicing Fee (together with any portion of the Servicing
Fee that remains unpaid from prior Distribution Dates or Payment Dates) will be
paid solely to the extent of the Interest Distribution Amount. However, the
Servicing Fee will be paid prior to the distribution of any portion of the
Interest Distribution Amount to the Noteholders or the Certificateholders of the
given series.
Unless otherwise provided in the related Prospectus Supplement with respect
to a given Trust, the Servicer will also collect and retain any late fees,
prepayment charges and other administrative fees or similar charges allowed by
applicable law with respect to the related Receivables and will be entitled to
reimbursement from such Trust for certain liabilities. Payments by or on behalf
of Obligors will be allocated to scheduled payments and late fees and other
charges in accordance with the Servicer's normal practices and procedures.
The Servicing Fee will compensate the Servicer for performing the functions
of a third party servicer of motor vehicle receivables as an agent for their
beneficial owner, including collecting and posting all payments,
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responding to inquiries of Obligors on the Receivables, investigating
delinquencies, sending payment coupons to Obligors, reporting tax information to
Obligors, paying costs of collections and disposition of defaults and policing
the collateral. The Servicing Fee also will compensate the Servicer for
administering the particular Receivables Pool, including making Advances,
accounting for collections and furnishing monthly and annual statements to the
related Owner Trustee and Indenture Trustee with respect to distributions and
generating federal income tax information for such Trust and for the related
Noteholders and Certificateholders. The Servicing Fee also will reimburse the
Servicer for certain taxes, the fees of the related Owner Trustee and Indenture
Trustee, accounting fees, outside auditor fees, data processing costs and other
costs incurred in connection with administering the applicable Receivables Pool.
DISTRIBUTIONS
With respect to each series of Securities, beginning on the Payment Date or
Distribution Date, as applicable, specified in the related Prospectus
Supplement, distributions of principal and interest (or, where applicable, of
principal or interest only) on each class of such Securities entitled thereto
will be made by the Applicable Trustee to the Noteholders and the
Certificateholders of such series. The timing, calculation, allocation, order,
source, priorities of and requirements for all payments to each class of
Noteholders and all distributions to each class of Certificateholders of such
series will be set forth in the related Prospectus Supplement.
With respect to each Trust, on each Payment Date and Distribution Date, as
applicable, collections on the related Receivables will be transferred from the
Collection Account to the Note Distribution Account and the Certificate
Distribution Account for distribution to Noteholders and Certificateholders to
the extent provided in the related Prospectus Supplement. Credit enhancement,
such as a Reserve Account, will be available to cover any shortfalls in the
amount available for distribution on such date to the extent specified in the
related Prospectus Supplement. As more fully described in the related Prospectus
Supplement, and unless otherwise specified therein, distributions in respect of
principal of a class of Securities of a given series will be subordinate to
distributions in respect of interest on such class, and distributions in respect
of the Certificates of such series may be subordinate to payments in respect of
the Notes of such series.
CREDIT AND CASH FLOW ENHANCEMENT
The amounts and types of credit enhancement arrangements and the provider
thereof, if applicable, with respect to each class of Securities of a given
series, if any, will be set forth in the related Prospectus Supplement. If and
to the extent provided in the related Prospectus Supplement, credit enhancement
may be in the form of subordination of one or more classes of Securities,
Reserve Accounts, over-collateralization, letters of credit, credit or liquidity
facilities, surety bonds, guaranteed investment contracts, swaps or other
interest rate protection agreements, repurchase obligations, other agreements
with respect to third party payments or other support, cash deposits or such
other arrangements as may be described in the related Prospectus Supplement or
any combination of two or more of the foregoing. If specified in the applicable
Prospectus Supplement, credit enhancement for a class of Securities may cover
one or more other classes of Securities of the same series, and credit
enhancement for a series of Securities may cover one or more other series of
Securities.
The presence of a Reserve Account and other forms of credit enhancement for
the benefit of any class or series of Securities is intended to enhance the
likelihood of receipt by the Securityholders of such class or series of the full
amount of principal and interest due thereon and to decrease the likelihood that
such Securityholders will experience losses. Unless otherwise specified in the
related Prospectus Supplement, the credit enhancement for a class or series of
Securities will not provide protection against all risks of loss and will not
guarantee repayment of the entire principal balance and interest thereon. If
losses occur which exceed the amount covered by any credit enhancement or which
are not covered by any credit enhancement, Securityholders of any class or
series will bear their allocable share of deficiencies, as described in the
related Prospectus Supplement. In addition, if a form of credit enhancement
covers more than one series of Securities, Securityholders of any such series
will be subject to the risk that such credit enhancement will be exhausted by
the claims of Securityholders of other series.
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Reserve Account. If so provided in the related Prospectus Supplement,
pursuant to the related Sale and Servicing Agreement, the Seller will establish
for a series or class of Securities an account, as specified in the related
Prospectus Supplement (the "Reserve Account"), which will be maintained with the
applicable Indenture Trustee. Unless otherwise provided in the related
Prospectus Supplement, the Reserve Account will be funded by an initial deposit
by the Seller on the Closing Date in the amount set forth in the related
Prospectus Supplement. As further described in the related Prospectus
Supplement, the amount on deposit in the Reserve Account will be increased on
each Distribution Date or Payment Date thereafter up to the Specified Reserve
Account Balance (as defined in the related Prospectus Supplement) by the deposit
therein of the amount of collections on the related Receivables remaining on
each such Distribution Date or Payment Date after the payment of all other
required payments and distributions on such date. The related Prospectus
Supplement will describe the circumstances and manner under which distributions
may be made out of the Reserve Account, either to holders of the Securities
covered thereby or to the applicable Company.
NET DEPOSITS
As an administrative convenience, unless the Servicer is required to remit
collections daily (see "-- Collections" above), the Servicer will be permitted
to make the deposit of collections, aggregate Advances and Purchase Amounts for
any Trust for or with respect to the related Collection Period net of
distributions to be made to the Servicer for such Trust with respect to such
Collection Period. The Servicer may cause to be made a single, net transfer from
the Collection Account to the related Payahead Account, or vice versa. The
Servicer, however, will account to the Indenture Trustee, the Owner Trustee, the
Noteholders and the Certificateholders with respect to each Trust as if all
deposits, distributions and transfers were made individually. If Payment Dates
do not coincide with Distribution Dates, all distributions, deposits or other
remittances made on a Payment Date will be treated as having been distributed,
deposited or remitted on the Distribution Date for the applicable Collection
Period for purposes of determining other amounts required to be distributed,
deposited or otherwise remitted on such Distribution Date.
STATEMENTS TO TRUSTEES AND TRUST
Prior to each Distribution Date or Payment Date with respect to each series
of Securities, the Servicer will provide to the applicable Indenture Trustee and
the applicable Owner Trustee as of the close of business on the last day of the
preceding Collection Period a statement setting forth substantially the same
information as is required to be provided in the periodic reports provided to
Securityholders of such series described under "Certain Information Regarding
the Securities -- Reports to Securityholders".
EVIDENCE AS TO COMPLIANCE
Each Sale and Servicing Agreement will provide that a firm of independent
public accountants will furnish to the related Trust and Indenture Trustee
annually a statement as to compliance by the Servicer during the preceding
twelve months (or, in the case of the first such certificate, from the
applicable Closing Date) with certain standards relating to the servicing of the
applicable Receivables Pool, the Servicer's accounting records and computer
files with respect thereto and certain other matters.
Each Sale and Servicing Agreement will also provide for delivery to the
related Trust and Indenture Trustee, substantially simultaneously with the
delivery of such accountants' statement referred to above, of a certificate
signed by an officer of the Servicer stating that the Servicer has fulfilled its
obligations under the Sale and Servicing Agreement throughout the preceding
twelve months (or, in the case of the first such certificate, from the Closing
Date) or, if there has been a default in the fulfillment of any such obligation,
describing each such default. The Servicer has agreed to give each Indenture
Trustee and each Owner Trustee notice of certain Servicer Defaults under the
related Sale and Servicing Agreement.
Copies of such statements and certificates may be obtained by
Securityholders by a request in writing addressed to the Applicable Trustee.
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CERTAIN MATTERS REGARDING THE SERVICER
Each Sale and Servicing Agreement will provide that CCC may not resign from
its obligations and duties as Servicer thereunder, except upon determination
that CCC's performance of such duties is no longer permissible under applicable
law. No such resignation will become effective until the related Indenture
Trustee or a successor servicer has assumed CCC's servicing obligations and
duties under such Sale and Servicing Agreement.
Each Sale and Servicing Agreement will further provide that neither the
Servicer nor any of its directors, officers, employees and agents will be under
any liability to the related Trust or the related Noteholders or
Certificateholders for taking any action or for refraining from taking any
action pursuant to such Sale and Servicing Agreement or for errors in judgment;
except that neither the Servicer nor any such person will be protected against
any liability that would otherwise be imposed by reason of willful misfeasance,
bad faith or negligence in the performance of the Servicer's duties thereunder
or by reason of reckless disregard of its obligations and duties thereunder. In
addition, each Sale and Servicing Agreement will provide that the Servicer is
under no obligation to appear in, prosecute or defend any legal action that is
not incidental to the Servicer's servicing responsibilities under such Sale and
Servicing Agreement and that, in its opinion, may cause it to incur any expense
or liability.
