AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 11, 1997
REGISTRATION NO. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
____________________________________
CHRYSLER FINANCIAL CORPORATION
(Exact name of Registrant as specified in its charter)
MICHIGAN 38-0961430
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
27777 FRANKLIN ROAD
SOUTHFIELD, MICHIGAN 48034-8286
(248) 948-3060
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
CHRISTOPHER A. TARAVELLA, ESQ.
CHRYSLER FINANCIAL CORPORATION
27777 FRANKLIN ROAD
SOUTHFIELD, MICHIGAN 48034-8286
(248) 948-3060
(Name, address, including zip code, and telephone number, including area
code,
of agent for service)
____________________________________
COPY TO:
RENWICK D. MARTIN, ESQ.
BROWN & WOOD LLP
ONE WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(212) 839-5319
____________________________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this Registration Statement becomes effective as
determined by market conditions.
____________________________________
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. / /
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offer. / / _______________.
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / _______________.
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
____________________________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED MAXIMUM
MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED PER UNIT/(2)/ PRICE/(2)/ REGISTRATION FEE
REGISTERED
<S> <C> <C> <C> <C>
Asset Backed Securities . $8,000,000,000(1) 100% $8,000,000,000 $2,424,243
</TABLE>
(1) $580,050,210.82 aggregate principal amount of Asset Backed Securities
registered by the Registrant under Registration Statement No. 33-55789
referred to below and not previously sold is carried forward in this
Registration Statement pursuant to Rule 429. A registration fee of
$200,016.97 in connection with such unsold amount of Asset Backed Securities
was paid previously under the foregoing Registration Statement.
(2) Estimated solely for the purpose of calculating the registration fee.
____________________________________
PURSUANT TO RULE 429, THE PROSPECTUS AND FORMS OF PROSPECTUS SUPPLEMENT
CONTAINED IN THIS REGISTRATION STATEMENT ALSO RELATE TO, AND THIS
REGISTRATION STATEMENT CONSTITUTES A POST-EFFECTIVE AMENDMENT TO,
REGISTRATION STATEMENT NO. 33-55789, WHICH BECAME EFFECTIVE ON OCTOBER 21,
1994, AND ANY UNSOLD SECURITIES REGISTERED THEREUNDER.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SECTION 8(A), MAY DETERMINE.
INTRODUCTORY NOTE
This Registration Statement contains (i) a form of Prospectus relating
to the offering of series of Asset Backed Notes and/or Asset Backed
Certificates by various Premier Auto Trusts created from time to time by
Chrysler Financial Corporation and (ii) two forms of Prospectus Supplement
relating to the offering by Premier Auto Trust 199 - of the particular
series of Asset Backed Certificates or of Asset Backed Notes and Asset Backed
Certificates described therein. Each form of Prospectus Supplement relates
only to the securities described therein and is a form which may be used,
among others, by Chrysler Financial Corporation to offer Asset Backed Notes
and/or Asset Backed Certificates under this Registration Statement. The
features applicable to any actual series of Asset Backed Securities may
include any features specified in the Prospectus.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SUPPLEMENT TO THE ACCOMPANYING PROSPECTUS
SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JULY 11, 1997
PROSPECTUS SUPPLEMENT
(To Prospectus dated , 199_)
$
PREMIER AUTO TRUST 199 -
$ % ASSET BACKED CERTIFICATES, CLASS A
($ % ASSET BACKED CERTIFICATES, CLASS B)
CHRYSLER FINANCIAL CORPORATION
SELLER AND SERVICER
____________________________________
The Premier Auto Trust 199 - (the "Trust") will be formed pursuant to
a Pooling and Servicing Agreement, to be dated as of , 199 (the
"Closing Date"), among Chrysler Financial Corporation (the "Seller" and the
"Servicer") and , as Trustee, and will issue $ aggregate
principal amount of % Asset Backed Certificates, Class A (the "Class A
Certificates") and $ aggregate principal amount of % Asset Backed
Certificates, Class B (the "Class B Certificates" and, together with the
Class A Certificates, the "Certificates"). (Only the Class A Certificates are
being offered hereby.) The Class A Certificates will evidence in the
aggregate an undivided ownership interest in approximately % of the trust.
The Class B Certificates (, which initially will be sold to and retained by
( , a wholly-owned subsidiary of the seller (the "Company")) (a
limited liability company (the "Company"), the general partner of which is
, a wholly-owned subsidiary of the Seller), will evidence in the
aggregate an undivided ownership interest in approximately % of the Trust
(and will not be offered hereby). The rights of the Class B
Certificateholders to receive distributions with respect to the receivables
are subordinated to the rights of the Class A Certificateholders to the
extent described herein. The trust property will include a pool of motor
vehicle retail installment sale contracts (the "Receivables"), secured by
security interests in the motor vehicles financed thereby and including
certain monies due or received thereunder on or after , 199 , and
certain other property. (The Trustee also will hold monies on deposit in a
trust account (the "Pre-funding Account"). Additional motor vehicle retail
installment sale contracts (the "Subsequent Receivables") will be purchased
by the Trust from the Seller from time to time on or before , 199
out of funds on deposit in the pre-funding account.)
Principal and interest to the extent of the applicable pass through rate
generally will be distributed on the day of each month (the "Distribution
Date"), commencing , 199 . The Final Scheduled Distribution Date
on the Certificates will be , 199 .
(Continued on following page)
____________________________________
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. NEITHER THE CERTIFICATES NOR
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.
<TABLE>
<CAPTION>
UNDERWRITING DISCOUNT PROCEEDS TO THE
PRICE TO PUBLIC(1) SELLER(1)(2)
<S> <C> <C> <C>
Per Class A Certificate . . % % %
Per Class B Certificate . . % % %
Total . . . . . . . . . . . $ $ $
</TABLE>
(1) Plus accrued interest, if any, from , 199 .
(2) Before deducting expenses, estimated to be $ .
____________________________________
The (Class A) Certificates are offered by the Underwriters when, as and
if issued and accepted by the Underwriters and subject to their right to
reject orders in whole or in part. It is expected that delivery of the
Certificates will be made in book-entry form only through the Same Day Funds
Settlement System of The Depository Trust Company on or about the Closing
Date.
____________________________________
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS , 199 .
(CONTINUED FROM PRECEDING PAGE)
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 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 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.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE
CERTIFICATES. SUCH TRANSACTIONS MAY INCLUDE STABILIZING AND THE PURCHASE OF
CERTIFICATES TO COVER SYNDICATE SHORT POSITIONS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING" HEREIN.
REPORTS TO CERTIFICATEHOLDERS
Unless and until 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 Certificates. See "Certain Information Regarding the
Securities--Book-Entry Registration" and "--Reports to Certificateholders" 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.
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.
Issuer Premier Auto Trust 199 - (the "Trust" or the
"Issuer"), a trust to be formed by the Seller and
the Trustee pursuant to the Agreement.
Seller and Servicer Chrysler Financial Corporation (the "Seller", the
"Servicer" or "CFC").
Trustee ___________________, as trustee under the Agreement
(the "Trustee").
The Certificates The Trust will issue Asset Backed Certificates (the
"Certificates") in an aggregate initial principal
amount of $ . The Certificates represent
fractional undivided interests in the Trust and will
be issued pursuant to a Pooling and Servicing
Agreement to be dated as of , 199 (as
amended and supplemented from time to time, the
"Agreement"), among the Seller, the Servicer and the
Trustee.
The Certificates will consist of $
aggregate principal amount of %
Asset Backed Certificates, Class A (the "Class A
Certificates") and $ aggregate principal
amount of % Asset Backed Certificates,
Class B (the "Class B Certificates"). (Only the
Class A Certificates are being offered hereby.) Each
Certificate will represent a fractional undivided
ownership interest in the Trust. The Trust assets
will include the Receivables, all monies due
thereunder on or after , 199 with
respect to the Precomputed Receivables and all
monies received thereunder on or after
, 199 with respect to the Simple Interest
Receivables (each such date, a "Cutoff Date"),
security interests in the vehicles financed thereby
("Financed Vehicles"), certain bank accounts and the
proceeds thereof, any proceeds from claims on
certain insurance policies, and certain rights under
the Agreement. The Certificates will be issued in
fully registered form in denominations of $1,000 and
integral multiples thereof.
The Class A Certificates will evidence in the
aggregate an undivided ownership interest (the
"Class A Percentage") of approximately % of the
Trust (initially representing $ ) and the
Class B Certificates will evidence in the aggregate
an undivided ownership interest (the "Class B
Percentage") of approximately % of the Trust
(initially representing $ ). The Class B
Certificates are subordinated to the Class A
Certificates to the extent described herein. (The
Class B Certificates are not being offered hereby
and initially will be sold to and retained by
, a wholly-owned subsidiary of the Seller
(the "Company")).
The Receivables On , 199 (the "Closing Date"), the Trust
will purchase Receivables (the "Initial
Receivables") having an aggregate principal balance
of approximately $ as of , 199
(the "Initial Cutoff Date"), from the Seller
pursuant to the Agreement. On and following the
Closing Date, pursuant to the Agreement, the Seller
will be obligated, subject only to the availability
thereof, to sell, and the Trust will be obligated to
purchase, subject to the satisfaction of certain
conditions set forth therein, additional Receivables
(the "Subsequent Receivables") from time to time
during the Funding Period having an aggregate
principal balance equal to approximately $
(such amount being equal to an 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 "Subsequent Cutoff Date") the
date as of which particular Subsequent Receivables
are conveyed to the Trust. It is expected that
certain of the Subsequent Receivables arising
between the Initial Cutoff Date and the Closing Date
will be conveyed to the Trust on the Closing Date
and that other Subsequent Receivables will be
conveyed to the Trust as frequently as daily
thereafter on dates specified by the Seller (each
date on which Subsequent Receivables are conveyed to
the Trust being referred to as a "Subsequent
Transfer Date") occurring during the Funding Period.
See "Description of the Certificates--Sale and
Assignment of Receivables; Subsequent Receivables"
herein.
The Initial Receivables have been selected, and the
Subsequent Receivables will be selected, from the
contracts owned by the Seller based on the criteria
specified in the Agreement and described herein and
in the Prospectus. As of the Initial Cutoff Date,
the weighted average annual percentage rate of the
Initial Receivables was approximately ____%, the
weighted average remaining maturity of the Initial
Receivables was approximately ____ months and the
weighted average original maturity of the Initial
Receivables was approximately ____ months. No
Initial Receivable has, and no Subsequent Receivable
will have, a scheduled maturity later than (the
"Final Scheduled Maturity Date").
Subsequent Receivables may be originated by CFC at a
later date using credit criteria different from
those which were applied to the Initial Receivables
and may be of a different credit quality and
seasoning. In addition, following the transfer of
Subsequent Receivables to the Trust, the
characteristics of the entire pool of Receivables
included in the Trust may vary significantly from
those of the Initial Receivables. 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
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 the 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 , 199 . Distributions will be
made to holders of the Certificates (the
"Certificateholders") of record as of the day
immediately preceding such Distribution Date or, if
Definitive Certificates are issued, as of the
day of the preceding month (a "Record Date"). A
"Business Day" is a day that in New York City or in
the city in which the corporate trust office of the
Trustee is located is neither a legal holiday nor a
day on which banking institutions are authorized by
law, regulation or executive order to be closed.
B. Class A Pass
Through Rate % per annum (the "Class A Pass Through Rate").
C. Class B Pass
Through Rate % per annum (the "Class B Pass Through Rate").
D. Class A Interest On each Distribution Date, the Trustee shall
distribute pro rata to the Class A
Certificateholders interest at the Class A Pass
Through Rate on the Class A Certificate Balance as
of the last day of the preceding calendar month
(before giving effect to distributions of principal
on such Distribution Date) generally to the extent
of funds available from (i) the Class A Percentage
of the Interest Distribution Amount, (ii) the
Reserve Account and (iii) the Class B Percentage of
the Total Distribution Amount. The "Class A
Certificate Balance" will equal, initially, $
and thereafter will equal the initial Class
A Certificate Balance, reduced by all principal
distributions on the Class A Certificates.
E. Class A
Principal On each Distribution Date, the Trustee shall
distribute pro rata to Class A Certificateholders an
amount equal to the Class A Percentage of the
Principal Distribution Amount for the Collection
Period preceding such Distribution Date to the
extent of funds available therefor. The "Principal
Distribution Amount" is the amount of principal paid
or, in certain circumstances, scheduled to be paid
with respect to the Receivables plus, in certain
circumstances, the principal balance of defaulted
Receivables, as calculated by the Servicer as
described under "Description of the Certificates --
Distributions." The Class A Percentage of the
Principal Distribution Amount will be passed through
on each Distribution Date to the Class A
Certificateholders to the extent of funds available
from (i) the Class A Percentage of the Principal
Distribution Amount (exclusive of the portion
thereof attributable to Realized Losses), (ii) the
Reserve Account and (iii) the Class B Percentage of
the Total Distribution Amount. In addition, on the
Distribution Date occurring on , 199 (the
"Final Scheduled Distribution Date"), the principal
due to be distributed to the Class A
Certificateholders will include the lesser of (i)
the Class A Percentage of any payments of principal
due and remaining unpaid with respect to the
Receivables in the Trust as of the last day of the
preceding Collection Period and (ii) the portion of
the amount in clause (i) above that is necessary
(after giving effect to all other amounts
distributed to Class A Certificateholders on such
Distribution Date and allocable to principal) to
reduce the Class A Certificate Balance to zero. The
"Class A Certificate Balance" will equal, initially,
$ and, thereafter, will equal the initial
Class A Certificate Balance reduced by all amounts
previously distributed to Class A Certificateholders
as principal. "Realized Losses" means the excess of
the principal balance of any Liquidated Receivable
over Liquidation Proceeds to the extent allocable to
principal received in the Collection Period in which
the Receivable became a Liquidated Receivable. A
"Collection Period" with respect to a Distribution
Date will be the calendar month preceding the month
in which such Distribution Date occurs, or, in the
case of the initial Distribution Date, the period
from the Initial Cutoff Date through the last day of
the calendar month preceding the month in which the
initial Distribution Date occurs. The reconciliation
methodology for determining the Principal
Distribution Amount, as described under "Description
of the Transfer and Servicing Agreements --
Distributions -- Allocation of Collections on
Receivables; Reconciliation" in the Prospectus will
not be used.
F. Class B
Interest On each Distribution Date, the Trustee shall
distribute pro rata to the Class B
Certificateholders interest at the Class B Pass
Through Rate on the Class B Certificate Balance as
of the last day of the preceding calendar month
(before giving effect to distributions of principal
on such Distribution Date) generally to the extent
of funds available, after giving effect to the prior
rights of the Class A Certificateholders to receive
the distribution of principal and interest due them
as described above, from (i) the Class B Percentage
of the Interest Distribution Amount and (ii) the
Reserve Account. The "Class B Certificate Balance"
will equal, initially, $ and, thereafter,
will equal the initial Class B Certificate Balance
reduced by all amounts previously distributed to
Class B Certificateholders (or deposited in the
Reserve Account, but not including the Reserve
Account Initial Deposit) and allocable to principal
and by Realized Losses.
G. Class B
Principal On each Distribution Date, the Trustee will
distribute the Class B Percentage of the Principal
Distribution Amount to the Class B
Certificateholders to the extent of funds available
(after giving effect to the distribution of the
interest and principal due to the Class A
Certificateholders and the interest due to the Class
B Certificateholders) from (i) the Class B
Percentage of the Principal Distribution Amount
(exclusive of the portion thereof attributable to
Realized Losses) and (ii) the Reserve Account. In
addition, on the Final Scheduled Distribution Date,
the principal required to be distributed to the
Class B Certificateholders will include the lesser
of (i) the Class B Percentage of any payments of
principal due and remaining unpaid with respect to
the Receivables in the Trust as of the last day of
the preceding Collection Period and (ii) the portion
of the amount in clause (i) above that is necessary
(after giving effect to all other amounts
distributed to Class A and Class B
Certificateholders on such Distribution Date and
allocable to principal) to reduce the Class B
Certificate Balance to zero.
H. 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 Class A Certificateholders will receive an
amount equal to the Class A Certificate Balance
together with accrued interest at the Class A Pass
Through Rate, the Class B Certificateholders will
receive an amount equal to the Class B Certificate
Balance together with accrued interest at the Class
B Pass Through Rate, and the Certificates will be
retired. The "Initial Pool Balance" will equal the
sum of (i) the Pool Balance as of the Initial Cutoff
Date plus (ii) the aggregate principal balances of
all Subsequent Receivables added to the Trust as of
their respective Subsequent Cutoff Dates. See
"Description of the Certificates -- Optional
Prepayment" herein.
I. 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
any amount remains on deposit in the Pre-Funding
Account after giving effect to the purchase of all
Subsequent Receivables, including any such purchase
on such date (a "Mandatory Repurchase"). The
aggregate principal amount of Certificates to be
prepaid will be an amount equal to 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 if the aggregate
principal amount of Certificates to be prepaid
pursuant to a Mandatory Repurchase exceeds $
. 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
remaining Pre-Funded Amount (the "Certificate
Prepayment Amount") at the related 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 , 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 , in the case of a Class A
Certificate, and on the , in the case of a
Class B Certificate. Such excess shall be discounted
to present value to such Distribution Date at the
applicable 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 Agreement as liquidated
damages for the failure to deliver Subsequent
Receivables having an aggregate principal amount
equal to the Pre-Funded Amount. No other assets of
the Seller or 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 (i)
the date on which (a) the amount on deposit in the
Pre-Funding Account is less than $ , (b) an
Event of Default occurs under the Agreement or (c)
certain events of insolvency occur with respect to
the Seller or the Servicer or (ii) the close of
business on the Distribution Date, the Pre-Funded
Amount will be maintained as an account in the name
of the Trustee (the "Pre-Funding Account"). The
Pre-Funded Amount will initially equal approximately
$ , and, during the Funding Period, will be
reduced by the amount thereof used to purchase
Subsequent Receivables in accordance with the
Agreement and the amount thereof deposited in the
Reserve Account in connection with the purchase of
such Subsequent Receivables. The Seller expects that
the Pre-Funded Amount will be reduced to less than $
by the Distribution Date. Any
Pre-Funded Amount remaining at the end of the
Funding Period will be payable to the
Certificateholders pro rata in proportion to their
initial principal amounts.
Subordination The rights of the Class B Certificateholders to
receive distributions to which they would otherwise
be entitled with respect to the Receivables are
subordinated to the rights of the Class A
Certificateholders, as described more fully herein.
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 of at least $
plus an amount attributable to the difference
between the anticipated investment earnings on the
Pre-Funded Amount and the weighted average interest
expense on the portion of the Certificates
represented by the Pre-Funded Amount. On each
Subsequent Transfer Date, cash or Eligible
Investments having a value approximately equal to
% of the aggregate principal balance of the
Subsequent Receivables conveyed to the Trust on such
Subsequent Transfer Date will be withdrawn from the
Pre-Funding Account from amounts otherwise
distributable to the Seller in connection with the
sale of Subsequent 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 Subsequent
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 to be made on such Distribution Date)
in excess of the Specified Reserve Account Balance
for such Distribution Date will be released to the
Company. The "Specified Reserve Account Balance"
with respect to any Distribution Date generally will
be equal to (state formula). The amount in the
Reserve Account will be increased by the deposit
thereto on each Distribution Date of the amount, if
any, of the Total Distribution Amount remaining
after the payment of the Servicing Fee and any prior
unpaid Servicing Fees, the Class A Distributable
Amount and the Class B Distributable Amount until
the amount in the Reserve Account equals the
Specified Reserve Account Balance. Amounts in the
Reserve Account on any Distribution Date (after
giving effect to all distributions made on such
Distribution Date) in excess of the Specified
Reserve Account Balance for such Distribution Date
generally will be released to the Company and will
no longer be available to the Certificateholders.
The Reserve Account will be maintained with the
Trustee as a segregated trust account, but will not
be part of the Trust.
Collection Account Except under certain conditions described herein,
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 Trustee (the "Collection
Account"). Pursuant to the Agreement, the Servicer
will have the revocable power to instruct the
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 Class A Distributable Amount
to the Class A Certificateholders (iii) the Class B
Distributable Amount to the Class B
Certificateholders, and (iv) the remaining balance,
if any, to the Reserve Account.
Tax Status In the opinion of Brown & Wood LLP ("Federal Tax
Counsel") the Trust will be treated as a grantor
trust for federal income tax purposes and will not
be subject to federal income tax. Certificate Owners
will report their pro rata share of all income
earned on the Receivables (other than amounts, if
any, treated as "stripped coupons") and, subject to
certain limitations in the case of Certificate
Owners who are individuals, trusts, or estates, may
deduct their pro rata share of reasonable servicing
and other fees. See "Certain Federal Income Tax
Consequences" in the Prospectus for additional
information concerning the application of federal
income tax laws to the Trust and the Certificates.
ERISA
Considerations Subject to the considerations discussed under "ERISA
Considerations" herein and in the Prospectus, the
Class A Certificates are eligible for purchase by
employee benefit plans.
The Class B Certificates may not be acquired by any
employee benefit plan subject to the Employee
Retirement Income Security Act of 1974, as amended
("ERISA") or by an individual retirement account.
See "ERISA Considerations" herein and in the
Prospectus.
Ratings of the
Certificates It is a condition to the issuance of the Class A
Certificates that they be rated in the highest investment
rating category by at least two nationally recognized
rating agencies(, and it is a condition to the issuance
of the Class B Certificates that they be rated by at
least two nationally recognized rating agencies at least
" " or its equivalent). There can be no assurance
that a rating will not be lowered or withdrawn by a
rating agency if circumstances so warrant.
SPECIAL CONSIDERATIONS
Limited Liquidity. There is currently no secondary market for the Class
A Certificates or the Class B Certificates. The Underwriters currently intend
to make a market in the Class A Certificates and the Class B Certificates,
but they are 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 Certificateholders with liquidity of investment or that it
will continue for the life of the Class A Certificates or the Class B
Certificates.
The Receivables and the Pre-Funding Account. On the Closing Date, the
Seller will transfer to the Trust the approximately $ of Initial
Receivables and the approximately $ Pre-Funded Amount on deposit in
the Pre-Funding Account. If the principal amount of eligible Receivables
originated by CFC during the Funding Period is less than the Pre-Funded
Amount, the Seller will have insufficient Receivables to sell to the Trust on
the Subsequent Transfer Dates, thereby resulting in a prepayment of principal
to 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 Seller and Chrysler
Corporation" below. In addition, any conveyance of Subsequent Receivables is
subject to the satisfaction, on or before the related Subsequent Transfer
Date, of the following conditions precedent, among others: (i) each such
Subsequent Receivable must satisfy the eligibility criteria specified in the
Agreement (including the requirement that such Subsequent Receivables have
not been repurchased by the Seller through the exercise of an optional
repurchase provision contained in another securitization transaction); (ii)
the Seller will not select such Subsequent Receivables in a manner that it
believes is adverse to the interests of the Certificateholders; (iii) as of
the related Subsequent Cutoff Date, the Receivables in the Trust at that
time, including the Subsequent Receivables to be conveyed by the Seller as of
such Subsequent 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 Subsequent
Transfer Date shall have been made; and (v) the Seller shall have executed
and delivered to the Trustee a written assignment conveying such Subsequent
Receivables to the Trustee (including a schedule identifying such Subsequent
Receivables). Moreover, any such conveyance of Subsequent Receivables made
during any given Collection Period will also be subject to the satisfaction,
on or about the fifteenth day of the month following the end of such
Collection Period, of the following conditions subsequent, among others: (a)
the Seller will deliver certain opinions of counsel to the Trustee and the
Rating Agencies with respect to the validity of the conveyance of all such
Subsequent Receivables conveyed during such Collection Period; (b) the
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
Subsequent Receivables conveyed by the Seller during such Collection Period,
satisfied the parameters described under "The Receivables Pool" herein and
under "The Receivables Pools" in the Prospectus; and (c) the Rating Agencies
shall have each notified the Seller in writing that, following the addition
of all such Subsequent Receivables, the Certificates will be rated by the
Rating Agencies in the same respective rating categories in which they were
rated on the Closing Date. The Seller will immediately repurchase any
Subsequent 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
Certificates may depend on factors other than the characteristics of the
Subsequent Receivables, including the delinquency, repossession and net loss
experience on the automobile and light duty truck receivables in the
portfolio serviced by CFC.
To the extent that amounts on deposit in the Pre-Funding Account have
not been fully applied to the conveyance of Subsequent Receivables to the
Trust by the end of the Funding Period, 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
Pre-Funded Amount remaining in the Pre-Funding Account following the purchase
of any Subsequent Receivables on such Distribution Date. It is anticipated
that the principal amount of Subsequent Receivables sold to 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 Certificateholders.
Each Subsequent Receivable must satisfy the eligibility criteria
specified in the Agreement at the time of its addition. However, Subsequent
Receivables may have been originated by CFC at a later date using credit
criteria different from those which were applied to the Initial Receivables
and may be of a different credit quality and seasoning. In addition, an
increasing percentage of the Subsequent Receivables may be Fixed Value
Receivables or Receivables generated under the Market Value Pricing program.
Therefore, following the transfer of Subsequent Receivables to the Trust, the
characteristics of the entire Receivables Pool included in the Trust may vary
significantly from those of the Initial Receivables. See "The Receivables
Pool" herein and "The Receivables Pools" in the Prospectus.
Social, Economic and Other Factors. The ability of CFC to generate
Subsequent 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; Financial Condition of the Seller
and Chrysler Corporation. CFC is not generally obligated to make any
payments in respect of the Notes or the Receivables. However, if CFC were to
cease acting as Servicer, delays in processing payments on the Receivables
and information in respect thereof could occur and result in delays in
payments to the Noteholders.
Chrysler Corporation and its consolidated subsidiaries ("Chrysler")
reported earnings before income taxes, extraordinary item, and the cumulative
effect of a change in accounting principle of $___ billion in 199__, compared
with $___ billion in 199__. Net earnings for 199__ were $___ billion, or
$____ per common share, compared with $___ billion, or $____ per common share
in 199__.
Chrysler also reported earnings before income taxes and extraordinary
item of $_____ million in the fourth quarter of 199__, compared with $_____
million in the fourth quarter of 199__. Net earnings for the fourth quarter
of 199__ were $___ million, or $____ per common share, compared with $_____
million, or $____ per common share in the fourth quarter of 199__.
CFC achieved record net earnings of $___ million in 199__ compared to
$___ million and $___ million in 199__ and 199__, respectively. The increase
in net earnings for 199__ compared to 199__ primarily reflects net margin
improvements partially offset by an increase in the provision for credit
losses. The increase in net earnings for 199__ compared to 199__ primarily
reflects higher levels of automotive financing, lower operating expenses and
lower costs of bank facilities.
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.
Subordination; Limited Assets. Distributions of interest and principal
on the Class B Certificates will be subordinated in priority of payment to
interest and principal due on the Class A Certificates. Consequently, the
Class B Certificateholders will not receive any distributions with respect to
a Collection Period until the full amount of interest on and principal of the
Class A Certificates on such Distribution Date has been distributed to the
Class A Certificateholders. Any amounts released from the Reserve Account to
the Company will not be available to the Certificateholders.
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 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 be available only 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 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 distributions on the Certificates.
Ratings of the Certificates. It is a condition to the issuance of the
Certificates that the Class A Certificates be rated in the highest rating
category, and the Class B Certificates be rated " " 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 Certificates,
inasmuch as such rating does not comment as to market price or suitability
for a particular investor. The ratings of the Certificates address the
likelihood of the payment of principal and interest on the Certificates
pursuant to their terms. However, the Rating Agencies do not evaluate, and
the ratings of the Certificates do not address, the likelihood that 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 Seller will establish the Trust by selling and assigning the Trust
property, as described below, to the Trustee in exchange for the
Certificates. The Servicer will service the Receivables pursuant to the
Agreement and will be compensated for acting as the Servicer. See
"Description of the Certificates -- Servicing Compensation and Payment of
Expenses". To facilitate servicing and to minimize administrative burden and
expense, the Servicer will be appointed custodian for the Receivables by the
Trustee, but will not stamp the Receivables to reflect the sale and
assignment of the Receivables to the Trust or amend the certificates of title
of the Financed Vehicles. In the absence of amendments to the certificates of
title, the Trustee may not have perfected security interests in the Financed
Vehicles securing the Receivables originated in some states. See "Certain
Legal Aspects of the Receivables" in the Prospectus.
If the protection provided to the Certificateholders by the Reserve
Account and, in the case of the Class A Certificateholders, the subordination
of the Class B Certificates is insufficient, the Trust will look only to the
Obligors on the Receivables and the proceeds from the repossession and sale
of 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 Certificateholders with respect to
the Certificates. See "Description of the Certificates -- Distributions" and
"-- Reserve Account" herein and "Certain Legal Aspects of the Receivables" in
the Prospectus.
Each Certificate represents a fractional undivided ownership interest in
the Trust. The Trust property includes retail instalment sale contracts
between Dealers and Obligors, and all payments due thereunder on or after the
related Cutoff Date with respect to the Precomputed Receivables and all
payments received thereunder on or after the related Cutoff Date with respect
to the Simple Interest Receivables. The Trust property also includes (i) such
amounts as from time to time may be held in one or more trust accounts
established and maintained by the Servicer pursuant to the Agreement, as
described below; (ii) security interests in the Financed Vehicles and any
accessions thereto; (iii) the rights to proceeds with respect to the
Receivables from claims on 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 with respect to
the Receivables 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 Trustee; (vi) the Pre-Funded Account and
(vii) any and all proceeds of the foregoing. The Reserve Account will be
maintained by the Trustee for the benefit of the Certificateholders, but will
not be part of the Trust.
