Prospectus Supplement
(To Prospectus Dated October 20, 1994)
$500,000,000
CARCO Auto Loan Master Trust
Floating Rate Auto Loan
Asset Backed Certificates, Series 1994-1
U.S. AUTO RECEIVABLES COMPANY, Seller
CHRYSLER CREDIT CORPORATION, Servicer
The Floating Rate Auto Loan Asset Backed Certificates, Series 1994-1 (the
"Series 1994-1 Certificates"), offered hereby evidence undivided interests
in certain assets of the CARCO Auto Loan Master Trust (the "Trust")
created pursuant to a Pooling and Servicing Agreement among U.S. Auto
Receivables Company ("USA" or the "Seller"), Chrysler Credit Corporation,
as servicer ("CCC" or the "Servicer"), and Manufacturers and Traders Trust
Company, as trustee. The Trust assets include wholesale receivables (the
"Receivables") generated from time to time in a portfolio of revolving
financing arrangements (the "Accounts") with automobile dealers to finance
their automobile and light duty truck inventory and collections on the
Receivables. Certain assets of the Trust will be allocated to Series
1994-1 Certificateholders, including the right to receive a varying
percentage of each month's collections with respect to the Receivables at
the times and in the manner described herein. The Seller will own the
remaining interest in the Trust not represented by the Series 1994-1
Certificates or the Certificates of any other Series issued by the Trust
(the "Seller's Interest"). The Trust previously has issued seven other
Series of Certificates that are currently outstanding (each, a "Series").
From time to time, subject to certain conditions, the Seller may offer
other Series of Certificates, which may have terms significantly different
from the terms of the Series 1994-1 Certificates. The issuance of
additional Series of Certificates may impact the timing of payments
received by Series 1994-1 Certificateholders.
Interest will accrue on the Series 1994-1 Certificates at the rate of
0.18% per annum above one-month LIBOR (the "Index") prevailing on the
Adjustment Date (as defined herein), subject to certain limitations
described herein (the "Certificate Rate"). Interest with respect to the
Series 1994-1 Certificates is payable on the fifteenth day of each month
(or, if such day is not a business day, on the next succeeding business
day) (each, a "Distribution Date"), commencing on November 15, 1994.
Principal with respect to the Series 1994-1 Certificates is scheduled to
be paid on October 15, 1999, but may be paid earlier or later under
certain circumstances described herein.
The Seller's Interest will be subordinated to the rights of the Series
1994-1 Certificateholders to the limited extent of the Available
Subordinated Amount as described herein. Prospective investors should
consider the factors set forth under "Special Considerations" herein and
in the Prospectus.
THE SERIES 1994-1 CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST
ONLY AND DO NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF THE SELLER, THE
SERVICER OR ANY AFFILIATE THEREOF. NEITHER THE SERIES 1994-1 CERTIFICATES
NOR THE RECEIVABLES ARE INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Price to Underwriting Proceeds to the
Public(1) Discount Seller(1)(2)
<S> <C> <C> <C>
Per Certificate.......... 100.000% .325% 99.675%
Total.................... $500,000,000 $1,625,000 $498,375,000
<FN>
- --------------------------------------------------------------------------
(1) Plus accrued interest, if any, at the Certificate Rate from October
27, 1994.
(2) Before deducting expenses, estimated to be $635,000.
</TABLE>
The Series 1994-1 Certificates are offered subject to prior sale, and
subject to the Underwriters' right to reject orders in whole or in part.
It is expected that delivery of the Series 1994-1 Certificates will be
made in book-entry form only through the Same Day Funds Settlement System
of The Depository Trust Company on or about October 27, 1994.
Salomon Brothers Inc
Bear, Stearns & Co. Inc.
J.P. Morgan Securities Inc.
The date of this Prospectus Supplement is October 20, 1994.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES
1994-1 CERTIFICATES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT
ANY TIME.
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION WITH
RESPECT TO THE OFFERING OF THE SERIES 1994-1 CERTIFICATES. ADDITIONAL
INFORMATION IS CONTAINED IN THE PROSPECTUS AND PURCHASERS ARE URGED TO
READ BOTH THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF
THE SERIES 1994-1 CERTIFICATES MAY NOT BE CONSUMMATED UNLESS THE PURCHASER
HAS RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
<PAGE>
SUMMARY OF SERIES TERMS
This summary of Series Terms sets forth and defines specific terms
of the Series 1994-1 Certificates offered in this Prospectus Supplement
and the Prospectus, but is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and
in the Prospectus. Reference is made to the Index of Principal Terms in
each of this Prospectus Supplement and the Prospectus for the location
herein and therein of the definitions of certain capitalized terms used
herein. Certain capitalized terms used but not defined herein have the
meanings assigned to such terms in the Prospectus.