Under the circumstances specified in each Sale and Servicing Agreement, any
entity into which the Servicer may be merged or consolidated, or any entity
resulting from any merger or consolidation to which the Servicer is a party, or
any entity succeeding to the business of the Servicer or, with respect to its
obligations as Servicer, any corporation 50% or more of the voting stock of
which is owned, directly or indirectly, by Chrysler, which corporation or other
entity in each of the foregoing cases assumes the obligations of the Servicer,
will be the successor of the Servicer under such Sale and Servicing Agreement.
SERVICER DEFAULT
Except as otherwise provided in the related Prospectus Supplement,
"Servicer Default" under each Sale and Servicing Agreement will consist of (i)
any failure by the Servicer to deliver to the related Indenture Trustee for
deposit in any of the Trust Accounts or the Certificate Distribution Account any
required payment or to direct such Indenture Trustee to make any required
distributions therefrom, which failure continues unremedied for five business
days after written notice from such Indenture Trustee or the related Owner
Trustee is received by the Servicer or after discovery of such failure by the
Servicer; (ii) any failure by the Servicer or the Seller, as the case may be,
duly to observe or perform in any material respect any other covenant or
agreement in such Sale and Servicing Agreement, which failure materially and
adversely affects the rights of the Noteholders or the Certificateholders of the
related series and which continues unremedied for 60 days after the giving of
written notice of such failure (A) to the Servicer or the Seller, as the case
may be, by such Indenture Trustee or such Owner Trustee or (B) to the Servicer
or the Seller, as the case may be, and to such Indenture Trustee and such Owner
Trustee by holders of Notes or Certificates of such series, as applicable,
evidencing not less than 25% in principal amount of such outstanding Notes or of
such Certificate Balance; and (iii) the occurrence of an Insolvency Event with
respect to the Servicer or the Seller. "Insolvency Event" means, with respect to
any Person, any of the following events or actions: certain events of
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings with respect to such Person and certain actions by such
Person indicating its insolvency, reorganization pursuant to bankruptcy
proceedings or inability to pay its obligations.
RIGHTS UPON SERVICER DEFAULT
Unless otherwise provided in the related Prospectus Supplement, as long as
a Servicer Default under a Sale and Servicing Agreement remains unremedied, the
related Indenture Trustee or holders of Notes of the related series evidencing
not less than a majority in principal amount of such Notes then outstanding may
terminate all the rights and obligations of the Servicer under such Sale and
Servicing Agreement, whereupon such Indenture Trustee or a successor servicer
appointed by such Indenture Trustee will succeed to all the responsibilities,
duties and liabilities of the Servicer under such Sale and Servicing Agreement
and will be
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entitled to similar compensation arrangements. If, however, a bankruptcy trustee
or similar official has been appointed for the Servicer, and no Servicer Default
other than such appointment has occurred, such trustee or official may have the
power to prevent such Indenture Trustee or such Noteholders from effecting a
transfer of servicing. In the event that such Indenture Trustee is unwilling or
unable to so act, it may appoint, or petition a court of competent jurisdiction
for the appointment of, a successor with a net worth of at least $100,000,000
and whose regular business includes the servicing of motor vehicle receivables.
Such Indenture Trustee may make such arrangements for compensation to be paid,
which in no event may be greater than the servicing compensation to the Servicer
under such Sale and Servicing Agreement.
WAIVER OF PAST DEFAULTS
With respect to each Trust, unless otherwise provided in the related
Prospectus Supplement, the holders of Notes evidencing at least a majority in
principal amount of the then outstanding Notes of the related series (or the
holders of the Certificates of such series evidencing not less than a majority
of the outstanding Certificate Balance, in the case of any Servicer Default
which does not adversely affect the related Indenture Trustee or such
Noteholders) may, on behalf of all such Noteholders and Certificateholders,
waive any default by the Servicer in the performance of its obligations under
the related Sale and Servicing Agreement and its consequences, except a Servicer
Default in making any required deposits to or payments from any of the Trust
Accounts in accordance with such Sale and Servicing Agreement. No such waiver
will impair such Noteholders' or Certificateholders' rights with respect to
subsequent defaults.
AMENDMENT
Unless otherwise provided in the related Prospectus Supplement, each of the
Transfer and Servicing Agreements may be amended by the parties thereto, without
the consent of the related Noteholders or Certificateholders, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of such Transfer and Servicing Agreements or of modifying in any
manner the rights of such Noteholders or Certificateholders; provided that such
action will not, in the opinion of counsel satisfactory to the related Indenture
Trustee, materially and adversely affect the interest of any such Noteholder or
Certificateholder. Unless otherwise specified in the related Prospectus
Supplement, the Transfer and Servicing Agreements may also be amended by the
Seller, the Servicer and the related Owner Trustee and Indenture Trustee with
the consent of the holders of Notes evidencing at least a majority in principal
amount of then outstanding Notes of the related series and the holders of
Certificates of such series evidencing at least a majority of the Certificate
Balance, for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of such Transfer and Servicing Agreements
or of modifying in any manner the rights of such Noteholders or
Certificateholders; provided, however, that no such amendment may (i) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on the related Receivables or distributions that are
required to be made for the benefit of such Noteholders or Certificateholders or
(ii) reduce the aforesaid percentage of the Notes or Certificates of such series
which are required to consent to any such amendment, without the consent of the
holders of all the outstanding Notes or Certificates, as the case may be, of
such series.
INSOLVENCY EVENT
If an Insolvency Event occurs with respect to the Company of a given Trust,
the related Receivables of such Trust will be liquidated and the Trust will be
terminated 90 days after the date of such Insolvency Event, unless, before the
end of such 90-day period, the related Owner Trustee shall have received written
instructions from (i) holders of each class of the Certificates (other than such
Company) with respect to such Trust representing more than 50% of the aggregate
unpaid principal amount of each such class (not including the principal amount
of such Certificates held by such Company), (ii) holders of each class of Notes
with respect to such Trust representing more than 50% of the aggregate unpaid
principal amount of each such class and (iii) holders, if any, of certificates
representing more than 50% of the aggregate unpaid principal amount of
certificates representing interests in, or indebtedness secured by, final fixed
value payments with respect to the Fixed Value Receivables, if any, initially
purchased by such Company and subsequently added to such
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Trust (such certificates or indebtedness being referred to herein as "Fixed
Value Securities"), to the effect that each such party disapproves of the
liquidation of such Receivables and termination of such Trust. Promptly after
the occurrence of an Insolvency Event with respect to such Company, notice
thereof is required to be given to such Noteholders, Certificateholders and
holders of Fixed Value Securities; provided that any failure to give such
required notice will not prevent or delay termination of such Trust. Upon
termination of any Trust, the related Owner Trustee shall direct the related
Indenture Trustee promptly to sell the assets of such Trust (other than the
Trust Accounts and the Certificate Distribution Account) in a commercially
reasonable manner and on commercially reasonable terms. The proceeds from any
such sale, disposition or liquidation of the Receivables of such Trust will be
treated as collections on such Receivables and deposited in the related
Collection Account. With respect to any Trust, if the proceeds from the
liquidation of the related Receivables and any amounts on deposit in the Reserve
Account (if any), the Payahead Account, the Note Distribution Account and the
Certificate Distribution Account are not sufficient to pay the Notes and the
Certificates of the related series in full, the amount of principal returned to
Noteholders and Certificateholders thereof will be reduced and some or all of
such Noteholders and Certificateholders will incur a loss.
Each Trust Agreement will provide that the applicable Owner Trustee does
not have the power to commence a voluntary proceeding in bankruptcy with respect
to the related Trust without the unanimous prior approval of all
Certificateholders (including the applicable Company) of such Trust and the
delivery to such Owner Trustee by each such Certificateholder (including such
Company) of a certificate certifying that such Certificateholder reasonably
believes that such Trust is insolvent.
PAYMENT OF NOTES
Upon the payment in full of all outstanding Notes of a given series and the
satisfaction and discharge of the related Indenture, the related Owner Trustee
will succeed to all the rights of the Indenture Trustee, and the
Certificateholders of such series will succeed to all the rights of the
Noteholders of such series, under the related Sale and Servicing Agreement,
except as otherwise provided therein.
COMPANY LIABILITY
Under each Trust Agreement, the applicable Company of the given Trust will
agree to be liable directly to an injured party for the entire amount of any
losses, claims, damages or liabilities (other than those incurred by a
Noteholder or a Certificateholder in the capacity of an investor with respect to
such Trust) arising out of or based on the arrangement created by such Trust
Agreement as though such arrangement created a partnership under the Delaware
Revised Uniform Limited Partnership Act in which such Company was a general
partner.