THE RECEIVABLES POOL
The pool of Receivables (the "Receivables Pool") will include the
Initial Receivables purchased as of the Initial Cutoff Date and will include
any Subsequent Receivables purchased as of any Subsequent Cutoff Date (the
Initial Cutoff Date or any Subsequent Cutoff Date being individually referred
to herein as a "Cutoff Date").
The Initial Receivables were purchased, and the Subsequent Receivables
were or will be purchased, by the Servicer from Dealers in the ordinary
course of business, and were or 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 ($300) and (ii) as of the applicable Cutoff Date, was not or will not
be more than 30 days past due. As of the applicable Cutoff Date, no Obligor
on any Receivable was or 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 CFC's "New-Finance
Buyer Plan" program. No selection procedures believed by the Seller to be
adverse to Certificateholders were or will be used in selecting the
Receivables.
The obligation of the Trust to purchase the Subsequent Receivables on a
Subsequent Transfer Date will be subject to the Receivables in the Trust,
including the Subsequent Receivables to be conveyed to the Trust on such
Subsequent Transfer Date, meeting the following criteria: (i) not more than
% of the principal balances of the Receivables in the Trust will represent
vehicles financed at CFC's used vehicle rates, and (ii) the weighted average
APR of the Receivables in the Trust will not be less than %, unless the
Seller increases the Reserve Account Initial Deposit by certain specified
amounts. In addition, such obligation will be subject to the Receivables,
including the Subsequent Receivables to be transferred to the Trust on such
Subsequent Transfer Date, having a weighted average remaining term not
greater than months. Such criteria will be based on the
characteristics of the Initial Receivables on the Initial Cutoff Date and any
Subsequent Receivables on the related Subsequent Cutoff Dates. In addition,
no Receivable will be sold to the Trust if such Receivable has been
repurchased by the Seller through the exercise of optional repurchase
provisions contained in other securitization transactions.
The Initial Receivables will represent approximately % of the
aggregate initial principal balance of the Certificates. However, except for
the criteria described in the preceding paragraphs, there will be no required
characteristics of the Subsequent Receivables. Therefore, following the
transfer of Subsequent Receivables to the Trust, 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 described in the following tables, may vary
significantly from those of the Initial Receivables.
The composition, distribution by APR and geographic distribution of the
Initial Receivables as of the Initial Cutoff Date are as set forth in the
following tables.
COMPOSITION OF THE INITIAL RECEIVABLES AS OF THE
INITIAL CUTOFF DATE
<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>
% $ months months $
</TABLE>
DISTRIBUTION BY APR
OF THE INITIAL RECEIVABLES
AS OF THE INITIAL CUTOFF DATE
<TABLE>
<CAPTION>
PERCENT OF
AGGREGATE AGGREGATE
NUMBER OF PRINCIPAL PRINCIPAL
APR RANGE RECEIVABLES BALANCE BALANCE
<S> <C> <C> <C>
0.00% to 3.00%.................
4.01% to 5.00%.................
5.01% to 6.00%.................
6.01% to 7.00%.................
7.01% to 8.00%.................
8.01% to 9.00%.................
9.01% to 10.00%................
10.01% to 11.00%...............
11.01% to 12.00%...............
12.01% to 13.00%...............
13.01% to 14.00%...............
14.01% to 15.00%...............
15.01% to 16.00%...............
16.01% to 17.00%...............
17.01% to 18.00%...............
18.01% to 19.00%...............
19.01% to 20.00%...............
Greater than 20.00%............
</TABLE>
GEOGRAPHIC DISTRIBUTION OF THE INITIAL RECEIVABLES
AS OF THEIR RESPECTIVE INITIAL CUTOFF DATES
<TABLE>
<CAPTION>
Percent of Percent of
Aggregate Aggregate
Principal Principal
State(1) Balance(2) State(1) Balance(2)
<S> <C> <C> <C>
Alabama . . . . . . . . . . Montana . . .
Alaska . . . . . . . . . . Nebraska . .
Arizona . . . . . . . . . . Nevada . . .
Arkansas . . . . . . . . . New Hampshire
California . . . . . . . . New Jersey .
Colorado . . . . . . . . . New Mexico .
Connecticut . . . . . . . . New York . .
Delaware . . . . . . . . . North Carolina
District of Columbia . . . North Dakota
Florida . . . . . . . . . . Ohio . . . .
Georgia . . . . . . . . . . Oklahoma . .
Hawaii . . . . . . . . . . Oregon . . .
Idaho . . . . . . . . . . . Pennsylvania
Illinois . . . . . . . . . Rhode Island
Indiana . . . . . . . . . . South Carolina
Iowa . . . . . . . . . . . South Dakota
Kansas . . . . . . . . . . Tennessee . .
Kentucky . . . . . . . . . Texas . . . .
Louisiana . . . . . . . . . Vermont . . .
Maine . . . . . . . . . . . Virginia . .
Maryland . . . . . . . . . Washington .
Massachusetts . . . . . . . West Virginia
Michigan . . . . . . . . . Wisconsin . .
Minnesota . . . . . . . . . Wyoming . . .
Mississippi . . . . . . . . Utah . . . .
Missouri . . . . . . . . .
</TABLE>
---------------
(1) Based on physical addresses of the Dealers originating the
Receivables.
(2) Percentages may not add to 100.0% because of rounding.
By aggregate principal balance, approximately % of the Initial
Receivables constitute Precomputed Receivables, % of the Initial
Receivables constitute Simple Interest Receivables and % constitute
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.
By aggregate principal balance, approximately % of the Initial
Receivables, constituting % of the number of Initial Receivables, as of
the Initial Cutoff Date, represent vehicles financed at CFC's new vehicle
rates, which apply to new and certain previously owned vehicles; the
remainder represent vehicles financed at CFC's used vehicle rates.
Approximately % of the aggregate principal balance of the Initial
Receivables represent financing of vehicles manufactured or distributed by
Chrysler.
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 CFC 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 CFC. 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 DECEMBER 31,
199__ 199__ 199__
NUMBER NUMBER NUMBER
OF OF OF
CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31,
199__ 199__ 199__
NUMBER NUMBER NUMBER
OF OF OF
CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
</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 CFC continues to service.
CREDIT LOSS/REPOSSESSION EXPERIENCE(1)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
199__ 199__ 199__ 199__ 199__ 199__
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Average Amount Outstanding
During the Period . . . . .
Average Number of Contracts
Outstanding During the
Period . . . . . . . . . . .
Percent of Contracts Acquired
During the Period with
Recourse to the Dealer . .
Repossessions as a Percent of
Average Number of Contracts
Outstanding . . . . . . . .
Net Losses as a Percent of
Liquidations(2)(3) . . . .
Net Losses as a Percent of
Average Amount
Outstanding(2) . . . . . .
</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 CFC continues to service.
(2) Net losses are equal to the aggregate of the 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,
including any losses resulting from disposition expenses and any losses
resulting from the failure to recover commissions to dealers with
respect to contracts that are prepaid or charged off.
(3) 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.
Approximately % of the aggregate principal balance of the Initial
Receivables as of the Initial Cutoff Date represents contracts with
recourse to Dealers. This factor was taken into consideration in
determining the principal balances of the Class A and Class B Certificates
and the Specified Reserve Account Balance. 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 the Seller retakes 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.
CHRYSLER FINANCIAL CORPORATION
Information regarding Chrysler Financial Corporation is set forth under
"Chrysler Financial Corporation" in the Prospectus. In addition, as of
____________, 199__, the Seller had approximately _____ employees and was
managing $____ billion in finance receivables and provided financial services
to automobile dealers and their customers through ___ zone offices in the
United States. During 199__, the Seller financed or leased approximately
_______ new and used vehicles at retail, including approximately _______ new
Chrysler passenger cars and light duty trucks, representing ___% of Chrysler's
U.S. retail and fleet deliveries. The Seller also financed at wholesale
approximately _________ new Chrysler passenger cars and light duty trucks,
representing ___% of Chrysler's U.S. factory unit sales for the year ended
____________, 199__.
WEIGHTED AVERAGE LIFE OF THE CERTIFICATES
Information regarding certain maturity and prepayment considerations with
respect to the Certificates is set forth under "Weighted Average Life of the
Securities" in the Prospectus. As the rate of payment of principal of each
class of Certificates depends on the rate of payment (including prepayments
and liquidations due to default) of the principal balance of the Receivables,
the final distribution in respect of the Certificates could occur
significantly earlier than the Final Scheduled Distribution Date.
Certificateholders will bear the risk of being able to reinvest principal
payments on the Certificates at yields at least equal to the yield on their
respective Certificates.
DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued pursuant to the terms of the
Agreement, a form of which has been filed as an exhibit to the Registration
Statement. A copy of the Agreement will be filed with the Commission
following the issuance of the Certificates. The following summary describes
certain terms of the Certificates and the 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 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 Agreement set forth in the
Prospectus, to which description reference is hereby made.
GENERAL
In general, it is intended that Class A Certificateholders receive,
on each Distribution Date, the Class A Percentage of the Principal
Distribution Amount plus interest at the Class A Pass Through Rate on the
Class A Principal Balance. Subject to the prior rights of the Class A
Certificateholders, it is intended that the Class B Certificateholders
receive, on each Distribution Date, the Class B Percentage of the Principal
Distribution Amount plus interest at the Class B Pass Through Rate on the
Class B Principal Balance.
The Certificates will evidence interests in the Trust created
pursuant to the Agreement. The Class A Certificates will evidence in the
aggregate an undivided ownership interest (the "Class A Percentage") of
approximately % of the Trust and the Class B Certificates will evidence
in the aggregate an undivided ownership interest (the "Class B Percentage")
of approximately % of the Trust. (The Class B Certificates, which are not
being offered hereby, initially will be held by the Company.)
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 Subsequent
Receivables, including any such purchase on such date, exceeds $
(a "Mandatory Repurchase").
The Certificate Prepayment Premium will be payable by the Trust to
the Certificateholders pursuant to a Mandatory Repurchase if the amount on
deposit in the Pre-Funding Account exceeds $ . 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 remaining
Pre-Funded Amount (the "Certificate Prepayment Amount") at the Class A Pass
Through Rate or the Class B Pass Through Rate, as applicable, 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 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 . 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 Agreement as liquidated
damages for the failure to deliver Subsequent 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.
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, the
Class A Certificateholders will receive an amount in respect of the Class A
Certificates equal to the outstanding Class A Certificate Balance together
with accrued interest at the Class A Pass Through Rate, the Class B
Certificateholders will receive an amount in respect of the Class B
Certificates equal to the outstanding Class B Certificate Balance together
with accrued interest at the Class B Pass Through Rate, which distributions
shall effect early retirement of the Certificates. See "Description of the
Transfer and Servicing Agreements -- Termination" in the Prospectus.
SALE AND ASSIGNMENT OF RECEIVABLES; SUBSEQUENT RECEIVABLES
Certain information with respect to the conveyance of the Initial
Receivables from the Seller to the Trust on the Closing Date pursuant to the
Agreement is set forth under "Description of the Transfer and Servicing
Agreements -- Sale and Assignment of Receivables" in the Prospectus. In
addition, during the Funding Period, pursuant to the Agreement, the Seller
will be obligated to sell to the Trust Subsequent Receivables having an
aggregate principal balance equal to approximately $ (such amount being
equal to the initial Pre-Funded Amount) to the extent that such Subsequent
Receivables are available.
During the Funding Period on each Subsequent 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 Subsequent
Receivables designated by the Seller as of the related Subsequent Cutoff
Date and identified in a schedule attached to a subsequent transfer
assignment relating to such Subsequent Receivables executed on such date by
the Seller. It is expected that on the Closing Date, subject to the
conditions described below, certain of the Subsequent Receivables
designated by the Seller and arising between the Initial Cutoff Date and
the Closing Date will be conveyed to the Trust. Upon the conveyance of
Subsequent Receivables to the Trust on a Subsequent Transfer Date, (i) the
Pool Balance will increase in an amount equal to the aggregate principal
balance of the Subsequent Receivables, (ii) an amount equal to % of the
aggregate principal balance of such Subsequent 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
balance of such Subsequent Receivables over the amount described in clause
(ii) will be withdrawn from the Pre-Funding Account and paid to the Seller.
Any conveyance of Subsequent Receivables is subject to the
satisfaction, on or before the related Subsequent Transfer Date, of the
following conditions precedent, among others: (i) each such Subsequent
Receivable must satisfy the eligibility criteria specified in the Agreement
(including that such Subsequent Receivable has not been repurchased by the
Seller through the exercise of optional repurchase provisions contained in
another securitization transaction); (ii) the Seller will not have selected
such Subsequent Receivables in a manner that it believes is adverse to the
interests of the Certificateholders; (iii) as of the related Subsequent
Cutoff Date, the Receivables, including any Subsequent Receivables conveyed
by the Seller as of such Subsequent 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 Subsequent Transfer Date shall have been made; and (v) the Seller
shall have executed and delivered to the Trustee a written assignment
conveying such Subsequent Receivables to the Trust (including a schedule
identifying such Subsequent Receivables). Moreover, any such conveyance of
Subsequent Receivables made during any Collection Period will also be
subject to the satisfaction, on or about 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 Trustee and the Rating Agencies with respect to
the validity of the conveyance of all such Subsequent Receivables conveyed
during such Collection Period; (ii) the Trustee shall have received written
confirmation from a firm of certified independent public accountants that,
as of each applicable Subsequent Cutoff Date, the Receivables in the Trust
at that time, including the Subsequent Receivables conveyed by the Seller
as of such Subsequent Cutoff Date, satisfied the parameters described under
"The Receivables Pool" herein and under "The Receivables Pools" in the
Prospectus; and (iii) the Rating Agencies shall have each notified the
Seller in writing that, following the addition of all such Subsequent
Receivables, the Class A Certificates and the Class B Certificates are
rated in the same respective rating categories in which they were rated at
the Closing Date. The Seller will immediately repurchase any Subsequent
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.
Subsequent Receivables may have been originated by CFC at a later
date using credit criteria different from those which were applied to the
Initial Receivables. See "Special Considerations -- The Receivables and the
Pre-Funding Account" and "The Receivables Pool" herein.
ACCOUNTS
In addition to the Accounts referred to under "Description of the
Transfer and Servicing Agreements -- Accounts" in the Prospectus, the
Servicer will also establish and will maintain with the Trustee, the
Payahead Account, the Pre-Funding Account and the Reserve Account, in the
name of the Trustee on behalf of the Certificateholders. The Reserve
Account will not be part of the Trust.
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 Collection Period (after giving effect to distributions to be made on
the following Distribution Date). 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. See "Description of the Transfer and
Servicing Agreements -- Servicing Compensation and Payment of Expenses" in
the Prospectus.
DISTRIBUTIONS
Deposits to Collection Account. On or about the Business Day of
each month (the "Determination Date"), the Servicer will provide the Trustee
with certain information with respect to the preceding Collection Period,
including the amount of aggregate collections on the Receivables, 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 (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).
On or before each Distribution Date, the Servicer shall cause to be
transferred from the Payahead Account to the Collection Account scheduled
payments due during the related Collection Period or as may be applied to
full prepayments on the Precomputed Receivables.
On or before each Distribution Date, the Servicer will cause 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 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
received in the Collection Period in which the Receivable became a
Liquidated Receivable.
The "Interest Distribution Amount" for a Distribution Date generally
will be the sum of the following amounts with respect to the preceding
Collection Period: (i) that portion of all collections on the Receivables
(including amounts withdrawn from the Payahead Account but excluding
amounts deposited into the Payahead Account) allocable to interest; (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 "Principal Distribution Amount" for a Distribution Date generally
will be the sum of the following amounts with respect to the preceding
Collection Period: (i) that portion of all collections on the Receivables
(including amounts withdrawn from the Payahead Account but excluding
amounts deposited into the Payahead Account) allocable to principal; (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 Interest Distribution Amount and the Principal Distribution
Amount on any 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;
(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.
The Interest Distribution Amount and Principal Distribution Amount
with respect to any Distribution Date will not be determined on the basis
of the reconciliation methodology described under "Description of the
Transfer and Servicing Agreements -- Distributions -- Allocation of
Collections on Receivables; Reconciliation".
Calculation of Distributable Amounts. The "Class A Distributable
Amount" with respect to a Distribution Date shall be an amount equal to the
sum of (i) the "Class A Principal Distributable Amount", consisting of the
Class A Percentage of the Principal Distribution Amount, plus (ii) the
"Class A Interest Distributable Amount", consisting of thirty (30) days'
interest at the Class A Pass Through Rate on the Class A Certificate
Balance as of the close of business on the last day of the preceding
Collection Period. In addition, on the Final Scheduled Distribution Date,
the Class A Principal Distributable Amount will include the lesser of
(A) the Class A Percentage of any payments of principal due and remaining
unpaid on each Receivable in the Trust as of the last day of the preceding
Collection Period and (B) the portion of such amount necessary (after
giving effect to the other amounts described above to be distributed to the
Class A Certificateholders on such Distribution Date and allocable to
principal) to reduce the Class A Certificate Balance to zero.
The "Class A Certificate Balance" shall equal, initially, $
and, thereafter, shall equal the initial Class A Certificate Balance reduced
by all amounts previously distributed to Class A Certificateholders and
allocable to principal.
The "Class B Distributable Amount" with respect to a Distribution
Date shall be an amount equal to the sum of (i) the "Class B Principal
Distributable Amount", consisting of the Class B Percentage of the
Principal Distribution Amount plus (ii) the "Class B Interest Distributable
Amount", consisting of thirty (30) days' interest at the Class B Pass
Through Rate on the Class B Certificate Balance as of the close of business
on the last day of the preceding Collection Period. In addition, on the
Final Scheduled Distribution Date, the principal required to be distributed
to the Class B Certificateholders will include the lesser of (i) the Class
B Percentage of any payments of principal due and remaining unpaid with
respect to the Receivables in the Trust as of the last day of the preceding
Collection Period and (ii) the portion of the amount in clause (i) above
that is necessary (after giving effect to all other amounts distributed to
Class A and Class B Certificateholders on such Distribution Date and
allocable to principal) to reduce the Class B Certificate Balance to zero.
The "Class B Certificate Balance" shall equal, initially, $
and, thereafter, shall equal the initial Class B Certificate Balance,
reduced by all amounts previously distributed to Class B Certificateholders
(or deposited in the Reserve Account, but not including the Reserve Account
Initial Deposit) and allocable to principal and by Realized Losses.
Calculation of Amounts to Be Distributed. Prior to each Distribution
Date, the Servicer will calculate the Total Distribution Amount, the
Class A Distributable Amount and the Class B Distributable Amount.
The holders of the Class A Certificates will receive on any
Distribution Date, to the extent of available funds, the Class A
Distributable Amount and any outstanding Class A Interest Carryover
Shortfall and Class A Principal Carryover Shortfall (each as defined below)
as of the close of the preceding Distribution Date. On each Distribution
Date on which the sum of the Class A Interest Distributable Amount and any
outstanding Class A Interest Carryover Shortfall from the preceding
Distribution Date (plus interest on such Class A Interest Carryover
Shortfall at the Class A Pass Through Rate from such preceding Distribution
Date to the current Distribution Date, to the extent permitted by law)
exceeds the Class A Percentage of the Interest Distribution Amount (after
payment of the Servicing Fee) on such Distribution Date, the Class A
Certificateholders shall be entitled generally to receive such amounts,
first, from the Class B Percentage of the Interest Distribution Amount;
second, if such amounts are insufficient, from the amounts available in the
Reserve Account; and third, if such amounts are insufficient, from the
Class B Percentage of the Principal Distribution Amount (other than the
portion thereof attributable to Realized Losses). The "Class A Interest
Carryover Shortfall" as of the close of any Distribution Date means the
excess of the Class A Interest Distributable Amount for such Distribution
Date, plus any outstanding Class A Interest Carryover Shortfall from the
preceding Distribution Date, plus interest on such outstanding Class A
Interest Carryover Shortfall, to the extent permitted by law, at the Class
A Pass Through Rate from such preceding Distribution Date through the
current Distribution Date, over the amount of interest that the holders of
the Class A Certificates actually received on such current Distribution Date.
On each Distribution Date on which the sum of the Class A Principal
Distributable Amount and any outstanding Class A Principal Carryover
Shortfall from the preceding Distribution Date exceeds the Class A
Percentage of the Principal Distribution Amount on such Distribution Date,
the Class A Certificateholders shall be entitled to receive such amounts
first, from the Class B Percentage of the Principal Distribution Amount
(other than the portion thereof attributable to Realized Losses); second,
if such amounts are insufficient, from amounts available in the Reserve
Account; and third, if such amounts are insufficient, from the Class B
Percentage of the Interest Distribution Amount. The "Class A Principal
Carryover Shortfall" as of the close of any Distribution Date means the
excess of the Class A Principal Distributable Amount plus any outstanding
Class A Principal Carryover Shortfall from the preceding Distribution Date
over the amount of principal that the holders of the Class A Certificates
actually received on such current Distribution Date.
The holders of the Class B Certificates will receive on any
Distribution Date, to the extent of available funds, the Class B
Distributable Amount and any outstanding Class B Interest Carryover
Shortfall and Class B Principal Carryover Shortfall (each as defined below)
as of the close of the preceding Distribution Date. On each Distribution
Date on which the sum of the Class B Interest Distributable Amount and any
outstanding Class B Interest Carryover Shortfall from the preceding
Distribution Date (plus interest on such Class B Interest Carryover
Shortfall at the Class B Pass Through Rate from such preceding Distribution
Date to the current Distribution Date, to the extent permitted by law)
exceeds the Class B Percentage of the Interest Distribution Amount (after
payment of the Servicing Fee) on such Distribution Date less any portion
thereof required to be distributed to the Class A Certificateholders
pursuant to their prior rights as described above, the Class B
Certificateholders shall be entitled generally to receive such amounts,
first, from the Class A Percentage of the Interest Distribution Amount that
is not otherwise required to be distributed to the Class A
Certificateholders as described above and, second, from the amount, if any,
available in the Reserve Account (after giving effect to any withdrawals
therefrom for distribution to the Class A Certificateholders on such
Distribution Date). The "Class B Interest Carryover Shortfall" as of the
close of any Distribution Date means the excess of the Class B Interest
Distributable Amount for such Distribution Date, plus any outstanding Class
B Interest Carryover Shortfall from the preceding Distribution Date, plus
interest on such outstanding Class B Interest Carryover Shortfall, to the
extent permitted by law, at the Class B Pass Through Rate from such
preceding Distribution Date through the current Distribution Date, over the
amount of interest that the holders of the Class B Certificates actually
received on such current Distribution Date.
On each Distribution Date on which the sum of the Class B Principal
Distributable Amount and any outstanding Class B Principal Carryover
Shortfall from the preceding Distribution Date exceeds the Class B
Percentage of the Principal Distribution Amount on such Distribution Date
less any portion thereof required to be distributed to the Class A
Certificateholders pursuant to their prior rights as described above, the
Class B Certificateholders shall be entitled to receive such amounts,
first, from the Interest Distribution Amount that is not otherwise required
to be distributed to the Class A or Class B Certificateholders as described
above and, second, from amounts available in the Reserve Account (after
giving effect to any withdrawals therefrom on such Distribution Date for
distribution to the Class A Certificateholders and for distribution of
interest to the Class B Certificateholders). The "Class B Principal
Carryover Shortfall" as of the close of any Distribution Date means the
excess of the Class B Principal Distributable Amount plus any outstanding
Class B Principal Carryover Shortfall from the preceding Distribution Date
over the amount of principal that the holders of Class B Certificates
actually received on such current Distribution Date.
SUBORDINATION OF THE CLASS B CERTIFICATES; RESERVE ACCOUNT
The rights of the Class B Certificateholders to receive distributions
with respect to the Receivables generally will be subordinated to the
rights of the Class A Certificateholders in the event of defaults and
delinquencies on the Receivables as described herein and provided in the
Agreement. The protection afforded to the Class A Certificateholders
through subordination will be effected both by the preferential right of
the Class A Certificateholders to receive current distributions with
respect to the Receivables and by the establishment of the Reserve Account.
The Reserve Account will be created with an initial deposit by the Seller
of the Reserve Account Initial Deposit and will be augmented by deposit
therein on each Distribution Date of the amount, if any, remaining from the
Total Distribution Amount after the distributions due to the
Certificateholders have been made until the amount in the Reserve Account
reaches the Specified Reserve Account Balance for such Distribution Date.
The Reserve Account will not be part of or otherwise includible in
the Trust and will be a segregated trust account held by the Trustee. On
each Distribution Date, (i) if the amounts on deposit in the Reserve
Account are less than the Specified Reserve Account Balance for such
Distribution Date, the Trustee will, after payment of any amounts required
to be distributed to Certificateholders and the payment of the Servicing
Fee due with respect to the related Collection Period (including any unpaid
Servicing Fees with respect to prior Collection Periods) withdraw from the
Collection Account and deposit in the Reserve Account the amount remaining
in the Collection Account that would otherwise be distributed to the
Company, or such lesser portion thereof as is sufficient to restore the
amount in the Reserve Account to such Specified Reserve Account Balance for
such Distribution Date, and (ii) if the amount on deposit in the Reserve
Account on such Distribution Date (after giving effect to all deposits or
withdrawals therefrom on such Distribution Date) is greater than the
Specified Reserve Account Balance for such Distribution Date, the Trustee
will release and distribute any such excess to the Company. Upon any such
distribution to the Company, the Certificateholders will have no rights in,
or claims to, such amounts.
Amounts held from time to time in the Reserve Account will continue
to be held for the benefit of holders of the Class A Certificates and
holders of the Class B Certificates. Funds in the Reserve Account shall be
invested as provided in the Agreement in Eligible Investments. The Company
shall be entitled to receive all investment earnings on amounts in the
Reserve Account. Investment income on amounts in the Reserve Account will
not be available for distribution to the Certificateholders or otherwise
subject to any claims or rights of the Certificateholders.
The time necessary for the Reserve Account to reach and maintain the
Specified Reserve Account Balance at any time after the Closing Date will be
affected by the delinquency, credit loss, repossession and prepayment
experience of the Receivables and, therefore, cannot be accurately predicted.
The subordination of the Class B Certificates and the Reserve Account
described above are intended to enhance the likelihood of receipt by Class
A Certificateholders of the full amount of principal and interest on the
Receivables due them and to decrease the likelihood that the Class A
Certificateholders will experience losses. However, in certain
circumstances, the Reserve Account could be depleted and shortfalls could
result.
If on any Distribution Date the holders of the Class A Certificates
do not receive the sum of the Class A Distributable Amount, the Class A
Interest Carryover Shortfall and the Class A Principal Carryover Shortfall
for such Distribution Date (after giving effect to any amounts withdrawn
from the Reserve Account and the Class B Percentage of the Total
Distribution Amount and applied to such deficiency, as described above),
the holders of the Class B Certificates generally will not receive any
portion of the Total Distribution Amount. While the Class B
Certificateholders are entitled to receive amounts from the Reserve Account
as described above, such entitlement is subordinated to the rights of the
Class A Certificateholders to receive amounts from the Reserve Account as
described above. If the Reserve Account becomes depleted, the Class B
Certificateholders may experience shortfalls in the distributions due them
and incur a loss on their investment.
ERISA CONSIDERATIONS
THE CLASS A CERTIFICATES
Subject to the considerations set forth under "ERISA Considerations
- -- Senior Certificates Issued By Trusts That Do Not Issue Notes" in the
Prospectus, the Class A Certificates may be purchased by an employee benefit
plan or an individual retirement account (a "Plan") subject to ERISA or
Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code").
A fiduciary of a Plan must determine that the purchase of a Class A
Certificate 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 Class A Certificates under ERISA, see "ERISA
Considerations" in the Prospectus.
THE CLASS B CERTIFICATES
The Class B 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 or (c) any entity whose underlying assets include plan assets
by reason of a plan's investment in the entity. By its acceptance of a
Class B Certificate, each Class B Certificateholder will be deemed to have
represented and warranted that it is not subject to the foregoing
limitation. For additional information regarding treatment of the Class B
Certificates under ERISA, see "ERISA Considerations" in the Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in an Underwriting
Agreement (the "Underwriting Agreement"), the Seller has agreed to cause
the Trust to sell to each of the Underwriters named below (the
"Underwriters"), and each of the Underwriters has severally agreed to
purchase, the principal amount of (Class A) Certificates set forth opposite
its name below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF PRINCIPAL AMOUNT OF
UNDERWRITERS CLASS A CLASS B
CERTIFICATES CERTIFICATES
<S> <C> <C>
$ $
Total . . . . . $ $
</TABLE>
The Seller has been advised by the Underwriters that they propose
initially to offer the (Class A) Certificates to the public at the prices
set forth herein, and to certain dealers at such price less the initial
concession not in excess of % per (Class A) Certificate. The Underwriters
may allow, and such dealers may reallow, a concession not in excess of %
per (Class A) Certificate to certain other dealers. After the initial
public offering of the (Class A) Certificates, the public offering prices
and such concessions may be changed.
LEGAL OPINIONS
In addition to the legal opinions described in the Prospectus,
certain legal matters relating to 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 ( ). ( may from time to time
render legal services to CFC and its affiliates).
