SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 1998
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OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from to
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Commission file number -
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CARCO AUTO LOAN MASTER TRUST
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(Exact name of registrant as specified in its charter)
State of New York Not Applicable
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
27777 Franklin Road, Southfield, Michigan 48034
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (248) 948-3058
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes __ X __ No _______
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The interim financial data presented herein are unaudited, but in the opinion
of management reflect all adjustments necessary for a fair presentation of
such information (see Note 1). Results for interim periods should not be
considered indicative of results for a full year.
2
<PAGE>
ITEM 1. FINANCIAL STATEMENTS - (CONTINUED)
<TABLE>
<CAPTION>
CARCO AUTO LOAN MASTER TRUST
STATEMENTS OF ASSETS, LIABILITIES AND EQUITY
(in millions of dollars)
June 30,
----------------------
1998 1997
---- ----
(unaudited)
<S> <C> <C>
ASSETS
Cash and Cash Equivalents (Note 2) $ 32.7 $ 481.5
Receivables (Note 4) 7,872.3 7,429.4
-------- --------
TOTAL ASSETS $7,905.0 $7,910.9
======== ========
LIABILITIES AND EQUITY
Amounts Held for Future Distribution (Note 2) $ 32.7 $ 481.5
Asset Backed Certificates (Notes 3 and 4) 7,872.3 7,429.4
-------- --------
TOTAL LIABILITIES AND EQUITY $7,905.0 $7,910.9
======== ========
<FN>
See Notes to Financial Statements.
</TABLE>
3
<PAGE>
ITEM 1. FINANCIAL STATEMENTS - (CONTINUED)
<TABLE>
<CAPTION>
CARCO AUTO LOAN MASTER TRUST
STATEMENT OF CASH RECEIPTS AND DISBURSEMENTS
(in millions of dollars)
Six Months Ended
June 30,
-----------------------
1998 1997
---- ----
(unaudited)
<S> <C> <C>
CASH RECEIPTS
Collections of Interest $ 282.0 $ 371.4
Collections of Principal 1,250.0 335.0
-------- --------
TOTAL CASH RECEIPTS 1,532.0 706.4
-------- --------
CASH DISBURSEMENTS
Distribution of Principal 1,250.0 --
Distributions of Interest 309.0 313.5
Distributions from Subordinated Accounts 10.0 --
Distributions of Servicer Fees 28.3 32.3
-------- --------
TOTAL CASH DISBURSEMENTS 1,597.3 345.8
-------- --------
CHANGE IN CASH AND CASH EQUIVALENTS (65.3) 360.6
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 98.0 120.9
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 32.7 $ 481.5
======== ========
<FN>
See Notes to Financial Statements.
</TABLE>
4
<PAGE>
ITEM 1. FINANCIAL STATEMENTS - (CONTINUED)
CARCO AUTO LOAN MASTER TRUST
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The financial statements of CARCO Auto Loan Master Trust (the "Trust") are
prepared on the basis of cash receipts and disbursements, which is a
comprehensive basis of accounting other than generally accepted accounting
principles. The primary difference from the accrual basis to this basis is
that the financial statements do not record accrued interest receivable on
the Receivables or accrued interest payable on the Certificates from the most
recent Distribution Date to the balance sheet date.
Derivative Financial Instruments
The Trust uses derivative financial instruments to manage its exposure
arising from declines in interest rates. The derivative financial instruments
used have been limited to interest rate swap agreements. The Trust does not
use derivative financial instruments for trading purposes.
Interest differentials resulting from interest rate swap agreements are
recorded on a cash basis as an adjustment to interest collections.
NOTE 2 - CASH AND CASH EQUIVALENTS
Short-term instruments with a maturity of less than 30 days when purchased
are considered to be cash equivalents. The Trust received certain cash
deposits from Chrysler Financial Corporation ("CFC") which are held as
liquidity and credit enhancement reserves and invested in short-term
instruments. Under the Sale and Servicing Agreement, the servicer is required
to convey principal and interest collections to the Trust within two business
days after their receipt. The Trust invests these collections in short-term
instruments pending distribution. If CFC maintains a short-term rating of at
least A-1 by Standard & Poor's and P-1 by Moody's the servicer may convey the
principal and interest collections to the Trust on a monthly basis. In May
1998, CFC met the rating requirements and the servicer began to convey
collections to the Trust on a monthly basis.
NOTE 3 - RELATED PARTIES
U.S. Auto Receivables Company ("USA") is, and CCC was, a wholly-owned
subsidiary of CFC. On December 31, 1995, CCC merged with and into CFC. On May
7, 1998, CFC's parent, Chrysler Corporation ("Chrysler"), Daimler-Benz
Aktiengesellschaft ("Daimler") and DaimlerChrysler Aktiengesellschaft
("DaimlerChrysler") entered into a Business Combination Agreement providing
for (i) the merger of a newly created Delaware corporation with and into
Chrysler ("the Chrysler Merger"); (ii) an offer by DaimlerChrysler to
exchange DaimlerChrysler ordinary shares for Daimler ordinary shares; and
(iii) the merger of Daimler with and into DaimlerChrysler. In the Chrysler
Merger, each share of outstanding Chrysler common stock will be converted
into the right to receive DaimlerChrysler shares. As a result of these
transactions, DaimlerChrysler will be owned by the former shareholders of
Chrysler and Daimler, and Chrysler will be a wholly owned subsidiary of
DaimlerChrysler. Consummation of the transactions contemplated by the
Business Combination Agreement is subject to the approval of Chrysler's and
Daimler's shareholders, regulatory approvals and the satisfaction or waiver
of various other conditions as more fully described in the Agreement.
5
<PAGE>
ITEM 1. FINANCIAL STATEMENTS - (CONTINUED)
CARCO AUTO LOAN MASTER TRUST
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - SALES OF CERTIFICATES
The following Certificates were issued by the Trust evidencing undivided
interests in certain assets of the Trust:
<TABLE>
<CAPTION>
Issue Principal Amount
Date Series Description (in millions)
- ----- ------------------ ----------------
<S> <C> <C>
8/91 7 7/8% Auto Loan Asset Backed Certificates, Series 1991-3 $750.0 (1)
10/91 Floating Rate Auto Loan Asset Backed Certificates, Series 1991-4 $500.0 (1)
12/91 Money Market Auto Loan Asset Backed Certificates, Series A $300.0 (1)
3/92 Money Market Auto Loan Asset Backed Certificates, Series B $350.0 (1)
5/92 Money Market Auto Loan Asset Backed Certificates, Series C $150.0 (1)
7/92 Floating Rate Auto Loan Asset Backed Certificates, Series 1992-1 $400.0 (1)
10/92 Floating Rate Auto Loan Asset Backed Certificates, Series 1992-2 $400.0 (1)
2/93 Floating Rate Auto Loan Asset Backed Certificates, Series 1993-1 $250.0 (1)
11/93 Floating Rate Auto Loan Asset Backed Certificates, Series 1993-2
Class A-1 Money Market Extendible Certificates $288.5
Class A-1 Money Market Extendible Certificates $111.5 (1)
Class A-2 Medium Term Certificates $100.0
10/94 Floating Rate Auto Loan Asset Backed Certificates, Series 1994-1 $500.0
12/94 7 7/8% Auto Loan Asset Backed Certificates, Series 1994-2 $500.0 (1)
12/94 8 1/8% Auto Loan Asset Backed Certificates, Series 1994-3 $350.0 (1)
1/95 Floating Rate Auto Loan Asset Backed Certificates, Series 1995-1 $600.0
3/95 Floating Rate Auto Loan Asset Backed Certificates, Series 1995-2 $600.0
5/95 Floating Rate Auto Loan Asset Backed Certificates, Series 1995-3 $500.0 (1)
5/95 Floating Rate Auto Loan Asset Backed Certificates, Series 1995-4 $500.0 (1)
5/95 Floating Rate Auto Loan Asset Backed Certificates, Series 1995-4A $500.0
12/95 Floating Rate Auto Loan Asset Backed Certificates, Series 1995-5 $250.0
11/96 Floating Rate Auto Loan Asset Backed Certificates, Series 1996-1 $500.0
12/96 Floating Rate Auto Loan Asset Backed Certificates, Series 1996-2 $500.0
8/97 6.689% Auto Loan Asset Backed Certificates, Series 1997-1 $700.0
<FN>
(1) Series matured prior to June 30, 1998. Refer to Note 5 for further
details.
</TABLE>
Receivables in excess of total investor's certificates outstanding at June
30, 1998 and 1997 are represented by Certificates held by USA.
The Trust filed a Prospectus Supplement dated June 16, 1998, which is a
supplement to the Prospectus dated June 16, 1998, where $1,000,000,000 of
Floating Rate Auto Loan Asset Backed Certificates, Series 1998-1, were issued
on July 1, 1998.
6
<PAGE>
ITEM 1. FINANCIAL STATEMENTS - (CONTINUED)
CARCO AUTO LOAN MASTER TRUST
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - PRINCIPAL AND INTEREST PAYMENTS
<TABLE>
<CAPTION>
Expected
Interest Interest Principal Maturity
Series Rate Payments Payments(1) Date(2)
- ------ -------- -------- ----------- --------
<S> <C> <C> <C> <C>
91-3 7 7/8% Semi-Annually 8/1996 Matured
92-2 LIBOR + 0.35% Monthly 10/1997 Matured
93-1 LIBOR + 0.28% Monthly 2/1998 Matured
93-2 A-1 Comm Paper + 0.075% Monthly 11/1997(3) Matured
A-1 Comm Paper + 0.075% Monthly -- 11/1998
A-2 LIBOR + 0.26% Monthly -- 11/1998
94-1 LIBOR + 0.18% Monthly -- 10/1999
94-2 7 7/8% Semi-Annually 8/1997 Matured
94-3 8 1/8% Annually 11/1997 Matured
95-1 LIBOR + 0.16% Monthly -- 7/1998
95-2 LIBOR + 0.13% Monthly -- 3/2000
95-3 Fed Funds + 0.25% Monthly 6/1998 Matured
95-4 Fed Funds + 0.26% Monthly 5/1998 Matured
95-4A Fed Funds + 0.26% Monthly -- 7/1998
95-5 Comm Paper + 0.1875% Monthly -- 2/2000
96-1 LIBOR + 0.135% Monthly -- 11/2003
96-2 LIBOR + 0.05% Monthly -- 12/2001
97-1 6.689% (4) Monthly -- 8/2004
<FN>
(1) The dates listed are the Distribution Dates on which the principal of the
Certificates were paid.
(2) The date listed is the Distribution Date on which the principal of the
Certificates is scheduled to be paid, however, the principal of the
Certificates may be paid earlier under certain circumstances described
in the related prospectus.
(3) In November 1997, $111.5 million of principal on Series 1993-2 was paid
to Certificateholders.
(4) In connection with this Series, the Trust entered into an interest rate
swap agreement with AIG Financial Products Corporation ("AIG"), the
notional amount of which is equal to the principal amount of the related
Certificates. Under this agreement, AIG paid the Trust interest at the
Certificate Rate, and the Trust paid interest to AIG based on a floating
rate of LIBOR plus 0.25%.
</TABLE>
The Tust filed a Prospectus Supplement dated June 16, 1998, which is a
supplement to the Prospectus dated June 16, 1998, where $1,000,000,000 of
Floating Rate Auto Loan Asset Backed Certficates, Series 1998-1 were issued
on July 1, 1998.
7
<PAGE>
ITEM 1. FINANCIAL STATEMENTS - (CONTINUED)
CARCO AUTO LOAN MASTER TRUST
NOTES TO FINANCIAL STATEMENTS
NOTE 6 - FEDERAL INCOME TAXES
The Certificates, in the opinion of outside legal counsel, will not be
characterized as debt of the Trust for federal income tax purposes.
Certificate holders will be subject to income tax on interest earned with
respect to the Certificates.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Certificates were issued by the Trust evidencing undivided
interests in certain assets of the Trust:
<TABLE>
<CAPTION>
Issue Date Series Description
Maturity Date Principal Amount
- ------------- ------------------
<S> <C>
August 1991 7 7/8% Auto Loan Asset Backed Certificates, Series 1991-3
August 1996 $750 million
October 1992 Floating Rate Auto Loan Asset Backed Certificates, Series 1992-2
October 1997 $400 million
February 1993 Floating Rate Auto Loan Asset Backed Certificates, Series 1993-1
February 1998 $250 million
November 1993 Floating Rate Auto Loan Asset Backed Certificates, Series 1993-2
Outstanding $388.5 million
November 1993 Floating Rate Auto Loan Asset Backed Certificates, Series 1993-2
November 1997 $111.5 million
October 1994 Floating Rate Auto Loan Asset Backed Certificates, Series 1994-1
Outstanding $500 million
December 1994 7 7/8% Auto Loan Asset Backed Certificates, Series 1994-2
August 1997 $500 million
December 1994 8 1/8% Auto Loan Asset Backed Certificates, Series 1994-3
November 1997 $350 million
January 1995 Floating Rate Auto Loan Asset Backed Certificates, Series 1995-1
Outstanding $600 million
March 1995 Floating Rate Auto Loan Asset Backed Certificates, Series 1995-2
Outstanding $600 million
May 1995 Floating Rate Auto Loan Asset Backed Certificates, Series 1995-3
June 1998 $500 million
May 1995 Floating Rate Auto Loan Asset Backed Certificates, Series 1995-4
May 1998 $500 million
May 1995 Floating Rate Auto Loan Asset Backed Certificates, Series 1995-4A
Outstanding $500 million
December 1995 Floating Rate Auto Loan Asset Backed Certificates, Series 1995-5
Outstanding $250 million
9
<PAGE>
<CAPTION>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Issue Date Series Description
Maturity Date Principal Amount
- ------------- ------------------
<S> <C>
November 1996 Floating Rate Auto Loan Asset Backed Certificates, Series 1996-1
Outstanding $500 million
December 1996 Floating Rate Auto Loan Asset Backed Certificates, Series 1996-2
Outstanding $500 million
August 1997 6.689% Auto Loan Asset Backed Certificates, Series 1997-1
Outstanding $700 million
</TABLE>
Chrysler Credit Corporation ("CCC") serviced the Receivables for a fee prior
to January 1, 1996. On December 31, 1995 CCC merged with and into Chrysler
Financial Corporation ("CFC"). CFC has serviced the Receivables for a fee
since this merger.
Pursuant to an Agreement of Resignation, Appointment and Acceptance dated as
of August 23, 1996, Manufacturers and Traders Trust Company resigned as the
Trustee of the Trust and The Bank of New York became the Trustee of the
Trust.
The Trust filed a Prospectus Supplement dated June 16, 1998, which is a
supplement to the Prospectus dated June 16, 1998, where $1,000,000,000 of
Floating Rated Asset Backed Certificiated, Series 1998-1 were issued on July
1, 1998.
The Trust has no employees.
10
<PAGE>
PART II. OTHER INFORMATION
ITEMS 1, 2, 3, 4, 5.
There is nothing to report with regard to these items.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed as part of this report:
3-A Certificate of Incorporation of U.S. Auto Receivables Company.
Filed as Exhibit 3.1 to Registration Statement No. 33-41177
and incorporated herein by reference.
3-B By-laws of U.S. Auto Receivables Company. Filed as Exhibit 3-B
to the Trust's Annual Report on Form 10-K for the year ended
December 31, 1991, and incorporated herein by reference.
4-A Pooling and Servicing Agreement, dated as of May 31, 1991,
among Chrysler Auto Receivables Company, as Seller, Chrysler
Credit Corporation, as Servicer, and Manufacturers and Traders
Trust Company, as Trustee. Filed as Exhibit 2 to the Trust's
Registration Statement on Form 8-A dated July 31, 1991, and
incorporated herein by reference.
4-B Series 1991-1 Supplement to the Pooling and Servicing
Agreement, dated as of May 31, 1991, among Chrysler Credit
Corporation, as Servicer, Chrysler Auto Receivables Company,
as Seller, and Manufacturers and Traders Trust Company, as
Trustee. Filed as Exhibit 3 to the Trust's Registration
Statement on Form 8-A dated July 31, 1991, and incorporated
herein by reference.
4-C Series 1991-2 Supplement to the Pooling and Servicing
Agreement, dated as of June 30, 1991, among Chrysler Credit
Corporation, as Servicer, Chrysler Auto Receivables Company,
as Seller, and Manufacturers and Traders Trust Company, as
Trustee. Filed as Exhibit 3 to the Trust's Registration
Statement on Form 8-A dated November 18, 1991, and
incorporated herein by reference.
4-D Series 1991-3 Supplement to the Pooling and Servicing
Agreement, dated as of June 30, 1991, among Chrysler Credit
Corporation, as Servicer, Chrysler Auto Receivables Company,
as Seller, and Manufacturers and Traders Trust Company, as
Trustee. Filed as Exhibit 3 to the Trust's Registration
Statement on Form 8-A dated November 18, 1991, and
incorporated herein by reference.
4-E Series 1991-4 Supplement, dated as of September 30, 1991,
among U.S. Auto Receivables Company, as Seller, Chrysler
Credit Corporation, as Servicer, and Manufacturers and Traders
Trust Company, as Trustee. Filed as Exhibit 3 to the Trust's
Registration Statement on Form 8-A dated December 20, 1991,
and incorporated herein by reference.
4-F Series A Supplement, dated as of November 30, 1991, among U.S.
Auto Receivables Company, as Seller, Chrysler Credit
Corporation, as Servicer, and Manufacturers and Traders Trust
Company, as Trustee. Filed as Exhibit 4-F to the Trust's
Annual Report on Form 10-K for the year ended December 31,
1991, and incorporated herein by reference.
4-G First Amendment, dated as of November 8, 1991, to the Series
1991-2 Supplement, dated as of June 30, 1991, among Chrysler
Credit Corporation, as Servicer, U.S. Auto Receivables
Company, as Seller, and Manufacturers and Traders Trust
Company, as Trustee. Filed as Exhibit 4-G to the Trust's
Annual Report on Form 10-K for the year ended December 31,
1991, and incorporated herein by reference.
11
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (continued)
4-H First Amendment, dated as of November 8, 1991, to the Series
1991-3 Supplement, dated as of June 30, 1991, among Chrysler
Credit Corporation, as Servicer, U.S. Auto Receivables
Company, as Seller, and Manufacturers and Traders Trust
Company, as Trustee. Filed as Exhibit 4-H to the Trust's
Quarterly Report on Form 10-Q for the period ended March 31,
1992, and incorporated herein by reference.
4-I Series B Supplement, dated as of March 1, 1992, among U.S.
Auto Receivables Company, as Seller, Chrysler Credit
Corporation, as Servicer, and Manufacturers and Traders Trust
Company, as Trustee. Filed as Exhibit 4-I to the Trust's
Quarterly Report on Form 10-Q for the period ended March 31,
1992, and incorporated herein by reference.
4-J Series C Supplement, dated as of May 1, 1992, among U.S. Auto
Receivables Company, as Seller, Chrysler Credit Corporation,
as Servicer, and Manufacturers and Traders Trust Company, as
Trustee. Filed as Exhibit 4-J to the Trust's Quarterly Report
on Form 10-Q for the period ended June 30, 1992, and
incorporated herein by reference.
4-K First Amendment dated as of August 6, 1992 to the Pooling and
Servicing Agreement dated as of May 31, 1991, as assigned by
Chrysler Auto Receivables Company to U.S. Auto Receivables
Company ("USA") on August 8, 1991, among USA, as Seller,
Chrysler Credit Corporation, as Servicer and Manufacturers and
Traders Trust Company, as Trustee. Filed as Exhibit 2.2 to the
Trust's Registration Statement on Form 8-A dated September 14,
1992, and incorporated herein by reference.
4-L Series 1992-1 Supplement dated as of July 1, 1992, among U.S.
Auto Receivables Company, as Seller, Chrysler Credit
Corporation, as Servicer, and Manufacturers and Traders Trust
Company, as Trustee. Filed as Exhibit 3 to the Trust's
Registration Statement on Form 8-A dated September 14, 1992,
and incorporated herein by reference.
4-M First Amendment dated as of August 24, 1992 to the Series
1991-1 Supplement dated as of May 31, 1991, among U.S. Auto
Receivables Company ("USA"), as seller (the "Seller"),
Chrysler Credit Corporation, as servicer (the "Servicer") and
Manufacturers and Traders Trust Company, as Trustee (the
"Trustee"), to the Pooling and Servicing Agreement dated as of
May 31, 1991, as assigned by Chrysler Auto Receivables Company
to USA on August 8, 1991, as amended by the First Amendment
dated as of August 6, 1992, among the Seller, the Servicer and
the Trustee. Filed as Exhibit 4-M to the Trust's Quarterly
Report on Form 10-Q for the period ended September 30, 1992,
and incorporated herein by reference.
4-N Second Amendment dated as of August 24, 1992 to the Series
1991-2 Supplement dated as of June 30, 1991, among U.S. Auto
Receivables Company ("USA"), as seller (the "Seller"),
Chrysler Credit Corporation, as servicer (the "Servicer") and
Manufacturers and Traders Trust Company, as Trustee (the
"Trustee"), to the Pooling and Servicing Agreement dated as of
May 31, 1991, as assigned by Chrysler Auto Receivables Company
to USA on August 8, 1991, as amended by the First Amendment
dated as of August 6, 1992, among the Seller, the Servicer and
the Trustee. Filed as Exhibit 4-N to the Trust's Quarterly
Report on Form 10-Q for the period ended September 30, 1992,
and incorporated herein by reference.
12
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (continued)
4-O Second Amendment dated as of August 24, 1992 to the Series
1991-3 Supplement dated as of June 30, 1991, among U.S. Auto
Receivables Company ("USA"), as seller (the "Seller"),
Chrysler Credit Corporation, as servicer (the "Servicer") and
Manufacturers and Traders Trust Company, as Trustee (the
"Trustee"), to the Pooling and Servicing Agreement dated as of
May 31, 1991, as assigned by Chrysler Auto Receivables Company
to USA on August 8, 1991, as amended by the First Amendment
dated as of August 6, 1992, among the Seller, the Servicer and
the Trustee. Filed as Exhibit 4-O to the Trust's Quarterly
Report on Form 10-Q for the period ended September 30, 1992,
and incorporated herein by reference.
4-P First Amendment dated as of August 24, 1992 to the Series
1991-4 Supplement dated as of September 30, 1991, among U.S.
Auto Receivables Company ("USA"), as seller (the "Seller"),
Chrysler Credit Corporation, as servicer (the "Servicer") and
Manufacturers and Traders Trust Company, as Trustee (the
"Trustee"), to the Pooling and Servicing Agreement dated as of
May 31, 1991, as assigned by Chrysler Auto Receivables Company
to USA on August 8, 1991, as amended by the First Amendment
dated as of August 6, 1992, among the Seller, the Servicer and
the Trustee. Filed as Exhibit 4-P to the Trust's Quarterly
Report on Form 10-Q for the period ended September 30, 1992,
and incorporated herein by reference.
4-Q Series 1992-2 Supplement dated as of October 1, 1992, among
U.S. Auto Receivables Company, as Seller, Chrysler Credit
Corporation, as Servicer, and Manufacturers and Traders Trust
Company, as Trustee. Filed as Exhibit 3 to the Trust's
Registration Statement on Form 8-A dated October 30, 1992, and
incorporated herein by reference.
4-R Series 1993-1 Supplement dated as of February 1, 1993, among
U.S. Auto Receivables Company, as Seller, Chrysler Credit
Corporation, as Servicer, and Manufacturers and Traders Trust
Company, as Trustee. Filed as Exhibit 3 to the Trust's
Registration Statement on Form 8-A dated March 15, 1993, and
incorporated herein by reference.