TERMINATION
With respect to each Trust, the obligations of the Servicer, the Seller,
the related Owner Trustee and the related Indenture Trustee pursuant to the
Transfer and Servicing Agreements will terminate upon the earlier of (i) the
maturity or other liquidation of the last related Receivable and the disposition
of any amounts received upon liquidation of any such remaining Receivables, (ii)
the payment to Noteholders and Certificateholders of the related series of all
amounts required to be paid to them pursuant to the Transfer and Servicing
Agreements and (iii) the occurrence of either event described below.
Unless otherwise provided in the related Prospectus Supplement, in order to
avoid excessive administrative expense, the Servicer will be permitted at its
option to purchase from each Trust, as of the end of any applicable Collection
Period, if the then outstanding Pool Balance with respect to the Receivables
held by such Trust is 10% or less of the Initial Pool Balance (as defined in the
related Prospectus Supplement, "Initial Pool Balance"), all remaining related
Receivables at a price equal to the aggregate of the Purchase Amounts thereof as
of the end of such Collection Period.
If and to the extent provided in the related Prospectus Supplement with
respect to a Trust, the applicable Indenture Trustee will, within ten days
following a Distribution Date or Payment Date as of which the Pool Balance is
equal to or less than the percentage of the Initial Pool Balance specified in
the related Prospectus
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Supplement, solicit bids for the purchase of the Receivables remaining in such
Trust, in the manner and subject to the terms and conditions set forth in such
Prospectus Supplement. If such Indenture Trustee receives satisfactory bids as
described in such Prospectus Supplement, then the Receivables remaining in such
Trust will be sold to the highest bidder.
As more fully described in the related Prospectus Supplement, any
outstanding Notes of the related series will be redeemed concurrently with
either of the events specified above and the subsequent distribution to the
related Certificateholders of all amounts required to be distributed to them
pursuant to the applicable Trust Agreement will effect early retirement of the
Certificates of such series.
ADMINISTRATION AGREEMENT
CCC, in its capacity as administrator (the "Administrator"), will enter
into an agreement (as amended and supplemented from time to time, an
"Administration Agreement") with each Trust and the related Indenture Trustee
pursuant to which the Administrator will agree, to the extent provided in such
Administration Agreement, to provide the notices and to perform other
administrative obligations required by the related Indenture. Unless otherwise
specified in the related Prospectus Supplement with respect to any Trust, as
compensation for the performance of the Administrator's obligations under the
applicable Administration Agreement and as reimbursement for its expenses
related thereto, the Administrator will be entitled to a monthly administration
fee in an amount equal to $200 per month, or such other amount as may be set
forth in the related Prospectus Supplement (the "Administration Fee"), which fee
will be paid by the Servicer.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
SECURITY INTEREST IN VEHICLES
In states in which retail installment sale contracts such as the
Receivables evidence the credit sale of automobiles and light duty trucks by
dealers to obligors, the contracts also constitute personal property security
agreements and include grants of security interests in the vehicles under the
applicable UCC. Perfection of security interests in the automobiles and light
duty trucks financed by the Seller is generally governed by the motor vehicle
registration laws of the state in which the vehicle is located. In all states in
which the Receivables have been originated, a security interest in automobiles
and light duty trucks is perfected by notation of the secured party's lien on
the vehicles' certificate of title (in addition, in Louisiana, a copy of the
installment sale contract must be filed with the appropriate governmental
recording office).
The Servicer sells on a daily basis to the Seller, pursuant to a
pre-existing inter-company agreement, all motor vehicle retail installment sales
contracts that the Servicer originates or acquires from dealers. All of such
contracts originated or acquired by the Servicer name the Servicer as obligee or
assignee and as the secured party. The Servicer also takes all actions necessary
under the laws of the state in which the financed vehicle is located to perfect
the Servicer's security interest in the financed vehicle, including, where
applicable, having a notation of its lien recorded on such vehicle's certificate
of title. Because the Servicer continues to service the contracts, the obligors
on the contracts will not be notified of the sale from the Servicer to the
Seller or the sale from the Seller to the Trust, and no action will be taken to
record the transfer of the security interest from the Servicer to the Seller or
from the Seller to the Trust by amendment of the certificates of title for the
Financed Vehicles or otherwise.
With respect to each Trust, pursuant to the related Sale and Servicing
Agreement, the Seller will assign its interests in the Financed Vehicles
securing the related Receivables to such Trust. However, because of the
administrative burden and expense, none of the Seller, the Servicer or the
related Owner Trustee will amend any certificate of title to identify such Trust
as the new secured party on such certificate of title relating to a Financed
Vehicle. Also, the Servicer will continue to hold any certificates of title
relating to the vehicles in its possession as custodian for the Seller and such
Trust pursuant to the related Sale and Servicing Agreement. See "Description of
the Transfer and Servicing Agreements -- Sale and Assignment of Receivables".
In most states, an assignment such as that under each Sale and Servicing
Agreement is an effective conveyance of a security interest without amendment of
any lien noted on a vehicle's certificate of title, and the assignee succeeds
thereby to the assignor's rights as secured party. However, by not identifying
such Trust as the secured party on the certificate of title, the security
interest of such Trust in the vehicle could be
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defeated through fraud or negligence. In such states, in the absence of fraud or
forgery by the vehicle owner or the Servicer or administrative error by state or
local agencies, the notation of the Servicer's lien on the certificates of title
will be sufficient to protect such Trust against the rights of subsequent
purchasers of a Financed Vehicle or subsequent lenders who take a security
interest in a Financed Vehicle. If there are any Financed Vehicles as to which
the Servicer failed to obtain and assign to the Seller a perfected security
interest, the security interest of the Seller would be subordinate to, among
others, subsequent purchasers of the Financed Vehicles and holders of perfected
security interests. Such a failure, however, would constitute a breach of the
warranties of the Seller under the related Sale and Servicing Agreement and
would create an obligation of the Seller to repurchase the related Receivable
unless the breach is cured. Pursuant to each Sale and Servicing Agreement, the
Seller will assign such rights to the related Trust. See "Description of the
Transfer and Servicing Agreements -- Sale and Assignment of Receivables" and
"Special Considerations -- Certain Legal Aspects -- Security Interests in
Financed Vehicles".
Under the laws of most states, the perfected security interest in a vehicle
would continue for four months after the vehicle is moved to a state other than
the state in which it is initially registered and thereafter until the owner
thereof re-registers the vehicle in the new state. A majority of states
generally require surrender of a certificate of title to re-register a vehicle.
Accordingly, a secured party must surrender possession if it holds the
certificate of title to the vehicle or, in the case of a vehicle registered in a
state providing for the notation of a lien on the certificate of title but not
possession by the secured party, the secured party would receive notice of
surrender if the security interest is noted on the certificate of title. Thus,
the secured party would have the opportunity to re-perfect its security interest
in the vehicle in the state of relocation. In states that do not require a
certificate of title for registration of a motor vehicle, re-registration could
defeat perfection. In the ordinary course of servicing motor vehicle
receivables, the Servicer takes steps to effect re-perfection upon receipt of
notice of re-registration or information from the obligor as to relocation.
Similarly, when an obligor sells a vehicle, the Servicer must surrender
possession of the certificate of title or will receive notice as a result of its
lien noted thereon and accordingly will have an opportunity to require
satisfaction of the related Receivable before release of the lien. Under each
Sale and Servicing Agreement, the Servicer is obligated to take appropriate
steps, at the Servicer's expense, to maintain perfection of security interests
in the Financed Vehicles and is obligated to purchase the related Receivable if
it fails to do so.
Under the laws of most states, liens for repairs performed on a motor
vehicle and liens for unpaid taxes take priority over even a perfected security
interest in a financed vehicle. The Code also grants priority to certain federal
tax liens over the lien of a secured party. The laws of certain states and
federal law permit the confiscation of vehicles by governmental authorities
under certain circumstances if used in unlawful activities, which may result in
the loss of a secured party's perfected security interest in the confiscated
vehicle. Under each Sale and Servicing Agreement, the Seller will represent to
the related Trust that, as of the date the related Receivable is sold to such
Trust, each security interest in a Financed Vehicle is or will be prior to all
other present liens (other than tax liens and other liens that arise by
operation of law) upon and security interests in such Financed Vehicle. However,
liens for repairs or taxes could arise, or the confiscation of a Financed
Vehicle could occur, at any time during the term of a Receivable. No notice will
be given to the Owner Trustee, the Indenture Trustee, the Noteholders or the
Certificateholders in respect of a given Trust if such a lien arises or
confiscation occurs.
REPOSSESSION
In the event of default by vehicle purchasers, the holder of the motor
vehicle retail installment sale contract has all the remedies of a secured party
under the UCC, except where specifically limited by other state laws. Among the
UCC remedies, the secured party has the right to perform self-help repossession
unless such act would constitute a breach of the peace. Self-help is the method
employed by the Servicer in most cases and is accomplished simply by retaking
possession of the financed vehicle. In the event of default by the obligor, some
jurisdictions require that the obligor be notified of the default and be given a
time period within which he may cure the default prior to repossession.