INDEX OF TERMS
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
APR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Cede . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Certificate Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Certificate Prepayment Amount . . . . . . . . . . . . . . . . . . . . . . S-
Certificate Prepayment Premium . . . . . . . . . . . . . . . . . . . . . S-
Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
CFC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Chrysler . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Class A Certificate Balance . . . . . . . . . . . . . . . . . . . . . . . S-
Class A Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Class A Distributable Amount . . . . . . . . . . . . . . . . . . . . . . S-
Class A Interest Carryover Shortfall . . . . . . . . . . . . . . . . . . S-
Class A Interest Distributable Amount . . . . . . . . . . . . . . . . . . S-
Class A Pass Through-Rate . . . . . . . . . . . . . . . . . . . . . . . . S-
Class A Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Class A Principal Carryover Shortfall . . . . . . . . . . . . . . . . . . S-
Class A Principal Distributable Amount . . . . . . . . . . . . . . . . . S-
Class B Certificate Balance . . . . . . . . . . . . . . . . . . . . . . . S-
Class B Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Class B Distributable Amount . . . . . . . . . . . . . . . . . . . . . . S-
Class B Interest Carryover Shortfall . . . . . . . . . . . . . . . . . . S-
Class B Interest Distributable Amount . . . . . . . . . . . . . . . . . . S-
Class B Pass Through Rate . . . . . . . . . . . . . . . . . . . . . . . . S-
Class B Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Class B Principal Carryover Shortfall . . . . . . . . . . . . . . . . . . S-
Class B Principal Distributable Amount . . . . . . . . . . . . . . . . . S-
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Collection Account . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Collection Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Cutoff Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
DTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Federal Tax Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Final Scheduled Distribution Date . . . . . . . . . . . . . . . . . . . . S-
Final Scheduled Maturity Date . . . . . . . . . . . . . . . . . . . . . . S-
Financed Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Funding Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Initial Cutoff Date . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Initial Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Initial Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Interest Distribution Amount . . . . . . . . . . . . . . . . . . . . . . S-
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Liquidated Receivables . . . . . . . . . . . . . . . . . . . . . . . . . S-
Liquidation Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Mandatory Repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . S-
MMC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Pre Funded Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Pre-Funding Account . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Principal Distribution Amount . . . . . . . . . . . . . . . . . . . . . . S-
Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Rating Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Realized Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Receivables Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Reserve Account Initial Deposit . . . . . . . . . . . . . . . . . . . . . S-
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
SFAS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Specified Reserve Account Balance . . . . . . . . . . . . . . . . . . . . S-
Subsequent Cutoff Date . . . . . . . . . . . . . . . . . . . . . . . . . S-
Subsequent Receivables . . . . . . . . . . . . . . . . . . . . . . . . . S-
Subsequent Transfer Date . . . . . . . . . . . . . . . . . . . . . . . . S-
Total Distribution Amount . . . . . . . . . . . . . . . . . . . . . . . . S-
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . S-
NO DEALER, SALESMAN OR OTHER
PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS OTHER THAN
THOSE CONTAINED OR INCORPORATED
BY REFERENCE IN THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS
$
AND, IF GIVEN OR MADE, SUCH PREMIER AUTO TRUST 199 -
INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON. THIS $
PROSPECTUS SUPPLEMENT AND THE
% ASSET BACKED CERTIFICATES,
PROSPECTUS DO NOT CONSTITUTE AN
CLASS A
OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY
$
SECURITIES OTHER THAN THE
[% ASSET BACKED CERTIFICATES,
SECURITIES OFFERED HEREBY, NOR
CLASS B]
AN OFFER OF THE SECURITIES IN
ANY STATE OR JURISDICTION IN
WHICH, OR TO ANY PERSON TO WHOM,
SUCH OFFER WOULD BE UNLAWFUL.
THE DELIVERY OF THIS PROSPECTUS
CHRYSLER FINANCIAL CORPORATION
SUPPLEMENT OR THE PROSPECTUS AT
SELLER AND SERVICER
ANY TIME DOES NOT IMPLY THAT
INFORMATION HEREIN OR THEREIN IS
CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
_____________________
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE ---------------------------
____
Reports to Certificateholders S-
PROSPECTUS SUPPLEMENT
Summary of Terms . . . . . . S-
Special Considerations . . . S- ---------------------------
The Trust . . . . . . . . . . S-
The Receivables Pool . . . . S-
Chrysler Financial Corporation S-
Weighted Average Life of the
Certificates . . . . . . . . S-
Description of the Certificates S-
ERISA Considerations . . . . S-
Underwriting . . . . . . . . S-
Legal Opinions . . . . . . . S-
Index of Terms . . . . . . . S-
PROSPECTUS
Available Information . . . . .
Incorporation of Certain
Documents by Reference . . . .
Summary of Terms . . . . . . .
Special Considerations . . . .
The Trusts . . . . . . . . . .
The Receivables Pools . . . . .
Weighted Average Life of the
Securities . . . . . . . . . .
Pool Factors and Trading
Information . . . . . . . . . .
Use of Proceeds . . . . . . . .
Chrysler Financial Corporation
Description of the Notes . . .
Description of the Certificates
Certain Information Regarding
the Securities . . . . . . . .
, 199
Description of the Transfer and
Servicing Agreements . . . . .
Certain Legal Aspects of the
Receivables . . . . . . . . . .
Certain Federal Income Tax
Consequences . . . . . . . . .
Certain State Tax Consequences
with respect to
Trusts for which a Partnership
Election Is Made . . . . . . .
ERISA Considerations . . . . .
Plan of Distribution . . . . .
Legal Opinions . . . . . . . .
Index of Terms . . . . . . . .
_____________________
UNTIL 90 DAYS AFTER THE DATE
OF THIS PROSPECTUS SUPPLEMENT,
ALL DEALERS EFFECTING
TRANSACTIONS IN THE
CERTIFICATES, WHETHER OR NOT
PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO
DELIVER A PROSPECTUS SUPPLEMENT
AND A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF
DEALERS TO DELIVER A PROSPECTUS
SUPPLEMENT AND A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH
RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
Subject to Completion, dated July 11, 1997
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus supplement and the accompanying
prospectus shall not constitute an offer to sell or the solicitation of an
offer to buy nor shall there be any sale of these securities in any State in
which such offer, solicitation or sale would be unlawful prior to the
registration or qualification under the securities laws of any such State.
PROSPECTUS SUPPLEMENT
- ---------------------
(TO PROSPECTUS DATED __________ __, 199__)
$_____________
PREMIER AUTO TRUST 199__-__
____% ASSET BACKED NOTES, CLASS A-2
____% ASSET BACKED NOTES, CLASS A-3
____% ASSET BACKED NOTES, CLASS A-4
____% ASSET BACKED NOTES, CLASS B
CHRYSLER FINANCIAL CORPORATION, SELLER AND SERVICER
------------------------
Premier Auto Trust 199__-__ (the "Trust") will be governed pursuant to
an Amended and Restated Trust Agreement to be dated as of __________ __,
199__, among Chrysler Financial Corporation (the "Seller"), Premier
Receivables L.L.C., an indirectly wholly-owned subsidiary of the Seller (the
"Company"), and Chase Manhattan Bank Delaware, as Owner Trustee. The Trust
will issue $___________ aggregate principal amount of Class A-1 ______% Asset
Backed Notes (the "Class A-1 Notes"), $___________ aggregate principal amount
of Class A-2 ____% Asset Backed Notes (the "Class A-2 Notes"), $___________
aggregate principal amount of Class A-3 ____% Asset Backed Notes (the "Class
A-3 Notes"), $___________ aggregate principal amount of Class A-4 ____% Asset
Backed
(Cover continued on following page)
------------------------
THE NOTES REPRESENT OBLIGATIONS OF THE TRUST ONLY AND DO NOT REPRESENT
OBLIGATIONS OF OR INTERESTS IN CHRYSLER FINANCIAL CORPORATION, THE
COMPANY OR ANY OF THEIR RESPECTIVE AFFILIATES. NONE OF THE
NOTES 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.
<TABLE>
<CAPTION>
Original Proceeds to
Principal Price to Underwriting the
Amount Public(1) Discount Seller(1)(2)
<S> <C> <C> <C> <C>
Per Class A-2 Note. . . $ % % %
Per Class A-3 Note. . . $ % % %
Per Class A-4 Note. . . $ % % %
Per Class B Note. . . . $ % % %
Total . . . . . . . . . $ $ $ $
</TABLE>
(1) Plus accrued interest, if any, from __________ __, 199__.
(2) Before deducting expenses, estimated to be $_______.
------------------------
The Offered Notes are offered subject to prior sale and subject to the
Underwriters' right to reject any order in whole or in part. It is expected
that delivery of the Offered Notes will be made in book-entry form only
through the facilities of The Depository Trust Company and Cedel Bank,
societe anonyme and the Euroclear System on or about __________ __, 199__.
------------------------
Underwriters of the Offered Class A Notes
UNDERWRITERS OF THE CLASS B NOTES
------------------------
The date of this Prospectus Supplement is __________ __, 199__.
(Continued from previous page)
Notes (the "Class A-4 Notes") and, together with the Class A-1 Notes, Class
A-2 Notes and Class A-3 Notes (the "Class A Notes"), and $__________
aggregate principal amount of Class B ____% Asset Backed Notes (the "Class B
Notes") and, together with the Class A Notes (the "Notes") pursuant to an
Indenture to be dated as of __________ __, 199__, between the Trust and The
First National Bank of Chicago, as Indenture Trustee. The Class A-1 Notes are
not being offered hereby. The Class A-2 Notes, Class A-3 Notes, Class A-4
Notes and Class B Notes are collectively referred to herein as the "Offered
Notes". The Class B Notes will be subordinated to the Class A Notes to the
extent provided herein. The assets of the Trust will include a pool of motor
vehicle retail installment sale contracts (the "Receivables"), secured by
security interests in the motor vehicles financed thereby and including
certain monies due or received thereunder on or after __________ __, 199__,
transferred to the Trust by the Seller on the Closing Date. The Notes will be
secured by the assets of the Trust pursuant to the Indenture, subject to the
release of certain assets as collateral to the extent provided herein.
Interest on the Notes will accrue at the respective fixed per annum
interest rates specified above. Interest on the Notes will generally be
payable on the sixth 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 __________ __, 199__. 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 or (iv) on the Class B Notes until the Class A-4
Notes have been paid in full.
Each class of Notes 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 could occur earlier than such dates as described herein. In
addition, the Class A-4 Notes and Class B Notes will be subject to redemption
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.
(Application will be made to list the Offered Notes on the Luxembourg
Stock Exchange.)
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. 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 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.
Certain persons participating in this offering may engage in
transactions that stabilize, maintain, or otherwise affect the price of the
Offered Notes. Such transactions may include stabilizing and the purchase of
Offered Notes to cover syndicate short positions. For a description of these
activities, see "Underwriting" herein.
REPORTS TO NOTEHOLDERS
Unless and until Definitive Notes 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 Offered Notes. 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.
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.
Issuer Premier Auto Trust 199__-__ (the "Trust" or the
"Issuer"), a Delaware business trust to be governed
pursuant to an Amended and Restated Trust
Agreement dated as of __________ __, 199__ (as
amended and supplemented from time to time, the
"Trust Agreement"), among the Seller, the Owner
Trustee and Premier Receivables L.L.C., a Michigan
limited liability company that is indirectly
wholly-owned by the Seller (the "Company").
Seller Chrysler Financial Corporation (the "Seller" or
"CFC").
Servicer CFC (in such capacity, the "Servicer").
Indenture Trustee The First National Bank of Chicago, as trustee under
the Indenture (the "Indenture Trustee").
Owner Trustee Chase Manhattan 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 __________ __,
199__ (as amended and supplemented from time to
time, the "Indenture"), between the Issuer and the
Indenture Trustee, as follows: (i) Class A-1
______% Asset Backed Notes (the "Class A-1 Notes")
in the aggregate initial principal amount of
$___________; (ii) Class A-2 ____% Asset Backed
Notes (the "Class A-2 Notes") in the aggregate
initial principal amount of $___________; (iii)
Class A-3 ____% Asset Backed Notes (the "Class A-3
Notes") in the aggregate initial principal amount
of $___________; (iv) Class A-4 ____% Asset Backed
Notes (the "Class A-4 Notes") in the aggregate
initial principal amount of $___________ and (v)
Class B ____% Asset Backed Notes (the "Class B
Notes") in the aggregate initial principal amount
of $__________. The Class A-1 Notes, Class A-2
Notes, Class A-3 Notes and, Class A-4 Notes are
collectively referred to herein as the "Class A
Notes", and the Class A Notes and the Class B
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 __________ __, 199__
(the "Closing Date") by CFC. The Class A-2 Notes,
Class A-3 Notes, Class A-4 Notes and Class B
Notes are referred to herein collectively as the
"Offered Notes."
The Notes will be secured by the assets of the
Trust pursuant to the Indenture.
The Receivables On the Closing Date, the Trust will purchase
Receivables having an aggregate principal balance of
approximately $________________ (the "Initial Pool
Balance") as of __________ __, 199__ (the "Cutoff
Date") from the Seller pursuant to a Sale and
Servicing Agreement to be dated as of __________ __,
199__ (as amended and supplemented from time to
time, the "Sale and Servicing Agreement"), between
the Trust and CFC, as Seller and Servicer. See
"Description of the Transfer and Servicing
Agreements -- Sale and Assignment of Receivables"
herein and in the Prospectus. The Receivables
have been 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. As of the Cutoff Date, the
weighted average annual percentage rate of the
Receivables was approximately _____%, the weighted
average remaining maturity of the Receivables was
approximately _____ months, and the weighted
average original maturity of the Receivables was
approximately _____ months. No Receivable has a
scheduled maturity later than __________ __,
20__ (the "Final Scheduled Maturity Date"). See
"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 received from
Obligors, 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 sixth 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 __________ __,
199__. 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 ______% per annum (the "Class A-1 Rate"), the
Class A-2 Notes will bear interest at the rate of
____% per annum (the "Class A-2 Rate"), the Class
A-3 Notes will bear interest at the rate of ____%
per annum (the "Class A-3 Rate"), the Class A-4
Notes will bear interest at the rate of ____% per
annum (the "Class A-4 Rate") and the Class B Notes
will bear interest at the rate of ____% per annum
(the "Class B Rate").
The interest rates for the various classes of Notes
are referred to herein collectively as "Interest
Rates".
C. Interest Interest on the outstanding principal amount of the
Notes will accrue at the applicable Interest
Rate from the Closing Date (in the case of the
first Distribution Date) or from the sixth day of
the month preceding the month of a Distribution Date
to and including the fifth day of the month of such
Distribution Date (each an "Interest Accrual
Period"). Interest on each class of Notes (other
than the Class A-1 Notes) will be calculated on the
basis of a 360-day year consisting of twelve
30-day months. Interest on the Class A-1 Notes
will be calculated on the basis of the actual
number of days in each Interest Accrual Period
divided by 360. See "Description of the Notes
-- Payments of Interest". Notwithstanding the
Events of Default described in the Prospectus under
the caption "Description of the Indenture -- The
Indenture -- Events of Default; Rights upon Event
of Default", until the principal amount of the Class
A-4 Notes has been paid in full, the failure to pay
interest due on the Class B Notes will not be an
Event of Default.
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 __________ __, 199__ to and
including __________ __, 199__) to the extent of
funds available therefor. The "Noteholders'
Principal Distributable Amount" will equal the
sum of (i) the Regular Principal Distribution
Amount (less, during the Collateral Release Period
described below under "Overcollateralization and
Release of Collateral", the Cash Release Amount)
plus (ii) the Accelerated Principal Distribution
Amount. The "Regular Principal Distribution Amount"
with respect to any Distribution Date will equal
the amount of principal paid or, in certain
circumstances, scheduled to be paid with respect
to the Receivables 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". The "Accelerated Principal
Distribution Amount" with respect to a Distribution
Date will equal the portion, if any, of the Total
Distribution Amount for the related Collection
Period that remains after payment of (a) the
Servicing Fee (together with any portion of the
Servicing Fee that remains unpaid from prior
Distribution Dates), (b) the interest due on
the Notes, (c) the Regular Principal Distribution
Amount, and (d) the amount, if any, required to be
deposited in the Reserve Account on such
Distribution Date.
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. Payments to
Noteholders will be made on each Distribution Date
in accordance with such determination. The
Servicing Fee in respect of a Collection Period
(together with any portion of the Servicing Fee
that remains unpaid from prior Distribution
Dates) will be paid on the Distribution Date
such Collection Period out of collections for such
Collection Period.
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; or (iv) on the Class B
Notes until the Class A-4 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 _____________ 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 __________ 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 ___________ 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 __________ Distribution
Date (the "Class A-4 Final Scheduled Distribution
Date"); and the outstanding principal amount of
the Class B Notes, to the extent not previously
paid, will be payable on the ______________
Distribution Date (the "Class B Final Scheduled
Distribution Date").
E. Optional Redemption The Class A-4 Notes and Class B 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, at a redemption price equal to
the unpaid principal amount of the Class A-4
Notes and Class B Notes plus accrued and unpaid
interest thereon. See "Description of the Notes
-- Optional Redemption" herein.
Overcollateralization
and Release of
Collateral The Initial Pool Balance ($________________)
will exceed the initial aggregate principal
amount of the Notes ($_____________) by an
amount equal to $_____________ (the "Initial
Overcollateralization Amount"), which amount is
approximately __% of the initial aggregate
principal amount of the Notes. Unless offset by
losses on the Receivables, the distribution of
the Accelerated Principal Distribution Amount,
if any, on a Distribution Date is expected to
cause the aggregate principal amount of the
Notes to decrease faster than the Pool Balance
decreases, thereby increasing the
Overcollateralization Amount and the
Overcollateralization Percentage. The
"Overcollateralization Amount" in respect of a
Distribution Date is equal to (a) the Pool
Balance as of the beginning of the preceding
Collection Period (the "Related Pool Balance")
minus (b) the aggregate outstanding principal
amount of the Notes after giving effect to
payments made on the Notes on the preceding
Distribution Date (the "Note Amount"). The
"Overcollateralization Percentage" in respect
of a Distribution Date is the percentage
derived from a fraction, the numerator of which
is the Overcollateralization Amount for such
Distribution Date and the denominator of which
is the Related Pool Balance. Subject to the
conditions set forth below, on each
Distribution Date, commencing with the First
Release Distribution Date, certain amounts of
cash and Receivables will be released to the
Trust, free of the lien of the Indenture, and
thereupon paid or transferred to the Company.
Any such cash and Receivables released to the
Company will not be available to make payments
on the Notes.
The release of cash and Receivables to the Trust
(and then to the Company) is subject to the
satisfaction of all of the following conditions:
(1) No release will be permitted until the
Distribution Date (the "First Release Distribution
Date") on which the Overcollateralization Amount
is at least equal to:
(Initial Overcollateralization Amount)
plus
((_%) x (Related Pool Balance minus
Initial Overcollateralization Amount))
(2) Subject to condition (4) below, the
aggregate principal balance of Receivables released
in respect of a Distribution Date will equal:
Overcollateralization Amount
less
Targeted Overcollateralization Amount.
The "Targeted Overcollateralization Amount" for a
Distribution Date is equal to:
(Note Amount)
____________ minus (Note Amount)
( (____%) )
(3) Subject to condition (4) below, the
amount of cash released on a Distribution Date
(the "Cash Release Amount") will equal (____%)
of the Regular Principal Distribution Amount for
such Distribution Date. However, on any
Distribution Date the Cash Release Amount and
any Receivables will be released only after the
Noteholders shall have received principal in an
amount at least equal to (____%) of the Regular
Principal Distributable Amount for such Distribution
Date.
(4) The cumulative amount of cash and
principal balances of Receivables released shall
not exceed the Initial Overcollateralization
Amount. Consequently, when such cumulative amount
has been released, there will be no further release
of cash or Receivables to the Trust pursuant to
the release provisions described above, and the
full Regular Principal Distribution Amount will
thereafter again be distributable as principal
to the Noteholders. The period during which such
releases are permitted is the "Collateral Release
Period".
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 equal to
$__________ (the "Specified Reserve Account
Balance"), which is __% of the initial aggregate
principal amount of the Notes. If, after the
Collateral Release Period, the Overcollateralization
Percentage at any time equals at least ____%, then
the Specified Reserve Account Balance will be
$__________, which is ____% of the initial aggregate
principal amount of the Notes.
Funds will be withdrawn from the Reserve Account 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. 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
and the deposit of the Noteholders' Distributable
Amount into the Note Distribution Account. The
Reserve Account will be maintained as an account
in the name of the Indenture Trustee.
Certain amounts in the Reserve Account on any
Distribution Date (after giving effect to all
distributions made 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").
Collection Account;
Priority of
Payments;
Subordination of
Class B Notes 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 related Collection Period,
together with any unpaid Servicing Fees from prior
Distribution Dates, to the Servicer, (ii) the
Noteholders' Interest Distributable Amount and the
Noteholders' Principal Distributable Amount into the
Note Distribution Account and (iii) the remaining
balance, if any, to the Reserve Account.
On each Distribution Date, the amount in the Note
Distribution Account will be applied, first, to
pay interest on the Class A Notes and to pay the
Noteholders' Principal Distributable Amount (up to
the outstanding principal amount of the Class A
Notes) as principal of the Class A Notes in the
order described herein and, second, to pay
interest on the Class B Notes and, after the
principal amount of the Class A-4 Notes has been
reduced to zero, to pay the Noteholders' Principal
Distributable Amount (less any portion thereof
applied to the Class A-4 Notes on such Distribution
Date) as principal of the Class B Notes (up to
the outstanding principal amount of the Class B
Notes).
Tax Status In the opinion of Brown & Wood LLP ("Federal
Tax Counsel"), for federal income tax purposes, the
Offered 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
_______________, the general counsel of the Seller
("Michigan Tax Counsel"), 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. Alternative characterizations
of the Trust and the Class B Notes are possible,
but would not generally result in materially
adverse tax consequences to Class B Noteholders.
See "Certain Federal Income Tax Consequences"
herein and "Certain Federal Income Tax Consequences"
and "Certain State Tax Consequences with Respect to
Trusts Which Issue One or More Classes of Notes"
in the Prospectus for additional information
concerning the application of federal income and
Michigan tax laws to the Trust and the Notes.
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.
Rating of the
Offered Notes It is a condition to the issuance of the Notes
that the Offered Notes (other than the Class B
Notes) be rated in the highest investment rating
category, and that the Class B Notes be rated at
least in the "A" category or its equivalent, by
at least two nationally recognized rating agencies.
There can be no assurance that a rating will
not be lowered or withdrawn by a rating agency
if circumstances so warrant.
SPECIAL CONSIDERATIONS
Limited Liquidity. There is currently no secondary market for the Notes
offered hereby. Each Underwriter currently intends to make a market in the
Notes offered hereby, 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 Noteholders with liquidity of investment or
that it will continue for the life of the Notes offered hereby.
Trust's Relationship to the Seller; Financial Condition of the Seller
and Chrysler Corporation. CFC is not generally obligated to make any payments
in respect of the Notes or the Receivables. However, if CFC were to cease
acting as Servicer, delays in processing payments on the Receivables and
information in respect thereof could occur and result in delays in
payments to the Noteholders.
Chrysler Corporation and its consolidated subsidiaries ("Chrysler")
reported earnings before income taxes, extraordinary item, and the cumulative
effect of a change in accounting principle of $___ billion in 199__, compared
with $___ billion in 199__. Net earnings for 199__ were $___ billion, or
$____ per common share, compared with $___ billion, or $____ per common share
in 199__.
Chrysler also reported earnings before income taxes and extraordinary
item of $_____ million in the fourth quarter of 199__, compared with $_____
million in the fourth quarter of 199__. Net earnings for the fourth quarter
of 199__ were $___ million, or $____ per common share, compared with $_____
million, or $____ per common share in the fourth quarter of 199__.
CFC achieved record net earnings of $___ million in 199__ compared to
$___ million and $___ million in 199__ and 199__, respectively. The increase
in net earnings for 199__ compared to 199__ primarily reflects net margin
improvements partially offset by an increase in the provision for credit
losses. The increase in net earnings for 199__ compared to 199__ primarily
reflects higher levels of automotive financing, lower operating expenses and
lower costs of bank facilities.
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.
Subordination of the Class B Notes; Limited Assets. Distributions of
interest and principal on the Class B Notes will be subordinated in priority
of payment to interest and principal due on the Class A Notes. Consequently,
the Class B Noteholders will not receive any payments on a Distribution Date
unless the full amount of interest on and principal of the Class A Notes due
on such Distribution Date has been paid to the Class A Noteholders. The Class
B Noteholders will not receive any distributions of principal until the
Distribution Date on which all of the Class A-4 Notes have been paid in full.
The Trust will not have, nor is it permitted or expected to have, any
significant assets or sources of funds other than the Receivables and the
Reserve Account. Holders of the Notes must rely for repayment upon payments
on the Receivables and, if and to the extent available, amounts on deposit in
the Reserve Account. 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, 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.
Ratings of the Notes. It is a condition to the issuance of the Notes
that each class of the Class A Notes be rated in the highest investment
rating category, and that the Class B Notes be rated at least in the "A"
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 Notes, inasmuch as such rating does not comment as to
market price or suitability for a particular investor. The ratings of the
Notes address the likelihood of the payment of principal and interest on the
Notes pursuant to their terms. 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 199__-__, 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, (iii) making payments
on the Notes and (iv) engaging in other activities that are necessary or
suitable to accomplish the foregoing or are incidental thereto or connected
therewith.
The Trust will initially be capitalized with equity (exclusive of the
amounts deposited in the Reserve Account) equal to $__________, which is the
difference between the aggregate principal amount of the Receivables as of
the Cutoff Date and the initial aggregate principal amount of the Notes. The
equity in the Trust (including the right to receive distributions from the
Reserve Account) will be evidenced by certificates issued by the Trust to the
Company, which may thereafter hold such equity or sell or otherwise transfer
it. In the case of any such sale or transfer to another entity, such entity
may become the "Company" for purposes of the events described under
"Description of the Transfer and Servicing Agreements -- Insolvency Events"
in the Prospectus and for other purposes. The net proceeds from the sale of
the Notes will be used by the Trust to purchase the Receivables from the
Seller pursuant to the Sale and Servicing Agreement.
If the protection provided to the investment of the Noteholders 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 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 Noteholders with respect to the Notes. 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
Chase Manhattan 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 had taken place on
such date:
Class A-1 Notes $
Class A-2 Notes
Class A-3 Notes
Class A-4 Notes
Class B Notes
Equity
------------------
Total $
===================
THE OWNER TRUSTEE
_____________________________ is the Owner Trustee under the Trust
Agreement. _____________________________ is a Delaware banking
corporation and its principal offices are located at _______________________
________________________________. 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 only the
Receivables purchased on the Closing Date. The Receivables were purchased,
directly or indirectly, by the Seller from Dealers in the ordinary course of
business and were 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, as
of the Cutoff Date, each Receivable (i) had a principal balance of at least
($300) and (ii) was not more than 30 days past due (an account is not
considered past due if the amount past due is less than 10% of the scheduled
monthly payment). As of the Cutoff Date, no Obligor on any Receivable was
noted in the related records of the Seller as being the subject of a
bankruptcy proceeding, and no Obligor on any Receivable financed a Financed
Vehicle under the Seller's "New-Finance Buyer Plan" program. No selection
procedures believed by the Seller to be adverse to Noteholders were used in
selecting the Receivables.
Set forth in the following tables is information concerning the
composition, distribution by annual percentage rate ("APR") and the
geographic distribution of the Receivables Pool as of the Cutoff Date.
PREMIER AUTO TRUST 199__-__
COMPOSITION OF THE RECEIVABLES POOL
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE AVERAGE
APR OF AGGREGATE NUMBER OF REMAINING ORIGINAL PRINCIPAL
RECEIVABLES PRINCIPAL BALANCE RECEIVABLES TERM TERM BALANCE
___________ _________________ ___________ _________ _________ _________
<S> <C> <C> <C> <C> <C>
% $ $
</TABLE>
PREMIER AUTO TRUST 199__-__
DISTRIBUTION BY APR OF THE RECEIVABLES POOL
<TABLE>
<CAPTION>
PERCENT OF
AGGREGATE
NUMBER OF AGGREGATE PRINCIPAL
APR RANGE RECEIVABLES PRINCIPAL BALANCE BALANCE(1)
___________________________________________ ___________ _________________ __________
<S> <C> <C> <C>
</TABLE>
___________________
(1) Percentages may not add to 100.0% because of rounding.
PREMIER AUTO TRUST 199_-_
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES POOL
<TABLE>
<CAPTION>
Percent of Aggregate Percent of Aggregate
State(2) Principal Balance(1) State(2) Principal Balance(1)
___________________________ ____________________ ______________________________ ____________________
<S> <C> <C> <C>
</TABLE>
____________________
(1) Percentages may not add to 100.0% because of rounding.
(2) Based on physical addresses of the dealers originating the receivables.
Approximately _____% of the aggregate principal balance of the
Receivables, constituting _____% of the number of the Receivables, represent
previously titled vehicles. Approximately _____% of the aggregate principal
balance of the Receivables represent financing of vehicles manufactured or
distributed by Chrysler. All of the Receivables are Simple Interest
Receivables. Approximately ____% of the Receivables are Fixed Value
Receivables. See "The Receivables Pools" in the Prospectus for a further
description of the characteristics of Simple Interest Receivables and Fixed
Value Receivables.
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 CFC continues to service. 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 DECEMBER 31,
_____________________________________________________________________________________
199__ 199__ 199__
______________________ ______________________ _______________________
NUMBER NUMBER NUMBER
OF OF OF
CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT
_________ ______ _________ ______ _________ ______
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31,
_____________________________________________________________________________________
199__ 199__ 199__
______________________ ________________________ _______________________
NUMBER NUMBER NUMBER
OF OF OF
CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT
_________ ______ _________ ______ _________ ______
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
</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 CFC continues
to service.
CREDIT LOSS/REPOSSESSION EXPERIENCE(1)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
___________________________________________________________________________
199__ 199__ 199__ 199__ 199__ 199__
__________ __________ __________ __________ __________ __________
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Average Amount Outstanding
During the Period . . . . . . . . . .
Average Number of Contracts
Outstanding During the Period . . . .