Title of Securities .... Floating Rate Auto Loan Asset Backed
Certificates, Series 1994-1 (the "Series 1994-1
Certificates").
The Series 1994-1
Invested Amount ...... The Series 1994-1 Invested Amount is expected to
be $500,000,000 on the Series Issuance Date
(based on information as of the Series Cut-Off
Date) and represents the principal amount of the
Series 1994-1 Certificates invested in
Receivables as of the Series Issuance Date. The
Invested Amount is subject to decrease to the
extent funds are deposited in the Excess Funding
Account and, subsequently, to increase to the
extent amounts are withdrawn from the Excess
Funding Account and paid to the Seller. The
Invested Amount is also subject to reduction
during the Accumulation Period and any Early
Amortization Period and at such other times as
deposits are made to the Excess Funding Account
in connection with the payment of Receivables.
Interest ............... Interest on the principal balance of the Series
1994-1 Certificates will accrue at the
Certificate Rate and will be payable to Series
1994-1 Certificateholders on the fifteenth day
of each month (or, if such day is not a business
day, on the next succeeding business day) (each,
a "Distribution Date"), commencing November 15,
1994. Interest will accrue for the period
beginning on and including the most recent
Distribution Date and ending on and including
the day preceding the next succeeding
Distribution Date (each an "Interest Period"),
except that the first Interest Period will begin
on and include the Series Issuance Date.
Interest for any Distribution Date due but not
paid on such Distribution Date will be due on
the next Distribution Date, together with, to
the extent permitted by applicable law, interest
on such amount at the Certificate Rate
calculated on the basis of the Index plus 2.0%.
The Certificate Rate for each Interest Period
will be determined on the second London business
day preceding the first day of such Interest
Period (each an "Adjustment Date"). The
Certificate Rate will equal one-month LIBOR (the
"Index") for the applicable Adjustment Date,
determined as provided herein, plus 0.18%;
provided that, if the Certificate Rate for any
Distribution Date calculated on the basis of the
Index is greater than the Assets Receivables
Rate, then the Certificate Rate for such
Distribution Date will be the Assets Receivables
Rate. If the Certificate Rate for any
Distribution Date is based on the Assets
Receivables Rate, the excess of (a) the amount
of interest on the Series 1994-1 Certificates
that would have accrued in respect of the
related Interest Period had interest been
calculated based on the Index over (b) the
amount of interest on the Series 1994-1
Certificates actually accrued in respect of such
period based on the Assets Receivables Rate
(such excess, together with the unpaid portion
of any such excess from prior Distribution Dates
(and interest accrued thereon at the Certificate
Rate calculated on the basis of the Index plus
2.0%), is referred to as the "Carry-over
Amount") will be paid on such Distribution Date
from amounts on deposit in the Yield Supplement
Account and, if such amounts are depleted, to
the extent funds are allocated and available
therefor after making all required distributions
and deposits with respect to the Series 1994-1
Certificates, including payments with respect to
principal (including payments to the Excess
Funding Account), Monthly Interest, the Monthly
Servicing Fee, the Reserve Fund Deposit Amount
and the Investor Default Amount as described
under "Series Provisions -- Distributions from
the Collection Account; Reserve Fund; Yield
Supplement Account". Interest will be calculated
on the basis of the actual number of days in
each Interest Period divided by 360.
Yield Supplement
Account .............. On the Series Issuance Date, the Seller will
deposit $2,000,000 in a trust account which will
be established by the Seller with the Trustee
(the "Yield Supplement Account"). The Yield
Supplement Account will be funded, from time to
time as described herein, by the deposit thereto
of certain amounts otherwise distributable to
the Seller. See "Series Provisions --
Distributions from the Collection Account;
Reserve Fund; Yield Supplement Account -- Yield
Supplement Account".
Expected Payment Date .. October 15, 1999.
Excess Funding
Account .............. Except during any Early Amortization Period or
after the April 1999 Distribution Date, the
Excess Funded Amount will be maintained in the
Excess Funding Account.