4-S Series 1993-2 Supplement dated as of November 1, 1993, among
U.S. Auto Receivables Company, as Seller, Chrysler Credit
Corporation, as Servicer, and Manufacturers and Traders Trust
Company, as Trustee. Filed as Exhibit 3 to the Trust's
Registration Statement on Form 8-A dated December 6, 1993, and
incorporated herein by reference.
4-T Second Amendment dated as of September 21, 1993, to Pooling
and Servicing Agreement dated as of May 31, 1991, as assigned
by Chrysler Auto Receivables Company to U.S. Auto Receivables
Company ("USA") on August 8, 1991, among USA, as Seller,
Chrysler Credit Corporation, as Servicer, and Manufacturers
and Traders Trust Company, as Trustee. Filed as Exhibit 4.3 to
USA's Registration Statement on Form S-1 (File No. 33-70144)
and incorporated herein by reference.
4-U Series 1994-1 Supplement dated as of September 30, 1994, among
U.S. Auto Receivables Company, as Seller, Chrysler Credit
Corporation, as Servicer, and Manufacturers and Traders Trust
Company, as Trustee. Filed as Exhibit 3 to the Trust's
Registration Statement on Form 8-A dated November 23, 1994,
and incorporated herein by reference.
13
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (continued)
4-V Series 1994-2 Supplement dated as of October 31, 1994, among
U.S. Auto Receivables Company, as Seller, Chrysler Credit
Corporation, as Servicer, and Manufacturers and Traders Trust
Company, as Trustee. Filed as Exhibit 3 to the Trust's
Registration Statement on Form 8-A dated December 22, 1994,
and incorporated herein by reference.
4-W Series 1994-3 Supplement dated as of November 30, 1994, among
U.S. Auto Receivables Company, as Seller, Chrysler Credit
Corporation, as Servicer, and Manufacturers and Traders Trust
Company, as Trustee. Filed as Exhibit 4-W to the Trust's
Annual Report on Form 10-K for the year ended December 31,
1994, and incorporated herein by reference.
4-X Series 1995-1 Supplement dated as of December 31, 1994, among
U.S. Auto Receivables Company, as Seller, Chrysler Credit
Corporation, as Servicer, and Manufacturers and Traders Trust
Company, as Trustee. Filed as Exhibit 3 to the Trust's
Registration Statement on Form 8-A dated January 19, 1995, and
incorporated herein by reference.
4-Y Series 1995-2 Supplement dated as of February 28, 1995, among
U.S. Auto Receivables Company, as Seller, Chrysler Credit
Corporation, as Servicer, and Manufacturers and Traders Trust
Company, as Trustee. Filed as Exhibit 3 to the Trust's
Registration Statement on Form 8-A dated March 27, 1995, and
incorporated herein by reference.
4-Z Series 1995-3 Supplement dated as of April 30, 1995, among
U.S. Auto Receivables Company, as Seller, Chrysler Credit
Corporation, as Servicer, and Manufacturers and Traders Trust
Company, as Trustee. Filed as Exhibit 4-Z to the Trust's
Quarterly Report on Form 10-Q for the period ended June 30,
1995, and incorporated herein by reference.
4-AA Series 1995-4 Supplement dated as of April 30, 1995, among
U.S. Auto Receivables Company, as Seller, Chrysler Credit
Corporation, as Servicer, and Manufacturers and Traders Trust
Company, as Trustee. Filed as Exhibit 4-AA to the Trust's
Quarterly Report on Form 10-Q for the period ended June 30,
1995, and incorporated herein by reference.
4-BB Series 1995-4A Supplement dated as of April 30, 1995, among
U.S. Auto Receivables Company, as Seller, Chrysler Credit
Corporation, as Servicer, and Manufacturers and Traders Trust
Company, as Trustee. Filed as Exhibit 4-BB to the Trust's
Quarterly Report on Form 10-Q for the period ended June 30,
1995, and incorporated herein by reference.
4-CC Series 1995-5 Supplement dated as of November 30, 1995, among
U.S. Auto Receivables Company, as Seller, Chrysler Credit
Corporation, as Servicer, and Manufacturers and Traders Trust
Company, as Trustee, and joined in by Societe Generale,
Chicago Branch, as Agent. Filed as Exhibit 4-CC to the Trust's
Annual Report on Form 10-K for the year ended December 31,
1995, and incorporated herein by reference.
4-DD Agreement of Resignation, Appointment and Acceptance dated as
of August 23, 1996, by and among U.S. Auto Receivables
Company, Chrysler Financial Corporation, Manufacturers and
Traders Trust Company and The Bank of New York. Filed as
Exhibit 4-DD to the Trust's Quarterly Report on Form 10-Q for
the period ended September 30, 1996, and incorporated herein
by reference.
14
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (continued)
4-EE Series 1996-1 Supplement dated as of September 30, 1996, among
U.S. Auto Receivables Company, as Seller, Chrysler Financial
Corporation, as Servicer, and The Bank of New York, as
Trustee. Filed as Exhibit 4-EE to the Trust's Annual Report on
Form 10-K for the year ended December 31, 1996, and
incorporated herein by reference.
4-FF Series 1996-2 Supplement dated as of November 30, 1996, among
U.S. Auto Receivables Company, as Seller, Chrysler Financial
Corporation, as Servicer, and The Bank of New York, as
Trustee. Filed as Exhibit 4-FF to the Trust's Annual Report on
Form 10-K for the year ended December 31, 1996, and
incorporated herein by reference.
4-GG Series 1997-1 Supplement dated as of July 24, 1997, among U.S.
Auto Receivables Company, as Seller, Chrysler Financial
Corporation, as Servicer, and The Bank of New York, as
Trustee. Filed as Exhibit 4-GG to the Trust's Quarterly Report
on Form 10-Q for the period ended September 30, 1997 and
incorporated herein by reference.
4-HH Series 1998-1 Supplement dated as of July 1, 1998, among U.S.
Auto Receivables Company, as Seller, Chrysler Financial
Corporation, as Servicer, and The Bank of New York, as
Trustee.
27 Financial Data Schedule.
(b) No reports on Form 8-K were filed by the Trust during the
quarter for which this report is filed.
15
<PAGE>
CARCO AUTO LOAN MASTER TRUST
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CARCO Auto Loan Master Trust (Registrant)
By: Chrysler Financial Corporation, as Servicer
-------------------------------------------
Date: August 5, 1998 By: /s/ T. F. Gilman
-------------------------------------------
T. F. Gilman, Vice President and Controller
Principal Accounting Officer
16
<PAGE>
CARCO AUTO LOAN MASTER TRUST
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ------- ----------------------
3-A Certificate of Incorporation of U.S. Auto Receivables Company.
Filed as Exhibit 3.1 to Registration Statement No. 33-41177
and incorporated herein by reference.
3-B By-laws of U.S. Auto Receivables Company. Filed as Exhibit 3-B
to the Trust's Annual Report on Form 10-K for the year ended
December 31, 1991, and incorporated herein by reference.
4-A Pooling and Servicing Agreement, dated as of May 31, 1991,
among Chrysler Auto Receivables Company, as Seller, Chrysler
Credit Corporation, as Servicer, and Manufacturers and Traders
Trust Company, as Trustee. Filed as Exhibit 2 to the Trust's
Registration Statement on Form 8-A dated July 31, 1991, and
incorporated herein by reference.
4-B Series 1991-1 Supplement to the Pooling and Servicing
Agreement, dated as of May 31, 1991, among Chrysler Credit
Corporation, as Servicer, Chrysler Auto Receivables Company,
as Seller, and Manufacturers and Traders Trust Company, as
Trustee. Filed as Exhibit 3 to the Trust's Registration
Statement on Form 8-A dated July 31, 1991, and incorporated
herein by reference.
4-C Series 1991-2 Supplement to the Pooling and Servicing
Agreement, dated as of June 30, 1991, among Chrysler Credit
Corporation, as Servicer, Chrysler Auto Receivables Company,
as Seller, and Manufacturers and Traders Trust Company, as
Trustee. Filed as Exhibit 3 to the Trust's Registration
Statement on Form 8-A dated November 18, 1991, and
incorporated herein by reference.
4-D Series 1991-3 Supplement to the Pooling and Servicing
Agreement, dated as of June 30, 1991, among Chrysler Credit
Corporation, as Servicer, Chrysler Auto Receivables Company,
as Seller, and Manufacturers and Traders Trust Company, as
Trustee. Filed as Exhibit 3 to the Trust's Registration
Statement on Form 8-A dated November 18, 1991, and
incorporated herein by reference.
E-1
<PAGE>
CARCO AUTO LOAN MASTER TRUST
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ------- ----------------------
4-E Series 1991-4 Supplement, dated as of September 30, 1991,
among U.S. Auto Receivables Company, as Seller, Chrysler
Credit Corporation as Servicer, and Manufacturers and Traders
Trust Company, as Trustee. Filed as Exhibit 3 to the Trust's
Registration Statement on Form 8-A dated December 20, 1991,
and incorporated herein by reference.
4-F Series A Supplement, dated as of November 30, 1991, among U.S.
Auto Receivables Company, as Seller, Chrysler Credit
Corporation, as Servicer, and Manufacturers and Traders Trust
Company, as Trustee. Filed as Exhibit 4-F to the Trust's
Annual Report on Form 10-K for the year ended December 31,
1991, and incorporated herein by reference.
4-G First Amendment, dated as of November 8, 1991, to the Series
1991-2 Supplement, dated as of June 30, 1991, among Chrysler
Credit Corporation, as Servicer, U.S. Auto Receivables
Company, as Seller, and Manufacturers and Traders Trust
Company, as Trustee. Filed as Exhibit 4-G to the Trust's
Annual Report on Form 10-K for the year ended December 31,
1991, and incorporated herein by reference.
4-H First Amendment, dated as of November 8, 1991, to the Series
1991-3 Supplement, dated as of June 30, 1991, among Chrysler
Credit Corporation, as Servicer, U.S. Auto Receivables
Company, as Seller, and Manufacturers and Traders Trust
Company, as Trustee. Filed as Exhibit 4-H to the Trust's
Quarterly Report on Form 10-Q for the period ended March 31,
1992, and incorporated herein by reference.
4-I Series B Supplement, dated as of March 1, 1992 among U.S. Auto
Receivables Company, as Seller, Chrysler Credit Corporation,
as Servicer, and Manufacturers and Traders Trust Company, as
Trustee. Filed as Exhibit 4-I to the Trust's Quarterly Report
on Form 10-Q for the period ended March 31, 1992, and
incorporated herein by reference.
E-2
<PAGE>
CARCO AUTO LOAN MATER TRUST
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ------- ----------------------
4-J Series C Supplement, dated as of May 1, 1992, among U.S. Auto
Receivables Company, as Seller, Chrysler Credit Corporation,
as Servicer, and Manufacturers and Traders Trust Company, as
Trustee. Filed as Exhibit 4-J to the Trust's Quarterly Report
on Form 10-Q for the period ended June 30, 1992, and
incorporated herein by reference.
4-K First Amendment dated as of August 6, 1992 to the Pooling and
Servicing Agreement dated as of May 31, 1991, as assigned by
Chrysler Auto Receivables Company to U.S. Auto Receivables
Company ("USA") on August 8, 1991, among USA, as Seller,
Chrysler Credit Corporation, as Servicer and Manufacturers and
Traders Trust Company, as Trustee. Filed as Exhibit 2.2 to the
Trust's Registration Statement on Form 8-A dated September 14,
1992, and incorporated herein by reference.
4-L Series 1992-1 Supplement dated as of July 1, 1992, among U.S.
Auto Receivables Company, as Seller, Chrysler Credit
Corporation, as Servicer, and Manufacturers and Traders Trust
Company, as Trustee. Filed as Exhibit 3 to the Trust's
Registration Statement on Form 8-A dated September 14, 1992,
and incorporated herein by reference.
4-M First Amendment dated as of August 24, 1992 to the Series
1991-1 Supplement dated as of May 31, 1991, among U.S. Auto
Receivables Company ("USA"), as seller (the "Seller"),
Chrysler Credit Corporation, as servicer (the "Servicer") and
Manufacturers and Traders Trust Company, as Trustee (the
"Trustee"), to the Pooling and Servicing Agreement dated as of
May 31, 1991, as assigned by Chrysler Auto Receivables Company
to USA on August 8, 1991, as amended by the First Amendment
dated as of August 6, 1992, among the Seller, the Servicer and
the Trustee. Filed as Exhibit 4-M to the Trust's Quarterly
Report on Form 10-Q for the period ended September 30, 1992,
and incorporated herein by reference.
E-3
<PAGE>
CARCO AUTO LOAN MASTER TRUST
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ------- ----------------------
4-N Second Amendment dated as of August 24, 1992 to the Series
1991-2 Supplement dated as of June 30, 1991, among U.S. Auto
Receivables Company ("USA"), as seller (the "Seller"),
Chrysler Credit Corporation, as servicer (the "Servicer") and
Manufacturers and Traders Trust Company, as Trustee (the
"Trustee"), to the Pooling and Servicing Agreement dated as of
May 31, 1991, as assigned by Chrysler Auto Receivables Company
to USA on August 8, 1991, as amended by the First Amendment
dated as of August 6, 1992, among the Seller, the Servicer and
the Trustee. Filed as Exhibit 4-N to the Trust's Quarterly
Report on Form 10-Q for the period ended September 30, 1992,
and incorporated herein by reference.
4-O Second Amendment dated as of August 24, 1992 to the Series
1991-3 Supplement dated as of June 30, 1991, among U.S. Auto
Receivables Company ("USA"), as seller (the "Seller"),
Chrysler Credit Corporation, as servicer (the "Servicer") and
Manufacturers and Traders Trust Company, as Trustee (the
"Trustee"), to the Pooling and Servicing Agreement dated as of
May 31, 1991, as assigned by Chrysler Auto Receivables Company
to USA on August 8, 1991, as amended by the First Amendment
dated as of August 6, 1992, among the Seller, the Servicer and
the Trustee. Filed as Exhibit 4-O to the Trust's Quarterly
Report on Form 10-Q for the period ended September 30, 1992,
and incorporated herein by reference.
4-P First Amendment dated as of August 24, 1992 to the Series
1991-4 Supplement dated as of September 30, 1991, among U.S.
Auto Receivables Company ("USA"), as seller (the "Seller"),
Chrysler Credit Corporation, as servicer (the "Servicer") and
Manufacturers and Traders Trust Company, as Trustee (the
"Trustee"), to the Pooling and Servicing Agreement dated as of
May 31, 1991, as assigned by Chrysler Auto Receivables Company
to USA on August 8, 1991, as amended by the First Amendment
dated as of August 6, 1992, among the Seller, the Servicer and
the Trustee. Filed as Exhibit 4-P to the Trust's Quarterly
Report on Form 10-Q for the period ended September 30, 1992,
and incorporated herein by reference.
E-4
<PAGE>
CARCO AUTO LOAN MASTER TRUST
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ------- ----------------------
4-Q Series 1992-2 Supplement dated as of October 1, 1992, among
U.S. Auto Receivables Company, as Seller, Chrysler Credit
Corporation, as Servicer, and Manufacturers and Traders Trust
Company, as Trustee. Filed as Exhibit 3 to the Trust's
Registration Statement on Form 8-A dated October 30, 1992, and
incorporated herein by reference.
4-R Series 1993-1 Supplement dated as of February 1, 1993, among
U.S. auto Receivables Company, as Seller, Chrysler Credit
Corporation, as Servicer, and Manufacturers and Traders Trust
Company, as Trustee. Filed as Exhibit 3 to the Trust's
Registration Statement on Form 8-A dated March 15, 1993, and
incorporated herein by reference.
4-S Series 1993-2 Supplement dated as of November 1, 1993, among
U.S. Auto Receivables Company, as Seller, Chrysler Credit
Corporation, as Servicer, and Manufacturers and Traders Trust
Company, as Trustee. Filed as Exhibit 3 to the Trust's
Registration Statement on Form 8-A dated December 6, 1993, and
incorporated herein by reference.
4-T Second Amendment dated as of September 21, 1993, to Pooling
and Servicing Agreement dated as of May 31, 1991, as assigned
by Chrysler Auto Receivables Company to U.S. Auto Receivables
Company ("USA") on August 8, 1991, among USA, as Seller,
Chrysler Credit Corporation, as Servicer, and Manufacturers
and Traders Trust Company, as Trustee. Filed as Exhibit 4.3 to
USA's Registration Statement on Form S-1 (File No. 33-70144)
and incorporated herein by reference.
4-U Series 1994-1 Supplement dated as of September 30, 1994, among
U.S. Auto Receivables Company, as Seller, Chrysler Credit
Corporation, as Servicer, and Manufacturers and Traders Trust
Company, as Trustee. Filed as Exhibit 3 to the Trust's
Registration Statement on Form 8-A dated November 23, 1994,
and incorporated herein by reference.
4-V Series 1994-2 Supplement dated as of October 31, 1994, among
U.S. Auto Receivables Company, as Seller, Chrysler Credit
Corporation, as Servicer, and Manufacturers and Traders Trust
Company, as Trustee. Filed as Exhibit 3 to the Trust's
Registration Statement on Form 8-A dated December 22, 1994,
and incorporated herein by reference.
E-5
<PAGE>
CARCO AUTO LOAN MASTER TRUST
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ------- ----------------------
4-W Series 1994-3 Supplement dated as of November 30, 1994, among
U.S. Auto Receivables Company, as Seller, Chrysler Credit
Corporation, as Servicer, and Manufacturers and Traders Trust
Company, as Trustee. Filed as Exhibit 4-W to the Trust's
Annual Report on Form 10-K for the year ended December 31,
1994, and incorporated herein by reference.
4-X Series 1995-1 Supplement dated as of December 31, 1994, among
U.S. Auto Receivables Company, as Seller, Chrysler Credit
Corporation, as Servicer, and Manufacturers and Traders Trust
Company, as Trustee. Filed as Exhibit 3 to the Trust's
Registration Statement on Form 8-A dated January 19, 1995, and
incorporated herein by reference.
4-Y Series 1995-2 Supplement dated as of February 28, 1995, among
U.S. Auto Receivables Company, as Seller, Chrysler Credit
Corporation, as Servicer, and Manufacturers and Traders Trust
Company, as Trustee. Filed as Exhibit 3 to the Trust's
Registration Statement on Form 8-A dated March 27, 1995, and
incorporated herein by reference.
4-Z Series 1995-3 Supplement dated as of April 30, 1995, among
U.S. Auto Receivables Company, as Seller, Chrysler Credit
Corporation, as Servicer, and Manufacturers and Traders Trust
Company, as Trustee. Filed as Exhibit 4-Z to the Trust's
Quarterly Report on Form 10-Q for the period ended June 30,
1995, and incorporated herein by reference.
4-AA Series 1995-4 Supplement dated as of April 30, 1995, among
U.S. Auto Receivables Company, as Seller, Chrysler Credit
Corporation, as Servicer, and Manufacturers and Traders Trust
Company, as Trustee. Filed as Exhibit 4-AA to the Trust's
Quarterly Report on Form 10-Q for the period ended June 30,
1995, and incorporated herein by reference.
4-BB Series 1995-4A Supplement dated as of April 30, 1995, among
U.S. Auto Receivables Company, as Seller, Chrysler Credit
Corporation, as Servicer, and Manufacturers and Traders Trust
Company, as Trustee. Filed as Exhibit 4-BB to the Trust's
Quarterly Report on Form 10-Q for the period ended June 30,
1995, and incorporated herein by reference.
E-6
<PAGE>
CARCO AUTO LOAN MASTER TRUST
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ------- ----------------------
4-CC Series 1995-5 Supplement dated as of November 30, 1995, among
U.S. Auto Receivables Company, as Seller, Chrysler Credit
Corporation, as Servicer, and Manufacturers and Traders Trust
Company, as Trustee, and joined in by Societe Generale,
Chicago Branch, as Agent. Filed as Exhibit 4-CC to the Trust's
Annual Report on Form 10-K for the year ended December 31,
1995, and incorporated herein by reference.
4-DD Agreement of Resignation, Appointment and Acceptance dated as
of August 23, 1996, by and among U.S. Auto Receivables
Company, Chrysler Financial Corporation, Manufacturers and
Traders Trust Company and The Bank of New York. Filed as
Exhibit 4-DD to the Trust's Quarterly Report on form 10-Q for
the period ended September 30, 1996, and incorporated herein
by reference.
4-EE Series 1996-1 Supplement dated as of September 30, 1996, among
U.S. Auto Receivables Company, as Seller, Chrysler Financial
Corporation, as Servicer, and The Bank of New York, as
Trustee. Filed as Exhibit 4-EE to the Trust's Annual Report on
Form 10-K for the year ended December 31, 1996, and
incorporated herein by reference.
4-FF Series 1996-2 Supplement dated as of November 30, 1996, among
U.S. Auto Receivables Company, as Seller, Chrysler Financial
Corporation, as Servicer, and The Bank of New York, as
Trustee. Filed as Exhibit 4-FF to the Trust's Annual Report on
Form 10-K for the year ended December 31, 1996, and
incorporated herein by reference.
4-GG Series 1997-1 Supplement dated as of July 31, 1997, among U.S.
Auto Receivables Company, as Seller, Chrysler Financial
Corporation, as Servicer, and The Bank of New York, as
Trustee. Filed as Exhibit 4-GG to the Trust's Quarterly Report
on Form 10-Q for the period ended September 30, 1997 and
incorporated herein by reference.
4-HH Series 1998-1 Supplement dated as of July 1, 1998, among U.S.
Auto Receivables Company, as Seller, Chrysler Financial
Corporation, as Servicer, and The Bank of New York, as
Trustee.
27 Financial Data Schedule.
E-7
CONFORMED COPY
SERIES 1998-1 SUPPLEMENT dated as of July 1,
1998 (the "Series Supplement"), among U.S. AUTO
RECEIVABLES COMPANY, a Delaware corporation, as Seller,
CHRYSLER FINANCIAL CORPORATION, a Michigan corporation,
as Servicer, and THE BANK OF NEW YORK, a New York
banking corporation, as Trustee.
Pursuant to the Pooling and Servicing Agreement dated as of
May 31, 1991, as assigned by Chrysler Auto Receivables Company ("CARCO") to
the Seller on August 8, 1991 (as assigned, amended and supplemented, the
"Agreement"), among the Seller, Chrysler Credit Corporation, which has been
succeeded by Chrysler Financial Corporation, as Servicer, and Manufacturer
and Traders Trust Company, which has been succeeded by The Bank of New York,
as Trustee, CARCO has created and assigned to the Seller the CARCO Auto Loan
Master Trust (the "Trust"). Section 6.03 of the Agreement provides that the
Seller may from time to time direct the Trustee to issue, on behalf of the
Trust, one or more new Series of Investor Certificates representing
fractional undivided interests in the Trust. The Principal Terms of any new
Series are to be set forth in a Supplement to the Agreement.
Pursuant to this Series Supplement, the Seller and the Trustee
shall create a new Series of Investor Certificates and specify the Principal
Terms thereof.
ARTICLE I
Creation of the Series 1998-1 Certificates
SECTION 1.01. Designation. (a) There is hereby created a
Series of Investor Certificates to be issued pursuant to the Agreement and
this Series Supplement to be known as the "Floating Rate Auto Loan Asset
Backed Certificates, Series 1998-1". Series 1998-1 shall consist of two
classes to be known as the "Class A-1 Certificates, Series 1998-1" and the
"Class A-2 Certificates, Series 1998-1".
(b) In the event that any term or provision contained herein
shall conflict with or be inconsistent with any term or provision contained
in the Agreement, the terms and provisions of this Series Supplement shall
govern.
<PAGE>
2
ARTICLE II
Definitions
SECTION 2.01. Definitions. (a) Whenever used in
this Series Supplement the following words and phrases shall
have the following meanings.