Percent of Contracts Acquired
During the Period with
Recourse to the Dealer . . . . . . .
Repossessions as a Percent of
Average Number of Contracts
Outstanding . . . . . . . . . . . . .
Net Losses as a Percent of
Liquidations (2)(3) . . . . . . . . .
Net Losses as a Percent of
Average Amount
Outstanding(2) . . . . . . . . . . .
</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 CFC continues to service.
(2) Net losses are equal to the aggregate of the 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,
including any losses resulting from disposition expenses and any losses
resulting from the failure to recover commissions to dealers with
respect to contracts that are prepaid or charged off.
(3) Liquidations represent a reduction in the outstanding balances of the
contracts as a result of monthly cash payments and charge-offs.
(During the fourth quarter of 1995 and throughout 1996, CFC experienced
higher credit losses on automotive retail receivables. CFC's management
attributes the increased losses to the combined effect of a deterioration in
consumer credit markets, an increase in the frequency of repossessions and
the organizational realignments within CFC that affected retail collections.
Recent credit loss experience may continue while continued actions are taken
to improve the credit mix and servicing of CFC's automotive retail
receivables. No assurance can be given as to the future results.)
The net loss figures above reflect the fact that the Seller had recourse
to Dealers on a portion of its retail installment sale contracts. By
aggregate principal balance, approximately ____% of the Receivables represent
contracts with 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.
CHRYSLER FINANCIAL CORPORATION
Information regarding the Seller is set forth under "Chrysler Financial
Corporation" in the Prospectus. In addition, as of ____________, 199__, the
Seller had approximately _____ employees and was managing $____ billion in
finance receivables and provided financial services to automobile dealers and
their customers through ___ zone offices in the United States. During 199__,
the Seller financed or leased approximately _______ new and used vehicles at
retail, including approximately _______ new Chrysler passenger cars and light
duty trucks, representing ___% of Chrysler's U.S. retail and fleet
deliveries. The Seller also financed at wholesale approximately _________ new
Chrysler passenger cars and light duty trucks, representing ___% of
Chrysler's U.S. factory unit sales for the year ended ____________, 199__.
WEIGHTED AVERAGE LIFE OF THE NOTES
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 and no principal
payments will be made on the Class B Notes until the Class A-4 Notes have
been paid in full. See "Description of the Notes -- Payments of Principal"
herein. As the rate of payment of principal of each class of Notes depends
primarily on the rate of payment (including prepayments) of the principal
balance of the Receivables, final payment of any class of the Notes could
occur significantly earlier than their respective final scheduled
Distribution Dates. In addition, the rate of payment of principal of each
class of Notes will be affected by the Accelerated Principal Distribution
Amounts applied to the payment of the principal of the Notes and, during the
Collateral Release Period, the reduction in the amount of the Regular
Principal Distribution Amount that is applied to the payment of principal
of the Notes. Noteholders will bear the risk of being able to reinvest
principal payments on the Notes at yields at least equal to the yields
on their respective Notes.
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 Notes. 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
First National Bank of Chicago, a national banking association, will be the
Indenture Trustee under the Indenture.
PAYMENTS OF INTEREST
Each class of Notes will constitute (Fixed Rate Securities), as such
term is defined under "Certain Information Regarding the Securities -- Fixed
Rate Securities" in the Prospectus. Interest on the principal balances of the
classes of the Notes will accrue at their respective per annum Interest Rates
and will be payable to the Noteholders monthly on each Distribution Date,
commencing ____________, 199_. Interest on the outstanding principal amount
of the Notes will accrue at the applicable Interest Rate from the Closing
Date (in the case of the first Distribution Date) or from the sixth day of
the month preceding the month of a Distribution Date to and including the
fifth day of the month of the Distribution Date (each an "Interest Accrual
Period"). Interest on the Notes (other than the Class A-1 Notes) will be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
Interest on the Class A-1 Notes will be calculated on the basis of the actual
number of days in each Interest Accrual Period divided by 360. 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 Class A 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 Class A Noteholders will
receive their ratable share (based upon the aggregate amount of interest due
to such class of Class A Noteholders) of the aggregate amount available to be
distributed in respect of interest on the Class A Notes. The Class B
Noteholders will receive interest on the Class B Notes only to the extent of
the funds remaining after payment of principal and interest due on the Class
A Notes. However, notwithstanding the Events of Default described in the
Prospectus under the caption "Description of the Indenture -- The Indenture
- -- Events of Default; Rights upon Event of Default", until the principal
amount of the Class A-4 Notes has been paid in full, the failure to pay
interest due on the Class B Notes will not be an Event of Default.
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 Regular Principal
Distribution Amount (less the Cash Release Amount during the Collateral
Release Period) plus (ii) the Accelerated Principal Distribution Amount. The
"Regular Principal Distribution Amount" with respect to any Distribution Date
will equal 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 Collection Period plus the principal
balances of defaulted Receivables written off in respect of such Collection
Period, subject to certain limitations. The "Accelerated Principal
Distribution Amount" with respect to any Distribution Date will equal the
portion, if any, of the Total Distribution Amount for the related Collection
Period that remains after payment of (a) the Servicing Fee, (b) the
Noteholders' Interest Distributable Amount, (c) the Regular Principal
Distribution Amount, and (d) the amount, if any, required to be deposited in
the Reserve Account on such Distribution Date. Principal payments on the
Notes will generally be derived from the Total Distribution Amount and the
amount, if any, in the Reserve Account remaining after the payment of the
Servicing Fee and the Noteholders' Interest Distributable Amount and,
in the case of any Accelerated Principal Distribution Amount, 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 for the related Collection Period allocable to
interest and the amount allocable to principal on an actual basis, and
payments to Noteholders on the following Distribution Date will be based on
such allocation.
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; and (v) to the principal balance of the Class B Notes until the
principal balance of the Class B Notes has been 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 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; and the principal balance of the Class
B Notes, to the extent not previously paid, will be due on the Class B 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.
OPTIONAL REDEMPTION
The Class A-4 Notes and Class B 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-4 Notes and Class B
Notes will be equal to the unpaid principal amount of such Notes plus accrued
and unpaid interest thereon (the "Redemption Price").
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 Sale and Servicing Agreement will be
filed with the Commission following the issuance of the Notes. 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
Certain information regarding the conveyance of the Receivables by the
Seller to the Trust on the Closing Date pursuant to the Sale and Servicing
Agreement is set forth in the Prospectus under "Description of the Transfer
and Servicing Agreements -- Sale and Assignment of Receivables".
ACCOUNTS
No Payahead Account will be established in relation to the Trust because
all of the Receivables are Simple Interest Receivables. The assets of the
Trust also will not include a Pre-Funding Account. All other Accounts
referred to under "Description of the Transfer and Servicing Agreements --
Accounts" in the Prospectus, as well as a 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.
NO ADVANCES
The Servicer will not make Advances in respect of the Receivables.
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 in respect of a Collection
Period (together with any portion of the Servicing Fee that remains unpaid
from prior Distribution Dates) will be paid on the Distribution Date
following such Collection Period out of collections for such Collection
Period. 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" on any Distribution Date 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 interest; (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) 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 (iv) Investment Earnings
for such Distribution Date. The Interest Distribution Amount shall be
determined on the related Determination Date on an actual basis.
The "Regular Principal Distribution Amount" on any Distribution Date
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; (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) 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; (iv) 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 (v) on the Distribution Date immediately following
the Final Scheduled Maturity Date (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 on an actual basis.
The Interest Distribution Amount and the Regular Principal Distribution
Amount on any Distribution Date shall exclude 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.
Deposits to the Distribution Account. On each Distribution Date, the
Servicer will 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 payment of the Servicing Fee for
the related Collection Period and all unpaid Servicing Fees from prior
Collection Periods, 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; and
(iv) the remaining balance, if any, to the Reserve Account.
For purposes hereof, the following terms shall have the following
meanings:
"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.
"Noteholders' Monthly Interest Distributable Amount" means, with
respect to any Distribution Date, interest accrued for the related
Interest Accrual Period 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 (or,
in the case of the first Distribution Date, on the Closing Date), after
giving effect to all payments of principal to the Noteholders of
such class on or prior to such Distribution 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.
"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; and (v) on the Class B
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 B
Notes to zero.
"Noteholders' Monthly Principal Distributable Amount" means, with
respect to each Distribution Date, the sum of (i) the Regular Principal
Distribution Amount (less the Cash Release Amount for such Distribution
Date during the Collateral Release Period) and (ii) the Accelerated
Principal Distribution Amount.
"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.
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 Class A 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;
(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; and
(iii) to the Class B Noteholders, accrued and unpaid interest on
the outstanding principal balance of the Class B Notes at the Class B
Rate; and
(iv) to the Class B Noteholders in reduction of principal until
the principal balance of the Class B Notes has been reduced to zero.
OVERCOLLATERALIZATION AND RELEASE OF COLLATERAL
The Initial Pool Balance ($________________) will exceed the initial
aggregate principal amount of the Notes ($_____________) by an amount equal
to $_____________ (the "Initial Overcollateralization Amount"), which amount
is approximately __% of the initial aggregate principal amount of the Notes.
Unless offset by losses on the Receivables, the distribution of the
Accelerated Principal Distribution Amount, if any, on a Distribution Date is
expected to cause the aggregate principal amount of the Notes to decrease
faster than the Pool Balance decreases, thereby increasing the
Overcollateralization Amount and the Overcollateralization Percentage. The
"Overcollateralization Amount" in respect of a Distribution Date is equal to
(a) the Pool Balance as of the beginning of the preceding Collection Period
(the "Related Pool Balance") minus (b) the aggregate outstanding principal
amount of the Notes after giving effect to payments made on the Notes on the
preceding Distribution Date (the "Note Amount"). The "Overcollateralization
Percentage" in respect of a Distribution Date is the percentage derived from
a fraction, the numerator of which is the Overcollateralization Amount for
such Distribution Date and the denominator of which is the Related Pool
Balance. Subject to the conditions set forth below, on each Distribution
Date, commencing with the First Release Distribution Date, certain amounts of
cash and Receivables will be released to the Trust, free of the lien of the
Indenture, and thereupon paid or transferred to the Company. Any such cash
and Receivables released to the Company will not be available to make
payments on the Notes.
The release of cash and Receivables to the Trust (and then to the
Company) is subject to the satisfaction of all of the following conditions:
(1) No release will be permitted until the Distribution Date (the
"First Release Distribution Date") on which the Overcollateralization Amount
is at least equal to:
(Initial Overcollateralization Amount)
plus
((_%) X (Related Pool Balance minus Initial Overcollateralization Amount))
(2) Subject to condition (4) below, the aggregate principal balance of
Receivables released in respect of a Distribution Date will equal:.
Overcollateralization Amount less Targeted Overcollateralization Amount
The "Targeted Overcollateralization Amount" for a Distribution Date is equal
to:
(Note Amount)
____________ minus (Note Amount)
( (____%) )
(3) Subject to condition (4) below, the amount of cash released on such
Distribution Date (the "Cash Release Amount") will equal (___%) of the
Regular Principal Distribution Amount for such Distribution Date. However, on
any Distribution Date the Cash Release Amount and any Receivables will be
released only after the Noteholders shall have received principal in an
amount at least equal to (____%) of the Regular Principal Distributable
Amount for such Distribution Date.
(4) The cumulative amount of cash and principal balances of Receivables
released shall not exceed the Initial Overcollateralization Amount.
Consequently, when such cumulative amount has been released, there will be no
further release of cash or Receivables to the Trust pursuant to the release
provisions described above, and the full Regular Principal Distribution
Amount will thereafter again be distributable as principal to the
Noteholders. The period during which such releases are permitted is the
"Collateral Release Period".
RESERVE ACCOUNT
The protection afforded to the Noteholders will be effected both by the
Overcollateralization Amount and by the establishment of the Reserve Account.
The Reserve Account will be created with an initial deposit by the Seller on
the Closing Date of cash or Eligible Investments in the amount of $__________
(the "Specified Reserve Account Balance"), which is ____% of the initial
aggregate principal amount of the Notes. If, after the Collateral Release
Period, the Overcollateralization Percentage at any time equals at least
____%, then the Specified Reserve Account Balance will be $__________, which
is ____% of the initial aggregate principal amount of the Notes.
Amounts held from time to time in the Reserve Account will continue to
be held for the benefit of Noteholders. On each Distribution Date, funds will
be withdrawn from the Reserve Account 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. 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 and the
deposit of the Noteholders' Distributable Amount into the Note Distribution
Account.
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, the Noteholders will not 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 Class A 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 Class A Noteholders as an accelerated payment of principal on such
Distribution Date.
After the payment in full, or the provision for such payment, of (i) all
accrued and unpaid interest on the Notes and (ii) the outstanding principal
balance of the Notes, any funds remaining on deposit in the Reserve Account,
subject to certain limitations, will be paid to the Company.
The Overcollateralization Amount 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. 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 could incur losses or a temporary shortfall in the amounts
distributed to the Noteholders could result, which could, in turn, increase
the average life of the Notes.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Brown & Wood LLP, counsel for the Underwriters and
special tax counsel for the Trust, for federal income tax purposes, the
Offered 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. If, contrary to the above opinion, the IRS successfully
asserted that the Class B Notes did not represent debt for federal income tax
purposes, such Notes might be treated as equity interests in the Trust. In
the event the Class B Notes were treated as interests in a partnership, the
consequences governing the Certificates as equity interests in a partnership
described in the Prospectus under "TRUSTS FOR WHICH A PARTNERSHIP ELECTION IS
MADE -- Tax Consequences to Holders of the Certificates" would apply to the
holders of such Notes.
ERISA CONSIDERATIONS
The Offered Notes may be purchased by an employee benefit plan or an
individual retirement account (a "Plan") subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") or Section 4975 of the
Internal Revenue Code of 1986, as amended (the "Code"). A fiduciary of a Plan
must determine that the purchase of an Offered 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 Offered Notes under
ERISA, see "ERISA Considerations" in the Prospectus.
The Offered Notes may not be purchased with the assets of a Plan if the
Seller, 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.
UNDERWRITING
Subject to the terms and conditions set forth in an Underwriting
Agreement (the "Underwriting Agreement"), the Seller has agreed to cause the
Trust to sell to each of the Underwriters named below (collectively, the
"Underwriters"), and each of the Underwriters has severally agreed to
purchase, the principal amount of the Offered Notes set forth opposite its
name below:
Class A-2 Notes
$
__________________
Total . . . . . . . . . . . . . . . . . . . . . $
==================
Class A-3 Notes
Principal Amount
________________
$
________________
Total . . . . . . . . . . . . . . . . . . . . . $
================
Class A-4 Notes
Principal Amount
________________
$
________________
Total . . . . . . . . . . . . . . . . . . . . $
================
Class B Notes
Principal Amount
________________
$
Total . . . . . . . . . . . . . . . . . . . . ________________
$
================
The Seller has been advised by the 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 _____% per Class A-2 Note, _____% per Class A-3 Note, _____% per
Class A-4 Note and _____% per Class B Note. The Underwriters may allow and
such dealers may reallow a concession not in excess of _____% per Class A-2
Note, _____% per Class A-3 Note, _____% per Class A-4 Note and _____% per
Class B Note to certain other dealers. After the initial public offering of
the Offered Notes, the public offering price and such concessions may be
changed.
Until the distribution of the Offered Notes is completed, rules of the
Commission may limit the ability of the Underwriters and certain selling
group members to bid for and purchase the Offered Notes. As an exception to
these rules, the Underwriters are permitted to engage in certain transactions
that stabilize the price of the Offered Notes. Such transactions consist of
bids or purchases for the purpose of pegging, fixing or maintaining the price
of the Offered Notes.
If the Underwriters create a short position in the Offered Notes in
connection with the offering, i.e., if they sell more Offered Notes than are
set forth on the cover page of this Prospectus Supplement, the Underwriters
may reduce that short position by purchasing Offered Notes in the open
market.
In general, purchases of a security for the purpose of stabilization or
to reduce a short position could cause the price of the security to be higher
than it might be in the absence of such purchases.
Neither the Seller nor any of the Underwriters makes any representation
or prediction as to the direction or magnitude of any effect that the
transactions described above may have on the prices of the Offered Notes. In
addition, neither the Seller nor any of the Underwriters makes any
representation that the Underwriters will engage in such transactions or that
such transactions, once commenced, will not be discontinued without notice.
Each Underwriter has represented and agreed that (a) it has not offered
or sold, and will not offer or sell, any Offered Notes to persons in the
United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or
agent) for the purposes of their businesses or otherwise in circumstances
that do not constitute an offer to the public in the United Kingdom for the
purposes of the Public Offers of Securities Regulations 1995, (b) it has
complied and will comply with all applicable provisions of the Financial
Services Act 1986 of Great Britain with respect to anything done by it in
relation to the Offered Notes in, from or otherwise involving the United
Kingdom and (c) it has only issued or passed on and will only issue or pass
on in the United Kingdom any document in connection with the issue of the
Offered Notes to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order
1995 or is a person to whom the document may otherwise lawfully be issued or
passed on.
Upon receipt of a request by an investor who has received an electronic
Prospectus Supplement and Prospectus from an Underwriter or a request by such
investor's representative within the period during which there is an
obligation to deliver a Prospectus Supplement and Prospectus, the Seller or
the Underwriter will promptly deliver, or cause to be delivered, without
charge, a paper copy of the Prospectus Supplement and Prospectus.
LEGAL OPINIONS
In addition to the legal opinions described in the Prospectus, certain
legal matters relating to the Offered Notes 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 LLP, New York, New York. Brown & Wood LLP
may from time to time render legal services to Chrysler Financial Corporation
and its affiliates.
INDEX OF TERMS
Accelerated Principal Distribution Amount . . . . . . . . . . . . . . . . S-
APR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Cash Release Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Cede . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
CEDEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
CEDEL Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
CFC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Chrysler . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Class A Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Class A-1 Final Scheduled Distribution Date . . . . . . . . . . . . . . . S-
Class A-1 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Class A-1 Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Class A-2 Final Scheduled Distribution Date . . . . . . . . . . . . . . . S-
Class A-2 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Class A-2 Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Class A-3 Final Scheduled Distribution Date . . . . . . . . . . . . . . . S-
Class A-3 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Class A-3 Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Class A-4 Final Scheduled Distribution Date . . . . . . . . . . . . . . . S-
Class A-4 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Class A-4 Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Class B Final Scheduled Distribution Date . . . . . . . . . . . . . . . . S-
Class B Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Class B Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Collateral Release Period . . . . . . . . . . . . . . . . . . . . . . . . S-
Collection Account . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Collection Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Cooperative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
CTAS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Cutoff Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Depositaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
DTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
EITF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
ESI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Euroclear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Euroclear Operator . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Euroclear Participants . . . . . . . . . . . . . . . . . . . . . . . . . S-
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Federal Tax Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Final Scheduled Distribution Date . . . . . . . . . . . . . . . . . . . . S-
Final Scheduled Maturity Date . . . . . . . . . . . . . . . . . . . . . . S-
First Release Distribution Date . . . . . . . . . . . . . . . . . . . . . S-
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Initial Overcollateralization Amount . . . . . . . . . . . . . . . . . . S-
Initial Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Interest Accrual Period . . . . . . . . . . . . . . . . . . . . . . . . . S-
Interest Distribution Amount . . . . . . . . . . . . . . . . . . . . . . S-
Interest Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Liquidated Receivables . . . . . . . . . . . . . . . . . . . . . . . . . S-
Liquidation Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Michigan Tax Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Note Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Noteholders' Distributable Amount . . . . . . . . . . . . . . . . . . . . S-
Noteholders' Interest Carryover Shortfall . . . . . . . . . . . . . . . . S-
Noteholders' Interest Distributable Amount . . . . . . . . . . . . . . . S-
Noteholders' Monthly Interest Distributable Amount . . . . . . . . . . . S-
Noteholders' Monthly Principal Distributable Amount . . . . . . . . . . . S-
Noteholders' Principal Carryover Shortfall . . . . . . . . . . . . . . . S-
Noteholders' Principal Distributable Amount . . . . . . . . . . . . . . . S-
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Offered Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Overcollateralization Amount . . . . . . . . . . . . . . . . . . . . . . S-
Overcollateralization Percentage . . . . . . . . . . . . . . . . . . . . S-
Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
PEI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Rating Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Realized Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Receivables Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Regular Principal Distribution Amount . . . . . . . . . . . . . . . . . . S-
Related Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Reserve Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Sale and Servicing Agreement . . . . . . . . . . . . . . . . . . . . . . S-
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Specified Reserve Account Balance . . . . . . . . . . . . . . . . . . . . S-
Targeted Overcollateralization Amount . . . . . . . . . . . . . . . . . . S-
Terms and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Thrifty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Total Distribution Amount . . . . . . . . . . . . . . . . . . . . . . . . S-
Transfer and Servicing Agreements . . . . . . . . . . . . . . . . . . . . S-
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . S-
Subject to completion, dated July 11, 1997
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to the registration or qualification under the securities laws
of any such State.
PROSPECTUS
- ----------
PREMIER AUTO TRUSTS
ASSET BACKED NOTES
ASSET BACKED CERTIFICATES
---------------------
CHRYSLER FINANCIAL CORPORATION
SELLER AND 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 may include one or more classes of Notes and/or one or
more classes of Certificates, will be issued by a trust (each, a "Trust").
Each Trust will be formed pursuant to either (i) a Trust Agreement to be
entered into among Chrysler Financial Corporation ("CFC"), as seller, the
Trustee specified in the related Prospectus Supplement (the "Trustee") and an
entity which will be specified in the related Prospectus Supplement and which
initially will be owned, directly or indirectly, by CFC (such entity, as
identified in the related Prospectus Supplement, the "Company"), or (ii) a
Pooling and Servicing Agreement to be entered into between the Trustee and
CFC, as seller and servicer. A Trust may issue one or more series of
Securities. If a series of Securities includes Notes, such Notes 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 or, if the related Trust issues more than one series of
Securities, a separate subdivision of such Trust allocated to such series of
Certificates. The related Prospectus Supplement will specify which class or
classes of Notes, if any, and which class or classes of Certificates, if any,
of the related series are being offered thereby. 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 and may include
certain other assets, all as described herein and in the related Prospectus
Supplement (collectively, with respect to a series of Securities issued by
such Trust, the "Series Trust Property"). If the Trust issues more than one
series of Securities, the Securities of a series will be supported solely by
the Series Trust Property allocated to such series and will not have any
rights in or claim on, or receive any payments from, the Series Trust
Property allocated to any other series of Securities issued by such Trust.
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 Trustee or the Indenture
Trustee, which will be used to purchase additional motor vehicle retail
installment sale contracts (the "Subsequent Receivables") from CFC 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. If a series includes multiple
classes of Securities, the rights of one or more classes of Securities to
receive payments may be senior or subordinate to the rights of one or more of
the other classes of such series. A series may include one or more classes of
Notes and/or 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 and/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 any class of
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, ANY
NOTES OF A SERIES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES OF A 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, 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 ____________, 199_.
AVAILABLE INFORMATION
Chrysler Financial Corporation, 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 any 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 Citicorp Center, 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. The Commission maintains a Web site at
http://www.sec.gov containing reports, proxy and information statements and
other information regarding registrants, including Chrysler Financial
Corporation, that file electronically with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed by Chrysler Financial Corporation, as originator of
the Trust referred to in the accompanying Prospectus Supplement, pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended, subsequent to the date of this Prospectus and prior to the
termination of the offering of the Securities offered by such Trust shall be
deemed to be incorporated by reference in this Prospectus. 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.
Chrysler Financial Corporation 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: 248-948-3058).
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".
Issuer . . . . . . . . . . . . . With respect to each series of
Securities, the trust (referred to
herein as the "Trust" or the
"Issuer") formed or to be formed
pursuant to either a Trust
Agreement (as amended and
supplemented from time to time, a
"Trust Agreement") among the
Seller, the Company for such Trust
and the Trustee for such Trust or
a Pooling and Servicing Agreement
(as amended and supplemented from
time to time, the "Pooling and
Servicing Agreement") between the
Trustee and Chrysler Financial
Corporation, as Seller and
Servicer. A Trust may issue on or
more series of Securities.
Seller . . . . . . . . . . . . . Chrysler Financial Corporation
("CFC" or, in its capacity as
seller, the "Seller").
Servicer . . . . . . . . . . . . Chrysler Financial Corporation (in
such capacity, the "Servicer").
Trustee . . . . . . . . . . . . . With respect to each series of
Securities, the Trustee specified in
the related Prospectus Supplement.
Indenture Trustee . . . . . . . . With respect to any applicable
series of Securities, the
Indenture Trustee specified in
the related Prospectus Supplement.
The Notes . . . . . . . . . . . . A series of Securities may 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"), and may or
may not include any Certificates.
The related Prospectus Supplement
will specify which class or
classes, if any, of Notes of the
related series are being offered
thereby. If a Trust issues more
than one series of Notes, the
Notes of a series will be secured
solely by the Series Trust
Property allocated to such series
and will not have any rights in or
claims on, or receive any payments
from, the Series Trust Property
allocated to any other series of
Securities issued by such Trust.
Unless otherwise specified in the
related Prospectus Supplement,
Notes will be available for
purchase in denominations of
$1,000 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 allocated to a series
of Notes (or, if not and, if and
to the extent provided in the
related Prospectus Supplement,
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", the
outstanding Notes of such series
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 in
respect of a series will include a
Pre-Funding Account (as such term
is defined in the related
Prospectus Supplement, the
"Pre-Funding Account"), one or
more classes of the outstanding
Notes of such series 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 Noteholders of such series 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 . . . . . . . . A series may include one or more
classes of Certificates and may or
may not include any Notes. The
related Prospectus Supplement will
specify which class or classes, if
any, of the Certificates are being
offered thereby. A Trust may
issue one or more series of
Certificates with or without
Notes. In such a case,
Certificates of a series will be
supported solely by the Series
Trust Property allocated to such
series and will not have any
rights in or claims on, or receive
any payments from, the Series
Trust Property allocated to any
other series of Securities issued
by such Trust.
Unless otherwise specified in the
related Prospectus Supplement,
Certificates will be available for
purchase in a minimum denomination
of $20,000 and will be available
in book-entry form only. Unless
otherwise specified in the related
Prospectus Supplement,
Certificateholders 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.
If a series of Securities includes
classes of Notes, distributions in
respect of the Certificates may be
subordinated in priority of
payment to payments on the Notes
to the extent specified in the
related Prospectus Supplement.
If the Servicer exercises its
option to purchase the Receivables
of a Trust allocated to a series
of Securities (or, if not, and if
and to the extent provided in the
related Prospectus Supplement,
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 of such series
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 Supplement provides
that the property of a Trust in
respect of a series will include a
Pre-Funding Account,
Certificateholders of such series
may 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 of such
series 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. In
addition, the property of a Trust
may include (i) notes and/or
certificates that were issued by a
prior Trust but were not then
offered pursuant to this
Prospectus ("Previously Issued
Securities") and/or (ii) the right
to receive collections in respect
of Receivables owned by one or
more prior Trusts that would
otherwise be released to the
Company. In the case of a Trust
that issues more than one series
of Securities, such property will
be allocated to a single series of
Securities issued by such Trust
(as so allocated, "Series Trust
Property"). Series Trust Property
will support only the single
series of Securities to which it
has been allocated and will not
benefit or result in any payments
on any other series of Securities
issued by the related Trust or any
other Trust.
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
or transfer Receivables (the
"Initial Receivables") having an
aggregate principal balance
specified in the related
Prospectus Supplement as of the
dates specified therein (the
"Initial Cutoff Date") to such
Trust pursuant to either a Sale
and Servicing Agreement between
CFC, as Seller and Servicer, and
the Trust (as amended and
supplemented from time to time, a
"Sale and Servicing Agreement")
or, if the Trust is to be treated
as a grantor trust for federal
income tax purposes, the related
Pooling and Servicing Agreement
between CFC, as Seller and
Servicer, and the Trustee. A
Prospectus Supplement may specify
that there will not be any Initial
Receivables sold to the Trust on
the Closing Date and that all
Receivables will be sold to the
Trust during the Funding Period
(which may include the Closing
Date) as described below. The
property of each Trust relating to
a series will also include amounts
on deposit in certain trust
accounts relating solely to such
series, 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 or Pooling and Servicing
Agreement), additional Receivables
(the "Subsequent Receivables") in
respect of the related series 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.
To the extent provided in the
related Prospectus Supplement, for
a period of time specified in such
Prospectus Supplement (the
"Revolving Period") collections of
principal on the Receivables for
the related series may be applied
to purchase additional Receivables
("Additional Receivables") from
the Seller for such series.
The Receivables arise or will
arise from loans originated by
motor vehicle dealers (the
"Dealers") and purchased by the
Seller, directly or indirectly,
pursuant to agreements with the
Dealers. The Receivables for any
given Receivables Pool will be
selected from the contracts owned
by the Seller based on the
criteria specified in the Sale and
Servicing Agreement or Pooling and
Servicing Agreement, as
applicable, and described herein
and in the related Prospectus
Supplement.
Credit Enhancement, If and to the extent specified in
Cash Flow Enhancement and the related Prospectus Supplement,
Liquidity Arrangements . . . . . 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, overcollateralization,
letters of credit, credit or
liquidity facilities, surety
bonds, guaranteed investment
contracts, swaps (including
without limitation currency
swaps), other interest rate
protection agreements, repurchase
obligations (including without
limitation put options), yield
supplement agreements, liquidity
arrangements, 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, cash
flow enhancement or liquidity
arrangement will have certain
limitations and exclusions from
coverage thereunder, which will be
described in the related
Prospectus Supplement.