Generally, the right of reinstatement may be exercised on a limited number of
occasions in any one-year period. In cases where the obligor objects or raises a
defense to repossession, or if otherwise required by applicable state law, a
court order must be obtained from the appropriate state court, and the vehicle
must then be repossessed in accordance with that order.
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NOTICE OF SALE; REDEMPTION RIGHTS
The UCC and other state laws require the secured party to provide the
obligor with reasonable notice of the date, time and place of any public sale
and/or the date after which any private sale of the collateral may be held. The
obligor has the right to redeem the collateral prior to actual sale by paying
the secured party the unpaid principal balance of the obligation plus reasonable
expenses for repossessing, holding and preparing the collateral for disposition
and arranging for its sale, plus, in some jurisdictions, reasonable attorneys'
fees, or, in some states, by payment of delinquent installments or the unpaid
balance.
DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS
The proceeds of resale of the vehicles generally will be applied first to
the expenses of resale and repossession and then to the satisfaction of the
indebtedness. While some states impose prohibitions or limitations on deficiency
judgments if the net proceeds from resale do not cover the full amount of the
indebtedness, a deficiency judgment can be sought in those states that do not
prohibit or limit such judgments. However, the deficiency judgment would be a
personal judgment against the obligor for the shortfall, and a defaulting
obligor can be expected to have very little capital or sources of income
available following repossession. Therefore, in many cases, it may not be useful
to seek a deficiency judgment or, if one is obtained, it may be settled at a
significant discount.
Occasionally, after resale of a vehicle and payment of all expenses and all
indebtedness, there is a surplus of funds. In that case, the UCC requires the
creditor to remit the surplus to any holder of a lien with respect to the
vehicle or if no such lienholder exists or there are remaining funds, the UCC
requires the creditor to remit the surplus to the former owner of the vehicle.
CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws and related regulations
impose substantial requirements upon lenders and servicers involved in consumer
finance. These laws include the Truth-in-Lending Act, the Equal Credit
Opportunity Act, the Federal Trade Commission Act, the Fair Credit Billing Act,
the Fair Credit Reporting Act, the Fair Debt Collection Procedures Act, the
Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations B and Z, the
Soldiers' and Sailors' Civil Relief Act of 1940, the Texas Consumer Credit Code,
state adoptions of the National Consumer Act and of the Uniform Consumer Credit
Code and state motor vehicle retail installment sales acts, retail installment
sales acts and other similar laws. Also, state laws impose finance charge
ceilings and other restrictions on consumer transactions and require contract
disclosures in addition to those required under federal law. These requirements
impose specific statutory liabilities upon creditors who fail to comply with
their provisions. In some cases, this liability could affect an assignee's
ability to enforce consumer finance contracts such as the Receivables.
The so-called "Holder-in-Due-Course" Rule of the Federal Trade Commission
(the "FTC Rule"), the provisions of which are generally duplicated by the
Uniform Consumer Credit Code, other statutes or the common law, has the effect
of subjecting a seller in a consumer credit transaction (and certain related
creditors and their assignees) to all claims and defenses which the obligor in
the transaction could assert against the seller of the goods. Liability under
the FTC Rule is limited to the amounts paid by the obligor under the contract
and the holder of the contract may also be unable to collect any balance
remaining due thereunder from the obligor.
Most of the Receivables will be subject to the requirements of the FTC
Rule. Accordingly, each Trust, as holder of the related Receivables, will be
subject to any claims or defenses that the purchaser of the applicable Financed
Vehicle may assert against the seller of the Financed Vehicle. Such claims are
limited to a maximum liability equal to the amounts paid by the Obligor on the
Receivable. If an Obligor were successful in asserting any such claim or
defense, such claim or defense would constitute a breach of the Seller's
warranties under the related Sale and Servicing Agreement and would create an
obligation of the Seller to repurchase the Receivable unless the breach is
cured. See "Description of the Transfer and Servicing Agreements -- Sale and
Assignment of Receivables".
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Courts have applied general equitable principles to secured parties
pursuing repossession and litigation involving deficiency balances. These
equitable principles may have the effect of relieving an obligor from some or
all of the legal consequences of a default.
In several cases, consumers have asserted that the self-help remedies of
secured parties under the UCC and related laws violate the due process
protections provided under the 14th Amendment to the Constitution of the United
States. Courts have generally upheld the notice provisions of the UCC and
related laws as reasonable or have found that the repossession and resale by the
creditor do not involve sufficient state action to afford constitutional
protection to borrowers.
Under each Sale and Servicing Agreement, the Seller will warrant to the
related Trust that each Receivable complies with all requirements of law in all
material respects. Accordingly, if an Obligor has a claim against such Trust for
violation of any law and such claim materially and adversely affects such
Trust's interest in a Receivable, such violation would constitute a breach of
the warranties of the Seller under such Sale and Servicing Agreement and would
create an obligation of the Seller to repurchase the Receivable unless the
breach is cured. See "Description of the Transfer and Servicing
Agreements -- Sale and Assignment of Receivables".
OTHER LIMITATIONS
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a secured party
to realize upon collateral or to enforce a deficiency judgment. For example, in
a Chapter 13 proceeding under the federal bankruptcy law, a court may prevent a
creditor from repossessing a vehicle, and, as part of the rehabilitation plan,
reduce the amount of the secured indebtedness to the market value of the vehicle
at the time of bankruptcy (as determined by the court), leaving the creditor as
a general unsecured creditor for the remainder of the indebtedness. A bankruptcy
court may also reduce the monthly payments due under a contract or change the
rate of interest and time of repayment of the indebtedness.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of certain federal income tax
consequences of the purchase, ownership and disposition of the Notes and the
Certificates. The summary does not purport to deal with federal income tax
consequences applicable to all categories of holders, some of which may be
subject to special rules. For example, it does not discuss the tax treatment of
Noteholders or Certificateholders that are insurance companies, regulated
investment companies or dealers in securities. Moreover, there are no cases or
Internal Revenue Service ("IRS") rulings on similar transactions involving both
debt and equity interests issued by a trust with terms similar to those of the
Notes and the Certificates. As a result, the IRS may disagree with all or a part
of the discussion below. Prospective investors are urged to consult their own
tax advisors in determining the federal, state, local, foreign and any other tax
consequences to them of the purchase, ownership and disposition of the Notes and
the Certificates.
The following summary is based upon current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), the Treasury regulations
promulgated thereunder and judicial or ruling authority, all of which are
subject to change, which change may be retroactive. Each Trust will be provided
with an opinion of special Federal tax counsel to each Trust specified in the
related Prospectus Supplement ("Federal Tax Counsel"), regarding certain federal
income tax matters discussed below. An opinion of Federal Tax Counsel, however,
is not binding on the IRS or the courts. No ruling on any of the issues
discussed below will be sought from the IRS. For purposes of the following
summary, references to the Trust, the Notes, the Certificates and related terms,
parties and documents shall be deemed to refer, unless otherwise specified
herein, to each Trust and the Notes, Certificates and related terms, parties and
documents applicable to such Trust.
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TAX CHARACTERIZATION OF THE TRUST
Federal Tax Counsel will deliver its opinion that the Trust will not be an
association (or publicly traded partnership) taxable as a corporation for
federal income tax purposes. This opinion will be based on the assumption that
the terms of the Trust Agreement and related documents will be complied with,
and on counsel's conclusions that (1) the Trust will not have certain
characteristics necessary for a business trust to be classified as an
association taxable as a corporation and (2) the nature of the income of the
Trust will exempt it from the rule that certain publicly traded partnerships are
taxable as corporations.
If the Trust were taxable as a corporation for federal income tax purposes,
the Trust would be subject to corporate income tax on its taxable income. The
Trust's taxable income would include all its income on the Receivables, possibly
reduced by its interest expense on the Notes. Any such corporate income tax
could materially reduce cash available to make payments on the Notes and
distributions on the Certificates, and Certificateholders could be liable for
any such tax that is unpaid by the Trust.
TAX CONSEQUENCES TO HOLDERS OF THE NOTES
Treatment of the Notes as Indebtedness. The Seller will agree, and the
Noteholders will agree by their purchase of Notes, to treat the Notes as debt
for federal income tax purposes. Federal Tax Counsel will, except as otherwise
provided in the related Prospectus Supplement, advise the Trust that the Notes
will be classified as debt for federal income tax purposes. The discussion below
assumes this characterization of the Notes is correct.
OID, Indexed Securities, etc. The discussion below assumes that all
payments on the Notes are denominated in U.S. dollars, and that the Notes are
not Indexed Securities or Strip Notes. Moreover, the discussion assumes that the
interest formula for the Notes meets the requirements for "qualified stated
interest" under proposed Treasury regulations (the "proposed OID regulations")
relating to original issue discount ("OID"), and that any OID on the Notes
(i.e., any excess of the principal amount of the Notes over their issue price)
does not exceed a de minimis amount (i.e., 1/4% of their principal amount
multiplied by the number of full years included in their term), all within the
meaning of the proposed OID regulations. If these conditions are not satisfied
with respect to any given series of Notes, additional tax considerations with
respect to such Notes will be disclosed in the applicable Prospectus Supplement.