Upon the earlier of (a) the commencement of any
Early Amortization Period and (b) the April 1999
Distribution Date, funds on deposit in the
Excess Funding Account will be distributed to
the Series 1994-1 Certificateholders as
described herein or deposited in the Principal
Funding Account as described herein.
Accumulation Period .... Unless an Early Amortization Event that is not
cured or waived as described herein shall have
occurred, the Series 1994-1 Certificates will
have an Accumulation Period of one, two, three,
four or five month(s) long as described in the
following paragraph.
On the April 1999 Distribution Date and each
Distribution Date thereafter that occurs prior
to the Accumulation Period Commencement Date,
the Servicer shall calculate the Accumulation
Period Length. The "Accumulation Period Length"
will be calculated on each such date as the
lesser of (i) the number of full Collection
Periods between such Distribution Date and the
Expected Payment Date and (ii) the product,
rounded upwards to the nearest integer not
greater than five, of (a) one divided by the
lowest monthly payment rate on the Receivables
during the last 12 months and (b) a fraction,
the numerator of which is the sum of (i) the
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 (excluding certain Series)
currently in their amortization or accumulation
periods or expected to be in their amortization
or accumulation periods by the Expected Payment
Date and the denominator of which is the sum of
such Invested Amount and the invested amounts as
of such Distribution Date (after giving effect
to all changes therein on such date) of all
other outstanding Series (excluding certain
Series) which are expected to be outstanding on
the Expected Payment Date. The Accumulation
Period Commencement Date (which will be the
first day of a Collection Period) will occur
when the number of full Collection Periods
remaining until the Expected Payment Date first
equals the Accumulation Period Length as
calculated above. If the Accumulation Period
Length is one month, two months, three months,
four months or five months in length, the
"Accumulation Period Commencement Date" shall be
the first day of the September 1999 Collection
Period, the August 1999 Collection Period, the
July 1999 Collection Period, the June 1999
Collection Period or the May 1999 Collection
Period, respectively. In addition, if at any
time after the April 1999 Distribution Date, any
other outstanding Series (excluding certain
Series) shall have entered into a reinvestment
period or an early amortization period, the
Accumulation Period Commencement Date shall be
the earlier of (i) the date that such
outstanding Series shall have entered into its
reinvestment period or early amortization period
and (ii) the Accumulation Period Commencement
Date as previously determined. See "Annex I --
Outstanding Series of Investor Certificates".
The effect of the calculation described above is
to permit the reduction of the length of the
Accumulation Period based on the invested
amounts of certain other Series which are
scheduled to be in their revolving periods
during the Accumulation Period and on increases
in the principal payment rate, which, if
continued, would result in a shorter
Accumulation Period.
Early Amortization
Period ............... The Series 1994-1 Certificates will have an
Early Amortization Period if an Early
Amortization Event occurs. See "Description of
the Certificates -- Reinvestment Events and
Early Amortization Events" in the Prospectus and
"Series Provisions -- Early Amortization Events"
herein for a description of the events that
might result in the commencement of an Early
Amortization Period. See also "Series Provisions
-- Distributions from the Collection Account;
Reserve Fund; Yield Supplement Account --
Principal Collections".
The Seller is required to add Receivables to the
Trust under certain circumstances described
under "Description of the Certificates --
Addition of Accounts" in the Prospectus. The
failure of the Seller to add Receivables when
required will result in the occurrence of an
Early Amortization Event. However, if no other
Early Amortization Event has occurred, the Early
Amortization Period resulting from such failure
will terminate and the Revolving Period will
recommence when the Seller would no longer be
required to add Receivables to the Trust, so
long as the scheduled termination date of the
Revolving Period has not occurred.
Notwithstanding the foregoing, in the event of
the occurrence of certain Early Amortization
Events, provided that the scheduled termination
date of the Revolving Period has not occurred,
the Revolving Period may recommence following
receipt of (i) written confirmation from each
Rating Agency (other than Moody's) that such
Rating Agency's rating of the Series 1994-1
Certificates will not be withdrawn or lowered
as a result of such recommencement and (ii) the
consent of Series 1994-1 Certificateholders
holding Series 1994-1 Certificates evidencing
more than 50% of the aggregate unpaid principal
amount of the Series 1994-1 Certificates to such
recommencement. See "Series Provisions -- Early
Amortization Events".