"Adjusted Invested Amount" shall mean, with respect to Series
1998-1 for any Collection Period, an amount equal to the sum of (a) the
Initial Invested Amount of the Series 1998-1 Certificates on the
Determination Date occurring in such Collection Period, minus the excess, if
any, of the aggregate amount of Investor Charge-Offs for all Distribution
Dates preceding such date over the aggregate amount of any reimbursements of
Investor Charge-Offs for all Distribution Dates preceding such date and (b)
the applicable Available Subordinated Amount, if any, on the Determination
Date occurring in such Collection Period (in each case, after giving effect
to the allocations, distributions, withdrawals and deposits to be made on the
Distribution Date following the Determination Date during the Collection
Period in which such date occurs).
"Allocable Defaulted Amount" shall mean, with respect to any
Collection Period, the product of (a) the Series 1998-1 Allocation Percentage
with respect to such Collection Period and (b) the Defaulted Amount with
respect to such Collection Period.
"Allocable Miscellaneous Payments" shall mean, with respect to
any Distribution Date, the product of (a) the Series 1998-1 Allocation
Percentage for the related Collection Period and (b) Miscellaneous Payments
with respect to the related Collection Period.
"Allocable Non-Principal Collections" shall mean, with respect
to any Deposit Date, the product of (a) the Series 1998-1 Allocation
Percentage for the related Collection Period and (b) the aggregate amount of
Collections of Non-Principal Receivables relating to such
Deposit Date.
"Allocable Principal Collections" shall mean, with respect to
any Deposit Date, the product of (a) the Series 1998-1 Allocation Percentage
for the related Collection Period and (b) the aggregate amount of Collections
in respect of Principal Receivables relating to such Deposit
Date.
"Assets Receivables Rate" shall mean, with respect
<PAGE>
3
to any Interest Period, an amount equal to the product of (a) the quotient
obtained by dividing (i) 360 by (ii) the actual number of days elapsed in
such Interest Period and (b) a percentage, expressed as a fraction, (i) the
numerator of which is the sum of (A) Investor Non-Principal Collections for
the Collection Period immediately preceding the last day of such Interest
Period (which, for the purposes of this definition only, shall be determined
based on the interest amounts billed to the Dealers which are due during such
Collection Period) less, unless the Monthly Servicing Fee has been waived by
the Servicer, the Certificateholders Monthly Servicing Fee with respect to
such immediately preceding Collection Period and (B) the Investment Proceeds
to be applied on the Distribution Date related to such Interest Period and
(ii) the denominator of which is the sum of (A) the product of (I) the Series
1998-1 Floating Allocation Percentage, (II) the Series 1998-1 Series
Allocation Percentage and (III) the average Pool Balance (after giving effect
to charge-offs) for such immediately preceding Collection Period, (B) the
principal balance on deposit in the Excess Funding Account on the first day
of such Interest Period (after giving effect to all deposits to and
withdrawals therefrom on such first day) and (C) the principal balance on
deposit in the Principal Funding Account on the first day of such Interest
Period (after giving effect to all deposits to and withdrawals therefrom on
such first day).
"Automatic Additional Accounts" shall have the meaning
specified in Section 9.01(e).
"Automatic Removal Accounts" shall have the meaning specified
in Section 9.01(c).
"Automatic Removal Date" shall have the meaning specified in
Section 9.01(c).
"Available Investor Principal Collections" shall mean, with
respect to any Distribution Date, the sum of (a) an amount equal to Investor
Principal Collections for such Distribution Date, (b) Allocable Miscellaneous
Payments with respect to such Distribution Date, (c) Series 1998-1 Excess
Principal Collections on deposit in the Collection Account for such
Distribution Date and (d) on the Class A-2 Termination Date, any funds in the
Reserve Fund after giving effect to Section 4.08, except for Section 4.08(e).
"Available Seller's Collections" shall mean, with respect to
any Deposit Date, the sum of (a) the Available Seller's Non-Principal
Collections for such Deposit Date and (b) the Available Seller's Principal
Collections for such
<PAGE>
4
Deposit Date; provided, however, that the Available Seller's Collections
shall be zero for any Collection Period with respect to which the Available
Subordinated Amount is zero on the Determination Date immediately following
the end of such Collection Period.
"Available Seller's Non-Principal Collections" shall mean,
with respect to any Deposit Date, an amount equal to the result obtained by
multiplying (a) the excess of (i) the Seller's Percentage for the related
Collection Period over (ii) the Excess Seller's Percentage for such
Collection Period by (b) Allocable Non-Principal Collections for such Deposit
Date.
"Available Seller's Principal Collections" shall mean, with
respect to any Deposit Date, an amount equal to the result obtained by
multiplying (a) the excess of (i) the Seller's Percentage for the related
Collection Period over (ii) the Excess Seller's Percentage for such
Collection Period by (b) Allocable Principal Collections for such Deposit
Date.
"Available Subordinated Amount" for the first Determination
Date shall mean an amount equal to the Required Subordinated Amount. The
Available Subordinated Amount for any subsequent Determination Date shall
mean an amount equal to (a) the lesser of (i) the Available Subordinated
Amount for the preceding Determination Date, minus (A) the Required
Subordination Draw Amount with respect to the preceding Distribution Date to
the extent provided in Section 4.08, minus (B) withdrawals from the Reserve
Fund pursuant to Section 4.08 on the preceding Distribution Date to make
distributions pursuant to Section 4.06(a)(iv) (but excluding any other
withdrawals from the Reserve Fund), plus (C) the portion of Excess Servicing
for such preceding Distribution Date distributed to the Seller pursuant to
Section 4.10(c), plus (D) the excess, if any, of the Required Subordinated
Amount for such Determination Date over the Required Subordinated Amount for
the immediately preceding Distribution Date due to an increase in the
Subordination Factor and (ii) the product of the fractional equivalent of the
Subordinated Percentage and the Invested Amount on such Determination Date,
minus (b) in the case of clause (a)(i), the Incremental Subordinated Amount
for such preceding Determination Date, plus (c) the Incremental Subordinated
Amount for the current Determination Date, plus (d) the Subordinated
Percentage of funds to be withdrawn from the Excess Funding Account on the
succeeding Distribution Date and paid to the Seller or allocated to one or
more Series; provided, however, that the Available Subordinated Amount may be
increased on any
<PAGE>
5
Determination Date by the Seller, in its sole discretion, by notice to the
Trustee on or before such Determination Date, so long as the cumulative
amount of such increases does not exceed the lesser of (v) $11,111,111 or (w)
1.11% of the Invested Amount on such date; provided, however, (x) that, from
and after the commencement of the Class A-1 Accumulation Period until the
Class A-1 Certificates are paid in full, (y) from and after the commencement
of the Class A-2 Accumulation Period until the Class A-2 Certificates are
paid in full and (z) from and after the commencement of any Early
Amortization Period (other than an Early Amortization Period which has ended
as described in clause (c) or clause (d) of the definition thereof in this
Series Supplement) shall have commenced, the Available Subordinated Amount
shall be calculated based on the Invested Amount, as of the close of business
on the day preceding such Class A-1 Accumulation Period, Class A-2
Accumulation Period, or Early Amortization Period, as applicable.
"Calculation Agent" shall mean the Trustee.
"Certificate Principal Percentage" shall mean (a) for any
Collection Period and the Class A-1 Certificates, the percentage equivalent
(which shall never exceed 100%) of a fraction, the numerator of which is the
Class A-1 Invested Amount as of the last day of the Class A-1 Revolving
Period if such last day has occurred or, if such last day has not occurred,
as of the last day of the immediately preceding Collection Period and the
denominator or which is the sum of (i) the Class A-1 Invested Amount as of
the last day of the Class A-1 Revolving Period if such last day has occurred
or, if such last day has not occurred, as of the last day of the immediately
preceding Collection Period and (ii) the Class A-2 Invested Amount as of the
last day of the Class A-2 Revolving Period, if such last day has occurred, of
if such last day has not occurred, as of the last day of the immediately
preceding Collection Period, provided that after the Class A-1 Certificates
have been paid in full the Certificate Principal Percentage with respect
thereto shall be zero; and (b) for any Collection Period and the Class A-2
Certificates in the aggregate, 100% minus the Certificate Principal
Percentage for the Class A-1 Certificates.
"Class A-1 Accumulation Period" shall mean, unless an Early
Amortization Event shall have occurred prior thereto (other than an Early
Amortization Event which has resulted in an Early Amortization Period which
has ended as described in clause (c) or clause (d) of the definition thereof
in this Series Supplement), the period commencing on
<PAGE>
6
the Class A-1 Accumulation Period Commencement Date and ending upon the first
to occur of (a) the commencement of an Early Amortization Period (other than
an Early Amortization Period which has ended as described in clause (c) or
clause (d) of the definition thereof in this Series Supplement) and (b) the
payment in full to Class A-1 Certificateholders of the outstanding principal
amount of the Class A-1 Certificates.
"Class A-2 Accumulation Period" shall mean, unless an Early
Amortization Event shall have occurred prior thereto (other than an Early
Amortization Event which has resulted in an Early Amortization Period which
has ended as described in clause (c) or clause (d) of the definition thereof
in this Series Supplement), the period commencing on the Class A-2
Accumulation Period Commencement Date and ending upon the first to occur of
(a) the commencement of an Early Amortization Period (other than an Early
Amortization Period which has ended as described in clause (c) or clause (d)
of the definition thereof in this Series Supplement) and (b) the payment in
full to Class A-2 Certificateholders of the outstanding principal amount of
the Class A-2 Certificates.
"Class A-1 Accumulation Period Commencement Date" shall mean
the first day of the Collection Period upon which the number of full
Collection Periods remaining until the Class A-1 Expected Payment Date first
equals the Class A-1 Accumulation Period Length; provided, however, that, if
at any time after the December 2000 Distribution Date, any other outstanding
Series (other than any Excluded Series) shall have entered into a
reinvestment period or an early amortization period, the Class A-1
Accumulation Period Commencement Date shall be the earlier of (i) the date
that such outstanding Series shall have entered into its reinvestment period
or early amortization period and (ii) the Class A-1 Accumulation Period
Commencement Date as previously determined. If the Class A-1 Accumulation
Period Length is one month, two months, three months, four months or five
months, the Class A-1 Accumulation Period Commencement Date shall mean the
first day of the May 2001 Collection Period, the April 2001 Collection
Period, the March 2001 Collection Period, the February 2001 Collection Period
or the January 2001 Collection Period, respectively.
"Class A-2 Accumulation Period Commencement Date" shall mean
the first day of the Collection Period upon which the number of full
Collection Periods remaining until the Class A-2 Expected Payment Date first
equals the Class A-2 Accumulation Period Length; provided, however, that, if
at any time after the December 2002 Distribution Date, any
<PAGE>
7
other outstanding Series (other than any Excluded Series) shall have entered
into a reinvestment period or an early amortization period, the Class A-2
Accumulation Period Commencement Date shall be the earlier of (i) the date
that such outstanding Series shall have entered into its reinvestment period
or early amortization period and (ii) the Class A-2 Accumulation Period
Commencement Date as previously determined. If the Class A-2 Accumulation
Period Length is one month, two months, three months, four months or five
months, the Class A-2 Accumulation Period Commencement Date shall mean the
first day of the May 2003 Collection Period, the April 2003 Collection
Period, the March 2003 Collection Period, the February 2003 Collection Period
or the January 2003 Collection Period, respectively.
"Class A-1 Accumulation Period Length" shall mean a period
which is one, two, three, four or five month(s) long and is calculated as of
the December 2000 Distribution Date and each Distribution Date thereafter
that occurs prior to the Class A-1 Accumulation Period Commencement Date, as
the lesser of (i) the number of full Collection Periods between such
Distribution Date and the Class A-1 Expected Payment Date and (ii) the
product, rounded upwards to the nearest integer not greater than five, of (a)
one divided by the lowest Monthly Payment Rate during the last 12 months and
(b) a fraction, the numerator of which is the sum of (i) the Class A-1
Invested Amount as of such Distribution Date (after giving effect to all
changes therein on such date) and (ii) the invested amounts of all other
Series (other than any Excluded Series) currently in their amortization or
accumulation periods or scheduled to be in their amortization or accumulation
periods by the Class A-1 Expected Payment Date as of such Distribution Date
(after giving effect to all changes therein on such date) and the denominator
of which is the sum of the Invested Amount as of such Distribution Date
(after giving effect to all changes therein on such date) and the invested
amounts as of such Distribution Date (after giving effect to all changes
therein on such date) of all other outstanding Series (other than any
Excluded Series) which are scheduled to be outstanding on the Class A-1
Expected Payment Date.
"Class A-2 Accumulation Period Length" shall mean a period
which is one, two, three, four or five month(s) long and is calculated as of
the December 2002 Distribution Date and each Distribution Date thereafter
that occurs prior to the Class A-2 Accumulation Period Commencement Date, as
the lesser of (i) the number of full Collection Periods between such
Distribution Date and the Class A-2 Expected Payment Date and (ii) the
product, rounded upwards to the nearest integer not greater than five, of (a)
one divided by
<PAGE>
8
the lowest Monthly Payment Rate during the last 12 months and (b) a fraction,
the numerator of which is the sum of (i) the Class A-2 Invested Amount as of
such Distribution Date (after giving effect to all changes therein on such
date) and (ii) the invested amounts of all other Series (other than any
Excluded Series) currently in their amortization or accumulation periods or
scheduled to be in their amortization or accumulation periods by the Class
A-2 Expected Payment Date as of such Distribution Date (after giving effect
to all changes therein on such date) and the denominator of which is the sum
of such Class A-2 Invested Amount and the invested amounts as of such
Distribution Date (after giving effect to all changes therein on such date)
of all other outstanding Series (other than any Excluded Series) which are
scheduled to be outstanding on the Class A-2 Expected Payment Date.
"Class A-1 Additional Carry-Over Amount" shall have the
meaning specified in Section 4.02(c).
"Class A-2 Additional Carry-Over Amount" shall have the
meaning specified in Section 4.02(d).
"Class A-1 Additional Interest" shall have the meaning
specified in Section 4.02(a).
"Class A-2 Additional Interest" shall have the meaning
specified in Section 4.02(b).
"Class A-1 Allocation Percentage" shall mean, for any
Collection Period, the percentage obtained by dividing the outstanding
principal amount of the Class A-1 Certificates as of the last day of the
immediately preceding Collection Period (after giving effect to any
reductions thereof to occur on the immediately following distribution Date)
by the aggregate outstanding principal amount of all the Series 1998-1
Certificates as of such last day (after giving effect to any reductions
thereof to occur on the immediately following Distribution Date).
"Class A-2 Allocation Percentage" shall mean, for any
Collection Period, the percentage obtained by subtracting from 100% the Class
A-1 Allocation Percentage.
"Class A-1 Available Investor Principal Collections" shall
mean, for any Distribution Date, the product of (x) the Available Investor
Principal Collections for such Distribution Date and (y) the Certificate
Principal Percentage for the Class A-1 Certificates for the immediately
preceding Collection Period.
<PAGE>
9
"Class A-2 Available Investor Principal Collections" shall
mean, for any Distribution Date, the product of (x) the Available Investor
Principal Collections for such Distribution Date and (y) the Certificate
Principal Percentage for the Class A-2 Certificates for the immediately
preceding Collection Period.
"Class A-1 Carry-over Amount" shall mean, for any Distribution
Date with respect to which the related Class A-1 Certificate Rate is
calculated on the basis of the Assets Receivables Rate, the excess of (a)
Class A-1 Monthly Interest for such Distribution Date determined as if such
Class A-1 Certificate Rate were calculated on the basis of the LIBOR formula
set forth in clause (a) of the definition of Class A-1 Certificate Rate over
(b) the actual Class A-1 Monthly Interest for such Distribution Date.
"Class A-2 Carry-over Amount" shall mean, for any Distribution
Date with respect to which the related Class A-2 Certificate Rate is
calculated on the basis of the Assets Receivables Rate, the excess of (a)
Class A-2 Monthly Interest for such Distribution Date determined as if such
Class A-2 Certificate Rate were calculated on the basis of the LIBOR formula
set forth in clause (a) of the definition of Class A-2 Certificate Rate over
(b) the actual Class A-2 Monthly Interest for such Distribution Date.
"Class A-1 Carry-over Shortfall" shall have the meaning
specified in Section 4.02(c).
"Class A-2 Carry-over Shortfall" shall have the meaning
specified in Section 4.02(d).
"Class A-1 Certificate Rate" shall mean, with respect to any
Interest Period, the lesser of (a) LIBOR for such Interest Period, plus 0.04%
and (b) the Assets Receivables Rate for the immediately preceding Interest
Period.
"Class A-2 Certificate Rate" shall mean, with respect to any
Interest Period, the lesser of (a) LIBOR for such Interest Period, plus 0.08%
and (b) the Assets Receivables Rate for the immediately preceding Interest
Period.
"Class A-1 Certificateholders" shall mean the Holders of Class
A-1 Certificates.
<PAGE>
10
"Class A-2 Certificateholders" shall mean the Holders of Class
A-2 Certificates.
"Class A-1 Certificateholders' Interest" shall mean that
portion of the Certificateholders' Interest evidenced by the Class A-1
Certificates.
"Class A-2 Certificateholders' Interest" shall mean that
portion of the Certificateholders' Interest evidenced by the Class A-2
Certificates.
"Class A-1 Certificates" shall mean any one of the
certificates executed by the Seller and authenticated by the Trustee,
substantially in the form of Exhibit A-1.
"Class A-2 Certificates" shall mean any one of the
certificates executed by the Seller and authenticated by the Trustee,
substantially in the form of Exhibit A-2.
"Class A-1 Controlled Amortization Amount" shall mean an
amount equal to the Class A-1 Invested Amount as of the December 2000
Distribution Date (after giving effect to any changes therein on such date),
divided by the Class A-1 Accumulation Period Length.
"Class A-2 Controlled Amortization Amount" shall mean an
amount equal to the Class A-2 Invested Amount as of the December 2002
Distribution Date (after giving effect to any changes therein on such date),
divided by the Class A-2 Accumulation Period Length.
"Class A-1 Controlled Distribution Amount" shall mean, with
respect to any Distribution Date, the excess, if any, of (a) the sum of (i)
the product of the Class A-1 Controlled Amortization Amount and the number of
Distribution Dates from and including the first Distribution Date with
respect to the Class A-1 Accumulation Period through and including such
Distribution Date (but not in excess of the Class A-1 Accumulation Period
Length) and (ii) the amount on deposit in the Excess Funding Account with
respect to the Class A-1 Certificates as of the December 2000 Distribution
Date (after giving effect to any withdrawals from or deposits to such account
on such date (other than the transfer to the Principal Funding Account of the
amounts on deposit therein on such date)), over (b) the sum of amounts on
deposit in the Excess Funding Account with respect to the Class A-1
Certificates and the Principal Funding Account, in each case before giving
effect to any withdrawals from or deposits to such accounts on such
Distribution Date.
<PAGE>
11
"Class A-2 Controlled Distribution Amount" shall mean, with
respect to any Distribution Date, the excess, if any, of (a) the sum of (i)
the product of the Class A-2 Controlled Amortization Amount and the number of
Distribution Dates from and including the first Distribution Date with
respect to the Class A-2 Accumulation Period through and including such
Distribution Date (but not in excess of the Class A-2 Accumulation Period
Length) and (ii) the amount on deposit in the Excess Funding Account with
respect to the Class A-2 Certificates as of the December 2002 Distribution
Date (after giving effect to any withdrawals from or deposits to such account
on such date (other than the transfer to the Principal Funding Account of the
amounts on deposit therein on such date)), over (b) the sum of amounts on
deposit in the Excess Funding Account with respect to the Class A-2
Certificates and the Principal Funding Account, in each case before giving
effect to any withdrawals from or deposits to such accounts on such
Distribution Date.
"Class A-1 Expected Payment Date" shall mean the June 2001
Distribution Date.
"Class A-2 Expected Payment Date" shall mean the June 2003
Distribution Date.
"Class A-1 Final Payment Date" shall mean the first
Distribution Date on which, after giving effect to all payments to be made on
that Distribution Date, the outstanding principal amount of the Class A-1
Certificates will be paid in full.
"Class A-2 Final Payment Date" shall mean the first
Distribution Date on which, after giving effect to all payments to be made on
that Distribution Date, the outstanding principal amount of the Class A-2
Certificates will be paid in full.
"Class A-1 Initial Invested Amount" means the portion of the
initial principal amount of the Class A-1 Certificates which is invested in
Principal Receivables on the Series Issuance Date, which is $500,000,000,
plus (x) the product of the Class A-1 Allocation Percentage and the amount of
any withdrawals from the Excess Funding Account in connection with the
purchase of an additional interest in Principal Receivables since the Series
Issuance Date, minus (y) the product of the Class A-1 Allocation Percentage
and the amount of any additions to the Excess Funding Account in connection
with a reduction in the Principal Receivables in the Trust or an increase in
the Subordination Factor since the Series Issuance Date and
<PAGE>
12
prior to the December 2000 Distribution Date, minus (z) the amount of any
principal payments (except principal payments made from the Excess Funding
Account) made to the holders of any Class A-1 Certificates that have been
paid in full.
"Class A-2 Initial Invested Amount" means the portion of the
initial principal amount of the Class A-2 Certificates which is invested in
Principal Receivables on the Series Issuance Date, which is $500,000,000,
plus (x) the product of the Class A-2 Allocation Percentage and the amount of
any withdrawals from the Excess Funding Account in connection with the
purchase of an additional interest in Principal Receivables since the Series
Issuance Date, minus (y) the product of the Class A-2 Allocation Percentage
and the amount of any additions to the Excess Funding Account in connection
with a reduction in the Principal Receivables in the Trust or an increase in
the Subordination Factor since the Series Issuance Date.
"Class A-1 Initial Principal Amount" shall mean $500,000,000.
"Class A-2 Initial Principal Amount" shall mean $500,000,000.
"Class A-1 Interest Shortfall" shall have the meaning
specified in Section 4.02(a).
"Class A-2 Interest Shortfall" shall have the meaning
specified in Section 4.02(b).
"Class A-1 Invested Amount" means for any date an amount equal
to the Class A-1 Initial Invested Amount, minus the amount, without
duplication, of principal payments (except principal payments made from the
Excess Funding Account) made to Class A-1 Certificateholders or deposited to
the Principal Funding Account in respect of the Class A-1 Certificates prior
to such date since the Series Issuance Date other than any such payments made
to holders of Class A-1 Certificates that have been paid in full, minus the
excess, if any, of the aggregate amount of Class A-1 Investor Charge-Offs for
all Distribution Dates preceding such date, over the aggregate amount of any
reimbursements of Class A-1 Investor Charge-Offs for all Distribution Dates
preceding such date.
"Class A-2 Invested Amount" means for any date an amount equal
to the Class A-2 Initial Invested Amount, minus the amount, without
duplication, of principal payments (except principal payments made from the
Excess Funding Account) made to Class A-2 Certificateholders or deposited
<PAGE>
13
to the Principal Funding Account in respect of the Class A-2 Certificates
prior to such date since the Series Issuance Date minus the excess, if any,
of aggregate amount of Class A-2 Investor Charge-Offs for all Distribution
Dates preceding such date, over the aggregate amount of any reimbursements of
Class A-2 Investor Charge-Offs for all Distribution Dates preceding such
date.
"Class A-1 Investor Charge-Offs" shall have the meaning
specified in Section 4.09.
"Class A-2 Investor Charge-Offs" shall have the meaning
specified in Section 4.09.
"Class A-1 Monthly Interest" shall have the meaning specified
in Section 4.02.
"Class A-2 Monthly Interest" shall have the meaning specified
in Section 4.02.