Interest Income on the Notes. Based on the above assumptions, except as
discussed in the following paragraph, the Notes will not be considered issued
with OID. The stated interest thereon will be taxable to a Noteholder as
ordinary interest income when received or accrued in accordance with such
Noteholder's method of tax accounting. Under the proposed OID regulations, a
holder of a Note issued with a de minimis amount of OID must include such OID in
income, on a pro rata basis, as principal payments are made on the Note. It is
believed that any prepayment premium paid as a result of a mandatory redemption
will be taxable as contingent interest when it becomes fixed and unconditionally
payable. A purchaser who buys a Note for more or less than its principal amount
will generally be subject, respectively, to the premium amortization or market
discount rules of the Code.
However, because a failure to pay interest currently on the Notes is not a
default and does not give rise to a penalty, under the proposed OID regulations
the Notes might be viewed as having been issued with OID. The proposed OID
regulations do not by their terms apply to debt instruments issued before the
regulations are finalized, and it is not clear whether the same principles would
apply in the absence of such regulations. In any event, this interpretation
would not significantly affect accrual basis holders of Notes, although it would
somewhat accelerate taxable income to cash basis holders by in effect requiring
them to report interest income on the accrual basis.
A holder of a Note that has a fixed maturity date of not more than one year
from the issue date of such Note (a "Short-Term Note") may be subject to special
rules. An accrual basis holder of a Short-Term Note (and certain cash method
holders, including regulated investment companies, as set forth in Section 1281
of the Code) generally would be required to report interest income as interest
accrues on a straight-line basis over the term of each interest period. Other
cash basis holders of a Short-Term Note would, in general, be
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required to report interest income as interest is paid (or, if earlier, upon the
taxable disposition of the Short-Term Note). However, a cash basis holder of a
Short-Term Note reporting interest income as it is paid may be required to defer
a portion of any interest expense otherwise deductible on indebtedness incurred
to purchase or carry the Short-Term Note until the taxable disposition of the
Short-Term Note. A cash basis taxpayer may elect under Section 1281 of the Code
to accrue interest income on all nongovernment debt obligations with a term of
one year or less, in which case the taxpayer would include interest on the
Short-Term Note in income as it accrues, but would not be subject to the
interest expense deferral rule referred to in the preceding sentence. Certain
special rules apply if a Short-Term Note is purchased for more or less than its
principal amount.
Sale or Other Disposition. If a Noteholder sells a Note, the holder will
recognize gain or loss in an amount equal to the difference between the amount
realized on the sale and the holder's adjusted tax basis in the Note. The
adjusted tax basis of a Note to a particular Noteholder will equal the holder's
cost for the Note, increased by any market discount, acquisition discount, OID
and gain previously included by such Noteholder in income with respect to the
Note and decreased by the amount of bond premium (if any) previously amortized
and by the amount of principal payments previously received by such Noteholder
with respect to such Note. Any such gain or loss will be capital gain or loss if
the Note was held as a capital asset, except for gain representing accrued
interest and accrued market discount not previously included in income. Capital
losses generally may be used only to offset capital gains.
Foreign Holders. Interest payments made (or accrued) to a Noteholder who
is a nonresident alien, foreign corporation or other non-United States person (a
"foreign person") generally will be considered "portfolio interest", and
generally will not be subject to United States federal income tax and
withholding tax, if the interest is not effectively connected with the conduct
of a trade or business within the United States by the foreign person and the
foreign person (i) is not actually or constructively a "10 percent shareholder"
of the Trust or the Seller (including a holder of 10% of the outstanding
Certificates) or a "controlled foreign corporation" with respect to which the
Trust or the Seller is a "related person" within the meaning of the Code and
(ii) provides the Owner Trustee or other person who is otherwise required to
withhold U.S. tax with respect to the Notes with an appropriate statement (on
Form W-8 or a similar form), signed under penalties of perjury, certifying that
the beneficial owner of the Note is a foreign person and providing the foreign
person's name and address. If a Note is held through a securities clearing
organization or certain other financial institutions, the organization or
institution may provide the relevant signed statement to the withholding agent;
in that case, however, the signed statement must be accompanied by a Form W-8 or
substitute form provided by the foreign person that owns the Note. If such
interest is not portfolio interest, then it will be subject to United States
federal income and withholding tax at a rate of 30 percent, unless reduced or
eliminated pursuant to an applicable tax treaty.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a Note by a foreign person will be exempt from United
States federal income and withholding tax, provided that (i) such gain is not
effectively connected with the conduct of a trade or business in the United
States by the foreign person and (ii) in the case of an individual foreign
person, the foreign person is not present in the United States for 183 days or
more in the taxable year.
Backup Withholding. Each holder of a Note (other than an exempt holder
such as a corporation, tax-exempt organization, qualified pension and
profit-sharing trust, individual retirement account or nonresident alien who
provides certification as to status as a nonresident) will be required to
provide, under penalties of perjury, a certificate containing the holder's name,
address, correct federal taxpayer identification number and a statement that the
holder is not subject to backup withholding. Should a nonexempt Noteholder fail
to provide the required certification, the Trust will be required to withhold 31
percent of the amount otherwise payable to the holder, and remit the withheld
amount to the IRS as a credit against the holder's federal income tax liability.
Possible Alternative Treatments of the Notes. If, contrary to the opinion
of Federal Tax Counsel, the IRS successfully asserted that one or more of the
Notes did not represent debt for federal income tax purposes, the Notes might be
treated as equity interests in the Trust. If so treated, the Trust might be
taxable
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as a corporation with the adverse consequences described above (and the taxable
corporation would not be able to reduce its taxable income by deductions for
interest expense on Notes recharacterized as equity). Alternatively, and most
likely in the view of Federal Tax Counsel, the Trust might be treated as a
publicly traded partnership that would not be taxable as a corporation because
it would meet certain qualifying income tests. Nonetheless, treatment of the
Notes as equity interests in such a publicly traded partnership could have
adverse tax consequences to certain holders. For example, income to certain
tax-exempt entities (including pension funds) would be "unrelated business
taxable income", income to foreign holders generally would be subject to U.S.
tax and U.S. tax return filing and withholding requirements, and individual
holders might be subject to certain limitations on their ability to deduct their
share of Trust expenses.
TAX CONSEQUENCES TO HOLDERS OF THE CERTIFICATES
Treatment of the Trust as a Partnership. The Seller and the Servicer will
agree, and the Certificateholders will agree by their purchase of Certificates,
to treat the Trust as a partnership for purposes of federal and state income
tax, franchise tax and any other tax measured in whole or in part by income,
with the assets of the partnership being the assets held by the Trust, the
partners of the partnership being the Certificateholders (including the Company
in its capacity as recipient of distributions from the Reserve Account), and the
Notes being debt of the partnership. However, the proper characterization of the
arrangement involving the Trust, the Certificates, the Notes, the Seller, the
Company and the Servicer is not clear because there is no authority on
transactions closely comparable to that contemplated herein.
A variety of alternative characterizations are possible. For example,
because the Certificates have certain features characteristic of debt, the
Certificates might be considered debt of the Company or the Trust. Any such
characterization would not result in materially adverse tax consequences to
Certificateholders as compared to the consequences from treatment of the
Certificates as equity in a partnership, described below. The following
discussion assumes that the Certificates represent equity interests in a
partnership.
Indexed Securities, etc. The following discussion assumes that all
payments on the Certificates are denominated in U.S. dollars, none of the
Certificates are Indexed Securities or Strip Certificates, and that a series of
Securities includes a single class of Certificates. If these conditions are not
satisfied with respect to any given series of Certificates, additional tax
considerations with respect to such Certificates will be disclosed in the
applicable Prospectus Supplement.
Partnership Taxation. As a partnership, the Trust will not be subject to
federal income tax. Rather, each Certificateholder will be required to
separately take into account such holder's allocated share of income, gains,
losses, deductions and credits of the Trust. The Trust's income will consist
primarily of interest and finance charges earned on the Receivables (including
appropriate adjustments for market discount, OID and bond premium) and any gain
upon collection or disposition of Receivables. The Trust's deductions will
consist primarily of interest accruing with respect to the Notes, servicing and
other fees, and losses or deductions upon collection or disposition of
Receivables.