Subordination of the
Seller's Interest .... If the Interest Collections, Investment
Proceeds, certain amounts in the Reserve Fund,
certain amounts in the Yield Supplement Account
and certain other amounts allocable to the
Series 1994-1 Certificateholders for any
Collection Period are not sufficient to cover
the interest payable with respect to the Series
1994-1 Certificates on the next Distribution
Date (plus any overdue interest and interest
thereon), the Monthly Servicing Fee for such
Distribution Date, any Investor Default Amount
for such Distribution Date and certain other
amounts, the Available Subordinated Amount will
be applied to make up such deficiency. The
Available Subordinated Amount for a
Determination Date is equal to (a) the lesser of
(i) the Available Subordinated Amount for the
preceding Determination Date, minus, with
certain limitations, the Draw Amount for such
preceding Determination Date, minus funds from
the Reserve Fund applied to cover any portion of
the Investor Default Amount, plus the excess, if
any, of the Required Subordinated Amount for
such Determination Date over the Required
Subordinated Amount for the immediately
preceding Determination Date, plus the amount of
Excess Servicing available to be paid to the
Seller as described under "Series Provisions --
Distributions from the Collection Account;
Reserve Fund Account; Yield Supplement Account
-- Excess Servicing", and (ii) the product of
the fractional equivalent of the Subordinated
Percentage and the Invested Amount minus (b) in
the case of clause (a)(i), the Incremental
Subordinated Amount for such preceding
Determination Date, plus (c) the Incremental
Subordinated Amount for the current
Determination Date, plus (d) the Subordinated
Percentage of funds to be withdrawn from the
Excess Funding Account on the succeeding
Distribution Date and paid to the Seller or
allocated to one or more Series; provided,
however, that, from and after the commencement
of the Accumulation Period or any Early
Amortization Period that is not terminated as
described herein until the payment in full of
the Series 1994-1 Certificates, the Available
Subordinated Amount shall be calculated based on
the Invested Amount as of the close of business
on the day preceding such Accumulation Period or
Early Amortization Period. The Available
Subordinated Amount for the first Determination
Date is equal to the Required Subordinated
Amount. The "Required Subordinated Amount" shall
mean, as of any date of determination, the sum
of (a) the product of the initial Subordinated
Percentage, as adjusted from time to time as
described herein other than as a result of an
increase therein at the option of the Seller,
and the Invested Amount and (b) the Incremental
Subordinated Amount.
The "Incremental Subordinated Amount" on any
Determination Date will equal the result obtained
by multiplying (a) a fraction, the numerator of
which is the sum of the Invested Amount on the
last day of the immediately preceding Collection
Period and the Available Subordinated Amount for
such Determination Date (calculated without
adding the Incremental Subordinated Amount for
such Determination Date as described in clause
(c) above), and the denominator of which is the
Pool Balance on such last day by (b) the excess,
if any, of (x) the sum of the Overconcentration
Amount, the Installment Balance Amount and the
aggregate amount of Ineligible Receivables on
such Determination Date over (y) the aggregate
amount of Ineligible Receivables, Receivables in
Accounts containing Dealer Overconcentrations and
Receivables in Installment Balances, in each case
that became Defaulted Receivables during the
preceding Collection Period and are not subject
to reassignment from the Trust, unless certain
insolvency events relating to the Seller or CCC
have occurred, as further described in the
Pooling and Servicing Agreement.
The "Subordinated Percentage" will initially
equal the percentage equivalent of a fraction,
the numerator of which is the Subordination
Factor and the denominator of which will be the
excess of 100% over the Subordination Factor. The
Subordination Factor will initially be 10%, but
will be subject to increase to 11% in the event
that the rating of CFC's long-term unsecured debt
is lowered below BBB- by Standard & Poor's or
withdrawn by Standard & Poor's, unless the Seller
receives written confirmation from Standard &
Poor's that the failure to so increase the
Subordination Factor would not result in such
Rating Agency lowering or withdrawing its rating
of the Series 1994-1 Certificates. The Seller
may, in its sole discretion, increase at any time
the Available Subordinated Amount for so long as
the cumulative amount of such discretionary
increases does not exceed the lesser of (i)
$5,555,555 or (ii) 1.11% of the Invested Amount
on such date. The Seller is not under any
obligation to increase the Available Subordinated
Amount at any time, except as described herein.
If the Available Subordinated Amount were reduced
to less than the Required Subordinated Amount, an
Early Amortization Event would occur. The Seller
could elect to increase the Available
Subordinated Amount at the time such an Early
Amortization Event would otherwise occur, thus
preventing or delaying the occurrence of the
Early Amortization Event.