"Class A-1 Monthly Principal" means, with respect to any
Distribution Date, the amount of monthly principal distributable with respect
to the Class A-1 Certificates on such Distribution Date, as determined
pursuant to Section 4.03.
"Class A-2 Monthly Principal" means, with respect to any
Distribution Date, the amount of monthly principal distributable with respect
to the Class A-2 Certificates on such Distribution Date, as determined
pursuant to Section 4.03.
"Class A-1 Reassignment Amount" shall mean, with respect to
any Distribution Date, after giving effect to any deposits and distributions
otherwise to be made on such Distribution Date, the sum of (a) the Class A-1
Invested Amount on such Distribution Date, (b) accrued and unpaid interest on
the unpaid balance of the Class A-1 Certificates (calculated on the basis of
the outstanding principal balance of the Class A-1 Certificates at the Class
A-1 Certificate Rate as in effect during the applicable Interest Periods)
through the day preceding such Distribution Date, (c) the amount of Class A-1
Additional Interest, if any, for such Distribution Date and any Class A-1
Additional Interest previously due but not distributed to the Class A-1
Certificateholders on a prior Distribution Date, (d) any Class A-1 Carry-over
Amount for such Distribution Date and any Class A-1 Carry-over Amount
previously due but not distributed to the Class A-1 Certificateholders on a
prior Distribution Date and (e) any Class A-1 Additional Carry-Over Amount for
such Distribution Date and any Class A-1
<PAGE>
14
Additional Carry-Over Amount previously due but not distributed to the Class
A-1 Certificateholders on a prior Distribution Date.
"Class A-2 Reassignment Amount" shall mean, with respect to
any Distribution Date, after giving effect to any deposits and distributions
otherwise to be made on such Distribution Date, the sum of (a) the Class A-2
Invested Amount on such Distribution Date, (b) accrued and unpaid interest on
the unpaid balance of the Class A-2 Certificates (calculated on the basis of
the outstanding principal balance of the Class A-2 Certificates at the Class
A-2 Certificate Rate as in effect during the applicable Interest Periods)
through the day preceding such Distribution Date, (c) the amount of Class A-2
Additional Interest, if any, for such Distribution Date and any Class A-2
Additional Interest previously due but not distributed to the Class A-2
Certificateholders on a prior Distribution Date, (d) any Class A-2 Carry-over
Amount for such Distribution Date and any Class A-2 Carry-over Amount
previously due but not distributed to the Class A-2 Certificateholders on a
prior Distribution Date and (e) any Class A-2 Additional Carry-Over Amount
for such Distribution Date and any Class A-2 Additional Carry-Over Amount
previously due but not distributed to the Class A-2 Certificateholders on a
prior Distribution Date.
"Class A-1 Revolving Period" shall mean the period beginning
at the close of business on the Business Day immediately preceding the Series
Cut-Off Date and terminating on the earlier of (a) the close of business on
the day immediately preceding the Class A-1 Accumulation Period Commencement
Date and (b) the close of business on the day an Early Amortization Period
commences; provided, however, that, if any Early Amortization Period
terminates as described in clause (c) or clause (d) of the definition thereof
in this Series Supplement, the Class A-1 Revolving Period will recommence as
of the close of business on the day such Early Amortization Period
terminates.
"Class A-2 Revolving Period" shall mean the period beginning
at the close of business on the Business Day immediately preceding the Series
Cut-Off Date and terminating on the earlier of (a) the close of business on
the day immediately preceding the Class A-2 Accumulation Period Commencement
Date and (b) the close of business on the day an Early Amortization Period
commences; provided, however, that, if any Early Amortization Period
terminates as described in clause (c) or clause (d) of the definition thereof
in this Series Supplement, the Class A-2 Revolving
<PAGE>
15
Period will recommence as of the close of business on the day such Early
Amortization Period terminates.
"Class A-1 Termination Date" shall mean the June 2003
Distribution Date.
"Class A-2 Termination Date" shall mean the June 2005
Distribution Date.
"Class A-1 Termination Proceeds" shall mean any Termination
Proceeds arising out of a sale of Receivables (or interests therein) pursuant
to Section 9.01 of this Series Supplement with respect to Class A-1.
"Class A-2 Termination Proceeds" shall mean any Termination
Proceeds arising out of a sale of Receivables (or interests therein) pursuant
to Section 9.01 of this Series Supplement with respect to Class A-2.
"Closing Date" shall mean July 1, 1998.
"Deficiency Amount" shall have the meaning specified in
Section 4.05.
"Early Amortization Event" shall mean any Early Amortization
Event specified in Section 9.01 of the Agreement, together with any
additional Early Amortization Event specified in Section 6.01 of this Series
Supplement.
"Early Amortization Period" shall mean a period beginning on
the day on which an Early Amortization Event specified in Section 9.01 of the
Agreement or Section 6.01 of this Series Supplement shall have occurred with
respect to Series 1998-1 and terminating on the earliest of (a) the payment
in full of the outstanding principal balance of the Series 1998-1
Certificates; (b) with respect to the Class A-1 Certificates, the Class A-1
Termination Date and, with respect to the Class A-2 Certificates, the Class
A-2 Termination Date; (c) if such Early Amortization Period has resulted from
the occurrence of an Early Amortization Event described in Section 9.01(a) of
the Agreement, the end of the first Collection Period during which an Early
Amortization Event would no longer be deemed to exist pursuant to such
Section 9.01(a), so long as no other Early Amortization Event (other than an
Early Amortization Event which has resulted in an Early Amortization Period
which has terminated as described in this clause (c) or clause (d) below)
shall have occurred and the scheduled termination of, with respect to the
Class A-1 Certificates, the Class A-1 Revolving Period or, with respect to
the Class A-2 Certificates, the Class A-2 Revolving Period shall not have
<PAGE>
16
occurred; and (d) if such Early Amortization Period has resulted from the
occurrence of an Early Amortization Event described in Sections 9.01(a), (f)
or (g) of the Agreement or Section 6.01, other than Section 6.01(f), (g) or
(h), of this Series Supplement, the end of the first Collection Period after
which (i) the Trustee has received written confirmation from each of Standard
& Poor's, Duff & Phelps, Inc. and Fitch Investors Service, Inc. that
termination of such Early Amortization Period will not result in the
downgrading or withdrawal of such entity's rating of the Series 1998-1
Certificates, and (ii) Series 1998-1 Certificateholders holding Series 1998-1
Certificates evidencing more than 50% of the aggregate unpaid principal
amount of the Series 1998-1 Certificates shall have consented to the
termination of such Early Amortization Period; provided that (X) no other
Early Amortization Event (other than an Early Amortization Event which has
resulted in an Early Amortization Period which has terminated as described in
this clause (d) or clause (c) above) shall have occurred, and (Y) the
scheduled termination of, with respect to the Class A-1 Certificates, the
Class A-1 Revolving Period or, with respect to the Class A-2 Certificates,
the Class A-2 Revolving Period shall not have occurred.
"Eligible Investments" shall mean (a) book-entry securities,
negotiable instruments or securities represented by instruments in bearer or
registered form having original or remaining maturities of 30 days or less
(unless each Rating Agency confirms in writing that a longer maturity will
not result in the downgrade or withdrawal of such Rating Agency's rating of
the Series 1998-1 Certificates), but in no event occurring later than the
Distribution Date next succeeding the Trustee's acquisition thereof (unless
each Rating Agency confirms in writing that a longer maturity will not result
in the downgrade or withdrawal of such Rating Agency's rating of the Series
1998-1 Certificates), which evidence:
(i) direct obligations of, and obligations fully guaranteed as
to timely payment by, the United States of America;
(ii) demand deposits, time deposits or certificates of deposit
of any depository institution or trust company incorporated under the
laws of the United States of America or any state thereof (or any
domestic branch of a foreign bank) and subject to supervision and
examination by Federal or state banking or depository institution
authorities; provided, however, that at the time of the Trust's
investment or contractual commitment to invest therein, the
<PAGE>
17
commercial paper or other short-term unsecured debt obligations
(other than such obligations the rating of which is based on the
credit of a person or entity other than such depository institution
or trust company) thereof shall have a credit rating from each of the
Rating Agencies in the highest investment category granted thereby;
(iii) commercial paper having, at the time of the Trust's
investment or contractual commitment to invest therein, a rating from
each of the Rating Agencies in the highest investment category
granted thereby;
(iv) investments in money market funds having a rating from each
of the Rating Agencies in the highest investment category granted
thereby or otherwise approved in writing thereby;
(v) bankers' acceptances issued by any depository institution
or trust company referred to in clause (ii) above;
(vi) repurchase obligations with respect to any security that is
a direct obligation of, or fully guaranteed by, the United States of
America or any agency or instrumentality thereof the obligations of
which are backed by the full faith and credit of the United States of
America, in either case entered into with a depository institution or
trust company (acting as principal) described in clause (ii); and
(vii) repurchase obligations with respect to any security or
whole loan entered into with (i) a depository institution or trust
company (acting as principal) described in clause (ii) above (except
that the rating referred to in the proviso in such clause (ii) shall
be A-1 or higher in the case of Standard & Poor's) (such depository
institution or trust company being referred to in this definition as
a "Financial Institution"), (ii) a broker/dealer (acting as
principal) registered as a broker or dealer under Section 15 of the
Securities Exchange Act of 1934, as amended (a "Broker/Dealer"), the
unsecured short-term debt obligations of which are rated P-1 by
Moody's and at least A-1 by Standard & Poor's at the time of entering
into such repurchase obligation (a "Rated Broker/Dealer"), (iii) an
unrated Broker/Dealer (an "Unrated Broker/Dealer"), acting as
principal, that is a wholly owned subsidiary of a nonbank holding
company the unsecured short-term debt obligations of which are rated
P-1 by Moody's and at least A-1 by Standard &
<PAGE>
18
Poor's at the time of entering into such repurchase obligation (a
"Rated Holding Company") or (iv) an unrated subsidiary (a "Guaranteed
Counterparty"), acting as principal, that is a wholly owned
subsidiary of a direct or indirect parent Rated Holding Company,
which guarantees such subsidiary's obligations under such repurchase
agreement; provided that the following conditions are satisfied:
(A) the aggregate amount of funds invested in
repurchase obligations of a Financial Institution, a Rated
Broker/Dealer, an Unrated Broker/Dealer or Guaranteed
Counterparty in respect of which the Standard & Poor's
unsecured short-term ratings are A-1 (in the case of an
Unrated Broker/Dealer or Guaranteed Counterparty, such rating
being that of the related Rated Holding Company) shall not
exceed 20% of the sum of the then outstanding principal
balance of Series 1998-1 Certificates (there being no limit on
the amount of funds that may be invested in repurchase
obligations in respect of which such Standard & Poor's rating
is A-1+ (in the case of an Unrated Broker/Dealer or Guaranteed
Counterparty, such rating being that of the related Rated
Holding Company));
(B) in the case of any Series 1998-1 Account (other
than the Collection Account and the Yield Supplement Account),
the rating from Standard & Poor's in respect of the unsecured
short-term debt obligations of the Financial Institution,
Rated Broker/Dealer, Unrated Broker/Dealer or Guaranteed
Counterparty (in the case of an Unrated Broker/Dealer or
Guaranteed Counterparty, such rating being that of the related
Rated Holding Company) shall be A-1+;
(C) the repurchase obligation must mature within 30
days of the date on which the Trustee enters into such
repurchase obligation;
(D) the repurchase obligation shall not be subordinated
to any other obligation of the related Financial Institution,
Rated Broker/Dealer Unrated Broker/Dealer or Guaranteed
Counterparty;
(E) the collateral subject to the repurchase obligation
is held, in the appropriate form, by a custodial bank on
behalf of the Trustee;
<PAGE>
19
(F) the repurchase obligation shall require that the
collateral subject thereto shall be marked to market daily;
(G) in the case of a repurchase obligation of a
Guaranteed Counterparty, the following conditions shall also
be satisfied:
(i) the Trustee shall have received an opinion
of counsel (which may be in-house counsel) to the
effect that the guarantee of the related Rated Holding
Company is a legal, valid and binding agreement of the
Rated Holding Company, enforceable in accordance with
its terms, subject as to enforceability to bankruptcy,
insolvency, reorganization and moratorium or other
similar laws affecting creditors' rights generally and
to general equitable principles;
(ii) the Trustee shall have received (x) an
incumbency certificate for the signer of such
guarantee, certified by an officer of such Rated
Holding Company, and (y) a resolution, certified by an
officer of the Rated Holding Company, of the board of
directors (or applicable committee thereof) of the
Rated Holding Company authorizing the execution,
delivery and performance of such guarantee by the Rated
Holding Company;
(iii) the only conditions to the obligation of such
Rated Holding Company to pay on behalf of the
Guaranteed Counterparty shall be that the Guaranteed
Counterparty shall not have paid under such repurchase
obligation when required (it being understood that no
notice to, demand on or other action in respect of the
Guaranteed Counterparty is necessary) and that the
Trustee shall make a demand on the Rated Holding
Company to make the payment due under such guarantee;
(iv) the guarantee of the Rated Holding Company
shall be irrevocable with respect to such repurchase
obligation and shall not be subordinate to other
obligations of the Rated Holding Company; and
(v) each of Standard & Poor's and Moody's has
confirmed in writing to the
<PAGE>
20
Trustee that it has reviewed the form of the guarantee
of the Rated Holding Company and has determined that
the Trust's investment in such repurchase obligation,
taking into account the issuance of such guarantee,
will not result in the downgrade or withdrawal of the
ratings assigned to the Series 1998-1 Certificates; and
(H) the repurchase obligations shall require that the
repurchase obligation be over-collateralized and shall provide
that, upon any failure to maintain such over-collateralization,
the repurchase obligation shall become due and payable, and
unless the repurchase obligation is satisfied immediately, the
collateral subject to the repurchase agreement shall be
liquidated and the proceeds applied to satisfy the unsatisfied
portion of the repurchase obligation; and
(b) any other investment consisting of a financial asset that by its terms
converts to cash within a finite period of time; provided that each Rating
Agency shall have notified the Seller, the Servicer and the Trustee that the
Trust's investment therein will not result in a reduction or withdrawal of
the rating of any outstanding class or Series with respect to which it is a
Rating Agency.
"Excess Funding Amount" shall have the meaning specified in
Section 4.04(d)(i).
"Excess Reserve Fund Required Amount" shall mean, for any
Distribution Date with respect to an Early Amortization Period, an amount
equal to the greater of (a) 5% of the initial principal balance of the Series
1998-1 Certificates and (b) the excess of (i) the sum of (x) the Available
Subordinated Amount on the preceding Determination Date (after giving effect
to the allocations, distributions, withdrawals and deposits to be made on
such Distribution Date) and (y) an amount equal to (A) the excess of the
Required Participation Percentage over 100%, multiplied by (B) the
outstanding principal balance of the Series 1998-1 Certificates on such
Distribution Date (after giving effect to any changes therein on such
Distribution Date) over (ii) the excess of (x) the Series 1998-1 Allocation
Percentage of the Pool Balance on the last day of the immediately preceding
Collection Period over (y) the Invested Amount on such Distribution Date
(after giving effect to changes therein on such Distribution Date); provided
that the Excess Reserve Fund Required Amount shall not exceed such Available
Subordinated Amount.
<PAGE>
21
"Excess Seller's Percentage" shall mean, with respect to any
Collection Period, a percentage (which percentage shall never be less than 0%
nor more than 100%) equal to (a) 100% minus, when used with respect to
Non-Principal Receivables, Defaulted Receivables and Principal Receivables
during any Nonprincipal Period, the sum of (i) the Floating Allocation
Percentage with respect to such Collection Period and (ii) the percentage
equivalent of a fraction, the numerator of which is the Available
Subordinated Amount as of the Determination Date occurring in such Collection
Period (after giving effect to the allocations, distributions, withdrawals
and deposits to be made on the Distribution Date immediately following such
Determination Date) and the denominator of which is the product of (x) the
Pool Balance as of the last day of such immediately preceding Collection
Period and (y) the Series 1998-1 Allocation Percentage for the Collection
Period in respect of which the Excess Seller's Percentage is being calculated
or (b) 100% minus, when used with respect to Principal Receivables during the
Class A-1 Accumulation Period, the Class A-2 Accumulation Period and an Early
Amortization Period, the sum of (i) the Principal Allocation Percentage with
respect to such Collection Period and (ii) the percentage equivalent of a
fraction, the numerator of which is the Available Subordinated Amount as of
the Determination Date occurring in such Collection Period (after giving
effect to the allocations, distributions, withdrawals and deposits to be made
on the Distribution Date immediately following such Determination Date) and
the denominator of which is the product of (x) the Pool Balance as of the
last day of such immediately preceding Collection Period and (y) the Series
1998-1 Allocation Percentage for the Collection Period in respect of which
the Excess Seller's Percentage is being calculated.
"Excess Servicing" shall mean, with respect to any
Distribution Date, the sum of the amount, if any, specified pursuant to
Section 4.06(a)(vii) with respect to such Distribution Date.
"Floating Allocation Percentage" shall mean, with respect to
any Collection Period, the percentage equivalent (which percentage shall
never exceed 100%) of a fraction, the numerator of which is the Invested
Amount as of the last day of the immediately preceding Collection Period and
the denominator of which is the product of (a) the Pool Balance as of such
last day and (b) the Series 1998-1 Allocation Percentage for the Collection
Period in respect of which the Floating Allocation Percentage is being
calculated; provided, however, that, with respect to the June and July 1998
Collection Periods, the Floating Allocation
<PAGE>
22
Percentage shall mean the percentage equivalent of a fraction, the numerator
of which is the Initial Invested Amount on the Closing Date and the
denominator of which is the product of (x) the Pool Balance on the Series
Cut-Off Date and (y) the Series 1998-1 Allocation Percentage with respect to
the Series Cut-Off Date.
"Incremental Subordinated Amount" shall mean, with respect to
any Determination Date, the result obtained by multiplying (a) a fraction,
the numerator of which is the sum of (i) (A) the Invested Amount on the last
day of the immediately preceding Collection Period or (B) with respect to the
first Determination Date, the Invested Amount on the Closing Date and (ii)
(A) the Available Subordinated Amount for such Determination Date (calculated
without adding the Incremental Subordinated Amount for such Distribution Date
as described in clause (c) of the definition thereof) or (B) with respect to
the first Determination Date, the product of the Invested Amount on the
Closing Date and the Subordinated Percentage and the denominator of which is
the Pool Balance on such last day by (b) the Trust Incremental Subordinated
Amount.
"Initial Distribution Date" shall mean July 15, 1998.
"Initial Invested Amount" means the sum of the Class A-1
Initial Invested Amount and the Class A-2 Initial Invested Amount.
"Initial Reserve Fund Deposit Amount" shall mean $3,500,000.
"Initial Yield Supplement Account Deposit Amount" shall mean
$4,000,000.
"Interest Period" shall mean, with respect to any Distribution
Date, the period from and including the Distribution Date immediately
preceding such Distribution Date to but excluding such Distribution Date (or,
in the case of the Initial Distribution Date, the period from and including
the Closing Date to but excluding the Initial Distribution Date). Interest
will be calculated on the basis of the actual number of days in each Interest
Period divided by 360 days.
"Invested Amount" shall mean for any date, an amount equal to
the sum of the Class A-1 Invested Amount and the Class A-2 Invested Amount,
in each case for such date.
<PAGE>
23
"Investment Proceeds" shall mean, with respect to any
Determination Date, all interest and other investment earnings (net of losses
and investment expenses) on funds on deposit in the Series 1998-1 Accounts,
together with an amount equal to the Series 1998-1 Allocation Percentage of
the interest and other investment earnings on funds held in the Collection
Account credited to the Collection Account pursuant to Section 4.02 of the
Agreement.
"Investor Charge-Offs" shall have the meaning specified in
Section 4.09.
"Investor Default Amount" shall mean, with respect to any
Distribution Date, an amount equal to the product of (a) the Allocable
Defaulted Amount for the related Collection Period and (b) the Floating
Allocation Percentage for the related Collection Period.
"Investor Non-Principal Collections" shall mean, with respect
to any Distribution Date, an amount equal to the product of (a) the Floating
Allocation Percentage for the related Collection Period and (b) Allocable
Non-Principal Collections deposited in the Collection Account for the related
Collection Period.
"Investor Principal Collections" shall mean, with respect to
any Distribution Date, the sum of (a) the product of (i) the Floating
Allocation Percentage, with respect to any Nonprincipal Period, or the
Principal Allocation Percentage, with respect to the Class A-1 Accumulation
Period, the Class A-2 Accumulation Period or an Early Amortization Period for
the related Collection Period (or any partial Collection Period which occurs
as the first Collection Period during an Early Amortization Period) and (ii)
Allocable Principal Collections deposited in the Collection Account for the
related Collection Period (or any partial Collection Period which occurs as
the first Collection Period during an Early Amortization Period) and (b) the
amount, if any, of Collections of Non-Principal Receivables, Excess Servicing
and Available Seller's Collections to be distributed pursuant to Section
4.06(a)(iv), 4.08(b) or 4.10(a) on such Distribution Date.
"LIBOR" shall mean, with respect to any Interest Period, the
offered rate for United States dollar deposits for one month that appears on
Telerate Page 3750 as of 11:00 A.M., London time, on the LIBOR Determination
Date. 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
<PAGE>
24
interbank market selected by the Calculation Agent) to provide the
Calculation Agent with its offered quotation for United States dollar
deposits for one month to prime banks in the London interbank market as of
11:00 A.M., London time, on such date. If at least two reference banks
provide the Calculation Agent with such offered quotations, LIBOR on such
date will be the arithmetic mean, rounded upwards, if necessary, to the
nearest 1/100,000 of 1% (.0000001), with five one-millionths of a percentage
point rounded upward, of all such quotations. If on such date fewer than two
of the reference banks provide the Calculation Agent with such quotations,
LIBOR on such date will be the arithmetic mean, rounded upwards, if
necessary, to the nearest 1/100,000 of 1% (.0000001), with five
one-millionths of a percentage point rounded upward, of the offered per annum
rates that one or more leading banks in The City of New York selected by the
Calculation Agent are quoting as of 11:00 A.M., New York City time, on such
date to leading European banks for United States dollar deposits for one
month; provided, however, that if such banks are not quoting as described
above, LIBOR for such date will be LIBOR applicable to the Interest Period
immediately preceding such Interest Period.
"LIBOR Business Day" shall mean any day that is both a
Business Day and a day on which banking institutions in the City of London,
England are not required or authorized by law to be closed.
"LIBOR Determination Date" shall mean, with respect to any
Interest Period, the second LIBOR Business Day prior to such Interest Period.
"Monthly Payment Rate" shall mean, for any Collection Period,
the percentage derived from dividing the Principal Collections for such
Collection Period by the average daily Pool Balance for such Collection
Period.
"Monthly Servicing Fee" shall have the meaning specified in
Section 3.01.
"Nonprincipal Period" shall mean any period that is not the
Class A-1 Accumulation Period, the Class A-2 Accumulation Period or an Early
Amortization Period.
"Pool Factor" shall mean, with respect to any Determination
Date, a number carried out to 11 decimals representing the ratio of the
Invested Amount as of such Determination Date (determined after taking into
account any increases or decreases in the Invested Amount which will occur on
the following Distribution Date) to the Initial Invested Amount.