The tax items of a partnership are allocable to the partners in accordance
with the Code, Treasury regulations and the partnership agreement (here, the
Trust Agreement and related documents). The Trust Agreement will provide, in
general, that the Certificateholders will be allocated taxable income of the
Trust for each month equal to the sum of (i) the interest that accrues on the
Certificates in accordance with their terms for such month, including interest
accruing at the Pass Through Rate for such month and interest on amounts
previously due on the Certificates but not yet distributed; (ii) any Trust
income attributable to discount on the Receivables that corresponds to any
excess of the principal amount of the Certificates over their initial issue
price; (iii) prepayment premium payable to the Certificateholders for such
month; and (iv) any other amounts of income payable to the Certificateholders
for such month. Such allocation will be reduced by any amortization by the Trust
of premium on Receivables that corresponds to any excess of the issue price of
Certificates over their principal amount. All remaining taxable income of the
Trust will be allocated to the Company. Based on the economic arrangement of the
parties, this approach for allocating Trust income should be permissible under
applicable Treasury regulations, although no assurance can be given that the IRS
would not require a greater amount of income to be allocated to
Certificateholders. Moreover, even under the
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foregoing method of allocation, Certificateholders may be allocated income equal
to the entire Pass Through Rate plus the other items described above even though
the Trust might not have sufficient cash to make current cash distributions of
such amount. Thus, cash basis holders will in effect be required to report
income from the Certificates on the accrual basis and Certificateholders may
become liable for taxes on Trust income even if they have not received cash from
the Trust to pay such taxes. In addition, because tax allocations and tax
reporting will be done on a uniform basis for all Certificateholders but
Certificateholders may be purchasing Certificates at different times and at
different prices, Certificateholders may be required to report on their tax
returns taxable income that is greater or less than the amount reported to them
by the Trust.
All of the taxable income allocated to a Certificateholder that is a
pension, profit sharing or employee benefit plan or other tax-exempt entity
(including an individual retirement account) will constitute "unrelated business
taxable income" generally taxable to such a holder under the Code.
An individual taxpayer's share of expenses of the Trust (including fees to
the Servicer but not interest expense) would be miscellaneous itemized
deductions. Such deductions might be disallowed to the individual in whole or in
part and might result in such holder being taxed on an amount of income that
exceeds the amount of cash actually distributed to such holder over the life of
the Trust.
The Trust intends to make all tax calculations relating to income and
allocations to Certificateholders on an aggregate basis. If the IRS were to
require that such calculations be made separately for each Receivable, the Trust
might be required to incur additional expense but it is believed that there
would not be a material adverse effect on Certificateholders.
Discount and Premium. It is believed that the Receivables were not issued
with OID, and, therefore, the Trust should not have OID income. However, the
purchase price paid by the Trust for the Receivables may be greater or less than
the remaining principal balance of the Receivables at the time of purchase. If
so, the Receivables will have been acquired at a premium or discount, as the
case may be. (As indicated above, the Trust will make this calculation on an
aggregate basis, but might be required to recompute it on a
Receivable-by-Receivable basis.)
If the Trust acquires the Receivables at a market discount or premium, the
Trust will elect to include any such discount in income currently as it accrues
over the life of the Receivables or to offset any such premium against interest
income on the Receivables. As indicated above, a portion of such market discount
income or premium deduction may be allocated to Certificateholders.
Section 708 Termination. Under Section 708 of the Code, the Trust will be
deemed to terminate for federal income tax purposes if 50% or more of the
capital and profits interests in the Trust are sold or exchanged within a
12-month period. If such a termination occurs, the Trust will be considered to
distribute its assets to the partners, who would then be treated as
recontributing those assets to the Trust, as a new partnership. The Trust will
not comply with certain technical requirements that might apply when such a
constructive termination occurs. As a result, the Trust may be subject to
certain tax penalties and may incur additional expenses if it is required to
comply with those requirements. Furthermore, the Trust might not be able to
comply due to lack of data.
Disposition of Certificates. Generally, capital gain or loss will be
recognized on a sale of Certificates in an amount equal to the difference
between the amount realized and the seller's tax basis in the Certificates sold.
A Certificateholder's tax basis in a Certificate will generally equal the
holder's cost increased by the holder's share of Trust income (includible in
income) and decreased by any distributions received with respect to such
Certificate. In addition, both the tax basis in the Certificates and the amount
realized on a sale of a Certificate would include the holder's share of the
Notes and other liabilities of the Trust. A holder acquiring Certificates at
different prices may be required to maintain a single aggregate adjusted tax
basis in such Certificates, and, upon sale or other disposition of some of the
Certificates, allocate a portion of such aggregate tax basis to the Certificates
sold (rather than maintaining a separate tax basis in each Certificate for
purposes of computing gain or loss on a sale of that Certificate).
Any gain on the sale of a Certificate attributable to the holder's share of
unrecognized accrued market discount on the Receivables would generally be
treated as ordinary income to the holder and would give rise to
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<PAGE> 90
special tax reporting requirements. The Trust does not expect to have any other
assets that would give rise to such special reporting requirements. Thus, to
avoid those special reporting requirements, the Trust will elect to include
market discount in income as it accrues.
If a Certificateholder is required to recognize an aggregate amount of
income (not including income attributable to disallowed itemized deductions
described above) over the life of the Certificates that exceeds the aggregate
cash distributions with respect thereto, such excess will generally give rise to
a capital loss upon the retirement of the Certificates.
Allocations Between Transferors and Transferees. In general, the Trust's
taxable income and losses will be determined monthly and the tax items for a
particular calendar month will be apportioned among the Certificateholders in
proportion to the principal amount of Certificates owned by them as of the close
of the last day of such month. As a result, a holder purchasing Certificates may
be allocated tax items (which will affect its tax liability and tax basis)
attributable to periods before the actual transaction.
The use of such a monthly convention may not be permitted by existing
regulations. If a monthly convention is not allowed (or only applies to
transfers of less than all of the partner's interest), taxable income or losses
of the Trust might be reallocated among the Certificateholders. The Company is
authorized to revise the Trust's method of allocation between transferors and
transferees to conform to a method permitted by future regulations.
Section 754 Election. In the event that a Certificateholder sells its
Certificates at a profit (loss), the purchasing Certificateholder will have a
higher (lower) basis in the Certificates than the selling Certificateholder had.
The tax basis of the Trust's assets will not be adjusted to reflect that higher
(or lower) basis unless the Trust were to file an election under Section 754 of
the Code. In order to avoid the administrative complexities that would be
involved in keeping accurate accounting records, as well as potentially onerous
information reporting requirements, the Trust will not make such election. As a
result, Certificateholders might be allocated a greater or lesser amount of
Trust income than would be appropriate based on their own purchase price for
Certificates.
Administrative Matters. The Owner Trustee is required to keep or have kept
complete and accurate books of the Trust. Such books will be maintained for
financial reporting and tax purposes on an accrual basis and the fiscal year of
the Trust will be the calendar year. The Owner Trustee will file a partnership
information return (IRS Form 1065) with the IRS for each taxable year of the
Trust and will report each Certificateholder's allocable share of items of Trust
income and expense to holders and the IRS on Schedule K-1. The Trust will
provide the Schedule K-1 information to nominees that fail to provide the Trust
with the information statement described below and such nominees will be
required to forward such information to the beneficial owners of the
Certificates. Generally, holders must file tax returns that are consistent with
the information return filed by the Trust or be subject to penalties unless the
holder notifies the IRS of all such inconsistencies.
Under Section 6031 of the Code, any person that holds Certificates as a
nominee at any time during a calendar year is required to furnish the Trust with
a statement containing certain information on the nominee, the beneficial owners
and the Certificates so held. Such information includes (i) the name, address
and taxpayer identification number of the nominee and (ii) as to each beneficial
owner (x) the name, address and identification number of such person, (y)
whether such person is a United States person, a tax-exempt entity or a foreign
government, an international organization, or any wholly owned agency or
instrumentality of either of the foregoing, and (z) certain information on
Certificates that were held, bought or sold on behalf of such person throughout
the year. In addition, brokers and financial institutions that hold Certificates
through a nominee are required to furnish directly to the Trust information as
to themselves and their ownership of Certificates. A clearing agency registered
under Section 17A of the Exchange Act is not required to furnish any such
information statement to the Trust. The information referred to above for any
calendar year must be furnished to the Trust on or before the following January
31. Nominees, brokers and financial institutions that fail to provide the Trust
with the information described above may be subject to penalties.
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The Company will be designated as the tax matters partner in the related
Trust Agreement and, as such, will be responsible for representing the
Certificateholders in any dispute with the IRS. The Code provides for
administrative examination of a partnership as if the partnership were a
separate and distinct taxpayer. Generally, the statute of limitations for
partnership items does not expire before three years after the date on which the
partnership information return is filed. Any adverse determination following an
audit of the return of the Trust by the appropriate taxing authorities could
result in an adjustment of the returns of the Certificateholders, and, under
certain circumstances, a Certificateholder may be precluded from separately
litigating a proposed adjustment to the items of the Trust. An adjustment could
also result in an audit of a Certificateholder's returns and adjustments of
items not related to the income and losses of the Trust.