Reserve Account . . . . . . . . . Unless otherwise specified in the
related Prospectus Supplement, a
Reserve Account will be created
for a series of Securities 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 a 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 of such series
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 With respect to each series of
Agreements . . . . . . . . . . . Securities, the Seller will sell
the related Receivables to the
related Trust pursuant to a Sale
and Servicing Agreement or a
Pooling and Servicing Agreement.
The rights and benefits of any
Trust under a 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.
CFC will undertake certain
administrative duties under an
Administration Agreement with
respect to any Trust that has
issued Notes.
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.
Unless otherwise specified in the
related Prospectus Supplement, the
Servicer will be entitled to
receive a fee for servicing the
Receivables included in each Trust
or Series Trust Property 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 the related
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
Receivable which fails to comply
with such requirements.
Tax Status . . . . . . . . . . . Unless the Prospectus Supplement
specifies that the related Trust
will be treated as a grantor trust
and, except as otherwise provided
in such Prospectus Supplement,
upon the issuance of the related
series of Securities (a) Federal
Tax Counsel to such Trust will
deliver an opinion to the effect
that, for federal income tax
purposes: (i) any 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. In
respect of any such series, each
Noteholder, by the acceptance of a
Note of such series, will agree to
treat such Note as indebtedness,
and each Certificateholder, if the
Certificates are not retained
solely by the Seller or an
affiliate thereof, by the
acceptance of a Certificate of
such series, will agree to treat
such 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.
If the Prospectus Supplement
specifies that the related Trust
will be treated as a grantor trust
and except as otherwise provided
in such Prospectus Supplement,
upon the issuance of the related
series of Certificates, Federal
Tax Counsel to such Trust will
deliver an opinion to the effect
that such Trust will be treated as
a grantor trust for federal income
tax purposes and will not be
subject to federal income tax.
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 any series
and any Certificates issued by a
Trust that is a grantor trust and
are not subordinated to any other
class of Certificates will be
eligible for purchase by employee
benefit plans.
Unless otherwise specified in the
related Prospectus Supplement, the
Certificates of any series that
are subordinated to any other
Security of that 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.
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 or Pooling
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.
A case decided by the United States Court of Appeals for the
Tenth Circuit contains language to the effect that accounts sold by an
entity that subsequently became bankrupt remained property of the
debtor's bankruptcy estate because the sale of accounts is treated as a
"security interest" that must be perfected under the Uniform Commercial
Code ("UCC"). Although the Contracts constitute chattel paper rather
than accounts under the UCC, sale of chattel paper, like sales of
accounts, must be perfected under Article 9 of the UCC. If CFC were to
become a debtor under any insolvency law and a court were to follow the
reasoning of the Tenth Circuit Court of Appeals and apply such reasoning to
chattel paper, the Owner Trust (and thus the Indenture Trustee) or the
Grantor Trust (and thus the Trustee), as applicable, could experience a
delay in or reduction of collections on the Contracts, and the
Noteholders and/or the Certificateholders could incur a loss on their
investment as a result.
With respect to each Trust that is not a grantor trust, if the related
Prospectus Supplement so specifies, upon the occurrence of an Insolvency
Event with respect to the Company (which, unless otherwise specified in the
related Prospectus Supplement, will be a wholly-owned subsidiary of the
Seller or a limited liability company of which the Seller and/or one or more
of its wholly-owned subsidiaries are members, as set forth in such Prospectus
Supplement), the Indenture Trustee or 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 related Collection Account of such Trust. If
the proceeds from the liquidation of the Receivables and any amounts on
deposit in the related Reserve Account, the related Note Distribution
Account, if any, and the related Certificate Distribution Account, if any,
with respect to any such Trust and any amounts available from any credit
enhancement are not sufficient to pay the Notes, if any, and the
Certificates, if any, of each related series in full, the amount of
principal returned to any Noteholders or the Certificateholders of each
series of such Trust will be reduced and such Noteholders and
Certificateholders will incur a loss. See "Description of the Transfer
and Servicing Agreements -- Insolvency Event".
Trust's Relationship to the Seller and its Affiliates. None of CFC,
Chrysler Corporation ("Chrysler") or any of their affiliates is generally
obligated to make any payments in respect of any Notes, the Certificates or
the Receivables of a given Trust.
However, in connection with the sale of Receivables by the Seller to a
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 CFC were to cease acting as
Servicer, delays in processing payments on the Receivables and information in
respect thereof could occur and result in delays in payments to the
Securityholders.
The related Prospectus Supplement may set forth certain additional
information regarding CFC and Chrysler. In addition, CFC 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 CFC 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 one or more
classes of Notes and/or Certificates of a series may be subordinated in
priority of payment to interest and principal due on one or more classes of
Notes of such series, and distributions of interest and principal on one or
more classes of Certificates may be subordinated in priority of payment to
interest and principal due on the Notes, if any, and one or more other
classes of Certificates 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 any series will represent interests solely
in, the related Trust and neither the Notes nor the Certificates of any
series will be insured or guaranteed by CFC, the applicable Trustee, any
Indenture Trustee or any other person or entity. Moreover, in the case of a
Trust that issues more than one series of Securities, the Securities of a
series issued by such Trust will be supported solely by the Series Trust
Property allocated to such series and will not have any rights in or claim
on, or receive any payments from, the Series Trust Property allocated to any
other series of Securities issued by such Trust. Consequently, holders of
the Securities of any series must rely for repayment upon payments on solely
the Receivables allocated to such series 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 for such series, 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 or Pooling 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 or Pooling 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 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 Servicer's option to purchase the Receivables of
a Receivables Pool and "-- Insolvency Event" regarding the possible sale
(if provided for in the related Prospectus Supplement) of the Receivables
owned by a Trust that is not a grantor trust if an Insolvency Event
with respect to the applicable Company occurs.
Risk of Commingling. With respect to each series of Securities, 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 for such series within two business days
of receipt thereof. However, in the event that CFC 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 CFC 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 for
such series 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 series of Securities that includes Notes, 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 Trustee or any of the Certificateholders,
if any, with respect to such series. The 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, if any, of such series. See "Description of the Transfer
and Servicing Agreements -- Waiver of Past Defaults".
Book-Entry Registration. Unless otherwise specified in the related
Prospectus Supplement, each class of a series of Securities 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 Trustee or any applicable Indenture Trustee as "Certificateholders",
"Noteholders" or "Securityholders", as the case may be (as such terms are
used herein or in the related Pooling and Servicing Agreement or related
Indenture and Trust Agreement, as applicable). 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
The Seller will establish a separate Trust pursuant to the respective
Trust Agreement or Pooling and Servicing Agreement, as applicable, for the
transactions described herein and in the related Prospectus Supplement. The
property of each Trust allocated to a series of Securities issued by such
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 the case of Simple Interest Receivables. The Receivables of
each Receivables Pool were or will be originated by the Dealers and purchased
by CFC, directly or indirectly, pursuant to agreements with Dealers ("Dealer
Agreements"). 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 Securities of a
series, the Seller will sell the Initial Receivables of the applicable
Receivables Pool to the Trust to the extent, if any, specified in the
related Prospectus Supplement. To the extent so provided in the related
Prospectus Supplement, Subsequent Receivables allocable to such series
of Securities will be conveyed to the Trust as frequently as daily during the
Funding Period and Additional Receivables allocable to such series of
Securities may be conveyed to the Trust during the Revolving Period. Any
Subsequent Receivables or Additional Receivables so conveyed will also be
assets of the applicable Trust allocated solely to such series of Securities,
subject to the prior rights of the related Indenture Trustee and the related
Noteholders, if any, therein. The property of each Trust allocated to a
series of Securities issued by such 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 or Pooling
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 (as allocated to such series of Securities and
together the Receivables Pool allocated to such series and payments thereon,
the "Series Trust Property"). To the extent specified in the related
Prospectus Supplement, a Pre-Funding Account, a Reserve Account or other form
of credit enhancement or Previously Issued Securities may be a part of the
property of the Series Trust Property in a Trust or may be held by the
Trustee or an Indenture Trustee for the benefit of holders of the related
Securities. If a Trust issues more than one series of Securities, the
Securities of a series will be supported solely by the Series Trust Property
allocated to such series and will not have any rights in or claim on, or
receive any payments from, the Series Trust Property allocated to any other
series of Securities issued by such Trust. Additionally, pursuant to
contracts between the Seller 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, each 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 any Noteholders of a series by the
subordination of the related Certificates, if any, and by the Reserve
Account, if any, or other credit enhancement for such series or the
protection provided to the related Certificateholders by any 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 Receivables in the related Series Trust Property, the
proceeds from the repossession and sale of Financed Vehicles which secure
defaulted Receivables in the related Series Trust Property 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 such
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 Trustee will be
specified in the applicable Prospectus Supplement.
THE TRUSTEE
The Trustee for each Trust will be specified in the related Prospectus
Supplement. The Trustee's liability in connection with the issuance and sale
of the related Securities is limited solely to the express obligations of
such Trustee set forth in the related Trust Agreement and the Sale and
Servicing Agreement or the related Pooling and Servicing Agreement, as
applicable. A 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 that is not a grantor trust and the Servicer in
respect of a Trust that is a grantor trust may also remove the Trustee if
the Trustee ceases to be eligible to continue as Trustee under the related
Trust Agreement or Pooling and Servicing Agreement, as applicable, or
if the Trustee becomes insolvent. In such circumstances, the Administrator or
Servicer, as applicable, will be obligated to appoint a successor trustee.
Any resignation or removal of a 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 Seller, directly or indirectly, 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 Seller 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 Receivables to be held by a Trust and allocated to a series of
Securities will be selected from the Seller's portfolio for inclusion in the
related 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 CFC'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 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 CFC 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 in such Trust; the final fixed
value payment will be sold by the Seller to the applicable Company. However,
in the case of a Trust that is not a grantor trust, such Company 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 and any finance
charges up to the date of final payment.
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.
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 CFC 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, if any, and the Certificates, if
any, 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 Trust pursuant to the related Sale
and Servicing Agreement or Pooling 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 or Pooling 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 Trust and
"-- Insolvency Event" regarding the possible sale (if provided for in the
related Prospectus Supplement) of the Receivables owned by a Trust that is
not a grantor trust if an Insolvency Event with respect to the Company
applicable to such Trust occurs.
In addition, a Prospectus Supplement may provide for a Revolving Period
during which principal collections in respect of the Receivables allocated to
the related series will be applied to purchase Additional Receivables for
inclusion in the related Series Trust Property rather than applied to make
distributions on the related Securities. Any such application would increase
the weighted average life of such Securities. Moreover, a Prospectus
Supplement may provide for a liquidity facility or similar arrangement under
which collections of principal may be invested in certain Eligible
Investments and distributed on the related Securities in planned amounts on
scheduled Distribution Dates.
In light of the above considerations, there can be no assurance as to
the amount of principal payments to be made on the Notes, if any, or the
Certificates, if any, 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, if any, and the Certificateholders, if any, 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 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 a series, the Noteholders, if any, and the Certificateholders, if
any, of such series will receive reports on or about each Payment Date
concerning with respect to the Collection Period immediately preceding such
Payment Date, payments received on the related Receivables, the related Pool
Balance (as such term is defined in the related Prospectus Supplement, the
"Pool Balance"), each Certificate Pool Factor or Note Pool Factor, as
applicable, 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 series will be applied by the
applicable Trust (i) to the purchase of the Receivables and, if applicable,
any Previously Issued Securities 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 such series of
Securities for general corporate purposes.
CHRYSLER FINANCIAL CORPORATION
CFC is a financial services organization, all of the common stock of
which is owned by Chrysler. CFC, 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. CFC 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. CFC'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 CFC. See
"Special Considerations -- Trust's Relationship to the Seller; Financial
Condition of Chrysler Corporation" in the related Prospectus Supplement. The
related Prospectus Supplement will set forth certain additional information
with respect to CFC. CFC's executive offices are located at 27777 Franklin
Road, Southfield, Michigan 48034-8286, and its telephone number is (810)
948-3058.
CFC will warrant to each Trust in the related Sale and Servicing
Agreement or Pooling and Servicing Agreement that the sale of the applicable
Receivables by CFC to such Trust is a valid sale of such Receivables to such
Trust. In addition, CFC 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 CFC will take all actions that are required to perfect the
Trust's ownership interest in such Receivables. Notwithstanding the
foregoing, if CFC 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 CFC 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 CFC's bankruptcy estate and would
not be available to CFC's creditors.
On December 31, 1995, Chrysler Credit Corporation ("CCC"), which had
been a wholly owned subsidiary of CFC and had provided retail, wholesale and
lease financing services to automobile dealers and their customers throughout
the United States and had originated and serviced CFC's motor vehicle loan
portfolio, was merged into CFC.
DESCRIPTION OF THE NOTES
GENERAL
With respect to each Trust that issues Notes, one or more classes of
Notes of the related series will be issued pursuant to the terms of an
Indenture, the forms of which have 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.
If a Trust issues more than one series of Notes, each such series may be
issued pursuant to a master Indenture. In such a case, the Notes of a series
will be secured solely by the Series Trust Property allocated to such series
and will not have any rights in or claims on, or receive any payments from,
the Series Trust Property allocated to any other series of Securities issued
by such Trust.
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 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, 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 with respect to each class of Notes of a series will be
described in the related Prospectus Supplement. The right of holders of any
class of Notes of a series 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 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 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. The aggregate initial principal amount of the Notes
and Certificates, if any, of a series may, after giving effect to the
purchase of all Subsequent Receivables, if any, be greater than the aggregate
initial principal balance of the Receivables in that series.
To the extent specified in the related Prospectus Supplement, payments
to Noteholders of two or more classes within a series in respect of interest
may have the same priority. Under certain circumstances, the amount available
for such payments could be less than the amount of interest payable on such
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 the holders of such classes of Notes will receive its ratable
share (based upon the aggregate amount of interest due to such classes of
Noteholders) of the aggregate amount available to be distributed in respect
of interest on such Notes. 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. A series with Notes may provide for a Revolving
Period, during which collections of principal in respect of the Receivables
are not applied to payments of principal of such Notes, or may provide for a
liquidity facility of similar arrangement that permits one or more classes of
Notes to be paid in planned amounts on scheduled Distribution Dates.
THE INDENTURE
Master Indenture. If a Trust issues more than one series of Notes, such
a series may be issued pursuant to a base indenture and a series supplement
thereto that relates to such series of Notes (such base indenture together
with such series supplement being also referred to herein as an "Indenture").
Modification of Indenture. With respect to each Trust that has issued
Notes pursuant to an Indenture, the Trust and the Indenture Trustee may, with
the consent of the holders of a majority of the outstanding Notes of the
related series, execute a supplemental indenture to add provisions to, change
in any manner or eliminate any provisions of, the related Indenture, or
modify (except as provided below) in any manner the rights of the related
Noteholders.
Unless otherwise specified in the related Prospectus Supplement with
respect to a series of Notes, without the consent of the holder of each such
outstanding Note affected thereby, 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 allocated to such series if the proceeds of
such sale would be insufficient to pay the principal amount and accrued but
unpaid interest on the outstanding Notes of such series; (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 Series Trust Property securing
such Notes or, except as otherwise permitted or contemplated in such
Indenture, terminate the lien of such Indenture on any such collateral or
deprive the holder of any such Note of the security afforded by the lien of
such Indenture.
Unless otherwise provided in the applicable Prospectus Supplement, the
Trust and the applicable Indenture Trustee may also enter into supplemental
indentures, without obtaining the consent of the Noteholders of the related
series, for the purpose of, among other things, adding any provisions to or
changing in any manner or eliminating any of the provisions of the related
Indenture or of modifying in any manner the rights of such Noteholders;
provided that such action will not materially and adversely affect the
interest of any such Noteholder.
Events of Default; Rights upon Event of Default. With respect to the
Notes of a series, unless otherwise specified in the related Prospectus
Supplement, "Events of Default" under the related Indenture will consist of:
(i) a default for five days (or for such other longer period specified in the
related Prospectus Supplement) or more in the payment of any interest on any
such Note; (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. 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.
In the case of a Trust that issues more than one series of Notes, an
Event of Default with respect to one such series of Notes will not of itself
constitute an Event of Default with respect to any such other series of
Notes.
If an Event of Default 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 Series Trust Property
allocated to such series, exercise remedies as a secured party, sell the
Receivables included in such Series Trust Property or elect to have the
applicable Trust maintain possession of such Receivables and continue to
apply collections on such Receivables as if there had been no declaration of
acceleration. Unless otherwise specified in the related Prospectus
Supplement, however, such Indenture Trustee is prohibited from selling the
related Receivables following an Event of Default, other than a default in
the payment of any principal of or a default for five days (or such longer
period specified in the related Indenture) or more in the payment of any
interest on any Note of such series, unless (i) the holders of all the
outstanding Notes of such series 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 such Receivables would not
be sufficient on an ongoing basis to make all payments on such Notes as such
payments would have become due if such obligations had not been declared due
and payable, and such Indenture Trustee obtains the consent of the holders of
66 2/3% of the aggregate outstanding amount of such Notes.
If a Trust issues more than one series of Notes, each such series of
Notes will be secured solely by the Series Trust Property allocated to such
series and will not have any rights in or claims on, or receive any payments
from, the Series Trust Property allocated to any other series of Securities
issued by such Trust.
Subject to the provisions of the applicable Indenture relating to the
duties of the related Indenture Trustee, if an Event of Default occurs and is
continuing with respect to a series of Notes, such Indenture Trustee will be
under no obligation to exercise any of the rights or powers under such
Indenture at the request or direction of any of the holders of such Notes, if
such Indenture Trustee reasonably believes it will not be adequately
indemnified against the costs, expenses and liabilities which 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
series will have the right to direct the time, method and place of conducting
any proceeding or any remedy available to the applicable Indenture Trustee in
respect of such series, and the holders of a majority in principal amount of
such Notes then outstanding may, in certain cases, waive any default with
respect to such Notes, except a default in the payment of principal or
interest or a default in respect of a covenant or provision of such Indenture
that cannot be modified without the waiver or consent of all the holders of
such outstanding Notes.
Unless otherwise specified in the related Prospectus Supplement, no
holder of a Note of any series will have the right to institute any
proceeding with respect to the related Indenture, unless (i) such holder
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 holders of a series of
Notes, by accepting such Notes, will covenant, to the extent legally
enforceable, that they will not at any time institute against the applicable
Trust any bankruptcy, reorganization or other proceeding under any federal or
state bankruptcy or similar law and that they do not have and will not assert
any claims against any Series Trust Property allocated to any other series of
Notes issued by such Trust.
With respect to any series of Notes issued by a Trust, neither the
related Indenture Trustee nor the related 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 such Notes or for the agreements of such
Trust contained in the applicable Indenture.
Certain Covenants. Each Indenture will provide that the related Trust
may not consolidate with or merge into any other entity, unless (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 federal income tax consequence to the Trust or to any related
Noteholder or Certificateholder.
With respect to each series of Notes issued by a Trust, such 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 and such series (collectively,
the "Related Documents"), sell, transfer, exchange or otherwise dispose of
any of the Series Trust Property allocated to such series, (ii) claim any
credit on or make any deduction from the principal and interest payable in
respect of the Notes of such 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 such Series Trust Property or any part
thereof, or any interest therein or the proceeds thereof.
No Trust may engage in any activity other than as specified under the
section of the related Prospectus Supplement entitled "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
series of Notes will be required to mail each year to all related Noteholders
a brief report relating to its eligibility and qualification to continue as
Indenture Trustee under the related Indenture, any amounts advanced by it
under the Indenture, the amount, interest rate and maturity date of certain
indebtedness owing by the related Trust to the applicable Indenture Trustee
in its individual capacity, the property and funds physically held by such
Indenture Trustee as such and any action taken by it that materially affects
the related Notes and that has not been previously reported.
Satisfaction and Discharge of Indenture. An Indenture will be
discharged with respect to the Series Trust Property securing 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, if so specified in the related Prospectus
Supplement, one or more classes of Certificates of the related series will be
issued pursuant to the terms of a Trust Agreement or a Pooling and Servicing
Agreement, a form of each 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 or Pooling and Servicing Agreement, as applicable.
Unless otherwise specified in the related Prospectus Supplement and
except for the Certificates, if any, of a series purchased by the applicable
Company, each class of Certificates will initially be represented by one or
more Certificates 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, if any, of a given series purchased by the
applicable Company, the Certificates will be available for purchase in
minimum denominations of $20,000 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 case may be, as the registered
holder of the Certificates, 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". Any 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").
If a Trust issues more than one series of Certificates, Certificates of
a series will be supported solely by the Series Trust Property allocated to
such series and will not have any rights in or claims on, or receive any
payments from, the Series Trust Property allocated to any other series of
Securities issued by such Trust.
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 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 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 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 series that includes Notes 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. A series with Certificates may provide for a Revolving Period,
during which collections of principal on the Receivables are not applied to
distributions on the related Securities, or may provide for a liquidity
facility or similar arrangement that permits one or more classes of the
related Securities to be paid in planned amounts on scheduled Distribution
Dates. The aggregate initial principal amount of the Certificates and the
Notes, if any, of a series may, after giving effect to the purchase of all
Subsequent Receivables, if any, for such series be greater than the aggregate
initial principal balance of the Receivables in that series.
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.
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 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 "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.
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:
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 Telerate Page
3750 at approximately 11:00 a.m., London time, on such LIBOR
Determination Date. "Telerate Page 3750" means the display page so
designated on the Dow Jones Telerate Service (or such other page as may
replace that page on that service, or such other service as may be
nominated as the information vendor, for the purpose of displaying
London interbank offered rates of major banks). If such rate appears on
Telerate Page 3750, LIBOR will be such rate. "LIBOR Business Day" as
used herein means a day that is both a Business Day (as defined in the
Indenture or Pooling and Servicing Agreement) and a day on which banking
institutions in the City of London, England are not required or
authorized by law to be closed. If on any LIBOR Determination Date the
offered rate does not appear on Telerate Page 3750, the Calculation
Agent will request each of the reference banks (which shall be major
banks that are engaged in transactions in the London interbank market
selected by the Calculation Agent) to provide the Calculation Agent with
its offered quotation for United States dollar deposits for the period
of the specified Index Maturity to prime banks in the London interbank
market as of 11:00 a.m., London time, on such date. If at least two
reference banks provide the Calculation Agent with such offered
quotations, LIBOR on such date will be the arithmetic mean, rounded
upwards, if necessary, to the nearest 1/100,000 of 1% (.0000001), with
five one-millionths of a percentage point rounded upward, of all such
quotations. If on such date fewer than two of the reference banks
provide the Calculation Agent with such offered quotations, LIBOR on
such date will be the arithmetic mean, rounded upwards, if necessary,
to the nearest 1/100,000 of 1% (.0000001), with five one-millionths of
a percentage point rounded upward, of the offered per annum rates that
one or more leading banks in The City of New York selected by the
Calculation Agent are quoting as of 11:00 a.m., New York City time,
on such date to leading European banks for United States dollar
deposits for the period of the specified Index Maturity;
provided, however, that if such banks are not quoting as described
above, LIBOR for such date will be LIBOR applicable to the Interest
Reset Period immediately preceding such 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 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 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 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 to the extent the applicable Company holds Certificates with respect
to any series of Securities, it is anticipated that the only
"Securityholder", "Noteholder" and "Certificateholder" will be DTC's Nominee.
Noteholders will not be recognized by each Indenture Trustee as Noteholders,
as such term is used in each Indenture, and Noteholders will be permitted to
exercise the rights of Noteholders only indirectly through DTC and its
Participants. Similarly, Certificateholders will not be recognized by each
Trustee as Certificateholders as such term is used in each Trust Agreement or
Pooling and Servicing 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 or Pooling and Servicing Agreement only at
the direction of one or more Participants to whose accounts with DTC the
applicable Notes or Certificates are credited. DTC may take conflicting
actions with respect to other undivided interests to the extent that such
actions are taken on behalf of Participants whose holdings include such
undivided interests.
Except as required by law, neither the Administrator, if any, the
applicable Trustee nor the applicable Indenture Trustee, if any, 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.
Cedel Bank, societe anonyme ("CEDEL") is incorporated under the laws of
Luxembourg as a professional depository. CEDEL holds securities for its
participating organizations ("CEDEL Participants") and facilitates the
clearance and settlement of securities transactions between CEDEL
Participants through electronic book-entry changes in accounts of CEDEL
Participants, thereby eliminating the need for physical movement of
certificates. Transactions may be settled in CEDEL in any of 28 currencies,
including United States dollars. CEDEL provides to its CEDEL Participants,
among other things, services for safekeeping, administration, clearance and
settlement of internationally traded securities and securities lending and
borrowing. CEDEL interfaces with domestic markets in several countries. As a
professional depository, CEDEL is subject to regulation by the Luxembourg
Monetary Institute. CEDEL Participants are recognized financial institutions
around the world, including underwriters, securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations
and may include the Underwriters. Indirect access to CEDEL is also available
to others, such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a CEDEL Participant, either
directly or indirectly.
The Euroclear System was created in 1968 to hold securities for
participants of the Euroclear System ("Euroclear Participants") and to clear
and settle transactions between Euroclear Participants through simultaneous
electronic book-entry delivery against payment, thereby eliminating the need
for physical movement of certificates and any risk from lack of simultaneous
transfers of securities and cash. Transactions may now be settled in
Euroclear in any of 32 currencies, including United States dollars. The
Euroclear System includes various other services, including securities
lending and borrowing, and interfaces with domestic markets in several
countries generally similar to the arrangements for cross-market transfers
with DTC. The Euroclear System is operated by Morgan Guaranty Trust Company
of New York, Brussels, Belgium office (the "Euroclear Operator" or
"Euroclear"), under contract with Euroclear Clearance System, S.C., a Belgian
cooperative corporation (the "Cooperative"). All operations are conducted by
the Euroclear Operator, and all Euroclear securities clearance accounts and
Euroclear cash accounts are accounts with the Euroclear Operator, not the
Cooperative. The Cooperative establishes policy for the Euroclear System on
behalf of Euroclear Participants. Euroclear Participants include banks
(including central banks), securities brokers and dealers and other
professional financial intermediaries and may include the Underwriters.
Indirect access to the Euroclear System is also available to other firms that
clear through or maintain a custodial relationship with a Euroclear
Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it
is regulated and examined by the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well as the Belgian
Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear
and the related Operating Procedures of the Euroclear System and applicable
Belgian law (collectively, the "Terms and Conditions"). The Terms and
Conditions govern transfers of securities and cash within the Euroclear
System, withdrawal of securities and cash from the Euroclear System, and
receipts of payments with respect to securities in the Euroclear System. All
securities in the Euroclear System are held on a fungible basis without
attribution of specific certificates to specific securities clearance
accounts. The Euroclear Operator acts under the Terms and Conditions only on
behalf of Euroclear Participants and has no record of or relationship with
persons holding through Euroclear Participants.
Distributions with respect to Securities held through CEDEL or Euroclear
will be credited to the cash accounts of CEDEL Participants or Euroclear
Participants in accordance with the relevant system's rules and procedures,
to the extent received by its Depositary. Such distributions will be subject
to tax reporting in accordance with relevant United States tax laws and
regulations. See "Certain Federal Income Tax Consequences" and "Global
Clearance, Settlement and Tax Documentation Procedures" in Annex I to this
Prospectus. CEDEL or the Euroclear Operator, as the case may be, will take
any other action permitted to be taken by a Security under the Indenture,
Trust Agreement or Pooling and Servicing Agreement, as applicable, on behalf
of a CEDEL Participant or Euroclear Participant only in accordance with its
relevant rules and procedures and subject to its Depositary's ability to
effect such actions on its behalf through DTC.
Cede, as nominee for DTC, will hold the Securities. CEDEL and Euroclear
will hold omnibus positions in the Securities on behalf of the CEDEL
Participants and the Euroclear Participants, respectively, through customers'
securities accounts in CEDEL's and Euroclear's names on the books of their
respective depositaries (collectively, the "Depositaries"), which in turn
will hold such positions in customers' securities accounts in the
Depositaries' names on the books of DTC.
Transfers between DTC's participating organizations (the "Participants")
will occur in accordance with DTC rules. Transfers between CEDEL Participants
and Euroclear Participants will occur in the ordinary way in accordance with
their applicable rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through CEDEL
Participants or Euroclear Participants, on the other, will be effected in DTC
in accordance with DTC rules on behalf of the relevant European international
clearing system by its Depositary; however, such cross-market transactions
will require delivery of instructions to the relevant European international
clearing system by the counterparty in such system in accordance with its
rules and procedures and within its established deadlines (European time).
The relevant European international clearing system will, if the transaction
meets its settlement requirements, deliver instructions to its Depositary to
take action to effect final settlement on its behalf by delivering or
receiving securities in DTC, and making or receiving payment in accordance
with normal procedures for same-day funds settlement applicable to DTC. CEDEL
Participants and Euroclear Participants may not deliver instructions directly
to the Depositaries.
Because of time-zone differences, credits of securities in CEDEL or
Euroclear as a result of a transaction with a Participant will be made during
the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in
such securities settled during such processing will be reported to the
relevant CEDEL Participant or Euroclear Participant on such business day.
Cash received in CEDEL or Euroclear as a result of sales of securities by or
through a CEDEL Participant or a Euroclear Participant to a Participant will
be received with value on the DTC settlement date but will be available in
the relevant CEDEL or Euroclear cash account only as of the business day
following settlement in DTC.
Although DTC, CEDEL and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Securities among participants
of DTC, CEDEL and Euroclear, they are under no obligation to perform or
continue to perform such procedures and such procedures may be discontinued
at any time.
In the event that any of DTC, Cedel or Euroclear should discontinue its
services, the Administrator would seek an alternative depository (if
available) or cause the issuance of Definitive Notes to the owners thereof or
their nominees in the manner described in the Prospectus under "Certain
Information Regarding the Securities -- Definitive Securities".