<PAGE>
25
"Principal Allocation Percentage" shall mean with respect to
any Collection Period, the percentage equivalent (which shall never exceed
100%) of a fraction, the numerator of which is the sum of (x) the Class A-1
Invested Amount as of the last day of the Class A-1 Revolving Period, if such
last day has occurred or, if such last day has not occurred, as of the last
day of the immediately preceding Collection Period, or, after the Class A-1
Certificates have been paid in full, zero and (y) the Class A-2 Invested
Amount as of the last day of the Class A-2 Revolving Period, if such last day
has occurred or, if such last day has not occurred, as of the last day of the
immediately preceding Collection Period and the denominator of which is the
product of (x) the Pool Balance as of such last day and (y) the Series 1998-1
Allocation Percentage for the Collection Period in respect of which the
Principal Allocation Percentage is being calculated; provided, however, that,
with respect to that portion of any Collection Period that falls after the
date on which any Early Amortization Event occurs (other than an Early
Amortization Event which has resulted in an Early Amortization Period which
has ended as described in clause (c) or clause (d) of the definition thereof
in this Series Supplement), the Principal Allocation Percentage shall be
reset using the Pool Balance as of the close of business on the date on which
such Early Amortization Event shall have occurred and Principal Collections
shall be allocated for such portion of such Collection Period using such
reset Principal Allocation Percentage.
"Reassignment Amount" shall mean the sum of the Class A-1
Reassignment Amount and the Class A-2 Reassignment Amount.
"Required Participation Percentage" shall mean, with respect
to Series 1998-1, 103%; provided, however, that if the aggregate amount of
Principal Receivables due from any Dealer or group of affiliated Dealers at
the close of business on the last day of any Collection Period with respect
to which such determination is being made pursuant to Section 9.04 is greater
than 1.5% of the Pool Balance on such last day, the Required Participation
Percentage shall mean, as of such last day and with respect to such
Collection Period and the immediately following Collection Period only, 104%;
provided further that the Seller may, upon 10 days' prior notice to the
Trustee and each Rating Agency, reduce the Required Participation Percentage
to a percentage which shall not be less than 100%; provided that no Rating
Agency shall have notified the Seller or the Servicer that any such reduction
will result in a reduction
<PAGE>
26
or withdrawal of the rating of any outstanding Series or Class with respect
to which it is a Rating Agency.
"Required Subordinated Amount" shall mean, as of any date of
determination, the sum of (a) the product of (i) the Subordinated Percentage
and (ii) the Invested Amount on such date and (b) the Incremental
Subordinated Amount.
"Required Subordination Draw Amount" shall have the meaning
specified in Section 4.05.
"Reserve Fund" shall have the meaning specified in Section
4.04.
"Reserve Fund Deposit Amount" shall mean, with respect to any
Distribution Date, the amount, if any, by which (a) the Reserve Fund Required
Amount for such Distribution Date exceeds (b) the amount of funds in the
Reserve Fund after giving effect to any withdrawals therefrom on such
Distribution Date.
"Reserve Fund Required Amount" shall mean, with respect to any
Distribution Date, an amount equal to the product of (a) 0.35% and (b) the
outstanding principal balance of the Series 1998-1 Certificates on such
Distribution Date (after giving effect to any changes therein on such
Distribution Date).
"Seller's Collections" shall mean, with respect to any
Collection Period, the sum of (a) the Seller's Percentage of Allocable
Non-Principal Collections for the related Collection Period, plus (b) the
Seller's Percentage of Allocable Principal Collections for the related
Collection Period.
"Seller's Percentage" shall mean 100% minus (a) the Floating
Allocation Percentage, when used with respect to Non-Principal Receivables,
Defaulted Receivables and Principal Receivables during any Nonprincipal
Period, and (b) the Principal Allocation Percentage, when used with respect
to Principal Receivables during the Class A-1 Accumulation Period, the Class
A-2 Accumulation Period and an Early Amortization Period.
"Series 1998-1" shall mean the Series of Investor
Certificates, the terms of which are specified in this Series Supplement.
"Series 1998-1 Accounts" shall have the meaning specified in
Section 4.04(e)(i).
<PAGE>
27
"Series 1998-1 Allocation Percentage" shall mean the Series
Allocation Percentage with respect to Series 1998-1.
"Series 1998-1 Certificateholders" shall mean the Class A-1
Certificateholders and the Class A-2 Certificateholders.
"Series 1998-1 Certificates" shall mean the Class A-1
Certificates and the Class A-2 Certificates.
"Series 1998-1 Excess Principal Collections" shall mean that
portion of Excess Principal Collections allocated to Series 1998-1 pursuant
to Section 4.11.
"Series 1998-1 Principal Shortfall" shall have the meaning
specified in Section 4.11.
"Series Cut-off Date" shall mean May 31, 1998.
"Servicing Fee Rate" shall mean, with respect to Series
1998-1, l% or, for any Distribution Date in respect of which the Monthly
Servicing Fee has been waived, 0%.
"Special Payment Date" shall mean each Distribution Date with
respect to any Early Amortization Period (other than an Early Amortization
Period which has ended as described in clause (c) or clause (d) of the
definition thereof in this Series Supplement).
"Subordinated Percentage" shall mean the percentage equivalent
of a fraction, the numerator of which is the Subordination Factor and the
denominator of which will be the excess of 100% over the Subordination
Factor.
"Subordination Factor" means 10%; provided, however, that the
Subordination Factor will be 11% in the event that the rating of the
long-term unsecured debt of CFC is lowered below BBB- by Standard & Poor's or
withdrawn by Standard & Poor's, unless, in either such case, the Seller
receives written confirmation from Standard & Poor's that the failure to so
increase the Subordination Factor would not result in the downgrade or
withdrawal of Standard & Poor's rating of the Series 1998-1 Certificates.
"Telerate Page 3750" shall mean 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).
<PAGE>
28
"Trust Available Subordinated Amount" means the sum of the
Available Subordinated Amount and the sum of the aggregate available
subordinated amounts for all other outstanding Series.
"Yield Supplement Account" shall have the meaning specified in
Section 4.04.
"Yield Supplement Account Deposit Amount" shall mean, with
respect to any Distribution Date, the amount, if any, by which the Yield
Supplement Account Required Amount exceeds the amount on deposit in the Yield
Supplement Account after giving effect to any deposits thereto and
withdrawals therefrom otherwise to be made on such Distribution Date.
"Yield Supplement Account Required Amount" shall mean, with
respect to any Distribution Date, an amount equal to the product of (a) 0.40%
and (b) the outstanding principal balance of the Series 1998-1 Certificates
on such Distribution Date (after giving effect to any changes therein on such
Distribution Date).
(b) Notwithstanding anything to the contrary in this Series
Supplement or the Agreement, the term "Rating Agency" shall mean, whenever
used in this Series Supplement or the Agreement with respect to Series
1998-1, Moody's and Standard & Poor's. As used in this Series Supplement and
in the Agreement with respect to Series 1998-1, "highest investment category"
shall mean (i) in the case of Standard & Poor's, A-l+ or AAA, as applicable,
and (ii) in the case of Moody's, P-1 or Aaa, as applicable. Any notice
required to be given to a Rating Agency pursuant to the Agreement or this
Series Supplement shall also be given to Fitch Investors Service, Inc.
("Fitch"), and Duff & Phelps, Inc. ("D&P"), although no such entity shall be
deemed to be a Rating Agency for any purposes of the Agreement or this Series
Supplement with respect to Series 1998-1.
(c) All capitalized terms used herein and not otherwise
defined herein have the meanings ascribed to them in the Agreement. The
definitions in Section 2.01 are applicable to the singular as well as to the
plural forms of such terms and to the masculine as well as to the feminine
and neuter genders of such terms.
(d) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Series Supplement shall refer to this Series
Supplement as a whole and not to any particular provision of this Series
Supplement; references to any Article, Section or Exhibit
<PAGE>
29
are references to Articles, Sections and Exhibits in or to this Series
Supplement unless otherwise specified; and the term "including" means
"including without limitation".
ARTICLE III
Servicing Fee
SECTION 3.01. Servicing Compensation. The monthly servicing
fee (the "Monthly Servicing Fee") shall be payable to the Servicer, in
arrears, on each Distribution Date in respect of any Collection Period (or
portion thereof) occurring prior to the earlier of the first Distribution
Date following the Class A-2 Termination Date and the first Distribution Date
on which the Invested Amount is zero, in an amount equal to one-twelfth of
the product of (a) the Servicing Fee Rate, (b) the Pool Balance as of the
last day of the Collection Period second preceding such Distribution Date and
(c) the Series 1998-1 Allocation Percentage with respect to the immediately
preceding Collection Period. The share of the Monthly Servicing Fee allocable
to the Series 1998-1 Certificateholders with respect to any Distribution Date
(the "Certificateholders Monthly Servicing Fee") shall be equal to
one-twelfth of the product of (a) the Servicing Fee Rate and (b) the Invested
Amount as of the last day of the Collection Period second preceding such
Distribution Date. The remainder of the Monthly Servicing Fee shall be paid
by the Seller and in no event shall the Trust, the Trustee or the Series
1998-1 Certificateholders be liable for the share of the Monthly Servicing
Fee to be paid by the Seller; and the remainder of the Servicing Fee shall be
paid by the Seller and the Investor Certificateholders of other Series and
the Series 1998-1 Certificateholders shall in no event be liable for the
share of the Servicing Fee to be paid by the Seller or the Investor
Certificateholders of other Series. The Certificateholders Monthly Servicing
Fee shall be payable to the Servicer solely to the extent amounts are
available for distribution in accordance with the terms of this Series
Supplement.
The Servicer will be permitted, in its sole discretion, to
waive the Monthly Servicing Fee for any Distribution Date by notice to the
Trustee on or before the related Determination Date; provided that the
Servicer believes that sufficient Collections of Non-Principal Receivables
will be available on any future Distribution Date to pay the
Certificateholders Monthly Servicing Fee relating to the waived Monthly
Servicing Fee. If the Servicer so waives the Monthly Servicing Fee for any
<PAGE>
30
Distribution Date, the Monthly Servicing Fee and the Certificateholders
Monthly Servicing Fee for such Distribution Date shall be deemed to be zero
for all purposes of this Series Supplement and the Agreement; provided,
however, that such Certificateholders Monthly Servicing Fee shall be paid on
a future Distribution Date solely to the extent amounts are available
therefor pursuant to Section 4.10(b); provided further that, to the extent
any such waived Certificateholders Monthly Servicing Fee is so paid, the
related portion of the Monthly Servicing Fee to be paid by the Seller shall
be paid by the Seller to the Servicer.
ARTICLE IV
Rights of Series 1998-1 Certificateholders and
Allocation and Application of Collections
SECTION 4.01. Allocations; Payments to Seller; Excess
Principal Collections and Unallocated Principal Collections. (a) Collections
of Non-Principal Receivables and Principal Receivables, Miscellaneous
Payments and Defaulted Amounts allocated to Series 1998-1 pursuant to Article
IV of the Agreement shall be allocated and distributed as set forth in this
Article.
(b) Subject to Section 4.01(d) below, the Servicer shall
instruct the Trustee to withdraw from the Collection Account and pay to the
Seller on the dates set forth below the following amounts:
(i) on each Deposit Date:
(A) an amount equal to the Excess Seller's Percentage
for the related Collection Period of Allocable Non-Principal
Collections deposited in the Collection Account for such
Deposit Date; and
(B) an amount equal to the Excess Seller's Percentage
for the related Collection Period of Allocable Principal
Collections deposited in the Collection Account for such
Deposit Date, if the Seller's Participation Amount (determined
after giving effect to any Principal Receivables transferred
to the Trust on such Deposit Date) exceeds the Trust Available
Subordinated Amount for the immediately preceding
Determination Date (after giving effect to the allocations,
distributions, withdrawals and deposits to be made
<PAGE>
31
on the Distribution Date immediately following
such Determination Date); and
(ii) on each Deposit Date with respect to any Nonprincipal
Period, an amount equal to the Available Seller's Principal
Collections for such Deposit Date, if the Seller's Participation
Amount (determined after giving effect to any Principal Receivables
transferred to the Trust on such Deposit Date) exceeds the Trust
Available Subordinated Amount for the immediately preceding
Determination Date (after giving effect to the allocations,
distributions, withdrawals and deposits to be made on the
Distribution Date immediately following such Determination Date);
provided, however, that Available Seller's Principal Collections
shall be paid to the Seller with respect to any Collection Period
only after an amount equal to the sum of (A) the Deficiency Amount,
if any, relating to the immediately preceding Collection Period and
(B) the excess, if any, of the Reserve Fund Required Amount over the
amount in the Reserve Fund on the immediately preceding Distribution
Date (after giving effect to the allocations of, distributions from,
and deposits in, the Reserve Fund on such Distribution Date) has been
deposited in the Collection Account from such Available Seller's
Principal Collections.
The withdrawals to be made from the Collection Account
pursuant to this Section 4.01(b) do not apply to deposits into the Collection
Account that do not represent Collections, including Miscellaneous Payments,
payment of the purchase price for the Certificateholders' Interest pursuant
to Section 2.03 of the Agreement, payment of the purchase price for the
Series 1998-1 Certificateholders' Interest pursuant to Section 7.01 of this
Series Supplement and proceeds from the sale, disposition or liquidation of
Receivables pursuant to Section 9.02 or 12.02 of the Agreement.
(c) The Servicer shall instruct the Trustee to withdraw from
the Collection Account and deposit into the Reserve Fund on Deposit Dates
with respect to any Nonprincipal Period, Available Seller's Principal
Collections for such Deposit Date, up to the amount of the excess, if any,
determined pursuant to Section 4.01(b)(ii)(B).
(d) Notwithstanding the provisions of Section 4.01(b)(i), on
each Deposit Date during any Collection Period on which any amount is on
deposit in the Excess Funding Account or Principal Funding Account, the
<PAGE>
32
Servicer shall instruct the Trustee to withdraw from the Collection Account
and deposit in the Yield Supplement Account the amounts otherwise
distributable to the Seller pursuant to Section 4.01(b)(i) until the amount
on deposit in the Yield Supplement Account is equal to the Yield Supplement
Account Required Amount.
SECTION 4.02. Monthly Interest. (a) The amount of monthly
interest ("Class A-1 Monthly Interest") with respect to the Class A-1
Certificates on any Distribution Date, commencing with the Initial
Distribution Date, shall be an amount equal to the product of (i) the Class
A-1 Certificate Rate, (ii) the outstanding principal balance of the Class A-1
Certificates as of the close of business on the preceding Distribution Date
(after giving effect to all repayments of principal made to Class A-1
Certificateholders on such preceding Distribution Date, if any) or, in the
case of the Initial Distribution Date, the Closing Date and (iii) a fraction,
the numerator of which is the actual number of days elapsed in such Interest
Period and the denominator of which is 360.
On the Determination Date preceding each Distribution Date,
commencing with the Initial Distribution Date, the Servicer shall determine
the excess, if any (the "Class A-1 Interest Shortfall"), of (x) the aggregate
Class A-1 Monthly Interest for the Interest Period applicable to such
Distribution Date over (y) the amount which will be available to be
distributed to Class A-1 Certificateholders on such Distribution Date in
respect thereof pursuant to this Series Supplement. If the Class A-1 Interest
Shortfall with respect to any Distribution Date is greater than zero, an
additional amount ("Additional Class A-1 Interest") equal to the product of
(i) the Class A-1 Certificate Rate (calculated pursuant to clause (a) of the
definition thereof) for the Interest Period commencing on the related
Distribution Date (or, for subsequent Interest Periods, the Class A-1
Certificate Rate (calculated pursuant to clause (a) of the definition
thereof) for such subsequent Interest Periods), (ii) such Class A-1 Interest
Shortfall (or the portion thereof which has not been paid to Class A-1
Certificateholders) and (iii) a fraction, the numerator of which is the
actual number of days elapsed in such Interest Period (or in a subsequent
Interest Period) and the denominator of which is 360, shall be payable as
provided herein with respect to the Class A-1 Certificates on each
Distribution Date following such Distribution Date to and including the
Distribution Date on which such Class A-1 Interest Shortfall is paid to Class
A-1 Certificateholders. Notwithstanding anything to the contrary herein,
Additional Class A-1 Interest shall be payable or distributed to
<PAGE>
33
Certificateholders only to the extent permitted by applicable law.
(b) The amount of monthly interest ("Class A-2 Monthly
Interest") with respect to the Class A-2 Certificates on any Distribution
Date, commencing with the Initial Distribution Date, shall be an amount equal
to the product of (i) the Class A-2 Certificate Rate, (ii) the outstanding
principal balance of the Class A-2 Certificates as of the close of business
on the preceding Distribution Date (after giving effect to all repayments of
principal made to Class A-2 Certificateholders on such preceding Distribution
Date, if any) or, in the case of the Initial Distribution Date, the Closing
Date and (iii) a fraction, the numerator of which is the actual number of
days elapsed in such Interest Period and the denominator of which is 360.
On the Determination Date preceding each Distribution Date,
commencing with the Initial Distribution Date, the Servicer shall determine
the excess, if any (the "Class A-2 Interest Shortfall"), of (x) the aggregate
Class A-2 Monthly Interest for the Interest Period applicable to such
Distribution Date over (y) the amount which will be available to be
distributed to Class A-2 Certificateholders on such Distribution Date in
respect thereof pursuant to this Series Supplement. If the Class A-2
Interest Shortfall with respect to any Distribution Date is greater than
zero, an additional amount ("Class A-2 Additional Interest") equal to the
product of (i) the Class A-1 Certificate Rate (calculated pursuant to clause
(a) of the definition thereof) for the Interest Period commencing on the
related Distribution Date (or, for subsequent Interest Periods, the Class A-2
Certificate Rate (calculated pursuant to clause (a) of the definition
thereof) for such subsequent Interest Periods), (ii) such Class A-2 Interest
Shortfall (or the portion thereof which has not been paid to Class A-2
Certificateholders) and (iii) a fraction, the numerator of which is the
actual number of days elapsed in such Interest Period (or in a subsequent
Interest Period) and the denominator of which is 360, shall be payable as
provided herein with respect to the Class A-2 Certificates on each
Distribution Date following such Distribution Date to and including the
Distribution Date on which such Class A-2 Interest Shortfall is paid to Class
A-2 Certificateholders. Notwithstanding anything to the contrary herein,
Additional Class A-2 Interest shall be payable or distributed to Class A-2
Certificateholders only to the extent permitted by applicable law.
(c) On the Determination Date preceding each Distribution
Date, commencing with the Initial Distribution
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34
Date, the Servicer shall determine the excess, if any (the "Class A-1
Carry-over Shortfall"), of (x) the Class A-1 Carry-over Amount, if any, for
such Distribution Date over (y) the amount which will be available to be
distributed to Class A-1 Certificateholders in respect thereof on such
Distribution Date pursuant to this Series Supplement. If the Class A-1
Carry-over Shortfall with respect to any Distribution Date is greater than
zero, an additional amount ("Class A-1 Additional Carry-over Amount") equal
to the product of (i) the Class A-1 Certificate Rate (calculated pursuant to
clause (a) of the definition thereof) for the Interest Period commencing on
the related Distribution Date (or, for subsequent Interest Periods, the Class
A-1 Certificate Rate (calculated pursuant to clause (a) of the definition
thereof) for such subsequent Interest Periods), (ii) such Class A-1
Carry-over Shortfall (or the portion thereof which has not been paid to Class
A-1 Certificateholders) and (iii) a fraction, the numerator of which is the
actual number of days elapsed in such Interest Period (or in a subsequent
Interest Period) and the denominator of which is 360, shall be payable as
provided herein with respect to the Class A-1 Certificates on each
Distribution Date following such Distribution Date to the Distribution Date
on which such Class A-1 Carry-over Shortfall is paid to Class A-1
Certificateholders. Notwithstanding anything to the contrary herein, any
Class A-1 Additional Carry-Over Amount shall be payable or distributed to
Class A-1 Certificateholders only to the extent permitted by applicable law.
(d) On the Determination Date preceding each Distribution
Date, commencing with the Initial Distribution Date, the Servicer shall
determine the excess, if any (the "Class A-2 Carry-over Shortfall"), of (x)
the Class A-2 Carry-over Amount, if any, for such Distribution Date over (y)
the amount which will be available to be distributed to Class A-2
Certificateholders in respect thereof on such Distribution Date pursuant to
this Series Supplement. If the Class A-2 Carry-over Shortfall with respect to
any Distribution Date is greater than zero, an additional amount ("Class A-2
Additional Carry-over Amount") equal to the product of (i) the Class A-2
Certificate Rate (calculated pursuant to clause (a) of the definition
thereof) for the Interest Period commencing on the related Distribution Date
(or, for subsequent Interest Periods, the Class A-2 Certificate Rate
(calculated pursuant to clause (a) of the definition thereof) for such
subsequent Interest Periods), (ii) such Class A-2 Carry-over Shortfall (or
the portion thereof which has not been paid to Class A-2 Certificateholders)
and (iii) a fraction, the numerator of which is the actual number of days
elapsed in such Interest
<PAGE>
35
Period (or in a subsequent Interest Period) and the denominator of which is
360, shall be payable as provided herein with respect to the Class A-2
Certificates on each Distribution Date following such Distribution Date to
the Distribution Date on which such Class A-2 Carry-over Shortfall is paid to
Class A-2 Certificateholders. Notwithstanding anything to the contrary
herein, any Class A-2 Additional Carry-Over Amount shall be payable or
distributed to Class A-2 Certificateholders only to the extent permitted by
applicable law.
SECTION 4.03. Determination of Monthly Principal. (a) The
amount of Class A-1 Monthly Principal distributable with respect to the Class
A-1 Certificates on each Distribution Date with respect to the Class A-1
Accumulation Period shall be equal to the Class A-1 Available Investor
Principal Collections with respect to such Distribution Date; provided,
however, that, for each such Distribution Date, Class A-1 Monthly Principal
shall not exceed the Class A-1 Controlled Distribution Amount for such
Distribution Date; and provided further that Class A-1 Monthly Principal
shall not exceed the Class A-1 Invested Amount.
(b) The amount of Class A-2 Monthly Principal distributable
with respect to the Class A-2 Certificates on each Distribution Date with
respect to the Class A-2 Accumulation Period shall be equal to the Class A-2
Available Investor Principal Collections with respect to such Distribution
Date; provided, however, that, for each such Distribution Date, Class A-2
Monthly Principal shall not exceed the Class A-2 Controlled Distribution
Amount for such Distribution Date; and provided further that Class A-2
Monthly Principal shall not exceed the Class A-2 Invested Amount.
(c) The amount of Class A-1 Monthly Principal distributable on
each Distribution Date with respect to an Early Amortization Period shall be
equal to the Class A-1 Invested Amount or, if less, the amount distributable
in respect of the Class A-1 Certificates on such Distribution Date pursuant
to Section 4.06(e).
(d) The amount of Class A-2 Monthly Principal distributable on
each Distribution Date with respect to an Early Amortization Period shall be
equal to the Class A-2 Invested Amount or, if less, the amount distributable
in respect of the Class A-2 Certificates on such Distribution Date pursuant
to Section 4.06(e).
SECTION 4.04. Establishment of Reserve Fund and Funding
Accounts. (a) (i) The Servicer, for the benefit
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36
of the Series 1998-1 Certificateholders, shall cause to be established and
maintained in the name of the Trustee, on behalf of the Trust, an Eligible
Deposit Account (the "Reserve Fund") which shall be identified as the
"Reserve Fund for the CARCO Auto Loan Master Trust, Series 1998-1" and shall
bear a designation clearly indicating that the funds deposited therein are
held for the benefit of the Series 1998-1 Certificateholders. On the Closing
Date, the Seller shall cause to be deposited in the Reserve Fund the Initial
Reserve Fund Deposit Amount.
(ii) At the direction of the Servicer, funds on deposit in the
Reserve Fund shall be invested by the Trustee in Eligible Investments
selected by the Servicer that will mature so that such funds will be
available at the close of business on or before the Business Day next
preceding the following Distribution Date. All Eligible Investments shall be
held by the Trustee for the benefit of the Series 1998-1 Certificateholders.