Tax Consequences to Foreign Certificateholders. It is not clear whether
the Trust would be considered to be engaged in a trade or business in the United
States for purposes of federal withholding taxes with respect to non-U.S.
persons because there is no clear authority dealing with that issue under facts
substantially similar to those described herein. Although it is not expected
that the Trust would be engaged in a trade or business in the United States for
such purposes, the Trust will withhold as if it were so engaged in order to
protect the Trust from possible adverse consequences of a failure to withhold.
The Trust expects to withhold on the portion of its taxable income that is
allocable to foreign Certificateholders pursuant to Section 1446 of the Code, as
if such income were effectively connected to a U.S. trade or business, at a rate
of 34% for foreign holders that are taxable as corporations and 31% for all
other foreign holders. These rates may be increased by proposed tax legislation.
Subsequent adoption of Treasury regulations or the issuance of other
administrative pronouncements may require the Trust to change its withholding
procedures. In determining a holder's withholding status, the Trust may rely on
IRS Form W-8, IRS Form W-9 or the holder's certification of nonforeign status
signed under penalties of perjury.
Each foreign holder might be required to file a U.S. individual or
corporate income tax return (including, in the case of a corporation, the branch
profits tax) on its share of the Trust's income. Each foreign holder must obtain
a taxpayer identification number from the IRS and submit that number to the
Trust on Form W-8 in order to assure appropriate crediting of the taxes
withheld. A foreign holder generally would be entitled to file with the IRS a
claim for refund with respect to taxes withheld by the Trust, taking the
position that no taxes were due because the Trust was not engaged in a U.S.
trade or business. However, interest payments made (or accrued) to a
Certificateholder who is a foreign person generally will be considered
guaranteed payments to the extent such payments are determined without regard to
the income of the Trust. If these interest payments are properly characterized
as guaranteed payments, then the interest will not be considered "portfolio
interest." As a result, Certificateholders will be subject to United States
federal income tax and withholding tax at a rate of 30 percent, unless reduced
or eliminated pursuant to an applicable treaty. In such case, a foreign holder
would only be entitled to claim a refund for that portion of the taxes in excess
of the taxes that should be withheld with respect to the guaranteed payments.
Backup Withholding. Distributions made on the Certificates and proceeds
from the sale of the Certificates will be subject to a "backup" withholding tax
of 31% if, in general, the Certificateholder fails to comply with certain
identification procedures, unless the holder is an exempt recipient under
applicable provisions of the Code.
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CERTAIN STATE TAX CONSEQUENCES
The activities to be undertaken by the Servicer in servicing and collecting
the Receivables will take place in Michigan. The State of Michigan imposes a
state individual income tax and a single business tax which is imposed on
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.
Because of the variation in each state's tax laws based in whole or in part
upon income, it is impossible to predict tax consequences to holders of Notes
and Certificates in all of the state taxing jurisdictions in which they are
already subject to tax. Noteholders and Certificateholders are urged to consult
their own tax advisors with respect to state tax consequences arising out of the
purchase, ownership and disposition of Notes and Certificates.
For purposes of the following summary, references to the Trust, the Notes,
the Certificates and related terms, parties and documents shall be deemed to
refer, unless otherwise specified herein, to each Trust and the Notes,
Certificates and related terms, parties and documents applicable to such Trust.
TAX CONSEQUENCES WITH RESPECT TO THE NOTES
It is expected that the General Counsel of the Seller ("Michigan Tax
Counsel") will advise the Trust that, assuming the Notes will be treated as debt
for federal income tax purposes, the Notes will be treated as debt for Michigan
income and single business tax purposes. Accordingly, Noteholders not otherwise
subject to taxation in Michigan should not become subject to taxation in
Michigan solely because of a holder's ownership of Notes. However, a Noteholder
already subject to Michigan's income tax or single business tax could be
required to pay additional Michigan tax as a result of the holder's ownership or
disposition of Notes.
TAX CONSEQUENCES WITH RESPECT TO THE CERTIFICATES
If the arrangement created by the Trust Agreement is treated as a
partnership (not taxable as a corporation) for federal income tax purposes,
Michigan Tax Counsel will deliver his opinion that the same treatment should
also apply for Michigan tax purposes. In such case, the resulting constructive
partnership should not be treated as doing business in Michigan but rather
should be viewed as a passive holder of investments and, as a result, should not
be subject to the Michigan single business tax (which, if applicable, could
possibly result in reduced distributions to Certificateholders). The
Certificateholders also should not be subject to the Michigan single business
tax on income received through the partnership.
Under current law, Certificateholders that are nonresidents of Michigan and
are not otherwise subject to Michigan income tax should not be subject to
Michigan income tax on the income from the constructive partnership. 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 taxable as a corporation or a "publicly traded partnership" taxable
as a corporation, then 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.
* * *
THE FEDERAL AND STATE TAX DISCUSSIONS SET FORTH ABOVE ARE INCLUDED FOR
GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A NOTEHOLDER'S
OR CERTIFICATEHOLDER'S PARTICULAR TAX SITUATION. PROSPECTIVE PURCHASERS SHOULD
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE
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<PAGE> 93
TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF NOTES AND
CERTIFICATES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND
OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
ERISA CONSIDERATIONS
Section 406 of ERISA and Section 4975 of the Code prohibit a pension,
profit-sharing or other employee benefit plan, as well as individual retirement
accounts and certain types of Keogh Plans (each a "Benefit Plan"), from engaging
in certain transactions with persons that are "parties in interest" under ERISA
or "disqualified persons" under the Code with respect to such Benefit Plan. A
violation of these "prohibited transaction" rules may result in an excise tax or
other penalties and liabilities under ERISA and the Code for such persons.
Certain transactions involving the Trust might be deemed to constitute
prohibited transactions under ERISA and the Code with respect to a Benefit Plan
that purchased Notes or Certificates if assets of the Trust were deemed to be
assets of the Benefit Plan. Under a regulation issued by the United States
Department of Labor (the "Plan Assets Regulation"), the assets of the Trust
would be treated as plan assets of a Benefit Plan for the purposes of ERISA and
the Code only if the Benefit Plan acquired an "equity interest" in the Trust and
none of the exceptions contained in the Plan Assets Regulation was applicable.
An equity interest is defined under the Plan Assets Regulation as an interest
other than an instrument which is treated as indebtedness under applicable local
law and which has no substantial equity features. The likely treatment in this
context of Notes and Certificates of a given series will be discussed in the
related Prospectus Supplement.
Employee benefit plans that are governmental plans (as defined in Section
3(32) of ERISA) and certain church plans (as defined in Section 3(33) of ERISA)
are not subject to ERISA requirements.
A plan fiduciary considering the purchase of Securities of a given series
should consult its tax and/or legal advisors regarding whether the assets of the
related Trust would be considered plan assets, the possibility of exemptive
relief from the prohibited transaction rules and other issues and their
potential consequences.
PLAN OF DISTRIBUTION
On the terms and conditions set forth in an underwriting agreement with
respect to the Notes of a given series and an underwriting agreement with
respect to the Certificates of such series (collectively, the "Underwriting
Agreements"), the Seller will agree to cause the related Trust to sell to the
underwriters named therein and in the related Prospectus Supplement, and each of
such underwriters will severally agree to purchase, the principal amount of each
class of Notes and Certificates, as the case may be, of the related series set
forth therein and in the related Prospectus Supplement.
In each of the Underwriting Agreements with respect to any given series of
Securities, the several underwriters will agree, subject to the terms and
conditions set forth therein, to purchase all the Notes and Certificates, as the
case may be, described therein which are offered hereby and by the related
Prospectus Supplement if any of such Notes and Certificates, as the case may be,
are purchased.
Each Prospectus Supplement will either (i) set forth the price at which
each class of Notes and Certificates, as the case may be, being offered thereby
will be offered to the public and any concessions that may be offered to certain
dealers participating in the offering of such Notes and Certificates, as the
case may be, or (ii) specify that the related Notes and Certificates, as the
case may be, are to be resold by the underwriters in negotiated transactions at
varying prices to be determined at the time of such sale. After the initial
public offering of any such Notes and Certificates, as the case may be, such
public offering prices and such concessions may be changed.
Each Underwriting Agreement will provide that the Seller will indemnify the
underwriters against certain civil liabilities, including liabilities under the
Securities Act, or contribute to payments the several underwriters may be
required to make in respect thereof.
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Each Trust may, from time to time, invest the funds in its Trust Accounts
in Eligible Investments acquired from such underwriters.
Pursuant to each of the Underwriting Agreements with respect to a given
series of Securities, the closing of the sale of any class of Securities subject
to either thereof will be conditioned on the closing of the sale of all other
such classes subject to either thereof.
The place and time of delivery for the Securities in respect of which this
Prospectus is delivered will be set forth in the related Prospectus Supplement.
LEGAL OPINIONS
Certain legal matters relating to the Securities of any series will be
passed upon for the related Trust, the Seller and the Servicer by the General
Counsel of the Seller and the Servicer. Certain Michigan state tax and other
matters will be passed upon for the Trust by the General Counsel of the Seller
and the Servicer.