DEFINITIVE SECURITIES
Unless otherwise specified in the related Prospectus Supplement, the
Notes, if any, 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 or Trustee, as applicable, determines that DTC is no
longer willing or able to discharge properly its responsibilities as
depository with respect to such Securities and such Administrator or Trustee
is unable to locate a qualified successor (and if it is an Administrator that
has made such determination, such Administrator so notifies the Applicable
Trustee in writing), (ii) the Administrator or Trustee, as applicable, 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 or Pooling and Servicing 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.
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 Trustee, obtain access to the list of
all Certificateholders maintained by such Trustee for the purpose of
communicating with other Certificateholders with respect to their rights
under the related Trust Agreement or Pooling and Servicing Agreement or under
such Certificates.
REPORTS TO SECURITYHOLDERS
With respect to each series of Securities that includes Notes, 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. With respect to each series of Securities
that includes Certificates, on or prior to each Distribution Date, the
Servicer will prepare and provide to the related 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, if any, 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, if any, 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 of such Notes and to the Certificate Balance of each class of such
Certificates, including, if applicable, the difference, if any (which
may be a positive or negative number) between the amount determined on
such date to be distributable to Noteholders and Certificateholders on
account of principal on the next preceding Payment Date and the amount
actually distributed to Noteholders and Certificateholders on account of
principal on such Payment Date (the "Noteholders' Reconciliation
Principal Adjustment Amount" and "Certificateholders' Reconciliation
Principal Adjustment Amount", respectively);
(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 the
second preceding 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,
included in the related Series Trust Property that were repurchased in
such Collection Period;
(x) the balance of the related Reserve Account (if any) on such
date, after giving effect to changes therein on such date;
(xi) for each such date during the related Funding Period (if any),
the related remaining Pre-Funded Amount; and
(xii) for the first such date that is on or immediately following
the end of the Funding Period (if any), the amount of any related
remaining Pre-Funded Amount that has not been used to fund the purchase
of Subsequent Receivables and is being passed through as payments of
principal on the Securities of such series.
Each amount set forth pursuant to subclauses (i), (ii), (v) and (viii)
with respect to 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 or Pooling and Servicing Agreement pursuant to which a Trust will
purchase Receivables from the Seller with respect to a series of Securities
and the Servicer will agree to service such Receivables, each Trust
Agreement (in the case of a grantor trust, the Pooling and Servicing
Agreement) pursuant to which a Trust will be created and Certificates, if
any, will be issued and each Administration Agreement pursuant to which CFC
will undertake certain administrative duties with respect to a series of
Notes (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 series of Securities
in the related Prospectus Supplement (the "Closing Date"), the Seller will,
if so specified in such Prospectus Supplement, transfer and assign to the
applicable Trustee, without recourse, pursuant to a Sale and Servicing
Agreement or a Pooling and Servicing Agreement, as applicable, its entire
interest in the Initial Receivables, if any, of the related Receivables Pool,
including its security interests in the related Financed Vehicles. Each such
Receivable will be identified in a schedule appearing as an exhibit to such
Pooling and Servicing Agreement or Sale and Servicing Agreement (a "Schedule
of Receivables"). The applicable Trustee will, concurrently with such
transfer and assignment, execute and deliver the related Notes and/or
Certificates, as applicable. Unless otherwise provided in the related
Prospectus Supplement, the net proceeds received from the sale of the
Certificates and the Notes of a series will be applied to the purchase of the
related Receivables from the Seller and, to the extent specified in the
related Prospectus Supplement, to the deposit of the Pre-Funded Amount for
such series into the related Pre-Funding Account. The related Prospectus
Supplement for a series of Securities will specify whether, and the terms,
conditions and manner under which, Subsequent Receivables for such series
will be sold by the Seller to the applicable Trust from time to time during
any Funding Period for such series on each date specified as a transfer date
in the related Prospectus Supplement (each, a "Subsequent Transfer Date").
In each Sale and Servicing Agreement or Pooling 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 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 thereon
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 Certificateholders or the Trustee and any
Noteholders or Indenture Trustee in respect of the related series for any
such uncured breach.
Pursuant to each Sale and Servicing Agreement or Pooling and Servicing
Agreement, to assure uniform quality in servicing the Receivables and to
reduce administrative costs, each Trust will designate the Servicer as
custodian to maintain possession, as such Trust's agent, of the related motor
vehicle retail installment sale contracts and any other documents relating to
the Receivables. The Seller's accounting records and computer systems will
reflect the sale and assignment of the related Receivables to the applicable
Trust, and Uniform Commercial Code ("UCC") financing statements reflecting
such sale and assignment will be filed.
ACCOUNTS
With respect to each Trust that issues one or more series of Notes, 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
Noteholders and Certificateholders, if any, of such series, into which all
payments made on or with respect to the Receivables included in the Series
Trust Property for such series 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 such series 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 Trustee
an account, in the name of such Trustee on behalf of such Certificateholders,
into which amounts released from the Collection Account and any Pre-Funding
Account, Reserve Account or other credit or cash flow enhancement for such
series for distribution to such Certificateholders will be deposited and from
which all distributions to such Certificateholders will be made (the
"Certificate Distribution Account"). With respect to each Trust that does not
issue Notes, the Servicer will also establish and maintain the Collection
Account and any other Trust Account in the name of the related Trustee on
behalf of the related Certificateholders. The Trust Accounts relating to a
series of Securities will not contain funds relating to any other series of
Securities.
If so 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 or Trustee, into which, to the
extent required by the Sale and Servicing Agreement, early payments by or on
behalf of Obligors on Precomputed Receivables allocated to such series 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
for such series, 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 or, in the case of each
Trust that does not issue Notes, the applicable Trustee.
Any other accounts to be established with respect to a series of
Securities, 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 or Pooling 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 and may include motor vehicle
retail sale contracts. 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 for such series.
However, to the extent permitted by the Rating Agencies for a series, funds
in any Reserve Account for such series may be invested in securities that
will not mature prior to the date of the next distribution with respect to
the Certificates or Notes of such series 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
Receivables allocated to the related series (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 of such series 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 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 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 in respect of a series and
will, consistent with the related Sale and Servicing Agreement or Pooling 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 or Pooling 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) for the related
series. 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 series, 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) CFC 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 Precomputed Receivable in full, then, unless otherwise provided in
the related Prospectus Supplement, 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 transferred to the
Collection Account and applied either to the scheduled payment or to prepay
such Receivable in full.
ADVANCES
If so 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.
If so 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 Simple Interest Receivables allocated to a series 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 allocated to a series 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 for such series 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 series, 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 for such series 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 for such series. 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 such 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,
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 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 Trustee and Indenture
Trustee, if any, 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 series, 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, if any, and the
Certificate Distribution Account, if any, for distribution to Noteholders, if
any, and Certificateholders, if any, 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 one
or more classes of Certificates of such series may be subordinate to
payments in respect of Notes, if any, of such series or other classes of
Certificates of such series.
In the case of a Trust that issues more than one series of Securities,
the distributions on the Securities of any such series will be made solely
from funds in the Series Trust Property allocated to such series and not from
any other Series Trust Property.
Allocation of Collections on Receivables; Reconciliation. Distributions
of principal on the Securities of a series may be based on the amount of
principal collected or due, or the amount of Realized Losses incurred, in a
Collection Period. If so specified in a Prospectus Supplement, the amounts
of collections on the Receivables of a series that are allocable to interest
and principal, respectively, will first be estimated and then be reconciled
in the following manner with the following effect on the distributions on the
related Securities.
On the Business Day immediately preceding each Distribution Date or
Payment Date (a "Determination Date"), the Indenture Trustee, if any, or,
otherwise, the Trustee shall determine the amount in the Collection Account
available for distribution on the related Distribution Date or Payment 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, if any,
maintained with the Indenture Trustee or the Trustee, as applicable, in
accordance with the Sale and Servicing Agreement or Pooling and Servicing
Agreement, as applicable, and then any remaining amount in the Collection
Account shall be allocated to principal. Payments to Securityholders shall be
distributed on each Distribution Date or Payment 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 or the
Trustee, as applicable, with certain information with respect to the
Collection Period related to the prior Distribution Date or Payment Date. On
such current Determination Date or Payment Date, (i) the amounts so allocated
and distributed on the preceding Distribution Date or Payment 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 or Payment 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 or Payment
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 or Payment 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.
CREDIT AND CASH FLOW ENHANCEMENT; LIQUIDITY ARRANGEMENTS
The amounts and types of credit and cash flow 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 and cash flow enhancement may be in the form of
subordination of one or more classes of Securities of a series, Reserve
Accounts, overcollateralization, letters of credit, credit or liquidity
facilities, surety bonds, guaranteed investment contracts, swaps (including
without limitation currency swaps), other interest rate protection
agreements, repurchase obligations (including without limitation put
options), yield supplement agreements, 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 or cash flow enhancement or any such other arrangement for
a class of Securities may cover one or more other classes of Securities of
the same series, and credit or cash flow enhancement or any such other
arrangement 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.
Reserve Account. If so provided in the related Prospectus Supplement,
pursuant to the related Sale and Servicing Agreement or Pool 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 related Trustee or Indenture
Trustee, as applicable. 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 and, if the related series has a Funding Period, will also be
funded on each Subsequent Transfer Date to the extent described 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, if any,
or vice versa. The Servicer, however, will account to the Trustee, any
Indenture Trustee, the Noteholders, if any, and the Certificateholders with
respect to each series as if all deposits, distributions and transfers were
made individually. With respect to any Trust that issues both Certificates
and Notes, if the related 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, if any, and the applicable 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 and Pooling and Servicing Agreement
will provide that a firm of independent public accountants will furnish to
the related Trust and Indenture Trustee or Trustee, as applicable, 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, the Servicer's accounting records and computer files with
respect thereto and certain other matters.
Each Sale and Servicing Agreement and Pooling and Servicing Agreement
will also provide for delivery to the related Trust and Indenture Trustee or
Trustee, as applicable, 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 or Pooling and Servicing
Agreement, as applicable, 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 Trustee notice of certain Servicer Defaults under the related Sale
and Servicing Agreement or Pooling and Servicing Agreement, as applicable.
Copies of such statements and certificates may be obtained by
Securityholders by a request in writing addressed to the Applicable Trustee.
CERTAIN MATTERS REGARDING THE SERVICER
Each Sale and Servicing Agreement and Pooling and Servicing Agreement
will provide that CFC may not resign from its obligations and duties as
Servicer thereunder, except upon determination that CFC's performance of such
duties is no longer permissible under applicable law. No such resignation
will become effective until the related Indenture Trustee or Trustee, as
applicable, or a successor servicer has assumed CFC's servicing obligations
and duties under such Sale and Servicing Agreement or Pooling and Servicing
Agreement.
Each Sale and Servicing Agreement and Pooling 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 Pooling 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 and Pooling
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 or Pooling 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
and Pooling 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 or Pooling
and Servicing Agreement.
SERVICER DEFAULT
Except as otherwise provided in the related Prospectus Supplement,
"Servicer Default" under each Sale and Servicing Agreement and Pooling and
Servicing Agreement will consist of (i) any failure by the Servicer to
deliver to the Applicable Trustee for deposit in any of the related Trust
Accounts or the related Certificate Distribution Account any required payment
or to direct the Applicable Trustee to make any required distributions
therefrom, which failure continues unremedied for three business days after
written notice from the Applicable 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 or Pooling and Servicing Agreement, which failure materially and
adversely affects the rights of the Noteholders or the Certificateholders of
the related series and which continues unremedied for 60 days after the
giving of written notice of such failure (A) to the Servicer or the Seller,
as the case may be, by the Applicable Trustee or (B) to the Servicer or the
Seller, as the case may be, and to the Applicable Trustee by holders of Notes
or Certificates of such series, as applicable, evidencing not less than 25%
in principal amount of such outstanding Notes or of such Certificate Balance;
and (iii) the occurrence of an Insolvency Event with respect to the Servicer,
the Seller or any related Company. "Insolvency Event" means, with respect to
any Person, any of the following events or actions: certain events of
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings with respect to such Person and certain actions by such
Person indicating its insolvency, reorganization pursuant to bankruptcy
proceedings or inability to pay its obligations.
RIGHTS UPON SERVICER DEFAULT
In the case of any Trust that has issued Notes, unless otherwise
provided in the related Prospectus Supplement, as long as a Servicer Default
under a Sale and Servicing Agreement remains unremedied, the related
Indenture Trustee or holders of Notes of the related series evidencing not
less than 25% of 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 entitled to similar compensation arrangements. In the
case of any Trust that has not issued Notes, unless otherwise provided in the
related Prospectus Supplement, as long as a Servicer Default under the
related Pooling and Servicing Agreement remains unremedied, the related
Trustee or holders of Certificates of the related series evidencing not less
than 25% of the principal amount of such Certificates then outstanding may
terminate all the rights and obligations of the Servicer under such Pooling
and Servicing Agreement, whereupon such Trustee or a successor servicer
appointed by such Trustee will succeed to all the responsibilities, duties
and liabilities of the Servicer under such Pooling and Servicing Agreement
and will be entitled to similar compensation arrangements. If, however, a
bankruptcy trustee or similar official has been appointed for the Servicer,
and no Servicer Default other than such appointment has occurred, such
trustee or official may have the power to prevent such Indenture Trustee,
such Noteholders, such Trustee or such Certificateholders from effecting a
transfer of servicing. In the event that such Indenture Trustee or 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 or 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 or Pooling and Servicing Agreement.
WAIVER OF PAST DEFAULTS
With respect to each Trust that has issued Notes, unless otherwise
provided in the related Prospectus Supplement, the holders of Notes of a
series evidencing at least a majority in principal amount of the then
outstanding Notes of such 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 or to the Certificate
Distribution Account for such series in accordance with such Sale and
Servicing Agreement. With respect to each Trust that has not issued Notes,
holders of Certificates of a series evidencing not less than a majority of
the principal amount of such Certificates then outstanding may, on behalf of
all such Certificateholders, waive any default by the Servicer in the
performance of its obligations under the related Sale and Servicing Agreement
or Pooling and Servicing Agreement, except a Servicer Default in making any
required deposits to or payments from the Certificate Distribution Account or
the Trust Accounts for such series in accordance with such Pooling 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 Trustee or Indenture Trustee, as applicable, materially and
adversely affect the interest of any such Noteholder or Certificateholder.
Unless otherwise specified in the related Prospectus Supplement, the Transfer
and Servicing Agreements may also be amended by the Seller, the Servicer, the
related Trustee and any related Indenture Trustee with the consent of the
holders of Notes evidencing at least a majority in principal amount of then
outstanding Notes, if any, of the related series and the holders of the
Certificates of such series evidencing at least a majority of the principal
amount of such Certificates then outstanding, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of 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
Subject to the following paragraph, with respect to a Trust that is not
a grantor trust, if the related Prospectus so provides, upon the occurrence
of an Insolvency Event with respect to the Company in respect of such 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 Trustee shall have received
written instructions from (i) holders of each class of the Certificates
(other than such Company) of each series 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, if any, of each series
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 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 Trustee shall, or shall direct the
related Indenture Trustee to, promptly sell the assets of such Trust (other
than the Trust Accounts and Certificate Distribution Accounts) 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 allocable to each series issued by such Trust will be treated as
collections on such Receivables and deposited in the related Collection
Account for such series. With respect to any series of such Trust, if the
proceeds from the liquidation of the Receivables allocated to such series and
any amounts on deposit in the Reserve Account (if any), the Payahead Account
(if any), the Note Distribution Account (if any) and the Certificate
Distribution Account for such series are not sufficient to pay the Notes, if
any, and the Certificates of such series in full, the amount of principal
returned to Noteholders and Certificateholders of such series will be reduced
and some or all of such Noteholders and Certificateholders will incur a loss.
Each Trust Agreement will provide that the applicable 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 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 series and the
satisfaction and discharge of the related Indenture, the related 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
If the related Prospectus Supplement so provides, the applicable Company
with respect to the related Trust will agree under the related Trust
Agreement 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 series, the obligations of the Servicer, the
Seller, the related Trustee and the related Indenture Trustee, if any,
pursuant to the Transfer and Servicing Agreements will terminate upon the
earlier of (i) the maturity or other liquidation of the last related
Receivable included in the Series Trust Property allocated to such series and
the disposition of any amounts received upon liquidation of any such
remaining Receivables, (ii) the payment to Noteholders, if any, and
Certificateholders of such 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 included in Series Trust Property allocated to a series is 10% or
less of the Initial Pool Balance (as defined in the related Prospectus
Supplement, the "Initial Pool Balance") of such series, all such remaining
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 Trustee will, within ten days following a
Distribution Date or Payment Date as of which the Pool Balance of such series
is equal to or less than the percentage of the Initial Pool Balance of such
series specified in the related Prospectus Supplement, solicit bids for the
purchase of such Receivables remaining in such Trust and allocated to such
series, in the manner and subject to the terms and conditions set forth in
such Prospectus Supplement. If the Applicable Trustee receives satisfactory
bids as described in such Prospectus Supplement, then such remaining
Receivables will be sold to the highest bidder.
As more fully described in the related Prospectus Supplement, any
outstanding Notes of the related series will be redeemed concurrently with
either of the events specified above, and the subsequent distribution to the
related Certificateholders of all amounts required to be distributed to them
pursuant to the applicable Trust Agreement or Pooling and Servicing Agreement
will effect early retirement of the Certificates of such series.
ADMINISTRATION AGREEMENT
CFC, 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 that issues Notes 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 such 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
with respect to each series of Notes, 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 obtaining the certificate
of title to the Financed Vehicle or 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).
All contracts originated or acquired by the Seller name the Seller or
CCC as obligee or assignee and as the secured party. The Seller also takes
all actions necessary under the laws of the state in which the financed
vehicle is located to perfect the Seller's or CCC's security interest in the
financed vehicle, including, where applicable, having a notation of its lien
or CCC's lien, as applicable, recorded on such vehicle's certificate of
title. Because the Seller continues to service the contracts, the obligors on
the contracts will not be notified of the sale to the Trust, and no action
will be taken to record the transfer of the security interest from CCC to the
Seller or from the Seller to the Trust by amendment of the certificates of
title for the Financed Vehicles or otherwise.
The Seller will assign its interests in the Financed Vehicles securing
the related Receivables to each Trust pursuant to the related Sale and
Servicing Agreement or Pooling and Servicing Agreement (as applicable).
However, because of the administrative burden and expense, neither the Seller
nor the related Trustee will amend any certificate of title to identify the
Trust as the new secured party on the certificate of title relating to a
Financed Vehicle. Also, the Seller will continue to hold any certificates
of title relating to the vehicles in its possession as custodian for
the Trust pursuant to the related Sale and Servicing Agreement or Pooling
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 or Pooling and Servicing Agreement is an effective conveyance of a
security interest without amendment of any lien noted on a vehicle's
certificate of title, and the assignee succeeds thereby to the assignor's
rights as secured party. However, by not identifying a Trust as the secured
party on the certificate of title, the security interest of such Trust in the
vehicle could be defeated through fraud or negligence. In such states, in the
absence of fraud or forgery by the vehicle owner or the Seller or
administrative error by state or local agencies, the notation of the Seller's
lien or CCC's lien on the certificates of title will be sufficient to protect
a Trust against the rights of subsequent purchasers of a Financed Vehicle or
subsequent lenders who take a security interest in a Financed Vehicle. If
there are any Financed Vehicles as to which the Seller failed to obtain or
assign to the Trust a perfected security interest, the security interest of
the Trust would be subordinate to, among others, the interests of subsequent
purchasers of the Financed Vehicles and holders of perfected security
interests therein. Such a failure, however, would constitute a breach of the
warranties of the Seller under the related Sale and Servicing Agreement or
Pooling and Servicing Agreement and would create an obligation of the Seller
to repurchase the related Receivable unless the breach were cured. 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 and
Pooling 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 and Pooling 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 Trustee, any Indenture Trustee, any 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.
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 or Pooling
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".
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 and Pooling 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 or Pooling 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.
The federal income tax consequences to Certificateholders will vary
depending on whether (i) an election is made to treat the Trust as a
partnership under the Code, (ii) all the certificates are retained by the
Seller or an affiliate thereof, or (iii) whether the Trust will be treated as
a grantor trust. The Prospectus Supplement for each series of Certificates
will specify whether a partnership election will be made or the Trust will be
treated as a grantor trust.
TRUSTS FOR WHICH A PARTNERSHIP ELECTION IS MADE
TAX CHARACTERIZATION OF THE TRUST AS A PARTNERSHIP
Federal Tax Counsel will deliver its opinion that a Trust for which a
partnership election is made will not be an association (or publicly traded
partnership) taxable as a corporation for federal income tax purposes. This
opinion will be based on the assumption that the terms of the Trust Agreement
and related documents will be complied with, and on counsel's conclusions
that the nature of the income of the Trust will exempt it from the rule that
certain publicly traded partnerships are taxable as corporations.
TAX CONSEQUENCES TO HOLDERS OF THE NOTES
Treatment of the Notes as Indebtedness. The Seller will agree, and the
Noteholders will agree by their purchase of Notes, to treat the Notes as debt
for federal income tax purposes. Federal Tax Counsel will, except as
otherwise provided in the related Prospectus Supplement, advise the Trust
that the Notes will be classified as debt for federal income tax purposes.
The discussion below assumes this characterization of the Notes is correct.
OID, Indexed Securities, etc. The discussion below assumes that all
payments on the Notes are denominated in U.S. dollars, and that the Notes are
not Indexed Securities or Strip Notes. Moreover, the discussion assumes that
the interest formula for the Notes meets the requirements for "qualified
stated interest" under Treasury regulations (the "OID regulations") relating
to original issue discount ("OID"), and that any OID on the Notes (i.e., any
excess of the principal amount of the Notes over their issue price) does not
exceed a de minimis amount (i.e., 1/4% of their principal amount multiplied
by the number of full years included in their term), all within the meaning
of the OID regulations. If these conditions are not satisfied with respect to
any given series of Notes, additional tax considerations with respect to such
Notes will be disclosed in the applicable Prospectus Supplement.
Interest Income on the Notes. Based on the above assumptions, except as
discussed in the following paragraph, the Notes will not be considered issued
with OID. The stated interest thereon will be taxable to a Noteholder as
ordinary interest income when received or accrued in accordance with such
Noteholder's method of tax accounting. Under the OID regulations, a holder of
a Note issued with a de minimis amount of OID must include such OID in
income, on a pro rata basis, as principal payments are made on the Note. It
is believed that any prepayment premium paid as a result of a mandatory
redemption will be taxable as contingent interest when it becomes fixed and
unconditionally payable. A purchaser who buys a Note for more or less than
its principal amount will generally be subject, respectively, to the premium
amortization or market discount rules of the Code.
A holder of a Note that has a fixed maturity date of not more than one
year from the issue date of such Note (a "Short-Term Note") may be subject to
special rules. An accrual basis holder of a Short-Term Note (and certain cash
method holders, including regulated investment companies, as set forth in
Section 1281 of the Code) generally would be required to report interest
income as interest accrues on a straight-line basis over the term of each
interest period. Other cash basis holders of a Short-Term Note would, in
general, be required to report interest income as interest is paid (or, if
earlier, upon the taxable disposition of the Short-Term Note). However, a
cash basis holder of a Short-Term Note reporting interest income as it is
paid may be required to defer a portion of any interest expense otherwise
deductible on indebtedness incurred to purchase or carry the Short-Term Note
until the taxable disposition of the Short-Term Note. A cash basis taxpayer
may elect under Section 1281 of the Code to accrue interest income on all
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 (including de minimis OID) and gain previously included by such
Noteholder in income with respect to the Note and decreased by the amount of
bond premium (if any) previously amortized and by the amount of principal
payments previously received by such Noteholder with respect to such Note.
Any such gain or loss will be capital gain or loss if the Note was held as a
capital asset, except for gain representing accrued interest and accrued
market discount not previously included in income. Capital losses generally
may be used only to offset capital gains. Proposed investors in the Notes
should consult their tax advisers concering proposed legislation to reduce
the federal income tax rates on 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 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 at
graduated rates (if received by a non-U.S. person with effectively connected
income) and withholding tax at a rate of 30 percent, unless reduced or
eliminated pursuant to an applicable tax treaty.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a Note by a foreign person will be exempt from United
States federal income and withholding tax, provided that (i) such gain is not
effectively connected with the conduct of a trade or business in the United
States by the foreign person and (ii) in the case of an individual foreign
person, the foreign person is not present in the United States for 183 days
or more in the taxable year and does not otherwise have a "tax home" within
the United States.
Backup Withholding. Each holder of a Note (other than an exempt holder
such as a corporation, tax-exempt organization, qualified pension and
profit-sharing trust, individual retirement account or nonresident alien who
provides certification as to status as a nonresident) will be required to
provide, under penalties of perjury, a certificate containing the holder's
name, address, correct federal taxpayer identification number and a statement
that the holder is not subject to backup withholding. Should a nonexempt
Noteholder fail to provide the required certification, the Trust will be
required to withhold 31 percent of the amount otherwise payable to the
holder, and remit the withheld amount to the IRS as a credit against the
holder's federal income tax liability.
Possible Alternative Treatments of the Notes. If, contrary to the
opinion of Federal Tax Counsel, the IRS successfully asserted that one or
more of the Notes did not represent debt for federal income tax purposes, the
Notes might be treated as equity interests in the Trust. If so treated, the
Trust might be treated as a publicly traded partnership taxable as a
corporation with the adverse consequences described above (and the publicly
traded partnership taxable as a corporation would not be able to reduce its
taxable income by deductions for interest expense on Notes recharacterized as
equity). Alternatively, and most likely in the view of Federal Tax Counsel,
the Trust would be treated as a publicly traded partnership that would not be
taxable as a corporation because it would meet certain qualifying income
tests. Nonetheless, treatment of the Notes as equity interests in such a
partnership could have adverse tax consequences to certain holders. For
example, income to certain tax-exempt entities (including pension funds)
would be "unrelated business taxable income", income to foreign holders
generally would be subject to U.S. tax and U.S. tax return filing and
withholding requirements, and individual holders might be subject to certain
limitations on their ability to deduct their share of Trust expenses.
TAX CONSEQUENCES TO HOLDERS OF THE CERTIFICATES
Treatment of the Trust as a Partnership. The Seller and the Servicer
will agree, and the Certificateholders will agree by their purchase of
Certificates, to treat the Trust and each separate Series Trust Property as a
partnership for purposes of federal and state income tax, franchise tax and
any other tax measured in whole or in part by income, with the assets of the
partnership being the assets held by the Trust, the partners of the
partnership being the Certificateholders (including the Company in its
capacity as recipient of distributions from the Reserve Account), and the
Notes being debt of the related partnership. However, the proper
characterization of the arrangement involving the Trust, the Certificates,
the Notes, the Seller, 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 foregoing method of allocation, Certificateholders
may be allocated income equal to the entire Pass Through Rate plus the other
items described above even though the Trust might not have sufficient cash to
make current cash distributions of such amount. Thus, cash basis holders will
in effect be required to report income from the Certificates on the accrual
basis and Certificateholders may become liable for taxes on Trust income even
if they have not received cash from the Trust to pay such taxes. In addition,
because tax allocations and tax reporting will be done on a uniform basis for
all Certificateholders but Certificateholders may be purchasing Certificates
at different times and at different prices, Certificateholders may be
required to report on their tax returns taxable income that is greater or
less than the amount reported to them by the Trust.
All of the taxable income allocated to a Certificateholder that is a
pension, profit sharing or employee benefit plan or other tax-exempt entity
(including an individual retirement account) will constitute "unrelated
business taxable income" generally taxable to such a holder under the Code.
An individual taxpayer's share of expenses of the Trust (including fees
to the Servicer but not interest expense) would be miscellaneous itemized
deductions. Such deductions might be disallowed to the individual in whole or
in part and might result in such holder being taxed on an amount of income
that exceeds the amount of cash actually distributed to such holder over the
life of the Trust.
The Trust intends to make all tax calculations relating to income and
allocations to Certificateholders on an aggregate basis. If the IRS were to
require that such calculations be made separately for each Receivable, the
Trust might be required to incur additional expense but it is believed that
there would not be a material adverse effect on Certificateholders.
Discount and Premium. It is believed that the Receivables were not
issued with OID, and, therefore, the Trust should not have OID income.
However, the purchase price paid by the Trust for the Receivables may be
greater or less than the remaining principal balance of the Receivables at
the time of purchase. If so, the Receivables will have been acquired at a
premium or discount, as the case may be. (As indicated above, the Trust will
make this calculation on an aggregate basis, but might be required to
recompute it on a Receivable-by-Receivable basis.)
If the Trust acquires the Receivables at a market discount or premium,
the Trust will elect to include any such discount in income currently as it
accrues over the life of the Receivables or to offset any such premium
against interest income on the Receivables. As indicated above, a portion of
such market discount income or premium deduction may be allocated to
Certificateholders.
Section 708 Termination. Under Section 708 of the Code, the Trust will
be deemed to terminate for federal income tax purposes if 50% or more of the
capital and profits interests in the Trust are sold or exchanged within a
12-month period. Pursuant to final Treasury regulations issued on May 9
1997, if such a termination occurs, the Trust will be considered to have
contributed the assets of the Trust (the "old partnership") to a new
partnership (the "new partnership") in exchange for interests in the
partnership. Such interests would be deemed distributed to the partners of
the old partnership in liquidation thereof, which would not constitute a sale
or exchange.