On each Distribution Date, all interest and other investment earnings (net of
losses and investment expenses) on funds on deposit in the Reserve Fund
received prior to such Distribution Date shall be applied as set forth in
Section 4.06(a) of this Series Supplement. Funds deposited in the Reserve
Fund on a Business Day (which immediately precedes a Distribution Date) upon
the maturity of any Eligible Investments are not required to be invested
overnight.
(b) (i) The Servicer, for the benefit of the Series 1998-1
Certificateholders, shall establish and maintain in the name of the Trustee,
on behalf of the Trust, an Eligible Deposit Account (the "Yield Supplement
Account"), which shall be identified as the "Yield Supplement Account for the
CARCO Auto Loan Master Trust Series 1998-1" and shall bear a designation
clearly indicating that the funds deposited therein are held for the benefit
of the Series 1998-1 Certificateholders. On the Closing Date, the Seller
shall cause to be deposited into the Yield Supplement Account the Initial
Yield Supplement Account Deposit Amount.
(ii) At the direction of the Servicer, funds on deposit in the
Yield Supplement Account shall be invested by the Trustee in investments
consisting of financial assets selected by the Servicer; provided, however,
that such assets must, by their terms, convert to cash within a finite period
of time. All such financial assets shall be held by the Trustee for the
benefit of the Series 1998-1 Certificateholders. On each Distribution Date,
all interest and other investment earnings (net of losses and investment
expenses) on funds on deposit in the Yield Supplement
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37
Account shall be applied as set forth in Section 4.06(a) of this Series
Supplement.
(iii) If on any Distribution Date there is a Class A-1 Carry-over
Amount or a Class A-2 Carry-over Amount, the Servicer shall cause the Trustee
to apply the amounts on deposit in the Yield Supplement Account up to the
amount of such Carry-over Amount to satisfy such Carry-over Amount. In the
event of any insufficiency of funds on deposit in the Yield Supplement
Account to satisfy all such Carry-over Amounts, such funds shall be applied
to the Class A-1 Carry-over Amount and the Class A-2 Carry-over Amount pro
rata based on the Class A-1 Allocation Percentage and the Class A-2
Allocation Percentage, respectively, for the related Collection Period. The
Trustee shall be authorized to dispose of investments in the Yield Supplement
Account in order to obtain funds with which to satisfy any Class A-1
Carry-over Amount or Class A-2 Carry-over Amount.
(iv) If on any Distribution Date the amount on deposit in the
Yield Supplement Account (after giving effect to any withdrawals to be made
from the Yield Supplement Account on such Distribution Date) is greater than
the Yield Supplement Account Required Amount, the Servicer shall cause the
Trustee to pay to the Seller on such Distribution Date the excess of such
amount on deposit in the Yield Supplement Account over the Yield Supplement
Account Required Amount.
(c) (i) The Servicer, for the benefit of the Series 1998-1
Certificateholders, shall establish and maintain in the name of the Trustee,
on behalf of the Trust, an Eligible Deposit Account (the "Principal Funding
Account"), which shall be identified as the "Principal Funding Account for
CARCO Auto Loan Master Trust, Series 1998-1" and shall bear a designation
clearly indicating that the funds deposited therein are held for the benefit
of the Series 1998-1 Certificateholders.
(ii) At the direction of the Servicer, funds on deposit in the
Principal Funding Account shall be invested by the Trustee in Eligible
Investments selected by the Servicer. All such Eligible Investments shall be
held by the Trustee for the benefit of the Series 1998-1 Certificateholders.
On each Distribution Date all interest and other investment earnings (net of
losses and investment expenses) on funds on deposit therein shall be applied
as set forth in Section 4.06(a) of this Series Supplement. Funds on deposit
in the Principal Funding Account shall be invested at the direction of the
Servicer in Eligible Investments that will mature so that such funds will be
available on or before the close of business on the Business
<PAGE>
38
Day next preceding the Expected Payment Date. Funds deposited in the
Principal Funding Account on a Business Day (which immediately precedes
either the Class A-1 Expected Payment Date or the Class A-2 Expected Payment
Date) upon the maturity of any Eligible Investments are not required to be
invested overnight.
(d) (i) The Servicer, for the benefit of the Series 1998-1
Certificateholders, shall establish and maintain in the name of the Trustee,
on behalf of the Trust, an Eligible Deposit Account (the "Excess Funding
Account"), which shall be identified as the "Excess Funding Account for CARCO
Auto Loan Master Trust, Series 1998-1" and shall bear a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Series 1996-2 Certificateholders. No deposit will be made to the Excess
Funding Account on the Closing Date.
(ii) At the direction of the Servicer, funds on deposit in the
Excess Funding Account shall be invested by the Trustee in Eligible
Investments selected by the Servicer. All such Eligible Investments shall be
held by the Trustee for the benefit of the Series 1998-1 Certificateholders.
On each Distribution Date, all interest and other investment earnings (net of
losses and investment expenses) on funds on deposit in the Excess Funding
Account shall be applied as set forth in Section 4.06(a) of this Series
Supplement. Funds deposited in the Excess Funding Account on any Distribution
Date shall be invested at the direction of the Servicer in Eligible
Investments that will mature so that such funds will be available on or
before the close of business on the Business Day next preceding the following
Distribution Date. Funds deposited in the Excess Funding Account on a
Business Day (which immediately precedes a Distribution Date) upon the
maturity of any Eligible Investments are not required to be invested over-
night.
(e) (i) The Trustee shall possess all right, title and
interest in and to all funds on deposit from time to time in, and all
Eligible Investments and other financial assets credited to, the Reserve
Fund, the Yield Supplement Account, the Principal Funding Account and the
Excess Funding Account (collectively the "Series 1998-1 Accounts") and in all
proceeds thereof. The Series 1998-1 Accounts shall be under the sole dominion
and control of the Trustee for the benefit of the Series 1998-1
Certificateholders. If, at any time, any of the Series 1998-1 Accounts ceases
to be an Eligible Deposit Account, the Trustee (or the Servicer on its
behalf) shall within 10 Business Days (or such longer period, not to exceed
30 calendar days, as to which each
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39
Rating Agency may consent) establish a new Series 1998-1 Account meeting the
conditions specified in paragraph (a)(i), (b)(i), (c)(i) or (d)(i) above, as
applicable, as an Eligible Deposit Account and shall transfer any cash and/or
any investments to such new Series 1998-1 Account. Neither the Seller, the
Servicer nor any person or entity claiming by, through or under the Seller,
the Servicer or any such person or entity shall have any right, title or
interest in, or any right to withdraw any amount from, any Series 1998-1
Account, except as expressly provided herein. Schedule 1, which is hereby
incorporated into and made part of this Series Supplement, identifies each
Series 1998-1 Account by setting forth the account number of each such
account, the account designation of each such account and the name of the
institution with which such account has been established. If a substitute
Series 1998-1 Account is established pursuant to this Section, the Servicer
shall provide to the Trustee an amended Schedule 1, setting forth the
relevant information for such substitute Series 1998-1 Account.
(ii) Pursuant to the authority granted to the Servicer in
Section 3.01(a) of the Agreement, the Servicer shall have the power,
revocable by the Trustee, to make withdrawals and payments or to instruct the
Trustee to make withdrawals and payments from the Series 1998-1 Accounts for
the purposes of carrying out the Servicer's or Trustee's duties hereunder.
SECTION 4.05. Deficiency Amount. With respect to each
Distribution Date, commencing with the Initial Distribution Date, on the
related Determination Date, the Servicer shall determine the amount (the
"Deficiency Amount"), if any, by which (a) the sum of (i) Class A-1 Monthly
Interest and Class A-2 Monthly Interest for such Distribution Date, (ii) any
Class A-1 Monthly Interest and Class A-2 Monthly Interest previously due but
not distributed to the Series 1998-1 Certificateholders on a prior
Distribution Date, (iii) Class A-1 Additional Interest and Class A-2
Additional Interest, if any, for such Distribution Date and any Class A-1
Additional Interest and Class A-2 Additional Interest previously due but not
distributed to the Series 1998-1 Certificateholders on a prior Distribution
Date; (iv) the Certificateholders Monthly Servicing Fee for such Distribution
Date, (v) the Investor Default Amount, if any, for such Distribution Date;
(vi) the Series 1998-1 Allocation Percentage of the amount of any Adjustment
Payment required to be deposited in the Collection Account pursuant to
Section 3.09(a) of the Agreement with respect to the related Collection
Period that has not been so deposited as of such Determination Date; (vii) if
such Distribution Date constitutes the Class A-1 Final Payment Date the sum
of
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40
(A) the amount of any Class A-1 Carry-over Amount for such Distribution Date,
(B) the amount of any Class A-1 Carry-over Amount previously due but not
previously distributed to Class A-1 Certificateholders on a prior
Distribution Date, (C) the amount of any Class A-1 Additional Carry-over
Amount for such Distribution Date and (D) the amount of any Class A-1
Additional Carry-over Amount previously due but not previously paid to Class
A-1 Certificateholders on a prior Distribution Date, in each case that will
not be satisfied on such date by application, pursuant to Section
4.04(b)(iii), of amounts on deposit in the Yield Supplement Account has not
been so deposited as of such Determination Date; and (viii) if such
Distribution Date constitutes the Class A-2 Final Payment Date the sum of (A)
the amount of any Class A-2 Carry-over Amount for such Distribution Date, (B)
the amount of any Class A-2 Carry-over Amount previously due but not
previously distributed to Class A-2 Certificateholders on a prior
Distribution Date, (C) the amount of any Class A-2 Additional Carry-over
Amount for such Distribution Date and (D) the amount of any Class A-2
Additional Carry-over Amount previously due but not previously paid to Class
A-2 Certificateholders on a prior Distribution Date, in each case that will
not be satisfied on such date by application, pursuant to Section
4.04(b)(iii), of amounts on deposit in the Yield Supplement Account, exceeds
(b) the sum of (i) Investor Non-Principal Collections for such Distribution
Date plus any Investment Proceeds with respect to such Distribution Date and
(ii) the amount of funds in the Reserve Fund which are available pursuant to
Section 4.08(a) and Section 4.08(d) or 4.08(e), as applicable, to cover any
portion of the Deficiency Amount. The lesser of the Deficiency Amount and the
Available Subordinated Amount shall be the "Required Subordination Draw
Amount".
SECTION 4.06. Application of Investor Non-Principal
Collections, Investment Proceeds and Available Investor Principal
Collections. The Servicer shall cause the Trustee to apply, on each
Distribution Date, commencing with the Initial Distribution Date, Investor
Non-Principal Collections, Investment Proceeds and Available Investor
Principal Collections to make the following distributions:
(a) On each Distribution Date, commencing with the Initial
Distribution Date, an amount equal to the sum of Investor Non-Principal
Collections and any Investment Proceeds with respect to such Distribution
Date will be distributed in the following priority:
(i) first, an amount equal to Class A-1 Monthly
Interest for such Distribution Date, plus the amount of
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41
any Class A-1 Monthly Interest previously due but not distributed to
the Class A-1 Certificateholders on a prior Distribution Date, plus
the amount of any Class A-1 Additional Interest for such Distribution
Date and any Class A-1 Additional Interest previously due but not
distributed to the Class A-1 Certificateholders on a prior
Distribution Date shall be distributed to the Class A-1
Certificateholders; and an amount equal to Class A-2 Monthly Interest
for such Distribution Date, plus the amount of any Class A-2 Monthly
Interest previously due but not distributed to the Class A-2
Certificateholders on a prior Distribution Date, plus the amount of
any Class A-2 Additional Interest for such Distribution Date and any
Class A-2 Additional Interest previously due but not distributed to
the Class A-2 Certificateholders on a prior Distribution Date shall
be distributed to the Class A-2 Certificateholders;
(ii) second, an amount equal to the Certificateholders Monthly
Servicing Fee for such Distribution Date shall be distributed to the
Servicer (unless such amount has been netted against deposits to the
Collection Account or waived);
(iii) third, an amount equal to the Reserve Fund Deposit Amount,
if any, for such Distribution Date shall be deposited in the Reserve
Fund;
(iv) fourth, an amount equal to the Investor Default Amount for
such Distribution Date shall be treated as a portion of Investor
Principal Collections for such Distribution Date;
(v) fifth, an amount equal to the Class A-1 Carry-over Amount
(after giving effect to any withdrawals from the Yield Supplement
Account on such Distribution Date), if any, for such Distribution
Date, plus the amount of any Class A-1 Carry-over Amount previously
due but not previously distributed to the Class A-1
Certificateholders on a prior Distribution Date, plus the amount of
any Class A-1 Additional Carry-over Amount for such Distribution Date
and any Class A-1 Additional Carry-over Amount previously due but not
previously distributed to the Class A-1 Certificateholders on a prior
Distribution Date shall be distributed to the Class A-1
Certificateholders; and an amount equal to the Class A-2 Carry-over
Amount (after giving effect to any withdrawals from the Yield
Supplement Account on such Distribution Date), if any, for such
Distribution Date, plus the amount of any
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42
Class A-2 Carry-over Amount previously due but not previously
distributed to the Class A-2 Certificateholders on a prior
Distribution Date, plus the amount of any Class A-2 Additional
Carry-over Amount for such Distribution Date and any Class A-2
Additional Carry-over Amount previously due but not previously
distributed to the Class A-2 Certificateholders on a prior
Distribution Date shall be distributed to the Class A-2
Certificateholders;
(vi) sixth, an amount equal to the Yield Supplement Account
Deposit Amount, if any, for such Distribution Date shall be deposited
in the Yield Supplement Account; and
(vii) seventh, the balance, if any, shall constitute Excess
Servicing and shall be allocated and distributed as set forth in
Section 4.10.
In the event Investor Nonprincipal Collections and Investment
Proceeds are insufficient to make the entire amount of any distribution
described in clause (i) or (v) above, funds available for such distribution
will be applied to make such distribution to the Class A-1 Certificateholders
and the Class A-2 Certificateholders pro rata based on the Class A-1
Allocation Percentage and the Class A-2 Allocation Percentage, respectively,
for the related Collection Period. Any excess in the amount allocated to make
distributions to the holders of either Class of Series 1998-1 Certificates
pursuant to any such clause over the amount required to make such
distribution will be applied to cover any shortfalls in the amount available
to make distributions to Series 1998-1 Certificateholders of the other Class
pursuant to such clause.
(b) On each Distribution Date, commencing with the Initial
Distribution Date, with respect to any Nonprincipal Period, an amount equal
to Available Investor Principal Collections deposited in the Collection
Account for the related Collection Period shall be allocated first to make a
deposit to the Excess Funding Account if the sum of (i) the Invested Amount
(reduced for this purpose by the amount, if any, by which the Required
Participation Amount exceeds the Pool Balance due to an increase in the
Subordination Factor) and (ii) the amount on deposit in the Excess Funding
Account (other than any Investment Proceeds) prior to the allocation on such
Distribution Date is less than the outstanding principal balance of the
Series 1998-1 Certificates and second treated as Excess Principal
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43
Collections and applied in accordance with Section 4.04 of the Agreement.
(c) On each Distribution Date with respect to the Class A-1
Accumulation Period, an amount equal to Class A-1 Available Investor
Principal Collections will be distributed in the following priority:
(i) first, an amount equal to Class A-1 Monthly Principal for
such Distribution Date, shall be deposited by the Servicer or the
Trustee into the Principal Funding Account; and
(ii) second, unless an Early Amortization Event has occurred
(other than an Early Amortization Event which has resulted in an
Early Amortization Period which has ended as described in clause (c)
or clause (d) of the definition thereof in this Series Supplement),
after giving effect to the transactions referred to in clause (i)
above, an amount equal to the balance, if any, of such Class A-1
Available Investor Principal Collections shall be treated as Excess
Principal Collections and applied in accordance with Section 4.04 of
the Agreement and Section 4.11 hereof.
(d) On each Distribution Date with respect to the Class A-2
Accumulation Period, an amount equal to Class A-2 Available Investor
Principal Collections will be distributed in the following priority:
(i) first, an amount equal to Class A-2 Monthly Principal for
such Distribution Date, shall be deposited by the Servicer or the
Trustee into the Principal Funding Account; and
(ii) second, unless an Early Amortization Event has occurred
(other than an Early Amortization Event which has resulted in an
Early Amortization Period which has ended as described in clause (c)
or clause (d) of the definition thereof in this Series Supplement),
after giving effect to the transactions referred to in clause (i)
above, an amount equal to the balance, if any, of such Class A-2
Available Investor Principal Collections shall be treated as Excess
Principal Collections and applied in accordance with Section 4.04 of
the Agreement and Section 4.11 hereof.
(e) On each Distribution Date with respect to any Early
Amortization Period, an amount equal to the sum of Class A-1 Monthly
Principal and Class A-2 Monthly Principal will be distributed to the Class
A-1 Certificateholders and the Class A-2 Certificateholders, respectively.
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44
In the event Available Certificateholder Principal Collections
are insufficient to make the entire amount of any distribution described in
clause (e) above, funds available for such distribution will be applied to
make such distribution to the Class A-1 Certificateholders and the Class A-2
Certificateholders pro rata based on the Class A-1 Allocation Percentage and
the Class A-2 Allocation Percentage, respectively, for the related Collection
Period. Any excess in the amount allocated to make distributions to the
holders of either Class of Series 1998-1 Certificates pursuant to such clause
over the amount required to make such distribution will be applied to cover
any shortfalls in the amount available to make distributions to Series 1998-1
Certificateholders of the other Class pursuant to such clause.
SECTION 4.07. Distributions to Series 1998-1
Certificateholders. (a) The Servicer shall cause the Trustee to make the
following distributions at the following times from the Collection Account,
the Reserve Fund, the Principal Funding Account and the Excess Funding
Account:
(i) on each Distribution Date, all amounts on deposit in the
Collection Account or the Reserve Fund that are payable to the Series
1998-1 Certificatehol-ders with respect to accrued interest will be
distributed to the Series 1998-1 Certificateholders;
(ii) on the Class A-1 Expected Payment Date, all amounts on
deposit in the Principal Funding Account and the amount on deposit in
the Excess Funding Account with respect to the Class A-1
Certificates, and all amounts on deposit in the Collection Account
that are payable to the Class A-1 Certificateholders with respect to
principal, up to a maximum amount on any such day equal to the excess
of the outstanding principal balance of the Class A-1 Certificates
over the unreimbursed Class A-1 Investor Charge-Offs, shall be
distributed to the Class A-1 Certificateholders.
(iii) on the Class A-2 Expected Payment Date, all amounts on
deposit in the Principal Funding Account and the amount on deposit in
the Excess Funding Account with respect to the Class A-2
Certificates, and all amounts on deposit in the Collection Account
that are payable to the Class A-2 Certificateholders with respect to
principal, up to a maximum amount on any such day equal to the excess
of the outstanding principal balance of the Class A-2 Certificates
over the unreimbursed Class A-2 Investor Charge-Offs, shall be
distributed to the Class A-2 Certificateholders.
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45
(iv) on each Special Payment Date, all amounts on deposit in
the Principal Funding Account and the Excess Funding Account, and all
amounts on deposit in the Collection Account, in each such case that
are payable to the Class A-1 Certificateholders with respect to
principal, up to a maximum amount on any such day equal to the excess
of the outstanding principal balance of the Class A-1 Certificates
over the unreimbursed Investor Charge-Offs, shall be distributed to
the Class A-1 Certificateholders.
(v) on each Special Payment Date, all amounts on deposit in
the Principal Funding Account and the Excess Funding Account, and all
amounts on deposit in the Collection Account, in each such case that
are payable to the Class A-2 Certificateholders with respect to
principal, up to a maximum amount on any such day equal to the excess
of the outstanding principal balance of the Class A-2 Certificates
over the unreimbursed Investor Charge-Offs, shall be distributed to
the Class A-2 Certificateholders.
(b) On each Distribution Date on which there is any Class A-1
Carry-over Amount or Class A-1 Additional Carry-over Amount, the Servicer
shall instruct the Trustee to distribute to the Class A-1 Certificateholders
the amounts on deposit in the Yield Supplement Account and the Collection
Account payable with respect thereto pursuant to Section 4.04(b)(iii) and
Section 4.06(a)(other than from Available Seller's Collections), respectively.
(c) On each Distribution Date on which there is any Class A-2
Carry-over Amount or Class A-2 Additional Carry-over Amount, the Servicer
shall instruct the Trustee to distribute to the Class A-2 Certificateholders
the amounts on deposit in the Yield Supplement Account and the Collection
Account payable with respect thereto pursuant to Section 4.04(b)(iii) and
Section 4.06(a)(other than from Available Seller's Collections), respectively.
(d) If, on the Class A-1 Final Payment Date, there is any
Class A-1 Carry-over Amount or Class A-1 Additional Carry-over Amount (after
giving effect to any distributions on such date pursuant to Section 4.07(b)),
the Servicer shall instruct the Trustee to distribute to the Class A-1
Certificateholders the amounts payable with respect thereto pursuant to
Sections 4.08(b) and 4.08(d).
(e) If, on the Class A-2 Final Payment Date, there is any
Class A-2 Carry-over Amount or Class A-2 Additional Carry-over Amount (after
giving effect to any
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46
distributions on such date pursuant to Section 4.07(c)), the Servicer shall
instruct the Trustee to distribute to the Class A-2 Certificateholders the
amounts payable with respect thereto pursuant to Sections 4.08(b) and
4.08(e).
(f) The distributions to be made pursuant to this Section are
subject to the provisions of Sections 2.03, 9.02, 10.01 and 12.02 of the
Agreement and Sections 8.01 and 8.02 of this Series Supplement.
SECTION 4.08. Application of Reserve Fund and Available
Subordinated Amount. (a) If the portion of Investor Non-Principal Collections
and Investment Proceeds allocated to the Series 1998-1 Certificateholders on
any Distribution Date pursuant to Section 4.06(a) is not sufficient to make
the entire distributions required on such Distribution Date by Sections
4.06(a)(i), (ii) and (iv), the Servicer shall cause the Trustee to withdraw
funds from the Reserve Fund to the extent available therein, and apply such
funds to complete the distributions pursuant to Section 4.06(a)(i), (ii) and
(iv); provided, however, that during any Early Amortization Period (other
than an Early Amortization Period which has ended as described in clause (c)
or clause (d) of the definition thereof in this Series Supplement) funds
shall not be withdrawn from the Reserve Fund to make distributions otherwise
required by Section 4.06(a)(iv) to the extent that, after giving effect to
such withdrawal, the amount on deposit in the Reserve Fund shall be less than
$1,000,000.
(b) If there is a Required Subordination Draw Amount for such
Distribution Date, and such Distribution Date is not the Class A-1 Final
Payment Date or the Class A-2 Final Payment Date, the Servicer shall apply
or cause the Trustee to apply the Available Seller's Collections on deposit
in the Collection Account on such Distribution Date, but only up to the
amount of the Required Subordination Draw Amount, to make the distributions
required by Sections 4.06(a)(i), (ii) and (iv) that have not been made
through the application of funds from the Reserve Fund in accordance with the
preceding paragraph. If there is a Required Subordination Draw Amount for
such Distribution Date, and such Distribution Date is the Class A-1 Final
Payment Date or the Class A-2 Final Payment Date, the Servicer shall apply or
cause the Trustee to apply the Available Seller's Collections on deposit in
the Collection Account on such Distribution Date, but only up to the amount
of the Required Subordination Draw Amount, to make the distributions required
by (x) Sections 4.06(a)(i), (ii) and (iv) with respect to the Series 1998-1
Certificates and (y) Section (v) with respect to the Class A-1 Certificates,
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47
in the case of the Class A-1 Final Payment Date, or with respect to the Class
A-2 Certificates, in the case of the Class A-2 Final Payment Date, that have
not been made through the application of funds from the Reserve Fund in
accordance with Section 4.08(d). Any such Available Seller's Collections
remaining after the application thereof pursuant to the first or second
preceding sentence, as applicable, shall be treated as a portion of Investor
Principal Collections for such Distribution Date, but only up to the amount
of unpaid Adjustment Payments allocated to Series 1998-1 as described in
Section 4.05(a)(vi). The amount of the Available Seller's Collections applied
in accordance with the three preceding sentences shall reduce the Available
Subordinated Amount in all other cases as described in clause (A) of the
definition thereof. If the Required Subordination Draw Amount exceeds
Available Seller's Collections for such Distribution Date, the Available
Subordinated Amount shall be further reduced by the amount of such excess,
but not by more than the sum of (x) the Investor Default Amount and (y) the
amount of unpaid Adjustment Payments allocated to Series 1998-1 as described
in Section 4.05(a)(vi).