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INDEX OF TERMS
<TABLE>
<S> <C>
Actuarial Receivables................................................................ 13
Administration Agreement............................................................. 39
Administration Fee................................................................... 39
Administrator........................................................................ 39
Advance.............................................................................. 6
Applicable Trustee................................................................... 27
APR.................................................................................. 6
Base Rate............................................................................ 22
Benefit Plan......................................................................... 50
Calculation Agent.................................................................... 23
Calculation Date..................................................................... 24
CCC.................................................................................. 3
CD Rate.............................................................................. 23
CD Rate Determination Date........................................................... 23
CD Rate Security..................................................................... 22
Cede................................................................................. 11
Certificate Balance.................................................................. 4
Certificate Distribution Account..................................................... 31
Certificate Pool Factor.............................................................. 15
Certificateholders................................................................... 11
Certificates......................................................................... 1
Chrysler............................................................................. 10
Closing Date......................................................................... 30
Code................................................................................. 42
Collection Account................................................................... 31
Collection Period.................................................................... 32
Commercial Paper Rate................................................................ 23
Commercial Paper Rate Determination Date............................................. 23
Commercial Paper Rate Security....................................................... 22
Commission........................................................................... 2
Commodity Indexed Securities......................................................... 26
Company.............................................................................. 1
Composite Quotations................................................................. 22
Currency Indexed Securities.......................................................... 26
Cutoff Date.......................................................................... 11
Dealer Agreements.................................................................... 11
Dealers.............................................................................. 5
Definitive Certificates.............................................................. 28
Definitive Notes..................................................................... 28
Definitive Securities................................................................ 28
Depository........................................................................... 17
Distribution Date.................................................................... 21
DTC's Nominee........................................................................ 11
Eligible Deposit Account............................................................. 32
Eligible Institution................................................................. 32
Eligible Investments................................................................. 31
ERISA................................................................................ 8
Events of Default.................................................................... 18
Face Amount.......................................................................... 27
Federal Funds Rate................................................................... 24
Federal Funds Rate Determination Date................................................ 24
Federal Funds Rate Security.......................................................... 22
</TABLE>
52
<PAGE> 96
<TABLE>
<S> <C>
Federal Tax Counsel.................................................................. 42
Final Scheduled Maturity Date........................................................ 6
Financed Vehicles.................................................................... 5
Fixed Rate Securities................................................................ 22
Fixed Value Receivables.............................................................. 13
Fixed Value Securities............................................................... 38
Floating Rate Securities............................................................. 22
foreign person....................................................................... 44
FTC Rule............................................................................. 42
Funding Period....................................................................... 4
H.15(519)............................................................................ 22
Indenture............................................................................ 3
Indenture Trustee.................................................................... 1
Index................................................................................ 26
Index Maturity....................................................................... 22
Indexed Commodity.................................................................... 26
Indexed Currency..................................................................... 26
Indexed Principal Amount............................................................. 26
Indexed Securities................................................................... 26
Indirect Participants................................................................ 27
Initial Cutoff Date.................................................................. 5
Initial Pool Balance................................................................. 38
Initial Receivables.................................................................. 5
Insolvency Event..................................................................... 36
Interest Rate........................................................................ 3
Interest Reset Date.................................................................. 22
Interest Reset Period................................................................ 22
Investment Earnings.................................................................. 31
IRS.................................................................................. 42
Issuer............................................................................... 3
LIBOR................................................................................ 25
LIBOR Determination Date............................................................. 25
LIBOR Security....................................................................... 22
London Banking Day................................................................... 25
Market Value Pricing................................................................. 13
Michigan Tax Counsel................................................................. 49
Money Market Yield................................................................... 24
Note Distribution Account............................................................ 31
Note Pool Factor..................................................................... 15
Noteholders.......................................................................... 11
Notes................................................................................ 1
Obligors............................................................................. 11
OID.................................................................................. 43
Owner Trustee........................................................................ 1
Participants......................................................................... 17
Pass Through Rate.................................................................... 4
Payahead Account..................................................................... 31
Payaheads............................................................................ 32
Payment Date......................................................................... 17
Plan Assets Regulation............................................................... 50
Pool Balance......................................................................... 15
Pre-Funded Amount.................................................................... 5
Pre-Funding Account.................................................................. 1
</TABLE>
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<PAGE> 97
<TABLE>
<S> <C>
Precomputed Advance.................................................................. 6
Precomputed Receivables.............................................................. 13
Proposed OID Regulators.............................................................. 43
Prospectus Supplement................................................................ 1
Purchase Amount...................................................................... 30
Rating Agencies...................................................................... 10
Receivables.......................................................................... 1
Receivables Pool..................................................................... 11
Registration Statement............................................................... 2
Related Documents.................................................................... 20
Reserve Account...................................................................... 35
Reuters Screen LIBO Page............................................................. 25
Rule of 78's......................................................................... 13
Rule of 78's Receivables............................................................. 13
Rules................................................................................ 27
Sale and Servicing Agreement......................................................... 5
Schedule of Receivables.............................................................. 30
Securities........................................................................... 1
Securities Act....................................................................... 2
Securityholders...................................................................... 11
Seller............................................................................... 1
Servicer............................................................................. 3
Servicer Default..................................................................... 36
Servicing Fee........................................................................ 33
Servicing Fee Rate................................................................... 33
Short-Term Note...................................................................... 43
Simple Interest Advance.............................................................. 6
Simple Interest Receivables.......................................................... 14
Spread............................................................................... 22
Spread Multiplier.................................................................... 22
Stock Index.......................................................................... 26
Stock Indexed Securities............................................................. 26
Strip Certificates................................................................... 4
Strip Notes.......................................................................... 3
Subsequent Receivables............................................................... 1
Subsequent Transfer Date............................................................. 30
Transfer and Servicing Agreements.................................................... 30
Treasury bills....................................................................... 25
Treasury Rate........................................................................ 25
Treasury Rate Determination Date..................................................... 26
Treasury Rate Security............................................................... 22
Trust................................................................................ 3
Trust Accounts....................................................................... 31
Trust Agreement...................................................................... 1
UCC.................................................................................. 31
Underwriting Agreements.............................................................. 50
</TABLE>
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NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE SELLER OR BY THE UNDERWRITERS. THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, THE SECURITIES OFFERED HEREBY TO ANYONE
IN ANY JURISDICTION IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION
IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE ANY
SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT INFORMATION HEREIN OR THEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS PROSPECTUS
SUPPLEMENT OR PROSPECTUS.
---------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Reports to Securityholders....................... S-3
Summary of Terms................................. S-4
Special Considerations........................... S-16
The Trust........................................ S-19
The Receivables Pool............................. S-20
The Seller and the Servicer...................... S-25
Weighted Average Life of the Securities.......... S-25
Description of the Notes......................... S-26
Description of the Certificates.................. S-29
Description of the Transfer and Servicing
Agreements...................................... S-30
Certain Federal Income Tax Consequences.......... S-38
ERISA Considerations............................. S-39
Underwriting..................................... S-39
Legal Opinions................................... S-41
Index of Terms................................... S-43
PROSPECTUS
Available Information............................ 2
Incorporation of Certain Documents by
Reference....................................... 2
Summary of Terms................................. 3
Special Considerations........................... 9
The Trusts....................................... 11
The Receivables Pools............................ 13
Weighted Average Life of the Securities.......... 15
Pool Factors and Trading Information............. 15
Use of Proceeds.................................. 16
The Seller and the Servicer...................... 16
Description of the Notes......................... 17
Description of the Certificates.................. 22
Certain Information Regarding the Securities..... 22
Description of the Transfer and Servicing
Agreements...................................... 30
Certain Legal Aspects of the Receivables......... 39
Certain Federal Income Tax Consequences.......... 42
Certain State Tax Consequences................... 49
ERISA Considerations............................. 50
Plan of Distribution............................. 50
Legal Opinions................................... 51
Index of Terms................................... 52
</TABLE>
---------------------------
UNTIL 90 DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT, ALL DEALERS
EFFECTING TRANSACTIONS IN THE SECURITIES OFFERED BY THIS PROSPECTUS
SUPPLEMENT, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. THIS IS
IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT
TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
$1,500,000,000
PREMIER AUTO TRUST
1994-3
$498,000,000
FLOATING RATE
ASSET BACKED NOTES, CLASS A-2
$235,000,000
FLOATING RATE
ASSET BACKED NOTES, CLASS A-3
$210,000,000
6.50% ASSET BACKED NOTES,
CLASS A-4
$185,000,000
6.65% ASSET BACKED NOTES,
CLASS A-5
$304,500,000
6.85% ASSET BACKED NOTES,
CLASS A-6
$67,500,000
6.80% ASSET BACKED CERTIFICATES
CHRYSLER FINANCIAL CORPORATION
Seller
CHRYSLER CREDIT CORPORATION
Servicer
SALOMON BROTHERS INC
MERRILL LYNCH & CO.
J.P. MORGAN SECURITIES INC.
PROSPECTUS SUPPLEMENT
DATED MAY 25, 1994