Disposition of Certificates. Generally, capital gain or loss will be
recognized on a sale of Certificates in an amount equal to the difference
between the amount realized and the seller's tax basis in the Certificates
sold. A Certificateholder's tax basis in a Certificate will generally equal
the holder's cost increased by the holder's share of Trust income (includible
in income) and decreased by any distributions received with respect to such
Certificate. In addition, both the tax basis in the Certificates and the
amount realized on a sale of a Certificate would include the holder's share
of the Notes and other liabilities of the Trust. A holder acquiring
Certificates at different prices may be required to maintain a single
aggregate adjusted tax basis in such Certificates, and, upon sale or other
disposition of some of the Certificates, allocate a portion of such aggregate
tax basis to the Certificates sold (rather than maintaining a separate tax
basis in each Certificate for purposes of computing gain or loss on a sale of
that Certificate).
Any gain on the sale of a Certificate attributable to the holder's share
of unrecognized accrued market discount on the Receivables would generally be
treated as ordinary income to the holder and would give rise to special tax
reporting requirements. The Trust does not expect to have any other assets
that would give rise to such special reporting requirements. Thus, to avoid
those special reporting requirements, the Trust will elect to include market
discount in income as it accrues.
If a Certificateholder is required to recognize an aggregate amount of
income (not including income attributable to disallowed itemized deductions
described above) over the life of the Certificates that exceeds the aggregate
cash distributions with respect thereto, such excess will generally give rise
to a capital loss upon the retirement of the Certificates.
Allocations Between Transferors and Transferees. In general, the
Trust's taxable income and losses will be determined monthly and the tax
items for a particular calendar month will be apportioned among the
Certificateholders in proportion to the principal amount of Certificates
owned by them as of the close of the last day of such month. As a result, a
holder purchasing Certificates may be allocated tax items (which will affect
its tax liability and tax basis) attributable to periods before the actual
transaction.
The use of such a monthly convention may not be permitted by existing
regulations. If a monthly convention is not allowed (or only applies to
transfers of less than all of the partner's interest), taxable income or
losses of the Trust might be reallocated among the Certificateholders. 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 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.
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 35% for foreign holders that are taxable
as corporations and 39.6% for all other foreign holders. Subsequent adoption
of Treasury regulations or the issuance of other administrative
pronouncements may require the Trust to change its withholding procedures. In
determining a holder's withholding status, the Trust may rely on IRS Form
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.
TRUSTS IN WHICH ALL CERTIFICATES ARE RETAINED BY THE SELLER OR AN AFFILIATE
OF THE SELLER
TAX CHARACTERIZATION OF THE TRUST
Federal Tax Counsel will deliver its opinion that a Trust which issues
one or more classes of Notes to investors and all the Certificates of which
are retained by Seller or an affiliate thereof will not be an association (or
publicly traded partnership) taxable as a corporation for federal income tax
purposes. This opinion will be based on the assumption that the terms of the
Trust Agreement and related documents will be complied with, and on counsel's
conclusions that the Trust will constitute a mere security arrangement for
the issuance of debt by the single Certificateholder.
Treatment of the Notes as Indebtedness. The Seller will agree, and the
Noteholders will agree by their purchase of Notes, to treat the Notes as debt
for federal income tax purposes. Federal Tax Counsel will, except as
otherwise provided in the related Prospectus Supplement, advise the Trust
that the Notes will be classified as debt for federal income tax purposes.
Assuming such characterization of the Notes is correct, the federal income
tax consequences to Noteholders described above under the heading "TRUSTS FOR
WHICH A PARTNERSHIP ELECTION IS MADE--Tax Consequences to Holders of the
Notes" would apply to the Noteholders.
If, contrary to the opinion of Federal Tax Counsel, the IRS successfully
asserted that one or more classes of Notes did not represent debt for federal
income tax purposes, such class or classes of Notes might be treated as
equity interests in the Trust. If so treated, the Trust might be treated as
a publicly traded partnership taxable as a corporation. Alternatively, and
more likely in the view of Federal Tax Counsel the Trust would most likely be
treated as a publicly traded partnership that would not be taxable as a
corporation because it would meet certain qualifying income tests.
Nonetheless, treatment of Notes as equity interests in such a
partnership could have adverse tax consequences to certain holders of such
Notes. For example, income to certain tax-exempt entities (including pension
funds) would be "unrelated business taxable income", income to foreign
holders may be subject to U.S. withholding tax and U.S. tax return filing
requirements, and individual holders might be subject to certain limitations
on their ability to deduct their share of Trust expenses. In the event one or
more classes of Notes were treated as interests in a partnership, the
consequences governing the Certificates as equity interests in a partnership
described above under "TRUSTS FOR WHICH A PARTNERSHIP ELECTION IS MADE--Tax
Consequences to Holders of the Certificates" would apply to the holders of
such Notes.
TRUSTS TREATED AS GRANTOR TRUSTS
TAX CHARACTERIZATION OF THE TRUST AS A GRANTOR TRUST
If a partnership election is not made, Federal Tax Counsel will deliver
its opinion that the Trust will not be classified as an association taxable
as a corporation and that such Trust will be classified as a grantor trust
under subpart E, Part I of subchapter J of the Code. In this case, owners of
Certificates (referred to herein as "Grantor Trust Certificateholders") will
be treated for federal income tax purposes as owners of a portion of the
Trust's assets as described below. The Certificates issued by a Trust that is
treated as a grantor trust are referred to herein as "Grantor Trust
Certificates".
Characterization. Each Grantor Trust Certificateholder will be treated
as the owner of a pro rata undivided interest in the interest and principal
portions of the Trust represented by the Grantor Trust Certificates and will
be considered the equitable owner of a pro rata undivided interest in each of
the Receivables in the Trust. Any amounts received by a Grantor Trust
Certificateholder in lieu of amounts due with respect to any Receivable
because of a default or delinquency in payment will be treated for federal
income tax purposes as having the same character as the payments they
replace.
Each Grantor Trust Certificateholder will be required to report on its
federal income tax return in accordance with such Grantor Trust
Certificateholder's method of accounting its pro rata share of the entire
income from the Receivables in the Trust represented by Grantor Trust
Certificates, including interest, OID, if any, prepayment fees, assumption
fees, any gain recognized upon an assumption and late payment charges
received by the Servicer. Under Sections 162 or 212 each Grantor Trust
Certificateholder will be entitled to deduct its pro rata share of
servicing fees, prepayment fees, assumption fees, any loss recognized upon
an assumption and late payment charges retained by the Servicer, provided
that such amounts are reasonable compensation for services rendered to the
Trust. Grantor Trust Certificateholders that are individuals, estates or
trusts will be entitled to deduct their share of expenses only to the extent
such expenses plus all other Section 212 expenses exceed two percent of its
adjusted gross income. A Grantor Trust Certificateholder using the cash
method of accounting must take into account its pro rata share of income and
deductions as and when collected by or paid to the Servicer. A Grantor Trust
Certificateholder using an accrual method of accounting must take into
account its pro rata share of income and deductions as they become due or are
paid to the Servicer, whichever is earlier. If the servicing fees paid to the
Servicer are deemed to exceed reasonable servicing compensation, the amount
of such excess could be considered as an ownership interest retained by the
Servicer (or any person to whom the Servicer assigned for value all or a
portion of the servicing fees) in a portion of the interest payments on the
Receivables. The Receivables would then be subject to the "coupon stripping"
rules of the Code discussed below.
Premium. The price paid for a Grantor Trust Certificate by a holder
will be allocated to such holder's undivided interest in each Receivable
based on each Receivable's relative fair market value, so that such holder's
undivided interest in each Receivable will have its own tax basis. A Grantor
Trust Certificateholder that acquires an interest in Receivables at a premium
may elect to amortize such premium under a constant interest method.
Amortizable bond premium will be treated as an offset to interest income on
such Grantor Trust Certificate. The basis for such Grantor Trust Certificate
will be reduced to the extent that amortizable premium is applied to offset
interest payments. It is not clear whether a reasonable prepayment assumption
should be used in computing amortization of premium allowable under Section
171. A Grantor Trust Certificateholder that makes this election for a Grantor
Trust Certificate that is acquired at a premium will be deemed to have made
an election to amortize bond premium with respect to all debt instruments
having amortizable bond premium that such Grantor Trust Certificateholder
acquires during the year of the election or thereafter.
If a premium is not subject to amortization using a reasonable
prepayment assumption, the holder of a Grantor Trust Certificate acquired at
a premium should recognize a loss if a Receivable prepays in full, equal to
the difference between the portion of the prepaid principal amount of such
Receivable that is allocable to the Grantor Trust Certificate and the portion
of the adjusted basis of the Grantor Trust Certificate that is allocable to
such Receivable. If a reasonable prepayment assumption is used to amortize
such premium, it appears that such a loss would be available, if at all, only
if prepayments have occurred at a rate faster than the reasonable assumed
prepayment rate. It is not clear whether any other adjustments would be
required to reflect differences between an assumed prepayment rate and the
actual rate of prepayments.
STRIPPED BONDS AND STRIPPED COUPONS
Although the tax treatment of stripped bonds is not entirely clear,
based on recent guidance by the IRS, each purchaser of a Grantor Trust
Certificate will be treated as the purchaser of a stripped bond which
generally should be treated as a single debt instrument issued on the day it
is purchased for purposes of calculating any original issue discount.
Generally, under recently issued Treasury regulations (the "Section 1286
Treasury Regulations"), if the discount on a stripped bond is larger than a
de minimis amount (as calculated for purposes of the OID rules of the Code)
such stripped bond will be considered to have been issued with OID. See
"Original Issue Discount." Based on the preamble to the Section 1286 Treasury
Regulations, Federal Tax Counsel is of the opinion that, although the matter
is not entirely clear, the interest income on the Certificates at the sum of
the Pass Through Rate and the portion of the Servicing Fee Rate that does not
constitute excess servicing will be treated as "qualified stated interest"
within the meaning of the Section 1286 Treasury Regulations and such income
will be so treated in the Trustee's tax information reporting.
Original Issue Discount. The IRS has stated in published rulings that,
in circumstances similar to those described herein, the special rules of the
Code relating to "original issue discount" (currently Sections 1271 through
1273 and 1275) will be applicable to a Grantor Trust Certificateholder's
interest in those Receivables meeting the conditions necessary for these
sections to apply. Generally, a Grantor Trust Certificateholder that acquires
an undivided interest in a Receivable issued or acquired with OID must
include in gross income the sum of the "daily portions," as defined below, of
the OID on such Receivable for each day on which it owns a Certificate,
including the date of purchase but excluding the date of disposition. In the
case of an original Grantor Trust Certificateholder, the daily portions of
OID with respect to a Receivable generally would be determined as follows. A
calculation will be made of the portion of OID that accrues on the Receivable
during each successive monthly accrual period (or shorter period in
respect of the date of original issue or the final Distribution Date).
This will be done, in the case of each full monthly accrual period, by
adding (i) the present value of all remaining payments to be received on
the Receivable under the prepayment assumption used in respect of the
Receivables and (ii) any payments received during such accrual period, and
subtracting from that total the "adjusted issue price" of the Receivable
at the beginning of such accrual period. No representation is made that the
Receivables will prepay at any prepayment assumption. The "adjusted issue
price" of a Receivable at the beginning of the first accrual period is its
issue price (as determined for purposes of the OID rules of the Code) and the
"adjusted issue price" of a Receivable at the beginning of a subsequent
accrual period is the "adjusted issue price" at the beginning of the
immediately preceding accrual period plus the amount of OID allocable to that
accrual period and reduced by the amount of any payment (other than
"qualified stated interest") made at the end of or during that accrual
period. The OID accruing during such accrual period will then be divided by
the number of days in the period to determine the daily portion of OID for
each day in the period. With respect to an initial accrual period shorter
than a full monthly accrual period, the daily portions of OID must be
determined according to an appropriate allocation under either an exact or
approximate method set forth in the OID Regulations, or some other reasonable
method, provided that such method is consistent with the method used to
determine the yield to maturity of the Receivables.
With respect to the Receivables, the method of calculating OID as
described above will cause the accrual of OID to either increase or decrease
(but never below zero) in any given accrual period to reflect the fact that
prepayments are occurring at a faster or slower rate than the prepayment
assumption used in respect of the Receivables. Subsequent purchasers that
purchase Receivables at more than a de minimis discount should consult their
tax advisors with respect to the proper method to accrue such OID.
Market Discount. A Grantor Trust Certificateholder that acquires an
undivided interest in Receivables may be subject to the market discount rules
of Sections 1276 through 1278 to the extent an undivided interest in a
Receivable is considered to have been purchased at a "market discount."
Generally, the amount of market discount is equal to the excess of the
portion of the principal amount of such Receivable allocable to such holder's
undivided interest over such holder's tax basis in such interest. Market
discount with respect to a Grantor Trust Certificate will be considered to be
zero if the amount allocable to the Grantor Trust Certificate is less than
0.25% of the Grantor Trust Certificate's stated redemption price at maturity
multiplied by the weighted average maturity remaining after the date of
purchase. Treasury regulations implementing the market discount rules have
not yet been issued; therefore, investors should consult their own tax
advisors regarding the application of these rules and the advisability of
making any of the elections allowed under Code Sections 1276 through 1278.
The Code provides that any principal payment (whether a scheduled
payment or a prepayment) or any gain on disposition of a market discount bond
shall be treated as ordinary income to the extent that it does not exceed the
accrued market discount at the time of such payment. The amount of accrued
market discount for purposes of determining the tax treatment of subsequent
principal payments or dispositions of the market discount bond is to be
reduced by the amount so treated as ordinary income.
The Code also grants the Treasury Department authority to issue
regulations providing for the computation of accrued market discount on debt
instruments, the principal of which is payable in more than one installment.
While the Treasury Department has not yet issued regulations, rules described
in the relevant legislative history will apply. Under those rules, the holder
of a market discount bond may elect to accrue market discount either on the
basis of a constant interest rate or according to one of the following
methods. If a Grantor Trust Certificate is issued with OID, the amount of
market discount that accrues during any accrual period would be equal to the
product of (i) the total remaining market discount and (ii) a fraction, the
numerator of which is the OID accruing during the period and the denominator
of which is the total remaining OID at the beginning of the accrual period.
For Grantor Trust Certificates issued without OID, the amount of market
discount that accrues during a period is equal to the product of (i) the
total remaining market discount and (ii) a fraction, the numerator of which
is the amount of stated interest paid during the accrual period and the
denominator of which is the total amount of stated interest remaining to be
paid at the beginning of the accrual period. For purposes of calculating
market discount under any of the above methods in the case of instruments
(such as the Grantor Trust Certificates) that provide for payments that may
be accelerated by reason of prepayments of other obligations securing such
instruments, the same prepayment assumption applicable to calculating the
accrual of OID will apply. Because the regulations described above have not
been issued, it is impossible to predict what effect those regulations might
have on the tax treatment of a Grantor Trust Certificate purchased at a
discount or premium in the secondary market.
A holder who acquired a Grantor Trust Certificate at a market discount
also may be required to defer a portion of its interest deductions for the
taxable year attributable to any indebtedness incurred or continued to
purchase or carry such Grantor Trust Certificate purchased with market
discount. For these purposes, the de minimis rule referred above applies. Any
such deferred interest expense would not exceed the market discount that
accrues during such taxable year and is, in general, allowed as a deduction
not later than the year in which such market discount is includible in
income. If such holder elects to include market discount in income currently
as it accrues on all market discount instruments acquired by such holder in
that taxable year or thereafter, the interest deferral rule described above
will not apply.
Premium. To the extent a Grantor Trust Certificateholder is considered
to have purchased an undivided interest in a Receivable for an amount that is
greater than its stated redemption price at maturity of such Receivable, such
Grantor Trust Certificateholder will be considered to have purchased the
Receivable with "amortizable bond premium" equal in amount to such excess. A
Grantor Trust Certificateholder (who does not hold the Certificate for sale
to customers or in inventory) may elect under Section 171 of the Code to
amortize such premium. Under the Code, premium is allocated among the
interest payments on the Receivables to which it relates and is considered as
an offset against (and thus a reduction of) such interest payments. With
certain exceptions, such an election would apply to all debt instruments held
or subsequently acquired by the electing holder. Absent such an election, the
premium will be deductible as an ordinary loss only upon disposition of the
Certificate or pro rata as principal is paid on the Receivables.
Election to Treat All Interest as OID. The OID regulations permit a
Grantor Trust Certificateholder to elect to accrue all interest, discount
(including de minimis market or original issue discount) and premium in
income as interest, based on a constant yield method. If such an election
were to be made with respect to a Grantor Trust Certificate with market
discount, the Certificateholder would be deemed to have made an election to
include in income currently market discount with respect to all other debt
instruments having market discount that such Grantor Trust Certificateholder
acquires during the year of the election or thereafter. Similarly, a Grantor
Trust Certificateholder that makes this election for a Grantor Trust
Certificate that is acquired at a premium will be deemed to have made an
election to amortize bond premium with respect to all debt instruments having
amortizable bond premium that such Grantor Trust Certificateholder owns or
acquires. See "-- Premium" herein. The election to accrue interest, discount
and premium on a constant yield method with respect to a Grantor Trust
Certificate is irrevocable.
Sale or Exchange of a Grantor Trust Certificate. Sale or exchange of a
Grantor Trust Certificate prior to its maturity will result in gain or loss
equal to the difference, if any, between the amount received and the owner's
adjusted basis in the Grantor Trust Certificate. Such adjusted basis
generally will equal the seller's purchase price for the Grantor Trust
Certificate, increased by the OID included in the seller's gross income with
respect to the Grantor Trust Certificate, and reduced by principal payments
on the Grantor Trust Certificate previously received by the seller. Such gain
or loss will be capital gain or loss to an owner for which a Grantor Trust
Certificate is a "capital asset" within the meaning of Section 1221, and will
be long-term or short-term depending on whether the Grantor Trust Certificate
has been owned for the long-term capital gain holding period (currently more
than one year).
Grantor Trust Certificates will be "evidences of indebtedness" within
the meaning of Section 582(c)(1), so that gain or loss recognized from the
sale of a Grantor Trust Certificate by a bank or a thrift institution to
which such section applies will be treated as ordinary income or loss.
Non-U.S. Persons. Generally, to the extent that a Grantor Trust
Certificate evidences ownership in underlying Receivables that were issued on
or before July 18, 1984, interest or OID paid by the person required to
withhold tax under Section 1441 or 1442 to (i) an owner that is not a U.S.
Person (as defined below) or (ii) a Grantor Trust Certificateholder holding
on behalf of an owner that is not a U.S. Person will be subject to federal
income tax, collected by withholding, at a rate of 30% or such lower rate as
may be provided for interest by an applicable tax treaty. Accrued OID
recognized by the owner on the sale or exchange of such a Grantor Trust
Certificate also will be subject to federal income tax at the same rate.
Generally, such payments would not be subject to withholding to the extent
that a Grantor Trust Certificate evidences ownership in Receivables issued
after July 18, 1984, by natural persons if such Grantor Trust
Certificateholder complies with certain identification requirements
(including delivery of a statement, signed by the Grantor Trust
Certificateholder under penalties of perjury, certifying that such Grantor
Trust Certificateholder is not a U.S. Person and providing the name and
address of such Grantor Trust Certificateholder). Additional restrictions
apply to Receivables of where the obligor is not a natural person in order to
qualify for the exemption from withholding.
As used herein, a "U.S. Person" means a citizen or resident of the
United States, a corporation or a partnership organized in or under the laws
of the United States or any political subdivision thereof, an estate or
trust, the income of which from sources outside the United States is
includible in gross income for federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States,
or a trust if a court within the United States is able to exercise primary
supervision of the administration of the trust and one or more United States
fiduciaries have the authority to control all substantial decisions of the
trust.
Information Reporting and Backup Withholding. The Servicer will furnish
or make available, within a reasonable time after the end of each calendar
year, to each person who was a Grantor Trust Certificateholder at any time
during such year, such information as may be deemed necessary or desirable to
assist Grantor Trust Certificateholders in preparing their federal income tax
returns, or to enable holders to make such information available to
beneficial owners or financial intermediaries that hold Grantor Trust
Certificates as nominees on behalf of beneficial owners. If a holder,
beneficial owner, financial intermediary or other recipient of a payment on
behalf of a beneficial owner fails to supply a certified taxpayer
identification number or if the Secretary of the Treasury determines that
such person has not reported all interest and dividend income required to be
shown on its federal income tax return, 31% backup withholding may be
required with respect to any payments. Any amounts deducted and withheld from
a distribution to a recipient would be allowed as a credit against such
recipient's federal income tax liability.
FASIT Legislation. During 1996, President Clinton signed into law the
"Small Business Job Protection Act of 1996" (the "Act"). The Act creates a
new type of entity for federal income tax purposes called a "financial asset
securitization investment trust" or "FASIT." Beginning in September of 1997,
the Act generally enables certain arrangements similar to a trust that is
treated as a partnership to elect to be treated as a FASIT. Under the Act, a
FASIT generally would avoid federal income taxation and could issue
securities substantially similar to the Securities and those securities would
be treated as debt for federal income tax purposes. If so provided in the
related Prospectus Supplement, the Trust Agreement or the Pooling and
Servicing Agreement, as applicable, will permit the Seller or the Trustee to
take the appropriate action, or will set forth certain conditions which, if
satisfied, will permit the Seller to amend such Trust Agreement or Pooling
and Servicing Agreement, in order to enable all or a portion of the Trust to
qualify as a FASIT and to permit a FASIT election to be made with respect
thereto, and to make such modifications to such Trust Agreement or Pooling
and Servicing Agreement as may be permitted by reason of the making of such
an election. However, there can be no assurance that the Seller or the
Trustee will or will not cause any permissible FASIT election to be made with
respect to a Trust or amend the related Trust Agreement or Pooling and
Servicing Agreement in connection with any election. Transition rules
provided for by the FASIT legislation contemplate that the entities in
existence on August 31, 1997 may elect to be taxed under the FASIT rules.
However, how such an election would be made and how outstanding interests of
such entity are to be treated subsequent to the election is not explained in
the FASIT legislation.
CERTAIN STATE TAX CONSEQUENCES WITH RESPECT TO
TRUSTS WHICH ISSUE ONE OR MORE CLASSES OF NOTES
The activities of servicing and collecting the Receivables will be
undertaken by the Servicer which is a Michigan corporation. The State of
Michigan imposes a state individual income tax and a single business tax on
corporations, partnerships and other entities doing business in the State of
Michigan. This discussion relates only to Trusts for which a partnership
election is made, and 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.
* * *
THE FEDERAL AND STATE TAX DISCUSSIONS SET FORTH ABOVE ARE INCLUDED FOR
GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A
NOTEHOLDER'S OR CERTIFICATEHOLDER'S PARTICULAR TAX SITUATION. PROSPECTIVE
PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF NOTES AND
CERTIFICATES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND
OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX
LAWS.
ERISA CONSIDERATIONS
Section 406 of ERISA and Section 4975 of the Code prohibit a pension,
profit-sharing or other employee benefit 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 a 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 a
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.
SENIOR CERTIFICATES ISSUED BY TRUSTS THAT DO NOT ISSUE NOTES
Unless otherwise specified in the related Prospectus Supplement, the
following discussion applies only to nonsubordinated Certificates (referred
to herein as "Senior Certificates") issued by a Trust that does not issue
Notes.
The U.S. Department of Labor has granted to the lead Underwriter named
in the Prospectus Supplement an exemption (the "Exemption") from certain of
the prohibited transaction rules of ERISA with respect to the initial
purchase, the holding and the subsequent resale by Benefit Plans of
certificates representing interests in asset-backed pass-through trusts that
consist of certain receivables, loans and other obligations that meet the
conditions and requirements of the Exemption. The receivables covered by the
Exemption include motor vehicle installment sales contracts such as the
Receivables. The Exemption will apply to the acquisition, holding and resale
of the Senior Certificates by a Benefit Plan, provided that certain
conditions (certain of which are described below) are met.
Among the conditions which must be satisfied for the Exemption to apply
to the Senior Certificates are the following:
(1) The acquisition of the Senior Certificates by a Benefit Plan is
on terms (including the price for the Senior Certificates) that are at
least as favorable to the Benefit Plan as they would be in an arm's
length transaction with an unrelated party;
(2) The rights and interests evidenced by the Senior Certificates
acquired by the Benefit Plan are not subordinated to the rights and
interests evidenced by other certificates of the Trust;
(3) The Senior Certificates acquired by the Benefit Plan have
received a rating at the time of such acquisition that is in one of the
three highest generic rating categories from either Standard & Poor's
Corporation, Moody's Investors Service, Inc., Duff & Phelps Inc. or
Fitch Investors Service, Inc.;
(4) The Trustee is not an affiliate of any other member of the
Restricted Group (as defined below);
(5) The sum of all payments made to the Underwriters in connection
with the distribution of the Senior Certificates represents not more
than reasonable compensation for underwriting the Senior Certificates;
the sum of all payments made to and retained by the Seller pursuant to
the sale of the Contracts to the Trust represents not more than the fair
market value of such Contracts; and the sum of all payments made to and
retained by the Servicer represents not more than reasonable
compensation for the Servicer's services under the Agreement and
reimbursement of the Servicer's reasonable expenses in connection
therewith; and
(6) The Benefit Plan investing in the Senior Certificates is an
"accredited investor" as defined in Rule 501 (a)(1) of Regulation D of
the Securities and Exchange Commission under the Securities Act of 1933.
Moreover, the Exemption would provide relief from certain
self-dealing/conflict of interest or prohibited transactions only if, among
other requirements, (i) in the case of the acquisition of Senior Certificates
in connection with the initial issuance, at least fifty (50) percent of the
Senior Certificates are acquired by persons independent of the Restricted
Group (as defined below), (ii) the Benefit Plan's investment in Senior
Certificates does not exceed twenty-five (25) percent of all of the Senior
Certificates outstanding at the time of the acquisition, and (iii)
immediately after the acquisition, no more than twenty-five (25) percent of
the assets of the Benefit Plan are invested in certificates representing an
interest in one or more trusts containing assets sold or serviced by the same
entity. The Exemption does not apply to Plans sponsored by the Seller, any
Underwriter, the Trustee, the Servicer, any obligor with respect to Contracts
included in the Trust constituting more than five percent of the aggregate
unamortized principal balance of the assets in the Trust, or any affiliate of
such parties (the "Restricted Group").
The Seller believes that the Exemption will apply to the acquisition and
holding by Benefit Plans of Senior Certificates sold by the Underwriter or
Underwriters named in the Prospectus Supplement and that all conditions of
the Exemption other than those within the control of the investors have been
met. In addition, as of the date hereof, no obligor with respect to Contracts
included in the Trust constitutes more than five percent of the aggregate
unamortized principal balance of the assets of the Trust.
PLAN OF DISTRIBUTION
On the terms and conditions set forth in an underwriting agreement with
respect to the Notes, if any, of a 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 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, 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.
Each Trust may, from time to time, invest the funds in its Trust
Accounts in Eligible Investments acquired from such underwriters or from the
Seller.
Pursuant to each Underwriting Agreement with respect to a given series
of Securities, the closing of the sale of any class of Securities subject to
such Underwriting Agreement will be conditioned on the closing of the sale of
all other such classes of Securities of that series.
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 and the Seller by the General Counsel of
the Seller. Certain Michigan state tax and other matters will be passed upon
for the Trust by the General Counsel of the Seller.
INDEX OF TERMS
Actuarial Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . .
Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Administration Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Applicable Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
APR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Base Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Calculation Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Calculation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CD Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CD Rate Determination Date . . . . . . . . . . . . . . . . . . . . . . . . .
CD Rate Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cede . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certificate Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certificate Distribution Account . . . . . . . . . . . . . . . . . . . . . .
Certificate Pool Factor . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certificateholders' Reconciliation Principal Adjustment Amount . . . . . . .
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CFC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Chrysler . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Collection Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Collection Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial Paper Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial Paper Rate Determination Date . . . . . . . . . . . . . . . . . .
Commercial Paper Rate Security . . . . . . . . . . . . . . . . . . . . . . .
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commodity Indexed Securities . . . . . . . . . . . . . . . . . . . . . . . .
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Composite Quotations . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Currency Indexed Securities . . . . . . . . . . . . . . . . . . . . . . . . .
Cutoff Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dealer Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dealers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Definitive Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . .
Definitive Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Definitive Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DTC's Nominee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Eligible Deposit Account . . . . . . . . . . . . . . . . . . . . . . . . . .
Eligible Institution . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Eligible Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Federal Funds Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Federal Funds Rate Determination Date . . . . . . . . . . . . . . . . . . . .
Federal Funds Rate Security . . . . . . . . . . . . . . . . . . . . . . . . .
Federal Tax Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Final Scheduled Maturity Date . . . . . . . . . . . . . . . . . . . . . . . .
Financed Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed Rate Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed Value Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed Value Securities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Floating Rate Securities . . . . . . . . . . . . . . . . . . . . . . . . . .
FTC Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Funding Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Grantor Trust Certificateholders . . . . . . . . . . . . . . . . . . . . . .
Grantor Trust Certificates . . . . . . . . . . . . . . . . . . . . . . . . .
H.15(519) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Index Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indexed Commodity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indexed Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indexed Principal Amount . . . . . . . . . . . . . . . . . . . . . . . . . .
Indexed Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indirect Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Initial Cutoff Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Initial Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Initial Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Insolvency Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest Reset Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest Reset Period . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LIBOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LIBOR Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . .
LIBOR Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
London Banking Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Michigan Tax Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Money Market Yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note Distribution Account . . . . . . . . . . . . . . . . . . . . . . . . . .
Note Pool Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noteholders' Reconciliation Principal Adjustment Amount . . . . . . . . . . .
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Obligors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OID . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OID Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pass Through Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payahead Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payaheads . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plan Assets Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pooling and Servicing Agreement . . . . . . . . . . . . . . . . . . . . . . .
Pre-Funded Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pre-Funding Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Precomputed Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Precomputed Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . .
Previously Issued Securities . . . . . . . . . . . . . . . . . . . . . . . .
Prospectus Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rating Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . .
Related Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reserve Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reuters Screen LIBO Page . . . . . . . . . . . . . . . . . . . . . . . . . .
Revolving Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rule of 78's . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rule of 78's Receivables . . . . . . . . . . . . . . . . . . . . . . . . . .
Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sale and Servicing Agreement . . . . . . . . . . . . . . . . . . . . . . . .
Schedule of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . .
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 1286 Treasury Regulations . . . . . . . . . . . . . . . . . . . . . .
Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Senior Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Series Trust Property . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Servicer Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Servicing Fee Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-Term Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Simple Interest Advance . . . . . . . . . . . . . . . . . . . . . . . . . . .
Simple Interest Receivables . . . . . . . . . . . . . . . . . . . . . . . . .
Spread . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Spread Multiplier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock Indexed Securities . . . . . . . . . . . . . . . . . . . . . . . . . .
Strip Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Strip Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subsequent Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subsequent Transfer Date . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfer and Servicing Agreements . . . . . . . . . . . . . . . . . . . . . .
Treasury bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury Rate Determination Date . . . . . . . . . . . . . . . . . . . . . .
Treasury Rate Security . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trust Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
UCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Underwriting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Securities
(the "Global Securities") will be available only in book-entry form.
Investors in the Global Securities may hold such Global Securities through
any of DTC, CEDEL or Euroclear. The Global Securities will be tradeable as
home market instruments in both the European and U.S. domestic markets.
Initial settlement and all secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities
through CEDEL and Euroclear will be conducted in the ordinary way in
accordance with their normal rules and operating procedures and in accordance
with conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures
applicable to U.S. corporate debt obligations.
Secondary cross-market trading between CEDEL or Euroclear and DTC
Participants holding Offered Notes will be effected on a
delivery-against-payment basis through the respective Depositaries of CEDEL
and Euroclear (in such capacity) and DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be
subject to U.S. withholding taxes unless such holders meet certain
requirements and deliver appropriate U.S. tax documents to the securities
clearing organizations or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name
of Cede & Co. as nominee of DTC. Investors' interests in the Global
Securities will be represented through financial institutions acting on their
behalf as direct and indirect Participants in DTC. As a result, CEDEL and
Euroclear will hold positions on behalf of their participants through their
respective Depositaries, which in turn will hold such positions in accounts
as DTC Participants.
Investors electing to hold their Global Securities through DTC will
follow the settlement practices applicable to prior debt issues. Investors'
securities custody accounts will be credited with their holdings against
payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through CEDEL or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global
security and no "lock-up" or restricted period. Global Securities will be
credited to the securities custody accounts on the settlement date against
payments in same-day funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired
value date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to book-entry
securities in same-day funds.
Trading between CEDEL and/or Euroclear Participants. Secondary market
trading between CEDEL Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC seller and CEDEL or Euroclear purchaser. When
Global Securities are to be transferred from the account of a DTC Participant
to the account of a CEDEL Participant or a Euroclear Participant, the
purchaser will send instructions to CEDEL or Euroclear through a CEDEL
Participant or Euroclear Participant at least one business day prior to
settlement. CEDEL or Euroclear, as applicable, will instruct its Depositary
to receive the Global Securities against payment. Payment will include
interest accrued on the Global Securities from and including the last
coupon payment date to and excluding the settlement date. Payment will
then be made by such Depositary to the DTC Participant's account against
delivery of the Global Securities. After settlement has been completed,
the Global Securities will be credited to the applicable clearing system
and by the clearing system, in accordance with its usual procedures, to
the CEDEL Participant's or Euroclear Participant's account. The Global
Securities credit will appear the next day (European time) and the cash debit
will be back-valued to, and the interest on the Global Securities will accrue
from, the value date (which would be the preceding day when settlement
occurred in New York). If settlement is not completed on the intended value
date (i.e., the trade fails), the CEDEL or Euroclear cash debit will be
valued instead as of the actual settlement date.
CEDEL Participants and Euroclear Participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to
pre-position funds for settlement, either from cash on hand or existing lines
of credit, as they would for any settlement occurring within CEDEL or
Euroclear. Under this approach, they may take on credit exposure to CEDEL or
Euroclear until the Global Securities are credited to their accounts one day
later.
As an alternative, if CEDEL or Euroclear has extended a line of credit
to them, CEDEL Participants or Euroclear Participants can elect not to
pre-position funds and allow that credit line to be drawn upon the finance
settlement. Under this procedure, CEDEL Participants or Euroclear
Participants purchasing Global Securities would incur overdraft charges for
one day, assuming they cleared the overdraft when the Global Securities were
credited to their accounts. However, interest on the Global Securities would
accrue from the value date. Therefore, in many cases the investment income on
the Global Securities earned during that one-day period may substantially
reduce or offset the amount of such overdraft charges, although this result
will depend on each CEDEL Participant's or Euroclear Participant's particular
cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities
to the respective Depositary for the benefit of CEDEL Participants or
Euroclear Participants. The sale proceeds will be available to the DTC seller
on the settlement date. Thus, to the DTC Participant a cross-market
transaction will settle no differently than a trade between two DTC
Participants.
Trading between CEDEL or Euroclear seller and DTC purchaser. Due to
time zone differences in their favor, CEDEL Participants and Euroclear
Participants may employ their customary procedures for transactions in which
Global Securities are to be transferred by the respective clearing systems,
through their respective Depositaries, to a DTC Participant. The seller will
send instructions to CEDEL or Euroclear through a CEDEL Participant or
Euroclear Participant at least one business day prior to settlement. In these
cases, CEDEL or Euroclear will instruct their respective Depositaries, as
appropriate, to deliver the bonds to the DTC Participant's account against
payment. Payment will include interest accrued on the Global Securities from
and including the last coupon payment date to and excluding the settlement
date. The payment will then be reflected in the account of the CEDEL
Participant or Euroclear Participant the following day, and receipt of the
cash proceeds in the CEDEL Participant's or Euroclear Participant's account
would be back-valued to the value date (which would be the preceding day,
when settlement occurred in New York). Should the CEDEL Participant or
Euroclear Participant have a line of credit with its clearing system and
elect to be in debit in anticipation of receipt of the sale proceeds in its
account, the back-valuation will extinguish any overdraft charges incurred
over that one-day period. If settlement is not completed on the intended
value date (i.e., the trade fails), receipt of the cash proceeds in the CEDEL
Participant's or Euroclear Participant's account would instead be valued as
of the actual settlement date. Finally, day traders that use CEDEL or
Euroclear and that purchase Global Securities from DTC Participants for
delivery to CEDEL Participants or Euroclear Participants should note that
these trades would automatically fail on the sale side unless affirmative
action were taken. At least three techniques should be readily available to
eliminate this potential problem:
(a) borrowing through CEDEL or Euroclear for one day (until the
purchase side of the day trade is reflected in their CEDEL or Euroclear
accounts) in accordance with the clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC
Participant no later than one day prior to settlement, which would
give the Global Securities sufficient time to be reflected in their
CEDEL or Euroclear account in order to settle the sale side of the
trade; or
(c) staggering the value dates for the buy and sell sides of the
trade so that the value date for the purchase from the DTC Participant
is at least one day prior to the value date for the sale to the CEDEL
Participant or Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities through CEDEL
or Euroclear (or through DTC if the holder has an address outside the U.S.)
will be subject to the 30% U.S. withholding tax that generally applies to
payments of interest (including original issue discount) on registered debt
issued by U.S. Persons, unless (i) each clearing system, bank or other
financial institution that holds customers' securities in the ordinary course
of its trade or business in the chain of intermediaries between such
beneficial owner and the U.S. entity required to withhold tax complies with
applicable certification requirements and (ii) such beneficial owner takes
one of the following steps to obtain an exemption or reduced tax rate:
Exemption of non-U.S. Persons (Form W-8). Beneficial owners of
Offered Notes that are non-U.S. Persons generally can obtain a complete
exemption from the withholding tax by filing a signed Form W-8
(Certificate of Foreign Status). If the information shown on Form W-8
changes, a new Form W-8 must be filed within 30 days of such change.
Exemption for non-U.S. Person with effectively connected income
(Form 4224). A non-U.S. Person, including a non-U.S. corporation or
bank with a U.S. branch, for which the interest income is effectively
connected with its conduct of a trade or business in the United States
can obtain an exemption from the withholding tax by filing Form 4224
(Exemption from Withholding of Tax on Income Effectively Connected with
the Conduct of Trade or Business in the United States).
Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons that are beneficial owners of
Offered Notes residing in a country that has a tax treaty with the
United States can obtain an exemption or reduced tax rate (depending on
the treaty terms) by filing Form 1001 (Ownership, Exemption or Reduced
Rate Certificate). If the treaty provides only for a reduced rate,
withholding tax will be imposed at that rate unless the filer
alternatively files Form W-8. Form 1001 may be filed by the beneficial
owner of Offered Notes or such owner's agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a
complete exemption from the withholding tax by filing Form W-9 (Payer's
Request for Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The beneficial owner
of a Global Security or, in the case of a Form 1001 or a Form 4224
filer, such owner's agent, files by submitting the appropriate form to
the person through whom it holds the security (the clearing agency, in
the case of persons holding directly on the books of the clearing
agency). Form W-8 and Form 1001 are effective for three calendar years
and Form 4224 is effective for one calendar year.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of
the United States or any political subdivision thereof, (iii) an estate the
income of which is includible in gross income for United States tax purposes,
regardless of its source, or (iv) a trust if a court within the United States
is able to exercise primary supervision of the administration of the trust
and one or more United States fiduciaries have the authority to control all
substantial decisions of the trust. This summary does not deal with all
aspects of U.S. federal income tax withholding that may be relevant to
foreign holders of the Global Securities. Investors are advised to consult
their own tax advisors for specific tax advice concerning their holding and
disposing of the Global Securities.
<TABLE>
<CAPTION>
<S> <C>
NO DEALER, SALESPERSON OR 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 PREMIER AUTO TRUST
SELLER OR BY THE UNDERWRITERS. THIS 199_-_
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 ____% ASSET BACKED NOTES, CLASS A-2
IN WHICH THE PERSON MAKING SUCH OFFER
OR SOLICITATION IS NOT QUALIFIED TO $___________
DO SO OR TO ANYONE TO WHOM IT IS ____% ASSET BACKED NOTES, CLASS A-3
UNLAWFUL TO MAKE ANY SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF $___________
THIS PROSPECTUS SUPPLEMENT AND THE ____% ASSET BACKED NOTES, CLASS A-4
PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY $__________
CIRCUMSTANCES, CREATE AN IMPLICATION ____% ASSET BACKED NOTES, CLASS B
THAT INFORMATION HEREIN OR THEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE OF THIS PROSPECTUS
SUPPLEMENT OR PROSPECTUS. CHRYSLER FINANCIAL CORPORATION
_______________________ SELLER AND SERVICER
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT ---------------------------------
PAGE
PROSPECTUS SUPPLEMENT
Reports to Noteholders . . . . . S-
Summary of Terms . . . . . . . . S- ---------------------------------
Special Considerations . . . . . S-
The Trust . . . . . . . . . . . . S-
The Receivables Pool . . . . . . S-
Chrysler Financial Corporation . S- (UNDERWRITERS)
Weighted Average Life of
the Notes . . . . . . . . . . . S-
Description of the Notes . . . . S-
Description of the Transfer and
Servicing Agreements . . . . . . S-
Certain Federal Income Tax
Consequences . . . . . . . . . S-
ERISA Considerations . . . . . . S-
Underwriting . . . . . . . . . . S-
Legal Opinions . . . . . . . . . S-
Index of Terms . . . . . . . . . S-
PROSPECTUS
Available Information . . . . . . . .
Incorporation of Certain Documents by
Reference . . . . . . . . . . . . . .
Summary of Terms . . . . . . . . . .
Special Considerations . . . . . . . ---------------------
The Trusts . . . . . . . . . . . . .
The Receivables Pools . . . . . . . . DATED ___________, 199_
Weighted Average Life of the
Securities . . . . . . . . . . . .
Pool Factors and Trading Information
Use of Proceeds . . . . . . . . . . .
Chrysler Financial Corporation. . . .
Description of the Notes. . . . . . .
Certain Information Regarding
the Securities. . . . . . . . . . .
Description of the Transfer and
Servicing Agreements. . . . . . . .
Certain Legal Aspects of the
Receivables . . . . . . . . . . . .
Certain Federal Income Tax
Consequences. . . . . . . . . . . .
Certain State Tax Consequences with
Respect to Trusts which Issue one
or more Classes of Notes. . . . . .
ERISA Considerations. . . . . . . . .
Plan of Distribution. . . . . . . . .
Legal Opinions . . . . . . . . . . .
Index of Terms . . . . . . . . . . .
Annex I . . . . . . . . . . . . . .A-1
UNTIL 90 DAYS AFTER THE DATE OF THIS
PROPSECTUS SUPPLEMENT, ALL DEALERS EFFECTING
TRANSACTIONS IN THE NOTES 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.
</TABLE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*
The following is an itemized list of the estimated expenses
to be incurred in connection with the offering of the securities
being offered hereunder other than underwriting discounts and
commissions.
Registration Fee . . . . . . . . . . . . . . . . $2,424,243.00
Printing Expenses . . . . . . . . . . . . . . . . 225,000.00
Trustee Fees and Expenses . . . . . . . . . . . . 172,500.00
Legal Fees and Expenses . . . . . . . . . . . . . 150,000.00
Accountants' Fees and Expenses . . . . . . . . . . 150,000.00
Rating Agencies' Fees . . . . . . . . . . . . . . 1,500,000.00
Miscellaneous . . . . . . . . . . . . . . . . . . 257.00
------------
Total . . . . . . . . . . . . . . . . . $4,622,000.00
- ---------------
* All amounts except registration fee are estimates.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Chrysler Corporation (parent of the Registrant) is
incorporated under Delaware law. Section 145 of the Delaware
General Corporation Law provides that a Delaware corporation may
indemnify any person, including officers and directors, who are,
or are threatened to be made, parties to any threatened, pending
or completed legal action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action
by or in the right of such corporation), by reason of the fact
that such person is or was an officer or director of such
corporation, or is or was serving at the request of such
corporation as a director, officer, employee or agent of another
corporation or enterprise. The indemnity may include expenses
(including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided such
officer or director acted in good faith and in a manner he
reasonably believed to be in or not opposed to the corporation's
best interests and, for criminal actions or proceedings, had no
reasonable cause to believe that his conduct was illegal. A
Delaware corporation may indemnify officers and directors in an
action by or in the right of the corporation under the same
conditions, except that no indemnification is permitted without
judicial approval if the officer or director is adjudged to be
liable to the corporation. Where an officer or director is
successful on the merits or otherwise in the defense of any
action referred to above, the corporation must indemnify him
against the expenses which such officer or director actually and
reasonably incurred.
Section B of Article VIII of the Certificate of
Incorporation of Chrysler Corporation, the parent of the
Registrant, provides, in effect, that, subject to certain limited
exceptions, Chrysler Corporation will indemnify the officers and
directors of Chrysler Corporation or its subsidiaries to the
extent permitted by Delaware law. In addition, Chrysler
Corporation maintains insurance providing for payment, subject to
certain exceptions, on behalf of officers and directors of
Chrysler Corporation and its subsidiaries of money damages
incurred as a result of legal actions instituted against them in
their capacities as such officers or directors.
The Registrant is incorporated under Michigan law. Sections
561 to 565, inclusive, and Sections 567 and 569 of the Michigan
Business Corporation Act provide, in effect, that a Michigan
corporation may indemnify any persons, including officers and
directors, who are, or are threatened to be made, parties to any
threatened, pending or completed legal action, suit or
proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person was or is an
officer or director of such corporation, or is or was serving at
there quest of such corporation as a director, officer, partner,
trustee, employee or agent of another corporation or enterprise.
The indemnity may include expenses (including attorneys' fees),
judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection
with such action, suit or proceeding, provided such officer or
director acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests
of the corporation or its shareholders and, for criminal
proceedings, had no reasonable cause to believe that his or her
conduct was illegal. A Michigan corporation may indemnify
officers and directors in an action by or in the right of the
corporation under the same conditions, except that no
indemnification is permitted without judicial approval if the
officer or director is adjudged to be liable to the corporation.
Where an officer or director is successful on the merits or
otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses which such
officer or director actually and reasonably incurred.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS
(a) All financial statements, schedules and historical
financial
information have been omitted as they are not applicable.
1.1 Form of Underwriting Agreement for the Notes. Filed as
Exhibit 1.1 to Registration Statement No. 33-58942 of Chrysler
Financial Corporation, and incorporated herein by reference.
1.2 Form of Underwriting Agreement for the Certificates.
Filed as Exhibit 1.2 to Registration Statement No. 33-58942 of
Chrysler Financial Corporation, and incorporated herein by
reference.
3.1 Restated Articles of Incorporation of Chrysler
Financial Corporation as adopted and filed with the Corporation
Division of Michigan Department of Treasury on October 1, 1971.
Filed as Exhibit 3-A to Registration No. 2-43097 of Chrysler
Financial Corporation, and incorporated herein by reference.
3.2 Amendments to the Restated Articles of Incorporation
of Chrysler Financial Corporation filed with the Department of
Commerce of the State of Michigan on December 26, 1975, April 23,
1985 and June 21, 1985, respectively. Filed as Exhibit 3-B to the
Annual Report of Chrysler Financial Corporation on Form 10-K for
the year ended December 31, 1985, and incorporated herein by
reference.
3.3 Amendments to the Restated Articles of Incorporation
of Chrysler Financial Corporation filed with the Department of
Commerce of the State of Michigan on August 12, 1987 and August
14, 1987, respectively. Filed as Exhibit 3 to the Quarterly
Report of Chrysler Financial Corporation on Form 10-Q for the
quarter ended September 30, 1987, and incorporated herein by
reference.
3.4 Amendments to the Restated Articles of Incorporation
of Chrysler Financial Corporation filed with the Department of
Commerce of the State of Michigan on December 11, 1987 and
January 25, 1988, respectively. Filed as Exhibit 3-D to the
Annual Report of Chrysler Financial Corporation on Form 10-K for
the year ended December 31, 1989, and incorporated herein by
reference.
3.5 Amendments to the Restated Articles of Incorporation
of Chrysler Financial Corporation filed with the Department of
Commerce of the State of Michigan on June 13, 1989, June 23, 1989
(two amendments), September 13, 1989, January 31, 1990 and March
8, 1990, respectively. Filed as Exhibit 3-E to the Annual
Report of Chrysler Financial Corporation on Form 10-K for the
year ended December 31, 1989, and incorporated herein by
reference.
3.6 Amendments to the Restated Articles of Incorporation
of Chrysler Financial Corporation filed with the Department of
Commerce of the State of Michigan on March 29, 1990 and May 10,
1990. Filed as Exhibit 3-G to the Quarterly Report of Chrysler
Financial Corporation on Form 10-Q for the quarter ended March
31, 1990, and incorporated herein by reference.
3.7 By-Laws of Chrysler Financial Corporation as amended
to August 1, 1990. Filed as Exhibit 3-I to the Quarterly Report
of Chrysler Financial Corporation on Form 10-Q for the quarter
ended September 30, 1990, and incorporated herein by reference.
3.8 By-Laws of Chrysler Financial Corporation as amended
to January 1, 1992 and presently in effect. Filed as Exhibit 3-H
to the Annual Report of Chrysler Financial Corporation on Form
10-K for the year ended December 31, 1991, and incorporated
herein by reference.
*3.9 Form of Certificate of Trust for Premier Auto Trusts
(included in Exhibit 4.2).
*4.1 Form of Indenture between the Trust and the Indenture
Trustee (including forms of Notes).
*4.2 Form of Trust Agreement among the Registrant, the
Company and the Trustee (including forms of Certificates). Filed
as Exhibit 4.2 to Registration Statement No. 33-58942 of Chrysler
Financial Corporation, and incorporated herein by reference.
*4.3 Form of Pooling and Servicing Agreement, including the
Form of Standard Terms and Conditions of Agreement, among the
Registrant, the Servicer and the Trustee (including forms of
Certificates).
*5.1 Opinion of Christopher A. Taravella, Esq. with respect
to legality.
*8.1 Opinion of Brown & Wood LLP with respect to federal
tax matters.
*8.2 Opinion of Christopher A. Taravella, Esq. with respect
to tax matters under Michigan law.
*23.1 Consent of Christopher A. Taravella, Esq. (included in
the opinions filed as Exhibits 5.1 and 8.2).
*23.2 Consent of Brown & Wood LLP (included in its opinion
filed as Exhibit 8.1).
24.1 Power of Attorney.
*25.1 Form of T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 of The First National Bank of Chicago.
*25.2 Form of T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 of The Bank of New York.
*99.1 Form of Sale and Servicing Agreement among the
Registrant and the Trust.
99.2 Form of Administration Agreement among the Trust, the
Administrator and the Indenture Trustee. Filed as Exhibit 28.2
to Registration Statement No. 33-58942 of Chrysler Financial
Corporation, and incorporated herein by reference.
*99.3 Form of Purchase Agreement between the Company and the
Registrant.
______________________________
*To be filed by amendment.
ITEM 17. UNDERTAKINGS
(a) As to Rule 415:
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made of the securities registered hereby, a post-effective
amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933, as amended;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of this registration statement
(or the most recent post-effective amendment hereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in this registration statement; and
(iii) to include any material information with respect
to the plan of distribution not previously disclosed in this
registration statement or any material change to such information
in this registration statement;
provided, however, that the undertakings set forth in clauses (i)
and (ii) above do not apply if the information required to be
included in a post-effective amendment by those clauses is
contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of
1934, as amended, that are incorporated by reference in this
registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, as amended, each such
post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
The Registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act
under subsection (a) of Section 310 of the Trust Indenture Act in
accordance with the rules and regulations prescribed by the
Commission under Section 305(b)(2) of that Act.
(b) As to documents subsequently filed that are
incorporated by reference:
The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933, as amended, each filing of the registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934, as amended, that is incorporated by
reference in this registration statement shall be deemed to be a
new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) As to indemnification:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to
directors, officers and controlling persons of the registrant
pursuant to the provisions described under Item 15 above, or
otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933,
as amended, and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection
with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in such Securities Act of
1933, as amended, and will be governed by the final adjudication
of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to
believe that it meets all the requirements for filing on Form S-3
and has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the
City of Southfield and State of Michigan, on the 11th day of
July, 1997.
CHRYSLER FINANCIAL CORPORATION
by: /s/ T.W. SIDLIK
----------------------
Name: T.W. Sidlik
Title: Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
Signature Title Date
_________ _____ ____
Principal Executive Officer:
/s/ T.W. Sidlik Chairman of the Board July 11, 1997
_______________
T.W. Sidlik
Principal Financial Officer:
/s/ D.M. Cantwell Vice President and Treasurer July 11, 1997
________________
D.M. Cantwell
Principal Accounting Officer:
/s/ T.F. Gilman Vice President and Controller July 11, 1997
________________
T.F. Gilman
Board of Directors:
* Director July 11, 1997
___________________
T.P. Capo
* Director July 11, 1997
___________________
D.L. Davis
* Director July 11, 1997
____________________
W.J. O'Brien III
* Director July 11, 1997
___________________
T.W. Sidlik
* Director July 11, 1997
___________________
G.C. Valade
*By: /s/ B.C. Babbish
---------------------------------
B.C. Babbish
Attorney-in-Fact
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
1.1 Form of Underwriting Agreement for the Notes.
Filed as Exhibit 1.1 to Registration Statement No.
33-58942 of Chrysler Financial Corporation, and
incorporated herein by reference.
1.2 Form of Underwriting Agreement for the
Certificates. Filed as Exhibit 1.2 to Registration
Statement No. 33-58942 of Chrysler Financial
Corporation, and incorporated herein by reference.
3.1 Restated Articles of Incorporation of Chrysler
Financial Corporation as adopted and filed with
the Corporation Division of Michigan Department of
Treasury on October 1, 1971. Filed as Exhibit 3-A
to Registration No. 2-43097 of Chrysler Financial
Corporation, and incorporated herein by reference.
3.2 Amendments to the Restated Articles of
Incorporation of Chrysler Financial Corporation
filed with the Department of Commerce of the State
of Michigan on December 26, 1975, April 23, 1985
and June 21, 1985, respectively. Filed as Exhibit
3-B to the Annual Report of Chrysler Financial
Corporation on Form 10-K for the year ended
December 31, 1985, and incorporated herein by
reference.
3.3 Amendments to the Restated Articles of
Incorporation of Chrysler Financial Corporation
filed with the Department of Commerce of the State
of Michigan on August 12, 1987 and August 14,
1987, respectively. Filed as Exhibit 3 to the
Quarterly Report of Chrysler Financial Corporation
on Form 10-Q for the quarter ended September 30,
1987, and incorporated herein by reference.
3.4 Amendments to the Restated Articles of
Incorporation of Chrysler Financial Corporation
filed with the Department of Commerce of the State
of Michigan on December 11, 1987 and January 25,
1988, respectively. Filed as Exhibit 3-D to the
Annual Report of Chrysler Financial Corporation on
Form 10-K for the year ended December 31, 1989,
and incorporated herein by reference.
3.5 Amendments to the Restated Articles of
Incorporation of Chrysler Financial Corporation
filed with the Department of Commerce of the State
of Michigan on June 13, 1989, June 23, 1989 (two
amendments), September 13, 1989, January 31, 1990
and March 8, 1990, respectively. Filed as Exhibit
3-E to the Annual Report of Chrysler Financial
Corporation on Form 10-K for the year ended
December 31, 1989, and incorporated herein by
reference.
3.6 Amendments to the Restated Articles of
Incorporation of Chrysler Financial Corporation
filed with the Department of Commerce of the State
of Michigan on March 29, 1990 and May 10, 1990.
Filed as Exhibit 3-G to the Quarterly Report of
Chrysler Financial Corporation on Form 10-Q for
the quarter ended March 31, 1990, and incorporated
herein by reference.
3.7 By-Laws of Chrysler Financial Corporation as
amended to August 1, 1990. Filed as Exhibit 3-I
to the Quarterly Report of Chrysler Financial
Corporation on Form 10-Q for the quarter ended
September 30, 1990, and incorporated herein by
reference.
3.8 By-Laws of Chrysler Financial Corporation as
amended to January 1, 1992 and presently in
effect. Filed as Exhibit 3-H to the Annual Report
of Chrysler Financial Corporation on Form 10-K for
the year ended December 31, 1991, and incorporated
herein by reference.
*3.9 Form of Certificate of Trust for Premier Auto
Trusts (included in Exhibit 4.2).
*4.1 Form of Indenture between the Trust and the
Indenture Trustee (including forms of Notes).
*4.2 Form of Trust Agreement among the Registrant, the
Company and the Trustee (including forms of
Certificates). Filed as Exhibit 4.2 to
Registration Statement No. 33-58942 of Chrysler
Financial Corporation, and incorporated herein by
reference.
*4.3 Form of Pooling and Servicing Agreement, including
the Form of Standard Terms and Conditions of
Agreement, among the Registrant, the Servicer and
the Trustee (including forms of Certificates).
*5.1 Opinion of Christopher A. Taravella, Esq. with
respect to legality.
*8.1 Opinion of Brown & Wood LLP with respect to
federal tax matters.
*8.2 Opinion of Christopher A. Taravella, Esq. with
respect to tax matters under Michigan law.
*23.1 Consent of Christopher A. Taravella, Esq.
(included in the opinions filed as Exhibits 5.1
and 8.2).
*23.2 Consent of Brown & Wood LLP (included in its
opinion filed as Exhibit 8.1).
24.1 Power of Attorney.
*25.1 Form of T-1 Statement of Eligibility under the
Trust Indenture Act of 1939 of The First National
Bank of Chicago.
*25.2 Form of T-1 Statement of Eligibility under the
Trust Indenture Act of 1939 of The Bank of New
York.
*99.1 Form of Sale and Servicing Agreement among the
Registrant and the Trust.
99.2 Form of Administration Agreement among the Trust,
the Administrator and the Indenture Trustee.
Filed as Exhibit 28.2 to Registration Statement
No. 33-58942 of Chrysler Financial Corporation,
and incorporated herein by reference.
*99.3 Form of Purchase Agreement between the Company and
the Registrant.
______________________________
*To be filed by amendment.
Exhibit 24.1
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENT, that each of the undersigned directors of
Chrysler Financial Corporation hereby severally constitutes and appoints
CHRISTOPHER TARAVELLA, BYRON C. BABBISH and SILVIA M. KLEER, or any one or
more of them, to be his agents, proxies and attorneys-in-fact, to sign and
execute in his name, place and stead and on his behalf as a director of
Chrysler Financial Corporation, and to file with the Securities and Exchange
Commission, the Registration Statement of Chrysler Financial Corporation on
Form S-3, registering under the Securities Act of 1933, as amended, asset
backed securities having an aggregate initial public offering price of $8
billion and any and all further amendments (including post-effective
amendments) to such Registration Statement, and to file all exhibits thereto
and other documents in connection therewith, granting unto said
attorneys-in-fact and agents and each of them, full power and authority to do
and perform each and every act and thing required to be done that may be
necessary or desirable, hereby approving, ratifying and confirming all that
the aforesaid agents, proxies and attorneys-in-fact do, or that any one of
them does or causes to be done, on his behalf pursuant to this Power of
Attorney.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of
this 11th day of July, 1997.
/s/ T. P. Capo
- -------------------------------------
T. P. Capo
/s/ D. L. Davis
- -------------------------------------
D. L. Davis
/s/ W. J. O'Brien III
- -------------------------------------
W. J. O'Brien III
/s/ T. W. Sidlik
- -------------------------------------
T. W. Sidlik
/s/ G. C. Valade
- -------------------------------------
G. C. Valade