(c) If, after giving effect to the allocations of, distributions
from, and deposits in, the Reserve Fund made pursuant to Sections 4.01(c),
4.04, 4.06(a), 4.08(a) and 4.08(f), (i) the amount in the Reserve Fund is
greater than the Reserve Fund Required Amount (or, for any Distribution Date
with respect to an Early Amortization Period, the Excess Reserve Fund Required
Amount) for such Distribution Date, the Servicer shall cause the Trustee to
distribute such excess amount to the Seller, subject to the proviso contained
in paragraph (g) or (ii) the amount in the Reserve Fund is less than such
Reserve Fund Required Amount, then the Trustee shall deposit any remaining
Available Seller's Collections on deposit in the Collection Account for such
Distribution Date after giving effect to Section 4.08(b) into the Reserve Fund
until the amount in the Reserve Fund is equal to such Reserve Fund Required
Amount. On the Class A-2 Termination Date, any funds in the Reserve Fund will
be treated as Available Investor Principal Collections.
(d) If, on the Class A-1 Final Payment Date, after giving
effect to (c) above, there is a Class A-1 Carry-over Amount or a Class A-1
Additional Carry-over Amount after giving effect to withdrawals from the
Yield Supplement Account on such date, the Servicer shall cause the Trustee
to withdraw funds in the amount of such Class A-1 Carry-over Amount or Class
A-1 Additional Carry-over Amount from the Reserve Fund (to the extent
available
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48
therein), and distribute such funds to the Class A-1 Certificateholders.
(e) If, on the Class A-2 Final Payment Date, after giving
effect to (c) above, there is a Class A-2 Carry-over Amount or a Class A-2
Additional Carry-over Amount after giving effect to withdrawals from the
Yield Supplement Account on such date, the Servicer shall cause the Trustee
to withdraw funds in the amount of such Class A-2 Carry-over Amount or Class
A-2 Additional Carry-over Amount from the Reserve Fund (to the extent
available therein), and distribute such funds to the Class A-2
Certificateholders. Any funds remaining on deposit in the Reserve Fund after
the earlier of (i) payment in full of the outstanding principle balance of
the Series 1998-1 Certificates and (ii) the Class A-2 Termination Date shall
be paid to the Seller.
(f) If, for any Distribution Date with respect to an Early
Amortization Period, after giving effect to the allocations of, distributions
from, and deposits in, the Reserve Fund made pursuant to Sections 4.01(c),
4.04, 4.06(a) and 4.08(a), the amount in the Reserve Fund is less than the
Excess Reserve Fund Required Amount for such Distribution Date, the Trustee
shall deposit any remaining Available Seller's Collections on deposit in the
Collection Account for such Distribution Date into the Reserve Fund until the
amount in the Reserve Fund is equal to such Excess Reserve Fund Required
Amount.
(g) The balance of Available Seller's Collections on any
Distribution Date, after giving effect to any distributions thereof pursuant
to Section 4.08(a), (b), (c) or (f), shall be distributed to the Seller on
such Distribution Date; provided that, in the case of any remaining Available
Seller's Principal Collections, if the Trust Available Subordinated Amount
for the immediately preceding Determination Date exceeds the Seller's
Participation Amount on such date (determined after giving effect to any
Principal Receivables transferred to the Trust on such Distribution Date),
Section 4.08(c) hereof shall not apply and the amount of such excess shall be
deposited into the Reserve Fund, with any remaining Available Seller's
Principal Collections paid to the Seller.
SECTION 4.09. Investor Charge-Offs. If, on any Distribution
Date on which the Available Subordinated Amount on the preceding
Determination Date (after giving effect to the allocations, distributions,
withdrawals and deposits to be made on such Distribution Date) is zero and
the Deficiency Amount for such Distribution Date is greater than
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49
zero, the Invested Amount shall be reduced by the amount of the excess of
such Deficiency Amount over any remaining Available Subordinated Amount on
such Determination Date, but not by more than the Investor Default Amount (an
"Investor Charge-Off"). Any such reduction shall be applied to reduce the
Class A-1 Invested Amount (a "Class A-1 Investor Charge-Off") and the Class
A-2 Invested Amount (a "Class A-2 Investor Charge-Off") pro rata based on the
Class A-1 Allocation Percentage and the Class A-2 Allocation Percentage,
respectively, in each case for the related Collection Period. Class A-1
Investor Charge-Offs and Class A-2 Investor Charge-Offs shall thereafter be
reimbursed and the Invested Amount increased (but not by an amount in excess
of the aggregate unreimbursed Investor Charge-Offs on any Distribution Date)
by the sum of (a) Allocable Miscellaneous Payments with respect to such
Distribution Date and (b) the amount of Excess Servicing allocated and
available for that purpose pursuant to Section 4.10(a). Any such increase
shall be applied to increase the outstanding principal balance the Class A-1
Certificates and the Class A-2 Certificates pro rata based on the Class A-1
Allocated Percentage and the Class A-2 Allocation Percentage, respectively,
in each case for the related Collection Period.
SECTION 4.10. Excess Servicing. The Servicer shall cause the
Trustee to apply, on each Distribution Date, commencing with the Initial
Distribution Date, Excess Servicing with respect to the Collection Period
immediately preceding such Distribution Date, to make the following
distributions in the following priority:
(a) an amount equal to the aggregate amount of Investor
Charge-Offs which have not been previously reimbursed as provided in
Section 4.09 (after giving effect to the allocation on such
Distribution Date of any amount for that purpose pursuant to Section
4.09) shall be treated as a portion of Available Investor Principal
Collections with respect to such Distribution Date;
(b) an amount equal to the aggregate outstanding amounts of
the Certificateholders Monthly Servicing Fee which have been
previously waived pursuant to Section 3.01 shall be distributed to
the Servicer; and
(c) the balance, if any, shall be distributed to the Seller.
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50
SECTION 4.11. Excess Principal Collections.
(a) That portion of Excess Principal Collections for any Distribution Date
equal to the amount of Series 1998-1 Excess Principal Collections for such
Distribution Date will be allocated to Series 1998-1 and will be distributed
as set forth in this Series Supplement.
(b) Series 1998-1 Excess Principal Collections, with respect
to any Distribution Date, shall mean an amount equal to the Series 1998-1
Principal Shortfall for such Distribution Date; provided, however, that, if
the aggregate amount of Excess Principal Collections for all Series for such
Distribution Date is less than the aggregate amount of Principal Shortfalls
for all Series for such Distribution Date, then Series 1998-1 Excess
Principal Collections for such Distribution Date shall equal the product of
(x) Excess Principal Collections for all Series for such Distribution Date
and (y) a fraction, the numerator of which is the Series 1998-1 Principal
Shortfall for such Distribution Date and the denominator of which is the
aggregate amount of Principal Shortfalls for all Series for such Distribution
Date. The "Series 1998-1 Principal Shortfall", with respect to any
Distribution Date, shall equal the excess of (i) (x) for any Distribution
Date with respect to the Class A-1 Accumulation Period, the Class A-1
Controlled Distribution Amount, or with respect to the Class A-2 Accumulation
Period, the Class A-2 Controlled Distribution Amount, or (y) for any
Distribution Date with respect to an Early Amortization Period, the Invested
Amount, over (ii) (x) with respect to the Class A-1 Accumulation period, the
Class A-1 Available Investor Principal Collections for such Distribution Date
(excluding any portion thereof attributable to Excess Principal Collections),
or with respect to the Class A-2 Accumulation Period, the Class A-2 Available
Investor Principal Collections for such Distribution Date (excluding any
portion thereof attributable to Excess Principal Collections) or (y) with
respect to an Early Amortization Period, Available Investor Principal
Collections for such Distribution Date (excluding any portion thereof
attributable to Excess Principal Collections).
SECTION 4.12. Excess Funding Account. (a) Any funds on deposit
in the Excess Funding Account on the December 2000 Distribution Date and
allocable to the holders of Class A-1 Certificates will be deposited in the
Principal Funding Account on such date. In addition, on the December 2002
Distribution Date the amount on deposit in the Excess Funding Account will be
deposited in the Principal Funding Account. No funds will be deposited in the
Excess Funding Account during any Early Amortization Period. Additionally,
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51
no amounts will be deposited in the Excess Funding Account (i) with respect
to the Class A-1 Certificates, with respect to any Collection Period
following the October 2000 Collection Period or (ii) with respect to the
Class A-2 Certificates, with respect to any Collection Period following the
October 2002 Collection Period.
(b) On each Determination Date during any Nonprincipal Period,
the Seller shall determine whether the sum of the Invested Amount (reduced
for this purpose by the amount, if any, by which the Required Participation
Amount exceeds the Pool Balance due to an increase in the Subordination
Factor) and the amount on deposit in the Excess Funding Account (other than
any Investment Proceeds) is greater than the outstanding principal balance of
the Series 1998-1 Certificates. If on any such Determination Date such sum is
greater than the outstanding principal balance of the Series 1998-1
Certificates and thus there are sufficient Principal Receivables in the Trust
to permit an increase in the Invested Amount without causing an Early
Amortization Event to occur with respect to any outstanding Series, the
Seller shall notify the Trustee of the amount of the increase in the Invested
Amount. Subject to the provisions set forth below in this Section 4.12(b) and
to Sections 4.12(d) and (e) below, upon receipt of such notice the Invested
Amount shall be increased by the amount specified, and the Servicer shall
instruct the Trustee to withdraw from the Excess Funding Account and pay to
the Seller or allocate to one or more other Series, on the immediately
succeeding Distribution Date, an amount equal to the amount of such increase
in the Invested Amount. Any such increase in the aggregate Invested Amount
will be allocated to the Class A-1 Certificates and the Class A-2
Certificates pro rata based on the Class A-1 Allocation Percentage and the
Class A-2 Allocation Percentage, respectively, for the related Collection
Period. Such payment shall be in payment or partial payment pursuant to the
Receivables Purchase Agreement for additional Principal Receivables
transferred to the Trust or allocated to Series 1998-1. To the extent that
the Invested Amount is increased by any payment to the Seller or any
allocation to one or more other Series, the Seller's Interest or such other
Series' invested amount, as applicable, shall be reduced by the amount of
such payment. In addition, any increase in the Invested Amount is subject to
the condition that after giving effect to such increase (i) the Pool Balance
equals or exceeds (ii) the sum of (A) the Required Participation Amount, (B)
the sum of the Required Subordinated Amount and the sum of the required
subordinated amounts for all other Series (or, if such other series shall
have no required subordinated amount, the available subordinated amount with
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52
respect to such Series) and (C) the sum of any subordinated amounts
supporting any Enhancement for all other Series. In connection with the
foregoing, the Seller shall endeavor (taking into account any seasonality
experienced in the Accounts in the Trust) to minimize the amounts on deposit,
from time to time, in the Excess Funding Account.
(c) On each Determination Date during the Class A-2 Revolving
Period (after the commencement of the Class A-1 Accumulation Period), the
Seller shall determine whether the sum of the Class A-2 Invested Amount
(reduced for this purpose by the amount, if any, by which the Required
Participation Amount exceeds the Pool Balance due to an increase in the
Subordination Factor) and the amount on deposit in the Excess Funding Account
(other than any Investment Proceeds) is greater than the outstanding
principal balance of the Class A-2 Certificates. If on any such Determination
Date such sum is greater than the outstanding principal balance of the Class
A-2 Certificates and thus there are sufficient Principal Receivables in the
Trust to permit an increase in the Class A-2 Invested Amount without causing
an Early Amortization Event to occur with respect to any outstanding Series,
the Seller shall notify the Trustee of the amount of the increase in the
Class A-2 Invested Amount. Subject to the provisions set forth below in this
Section 4.12(c) and to Sections 4.12(d) and (e) below, upon receipt of such
notice the Class A-2 Invested Amount shall be increased by the amount
specified, and the Servicer shall instruct the Trustee to withdraw from the
Excess Funding Account and pay to the Seller or allocate to one or more other
Series, on the immediately succeeding Distribution Date, an amount equal to
the amount of such increase in the Class A-2 Invested Amount. Such payment
shall be in payment or partial payment pursuant to the Receivables Purchase
Agreement for additional Principal Receivables transferred to the Trust or
allocated to Series 1998-1. To the extent that the Class A-2 Invested Amount
is increased by any payment to the Seller or any allocation to one or more
other Series, the Seller's Interest or such other Series' invested amount, as
applicable, shall be reduced by the amount of such payment. In addition, any
increase in the Class A-2 Invested Amount is subject to the condition that
after giving effect to such increase (i) the Pool Balance equals or exceeds
(ii) the sum of (A) the Required Participation Amount, (B) the sum of the
Required Subordinated Amount and the sum of the required subordinated amounts
for all other Series (or, if such other series shall have no required
subordinated amount, the available subordinated amount with respect to such
Series) and (C) the sum of any subordinated amounts supporting any
Enhancement for all other Series. In connection with the foregoing, the
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53
Seller shall endeavor (taking into account any seasonality experienced in the
Accounts in the Trust) to minimize the amounts on deposit, from time to time,
in the Excess Funding Account.
(d) In the event that other Series issued by the Trust provide
for excess funding accounts or other arrangements similar to the Excess
Funding Account involving fluctuating levels of investments in Principal
Receivables, (i) the allocation of additional Principal Receivables to
increase the Invested Amount or the Class A-2 Invested Amount, as applicable,
and the invested amounts of such other Series (and the related withdrawals
from the Excess Funding Account and the other excess funding or similar
accounts) will be based on the proportion that the amount on deposit in the
Excess Funding Account bears to amounts on deposit in the excess funding
accounts of all Series providing for excess funding accounts or such similar
arrangements or to amounts otherwise similarly available and (ii) the deposit
of amounts into the Excess Funding Account and the excess funding accounts of
such other Series will be pro rata based on the proportion that the Adjusted
Invested Amount bears to the adjusted invested amounts of all Series
providing for excess funding accounts or such similar arrangements.
(e) In the event that any other Series is in an amortization,
early amortization or accumulation period the amounts of any withdrawals from
the Excess Funding Account shall be applied first to satisfy in full any then
applicable funding or payment requirements of such Series and second to make
a payment to the Seller. In the event that more than one other Series is in
an amortization, early amortization or accumulation period, the amounts of
any withdrawals from the Excess Funding Account shall be allocated (and, if
necessary, reallocated) among such Series as specified in the related Series
Supplement to meet the funding or payment requirements of each such Series
first to satisfy in full all then applicable funding or payment requirements
of each such Series and second to make a payment to the Seller.
SECTION 4.13. (a) Class A-1 Accumulation Period Length; Class
A-1 Accumulation Period Commencement Date. Beginning on the December 2000
Distribution Date, and on each Distribution Date thereafter that occurs prior
to the Class A-1 Accumulation Period Commencement Date, the Servicer shall
calculate the Class A-1 Accumulation Period Length and, if applicable,
determine the Class A-1 Accumulation Period Commencement Date. Once the
Servicer has determined the Class A-1 Accumulation Period
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54
Commencement Date, the Servicer shall promptly notify the Trustee in writing
of such determination. In connection therewith, the Seller hereby agrees not
to cause the Trust to issue any new Series during the period from the date
hereof until the date that the Class A-1 Certificates shall have been paid in
full, if such issuance would have an adverse effect on the results obtained
by application of the formula used to compute the Class A-1 Accumulation
Period Length.
(b) Class A-2 Accumulation Period Length; Class A-2
Accumulation Period Commencement Date. Beginning on the December 2002
Distribution Date, and on each Distribution Date thereafter that occurs prior
to the Class A-2 Accumulation Period Commencement Date, the Servicer shall
calculate then Class A-2 Accumulation Period Length and, if applicable,
determine the Class A-2 Accumulation Period Commencement Date. Once the
Servicer has determined the Class A-2 Accumulation Period Commencement Date,
the Servicer shall promptly notify the Trustee in writing of such
determination. In connection therewith, the Seller hereby agrees not to cause
the Trust to issue any new Series during the period from the date hereof
until the date that the Class A-2 Certificates shall have been paid in full,
if such issuance would have an adverse effect on the results obtained by
application of the formula used to compute the Class A-2 Accumulation Period
Length.
ARTICLE V
Distributions and Reports
to Series 1996-2 Certificateholders
SECTION 5.01. Distributions. (a) On each Distribution Date,
commencing with the Initial Distribution Date, the Trustee shall distribute
to each Series 1998-1 Certificateholder of record on the preceding Record
Date (other than as provided in Section 12.02 of the Agreement respecting a
final distribution) such Certificateholder's pro rata share (based on the
aggregate fractional undivided interests represented by the Series 1998-1
Certificates held by such Certificateholder) of the amounts on deposit in the
Series 1998-1 Accounts as is payable to the Series 1998-1 Certificateholders
on such Distribution Date pursuant to Section 4.07.
(b) Except as provided in Section 12.02 of the Agreement with
respect to a final distribution, distributions to Series 1998-1
Certificateholders hereunder
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55
shall be made by check mailed to each Series 1998-1 Certificateholder at such
Certificateholder's address appearing in the Certificate Register without
presentation or surrender of any Series 1998-1 Certificate or the making of
any notation thereon; provided, however, that, with respect to Series 1998-1
Certificates registered in the name of a Depository, such distributions shall
be made to such Depository in immediately available funds.
SECTION 5.02. Reports and Statements to Series 1998-1
Certificateholders. (a) At least two Business Days prior to each Distribution
Date, commencing with the Initial Distribution Date, the Servicer will
provide to the Trustee, and on each such Distribution Date, the Trustee shall
forward to each Series 1998-1 Certificateholder, a statement substantially in
the form of Exhibit B prepared by the Servicer setting forth certain
information relating to the Trust and the Series 1998-1 Certificates.
(b) A copy of each statement provided pursuant to paragraph
(a) will be made available for inspection at the Corporate Trust Office.
(c) On or before January 31 of each calendar year, beginning
with calendar year 1999, the Trustee shall furnish or cause to be furnished
to each Person who at any time during the preceding calendar year was a
Series 1998-1 Certificateholder (or Certificate Owner), a statement prepared
by the Servicer containing the information which is required to be contained
in the statement to Series 1998-1 Certificateholders as set forth in
paragraph (a) above, aggregated for such calendar year or the applicable
portion thereof during which such Person (or any related Certificate Owner)
was a Series 1998-1 Certificateholder (or Certificate Owner), together with
other information as is required to be provided by an issuer of indebtedness
under the Internal Revenue Code and such other customary information as is
necessary to enable the Series 1998-1 Certificateholders (or Certificate
Owners) to prepare their tax returns. Such obligation of the Trustee shall be
deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Trustee pursuant to any requirements of
the Internal Revenue Code as from time to time in effect.
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56
ARTICLE VI
Amortization Events
SECTION 6.01. Additional Amortization Events. The occurrence
of any of the following events shall be deemed to be an Early Amortization
Event solely with respect to Series 1998-1:
(a) on any Determination Date, the average of the Monthly
Payment Rates for the three preceding Collection Periods is less than
20%;
(b) on any Determination Date, the Available Subordinated
Amount for the next Distribution Date will be less than the Required
Subordinated Amount on such Determination Date, after giving effect
to the distributions to be made on the next Distribution Date;
(c) any Service Default with respect to Series
1998-1 occurs;
(d) on any Determination Date, as of the last day of the
preceding Collection Period, the aggregate amount of Principal
Receivables relating to Used Vehicles exceeds 20% of the Pool Balance
on such last day;
(e) any Class A-1 Carry-over Amount or Class A-2 Carry-over
Amount or any Class A-1 Additional Carry-over Amount or Class A-2
Additional Carry-over Amount is outstanding on six consecutive
Distribution Dates;
(f) the outstanding principal amount of the Class A-1
Certificates is not repaid by the Class A-1 Expected Payment Date;
(g) the outstanding principal amount of the Class A-2
Certificates is not repaid by the Class A-2 Expected Payment Date;
(h) the Trust shall file a petition commencing a voluntary
case under any chapter of the Federal bankruptcy laws; or the Trust
shall file a petition or answer or consent seeking reorganization,
arrangement, adjustment, or composition under any other similar
applicable Federal law, or shall consent to the filing of any such
petition, answer, or consent; or the Trust shall appoint, or consent
to the appointment of, a custodian, receiver, liquidator, trustee,
assignee, sequestrator or other similar official in bankruptcy or
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57
insolvency of it or of any substantial part of its property; or the
Trust shall make an assignment for the benefit of creditors, or shall
admit in writing its inability to pay its debts generally as they
become due; and
(i) any order for relief against the Trust shall have been
entered by a court having jurisdiction in the premises under any
chapter of the Federal bankruptcy laws, and such order shall have
continued undischarged or unstayed for a period of 60 days; or a
decree or order by a court having jurisdiction in the premises shall
have been entered approving as properly filed a petition seeking
reorganization, arrangement, adjustment, or composition of the Trust
under any other similar applicable Federal law, and such decree or
order shall have continued undischarged or unstayed for a period of
120 days; or a decree or order of a court having jurisdiction in the
premises for the appointment of a custodian, receiver, liquidator,
trustee, assignee, sequestrator, or other similar official in
bankruptcy or insolvency of the Trust or of any substantial part of
its property, or for the winding up or liquidation of its affairs,
shall have been entered, and such decree or order shall have remained
in force undischarged or unstayed for a period of 120 days.
The Trustee agrees that upon gaining knowledge of the
occurrence of any event described in Section 9.01 of the Agreement or Section
6.01 of this Series Supplement it shall (a) promptly provide notice to the
Rating Agencies of the occurrence of such event and (b) notify the Series
1998-1 Certificateholders of the occurrence of such event within 45 days of
the expiration of the applicable grace period, if any. In the case of any
event described in Sections 9.01(f) or (g) of the Agreement or Section
6.01(c) of this Series Supplement, an Early Amortization Event with respect
to Series 1998-1 will be deemed to have occurred only if, after the
applicable grace period described in such Sections, if any, either the
Trustee or Series 1998-1 Certificateholders evidencing more than 50% of the
aggregate unpaid principal amount of the Series 1998-1 Certificates by
written notice to the Seller and the Servicer (and the Trustee, if given by
Series 1998-1 Certificateholders) declare that an Early Amortization Event
has occurred as of the date of such notice. In the case of any other Early
Amortization Event, such Early Amortization Event will be deemed to have
occurred immediately upon the occurrence of such event, without any notice or
other action on the part of the Trustee or the Series 1998-1
Certificateholders.
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58
In the case of any Early Amortization Event described in
Sections 9.01(a), (f) or (g) of the Agreement or this Section 6.01, other
than Sections 6.01(f), (g), (h) or (i), provided that (i) no other Early
Amortization Event (other than an Early Amortization Event which has resulted
in an Early Amortization Period which has terminated as described in clause
(c) or clause (d) of the definition thereof in this Series Supplement) has
occurred and (ii) the scheduled termination of, with respect to the Class A-1
Certificates, the Class A-1 Revolving Period or, with respect to the Class
A-2 Certificates, the Class A-2 Revolving Period has not occurred, the
Trustee agrees that it shall request written confirmation from Standard &
Poor's, Duff & Phelps, Inc. and Fitch Investors Service, Inc. that the
termination of the Early Amortization Period caused by the occurrence of such
Early Amortization Event will not result in the downgrading or withdrawal of
such entity's rating of the Series 1998-1 Certificates.
The Trustee further agrees that, where applicable, it shall
promptly notify the Series 1998-1 Certificateholders that it has received the
written confirmation referred to in the preceding paragraph, and that the
Series 1998-1 Certificateholders may elect to terminate the related Early
Amortization Period.
ARTICLE VII
Optional Repurchase
SECTION 7.01. Optional Repurchase. (a) On any Distribution
Date occurring after the date on which the Class A-1 Invested Amount is
reduced to $50,000,000 or less, the Servicer shall have the option to
purchase the entire Class A-1 Certificateholders' Interest, at a purchase
price equal to the Class A-1 Reassignment Amount for such Distribution Date.
(b) On any Distribution Date occurring after the date on which
the Class A-2 Invested Amount is reduced to $50,000,000 or less, the Servicer
shall have the option to purchase the entire Class A-2 Certificateholders'
Interest, at a purchase price equal to the Class A-2 Reassignment Amount for
such Distribution Date.
(c) The Servicer shall give the Seller and the Trustee at
least 10 days' prior written notice of the Distribution Date on which the
Servicer intends to exercise one of the purchase options described above. Not
later than 12:00 noon, New York City time, on such Distribution Date
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59
the Servicer shall deposit the Class A-1 Reassignment Amount or the Class A-2
Reassignment Amount, as applicable, into the Collection Account in
immediately available funds. Such purchase options are subject to payment in
full of the Class A-1 Reassignment Amount or the Class A-2 Reassignment
Amount, as applicable. The Class A-1 Reassignment Amount or the Class A-2
Reassignment Amount, as applicable, shall be distributed as set forth in
Section 8.01(e) or (f), as applicable.
(d) If at the time the Servicer exercises one of its purchase
options hereunder the Servicer's long-term unsecured debt has a rating lower
than Baa3 by Moody's, the Servicer shall deliver to the Trustee on such
Distribution Date an Opinion of Counsel (which must be an independent outside
counsel) to the effect that, in reliance on certain certificates to the
effect that the Class A-1 Certificateholders' Interest or Class A-2
Certificateholders' Interest, as applicable, purchased by the Servicer
constitutes fair value for the consideration paid therefor and as to the
solvency of the Servicer, the purchase of the Class A-1 Certificateholders'
Interest or Class A-2 Certificateholders' Interest, as applicable, would not
be considered a fraudulent conveyance under applicable law.
ARTICLE VIII
Final Distributions
SECTION 8.01. Sale of Certificateholders' Interest Pursuant to
Section 2.03 of the Agreement; Distributions Pursuant to Section 7.01 of this
Series Supplement or Section 2.03 or 12.02(c) of the Agreement. (a) The
amount to be paid by the Seller to the Collection Account with respect to
Series 1998-1 in connection with a purchase of the Series 1998-1
Certificateholders' Interest pursuant to Section 2.03 of the Agreement shall
equal the Reassignment Amount for the Distribution Date on which such
repurchase occurs.
(b) With respect to the Reassignment Amount deposited into the
Collection Account pursuant to Section 2.03 of the Agreement, the Trustee
shall, not later than 12:00 noon, New York City time, on the Distribution
Date on which such amounts are deposited (or, if such date is not a
Distribution Date, on the immediately following Distribution Date) (in the
priority set forth below): (x) deposit the Invested Amount on such date into
the Principal Funding Account and (y) deposit the amount of
<PAGE>
60
accrued and unpaid interest on the unpaid balance of the Series 1998-1
Certificates, plus the amount of Class A-1 Additional Interest and Class A-2
Additional Interest, if any, for such Distribution Date and any Class A-1
Carry-over Amount, Class A-2 Carry-over Amount, Class A-1 Additional
Carry-over Amount or Class A-2 Additional Carry-over Amount previously due
but not paid to Series 1998-1 Certificateholders on any prior Distribution
Date, up to the Reassignment Amount for Series 1998-1.
(c) With respect to any Class A-1 Termination Proceeds
deposited into the Collection Account pursuant to Section 12.02(c) of the
Agreement, the Trustee shall, not later than 12:00 noon, New York City time,
on the Distribution Date on which such amounts are deposited (or, if such
date is not a Distribution Date, on the immediately following Distribution
Date) (in the priority set forth below): first, (x) deposit the Class A-1
Invested Amount on such date into the Principal Funding Account and (y)
deposit the amount of accrued and unpaid interest on the unpaid balance of
the Class A-1 Certificates, plus the amount of Class A-1 Additional Interest,
if any, for such Distribution Date and any Class A-1 Carry-over Amount or
Class A-1 Additional Carry-over Amount previously due but not paid to Class
A-1 Certificateholders on any prior Distribution Date, up to the Class A-1
Reassignment Amount and (ii) second, pay the remainder of any Class A-1
Termination Proceeds to the Seller.
(d) With respect to any Class A-2 Termination Proceeds
deposited into the Collection Account pursuant to Section 12.02(c) of the
Agreement, the Trustee shall, not later than 12:00 noon, New York City time,
on the Distribution Date on which such amounts are deposited (or, if such
date is not a Distribution Date, on the immediately following Distribution
Date) (in the priority set forth below): first, (x) deposit the Class A-2
Invested Amount on such date into the Principal Funding Account and (y)
deposit the amount of accrued and unpaid interest on the unpaid balance of
the Class A-2 Certificates, plus the amount of Class A-2 Additional Interest,
if any, for such Distribution Date and any Class A-2 Carry-over Amount or
Class A-2 Additional Carry-over Amount previously due but not paid to Class
A-2 Certificateholders on any prior Distribution Date, up to the Class A-2
Reassignment Amount and (ii) second, by the remainder of any Class A-2
Termination Proceeds to the Seller.
(e) With respect to the Class A-1 Reassignment Amount
deposited into the Collection Account pursuant to Section 7.01 of this Series
Supplement, the Trustee shall,
<PAGE>
61
not later than 12:00 noon, New York City time, on the Distribution Date on
which such amounts are deposited (in the priority set forth below): (x)
deposit the Class A-1 Invested Amount on such date into the Principal Funding
Account and (y) deposit the amount of accrued and unpaid interest on the
unpaid balance of the Class A-1 Certificates, plus the amount of Class A-1
Additional Interest, if any, for such Distribution Date and any Class A-1
Additional Interest, Class A-1 Carry-over Amount or Class A-1 Additional
Carry-over Amount previously due but not paid to Class A-1 Certificateholders
on any prior Distribution Date, up to the Class A-1 Reassignment Amount.
(f) With respect to the Class A-2 Reassignment Amount
deposited into the Collection Account pursuant to Section 7.01 of this Series
Supplement, the Trustee shall, not later than 12:00 noon, New York City time,
on the Distribution date on which such amounts are deposited (in the priority
set forth below): (x) deposit the Class A-2 Invested Amount on such date into
the Principal Funding Account and (y) deposit the amount of accrued and
unpaid interest on the unpaid balance of the Class A-2 Certificates, plus the
amount of Class A-2 Additional Interest, if any, for such Distribution Date
and any Class A-2 Additional Interest, Class A-2 Carry-over Amount or Class
A-2 Additional Carry-over Amount previously due but not paid to Class A-2
Certificateholders on any prior Distribution Date, up to the Class A-2
Reassignment Amount.
(g) Notwithstanding anything to the contrary in this Series
Supplement or the Agreement, the entire amount deposited in the Principal
Funding Account pursuant to Section 7.01 or 8.01 and all other amounts on
deposit therein shall be distributed in full to the Class A-1
Certificateholders or the Class A-2 Certificateholders, as applicable, on
such date and any distribution made pursuant to paragraph (c) or (d) above
shall be deemed to be a final distribution pursuant to Section 12.02 of the
Agreement with respect to the Class A-1 Certificates or Class A-2
Certificates.
SECTION 8.02. Distribution of Proceeds of Sale, Disposition or
Liquidation of the Receivables Pursuant to Section 9.02 of the Agreement. (a)
Not later than 12:00 noon, New York City time, on the Distribution Date
following the date on which the Insolvency Proceeds are deposited into the
Collection Account pursuant to Section 9.02(b) of the Agreement, the Trustee
shall first (in each case, after giving effect to any deposits and
distributions otherwise to be made on such Distribution Date) deduct an
amount equal to the Invested Amount on such Distribution Date from the
<PAGE>
62
portion of the Insolvency Proceeds allocated to Allocable Principal
Collections and deposit such amount in the Principal Funding Account;
provided that the amount of such deposit shall not exceed the product of (x)
the portion of the Insolvency Proceeds allocated to Allocable Principal
Collections and (y) 100% minus the Excess Seller's Percentage with respect to
the related Collection Period. The remainder of the portion of the Insolvency
Proceeds allocated to Allocable Principal Collections shall be allocated to
the Seller's Interest and shall be released to the Seller on such
Distribution Date.
(b) Not later than 12:00 noon, New York City time, on such
Distribution Date, the Trustee shall first (in each case, after giving effect
to any deposits and distributions otherwise to be made on such Distribution
Date) deduct an amount equal to the sum of (i) Class A-1 Monthly Interest and
Class A-2 Monthly Interest for such Distribution Date, (ii) any Class A-1
Monthly Interest and Class A-2 Monthly Interest previously due but not
distributed on a prior Distribution Date, (iii) the amount of Class A-1
Additional Monthly Interest and Class A-2 Additional Monthly Interest, if
any, for such Distribution Date and any Class A-1 Additional Monthly Interest
and Class A-2 Additional Monthly Interest previously due but not distributed
on a prior Distribution Date, (iv) any Class A-1 Carry-over Amount and Class
A-2 Carry-over Amount for such Distribution Date and any Class A-1 Cary-over
Amount and Class A-2 Carry-over Amount previously due but not distributed to
the Series 1998-1 Certificateholders on a prior Distribution Date and (v) the
amount of any Class A-1 Additional Carry-over Amount and any Class A-2
Additional Carry-over Amount for such Distribution Date and any Class A-1
Additional Carry-over Amount and any Class A-2 Additional Carry-over Amount
previously due but not distributed to the Series 1998-1 Certificateholders on
a prior Distribution Date, from the portion of the Insolvency Proceeds
allocated to Allocable Non-Principal Collections and deposit such amount in
the Collection Account with such funds designated by the Trustee as being
held for the benefit of the Series 1998-1 Certificateholders; provided that
the amount of such distribution shall not exceed (x) the product of (A) the
portion of the Insolvency Proceeds allocated to Allocable Non-Principal
Collections and (B) 100% minus the Excess Seller's Percentage. The remainder
of the portion of the Insolvency Proceeds allocated to Allocable
Non-Principal Collections shall be allocated to the Seller's Interest and
shall be released to the Seller on such Distribution Date.
<PAGE>
63
(c) Notwithstanding anything to the contrary in this Series
Supplement or in the Agreement, the entire amount deposited in the Principal
Funding Account and the Collection Account pursuant to this Section and all
other amounts on deposit therein shall be distributed in full to the Series
1998-1 Certificateholders on the Distribution Date on which funds are
deposited pursuant to this Section (or, if not so deposited on a Distribution
Date, on the immediately following Distribution Date) and any distribution
made pursuant to this Section shall be deemed to be a final distribution
pursuant to Section 12.02 of the Agreement with respect to Series 1998-1.
ARTICLE IX
Miscellaneous Provisions
SECTION 9.01. Certain Permitted Actions; Amendments to the
Agreement; Additional Covenants. (a) Notwithstanding anything to the contrary
in the Agreement, funds on deposit in the Collection Account may be invested
in any Eligible Investments (as that term is defined in this Series
Supplement).
(b) Notwithstanding anything to the contrary in the Agreement,
including Section 2.07(c) thereof, the Seller shall not be required to make
any deposit to the Collection Account in respect of the Repurchased
Receivables Price of any receivables repurchased by the Seller from the Trust
pursuant to such Section.
(c) Notwithstanding anything to the contrary contained herein
or in the Agreement, the Seller shall have the right to require the
reassignment to it of all the Trust's right, title and interest in, to and
under the Receivables then existing and thereafter created, all monies due or
to become due and all amounts received with respect thereto and all proceeds
thereof in or with respect to the Accounts ("Automatic Removed Accounts")
designated by the Seller, upon satisfaction of the following conditions: (a)
on or before the fifth business day immediately preceding the date upon which
such Accounts are to be removed, the Seller shall have given the Trust, each
Enhancement Provider and the Rating Agencies a Removal Notice specifying the
date for removal of the Automatic Removed Accounts (the "Automatic Removal
Date"); (b) on or prior to the date that is five Business Days after the
Automatic Removal Date, the Seller shall have delivered to the Trustee a
computer file or microfiche or written list containing a true and complete
list of the Automatic Removed
<PAGE>
64
Accounts specifying for each such Account, as of the removal notice date, its
account number and the aggregate amount of Receivables outstanding in such
Account; (c) the Seller shall have represented and warranted as of each
Automatic Removal Date that the list of Automatic Removed Accounts delivered
pursuant to clause (b) above, as of the Automatic Removal Date, is true and
complete in all material respects; (d) the Trustee shall have received
confirmation from each Rating Agency that such removal will not result in a
reduction or withdrawal of such Rating Agency's rating of any outstanding
Series or Class of Certificates; (e) the Seller shall have delivered to the
Trustee, each Rating Agency and any Enhancement Providers an officers'
certificate, dated the Automatic Removal Date, to the effect that the Seller
reasonably believes that such removal will not cause an early amortization
event to occur with respect to any Series; and (f) the Seller shall have
delivered to the Trustee, each Rating Agency and any Enhancement Providers a
Tax Opinion, dated the Automatic Removal Date, with respect to such removal.
Upon satisfaction of the above conditions, on the Automatic
Removal Date all the right, title and interest of the Trust in and to the
Receivables arising in the Automatic Removed Accounts, all monies due and to
become due and all amounts received with respect thereto and all proceeds
thereof shall be deemed removed from the Trust for all purposes.
(d) Notwithstanding anything to the contrary herein or in the
Agreement, subject to the other limitations described in Section 4.03 of the
Agreement, CFC need not deposit collections with respect to any Collection
Period in the Collection Account until the related Distribution Date.
(e) Unless otherwise agreed to by the Rating Agencies,
notwithstanding anything to the contrary herein or in the Agreement, the
Seller may from time to time, at its discretion, and subject only to the
limitations specified in this paragraph, designate Additional Accounts to be
added to the Trust. (Additional Accounts designated to be added to the Trust
in accordance with the provisions of this Section 10.01(e) are referred to
herein as "Automatic Additional Accounts".) On the Addition Date with respect
to any Automatic Additional Accounts, the Trust shall purchase the
Receivables in such Automatic Additional Accounts (and such Automatic
Additional Accounts shall be deemed to be Accounts for purposes of the
Agreement) as of the close of
<PAGE>
65
business on the applicable Additional Cut-Off Date, subject to the
satisfaction of the following conditions:
(i) such Automatic Additional Accounts shall be
Eligible Accounts;
(ii) the Seller shall, to the extent required by Section 4.03 of
the Agreement, have deposited in the Collection Account all
Collections with respect to such Automatic Additional Accounts since
the Additional CutOff Date;
(iii) no selection procedures believed by the Seller to be
adverse to the interests of the Series 1998-1 Certificateholders were
used in selecting such Automatic Additional Accounts;
(iv) as of each of the Additional Cut-Off Date and the Addition
Date, no Insolvency Event with respect to CFC or the Seller shall
have occurred nor shall the transfer of the Receivables arising in
the Automatic Additional Accounts to the Trust have been made in
contemplation of the occurrence thereof;
(v) the addition of the Receivables arising in the Automatic
Additional Accounts shall not cause an early amortization event or
any event that, after the giving of notice or the lapse of time,
would constitute a early amortization event to occur with respect to
any Series;
(vi) on or before each Addition Date with respect to Automatic
Additional Accounts, the Seller shall have delivered to the Trustee
and the Rating Agencies (A) an Opinion of Counsel with respect to the
Receivables in the Automatic Additional Accounts substantially in the
form of Exhibit G-2 to the Agreement and (B) a Tax Opinion with
respect to such addition;
(vii) within ten Business Days of the date on which any such
Receivables are added to the Trust, the Seller shall have delivered
to the Trustee a written assignment and a computer file or a
microfiche list containing a true and complete list of the related
Automatic Additional Accounts specifying for each such Account its
account number, the collection status, the aggregate amount
outstanding in such Account and the aggregate amount of Principal
Receivables outstanding in such Account; and
<PAGE>
66
(viii) the Seller shall have delivered to the Trustee an Officer's
Certificate of the Seller, dated the Addition Date, to the effect
that conditions (i) through (v) and (vii) above have been satisfied.
The Seller hereby represents and warrants to the Trust as of
the related Addition Date as to the matters relating to it set forth in
paragraphs (iii) and (iv) above and that the file or list described below is,
as of the applicable Additional Cut-Off Date, true and complete in all
material respects.
In connection with the designation of Automatic Additional
Account to be added to the Trust, the Seller shall deliver to the Trustee (i)
the computer file or microfiche list required to be delivered pursuant to
Section 2.01 of the Agreement with respect to such Automatic Additional
Accounts and (ii) a duly executed, written Assignment (including an
acceptance by the Trustee for the benefit of the Certificateholders),
substantially in the form of Exhibit B to the Agreement (the "Assignment").
Unless each Rating Agency otherwise consents, the number of
Automatic Additional Accounts added to the Trust with respect to any of the
three consecutive Collection Periods beginning in January, April, July and
October of each calendar year shall not exceed 8% of the number of Accounts
as of the first day of the calendar year during which such Collection Periods
commence and the number of Automatic Additional Accounts designated during
any such calendar year shall not exceed 20% of the number of Accounts as of
the first day of such calendar year. On or before the first business day of
each Collection Period beginning in January, April, July and October of each
calendar year, the Seller shall have requested and obtained notification from
each Rating Agency of any limitations to the right of the Seller to designate
Eligible Accounts as Automatic Additional Accounts during any period which
includes such Collection Period. To the extent that Automatic Additional
Accounts have been added to the Trust during the three consecutive Collection
Periods ending in the calendar month prior to such date, on or before January
31, April 30, July 31, October 31 of each calendar year, the Trustee shall
have received confirmation from each Rating Agency that the addition of all
Automatic Additional Accounts included as Accounts during the three
consecutive Collection Periods ending in the calendar month prior to such
date shall not have resulted in any applicable Rating Agency reducing or
withdrawing its rating of any outstanding Series or Class of Certificates. If
such Rating Agency confirmation with respect to any Automatic Additional
Accounts is not so
<PAGE>
67
received, such Automatic Additional Accounts will be removed from the Trust.
(f) Each Holder of a Series 1998-1 Certificate, by such
Holder's acceptance thereof, will be deemed to have consented to an amendment
to the Agreement that incorporates the provisions of Sections 9.01(a) and
9.01(b), 9.01(c), 9.01(d) and 9.01(e), it being understood that no such
amendment shall be effective unless and until each Series of Investor
Certificates issued prior to October 20, 1994 shall no longer be outstanding
or shall have consented to such amendment in accordance with the Agreement.
(g) Except for the conveyance hereunder to the Trustee, the
Seller will not sell, pledge, assign or transfer to any other Person any
rights it might have to funds on deposit in the Reserve Fund, the Principal
Funding Account, the Excess Funding Account or the Yield Supplement Account,
or Investment Proceeds with respect thereto.
(h) Notwithstanding anything to the contrary in Section
12.02(c) of the Agreement, the following shall be applicable to the Series
1998-1 Certificates;
In the event that the Class A-1 Invested Amount is greater than zero on the
Class A-1 Termination Date (after giving effect to deposits and distributions
otherwise to be made on the Class A-1 Termination Date), the Trustee will
sell or cause to be sold on the Class A-1 Termination Date Receivables (or
interests therein) in an amount equal to the sum of (i) 110% of the Class A-1
Invested Amount on the Class A-1 Termination Date (after giving effect to
such deposits and distributions) and (ii) the product of the Available
Subordinated Amount on the preceding Determination Date (after giving effect
to the allocations, distributions, withdrawals and deposits to be made on the
Distribution Date following such Determination Date) and the Class A-1
Allocation Percentage; provided, however, that in no event shall such amount
exceed the product of the Series 1998-1 Allocation Percentage (for the
Collection Period in which the Class A-1 Termination Date occurs) of
Receivables on the Class A-1 Termination Date and the Class A-1 Allocation
Percentage. The proceeds (the "Class A-1 Termination Proceeds") from such
sale shall be immediately deposited into the Collection Account for the
benefit of the Class A-1 Certificateholders.
In the event that the Class A-2 Invested Amount is greater
than zero on the Class A-2 Termination Date (after giving effect to deposits
and distributions otherwise to be
<PAGE>
68
made on the Class A-2 Termination Date), the Trustee will sell or cause to be
sold on the Class A-2 Termination Date Receivables (or interests therein) in
an amount equal to the sum of (i) 110% of the Class A-2 Invested Amount on
the Class A-2 Termination Date (after giving effect to such deposits and
distributions) and (ii) the Available Subordinated Amount on the preceding
Determination Date (after giving effect to the allocations, distributions,
withdrawals and deposits to be made on the Distribution Date following such
Determination Date); provided, however, that in no event shall such amount
exceed the Series 1998-1 Allocation Percentage (for the Collection Period in
which the Class A-2 Termination Date occurs) of Receivables on the Class A-2
Termination Date. The proceeds (the "Class A-2 Termination Proceeds") from
such sale shall be immediately deposited into the Collection Account for the
benefit of the Class A-2 Certificateholders.
SECTION 9.02. Ratification of Agreement. As supplemented by
this Series Supplement, the Agreement is in all respects ratified and
confirmed and the Agreement as so supplemented by this Series Supplement
shall be read, taken and construed as one and the same instrument.
SECTION 9.03. Counterparts. This Series Supplement may be
executed in two or more counterparts (and by different parties on separate
counterparts) each of which shall be an original, but all of which together
shall constitute one and the same instrument.
SECTION 9.04. Dealer Concentrations. So long as this Series
1998-1 shall be outstanding, on the last day of each Collection Period, the
Servicer shall determine if the aggregate amount of Principal Receivables due
from any Dealer or group of affiliated Dealers on such date is greater than
1.5% of the Pool Balance on such date. The Servicer shall promptly provide
the Trustee a report setting forth the basis for such determination. The
Trustee upon request from any Rating Agency will make such report available
to such Rating Agency.
SECTION 9.05. GOVERNING LAW. THIS SERIES SUPPLEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
<PAGE>
69
IN WITNESS WHEREOF, the Seller, the Servicer and the Trustee
have caused this Series Supplement to be duly executed by their respective
officers as of the day and year first above written.
U.S. AUTO RECEIVABLES COMPANY,
Seller,
by /s/ D. H. Olsen
------------------------------
CHRYSLER FINANCIAL CORPORATION,
Servicer,
by /s/ D. H. Olsen
------------------------------
THE BANK OF NEW YORK,
Trustee,
by /s/ Cheryl L. Laser
------------------------------
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<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> $ 33
<SECURITIES> 0
<RECEIVABLES> 7,872
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,905
<CURRENT-LIABILITIES> 33
<BONDS> 7,872
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 7,905
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> 0
<EPS-PRIMARY> 0.00
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