Required Participation
Percentage ........... "Required Participation Percentage" shall mean,
with respect to Series 1994-1, 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 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 ten days' prior notice to the
Trustee and the Rating Agencies reduce the
Required Participation Percentage to not less
than 100%, so long as the Rating Agencies shall
not have notified the Seller or the Servicer
that any such reduction will result in a
reduction or withdrawal of the rating of the
Series 1994-1 Certificates or any other
outstanding Series or Class of Certificates.
Other Series
Issuances ............ As of the date hereof, seven other Series issued
by the Trust are outstanding. See "Annex I --
Outstanding Series of Investor Certificates" for
a summary of the terms of the outstanding
Series.
Allocations ............ Interest Collections, Principal Collections and
Defaulted Receivables allocated to Series 1994-1
as described under "Description of the
Certificates -- Allocation Percentages --
Allocation among Series" in the Prospectus will
be further allocated between the Series 1994-1
Certificateholders' Interest and the Seller's
Interest as described below.
Interest Collections and Defaulted Receivables
allocated to Series 1994-1 will be allocated at
all times to the Series 1994-1
Certificateholders' Interest based on the
Floating Allocation Percentage applicable during
the related Collection Period. The Floating
Allocation Percentage for any Collection Period
is the percentage obtained by dividing the
Invested Amount on the last day of the
immediately preceding Collection Period by the
product of (x) the Pool Balance on the last day
of the immediately preceding Collection Period
and (y) the Series Allocation Percentage for the
Collection Period in respect of which the
Floating Allocation Percentage is being
calculated. Principal Collections allocated to
Series 1994-1 will be allocated to the Series
1994-1 Certificateholders' Interest based on the
Floating Allocation Percentage during the
Revolving Period and based on the Fixed
Allocation Percentage during the Accumulation
Period and any Early Amortization Period. The
Fixed Allocation Percentage for a Collection
Period during the Accumulation Period and any
Early Amortization Period is the percentage
equivalent of a fraction, the numerator of which
is the Invested Amount on the last day of the
Revolving Period and the denominator of which is
the product of (x) the Pool Balance on the last
day of the immediately preceding Collection
Period and (y) the Series Allocation Percentage
for the Collection Period in respect of which
the Fixed Allocation Percentage is being
calculated.
Excess Principal
Collections .......... Principal Collections otherwise allocable to
other Series, to the extent such collections are
not needed to make payments to or deposits for
the benefit of the Certificateholders of such
other Series, will be applied to cover principal
payments due to or for the benefit of the
holders of the Series 1994-1 Certificates and of
other Series of Certificates entitled thereto.
See "Description of the Certificates --
Allocation Percentages -- Principal Collection
for all Series" in the Prospectus and "Series
Provisions -- Allocation Percentages --
Principal Collections for all Series" herein.
Registration of Series
1994-1 Certificates .. The Series 1994-1 Certificates will initially be
represented by one or more Certificates
registered in the name of Cede, as the nominee
of DTC. No person acquiring an interest in the
Series 1994-1 Certificates will be entitled to
receive a definitive certificate representing
such person's interest except under certain
limited circumstances. Series 1994-1
Certificateholders may only hold their Series
1994-1 Certificates through DTC. Series 1994-1
Certificates may not be held through CEDEL or
Euroclear. See "Description of the Certificates
-- Definitive Certificates" in the Prospectus.
Servicing Fee Rate ..... 1.0% or, if the Monthly Servicing Fee has been
waived as discussed under "Description of the
Certificates -- Servicing Compensation and
Payment of Expenses" in the Prospectus, 0% for
the Distribution Date in respect of which the
Monthly Servicing Fee has been waived.
Optional Repurchase .... The Series 1994-1 Certificateholders' Interest
will be subject to optional repurchase by the
Seller on any Distribution Date after the
Invested Amount is reduced to an amount less
than or equal to $50,000,000 (10% of the initial
outstanding principal amount of the Series
1994-1 Certificates). The purchase price will
equal the sum of (i) the Invested Amount on the
Determination Date preceding the Distribution
Date on which the purchase is scheduled to be
made, (ii) accrued and unpaid interest on the
Series 1994-1 Certificates at the Certificate
Rate (together with interest on overdue
interest) and (iii) any outstanding Carry-over
Amount.
Series 1994-1
Termination Date ..... September 15, 2001. See "Series Provisions --
Series Termination".
ERISA Considerations ... Series 1994-1 Certificates may be eligible for
purchase by employee benefit plans. See "ERISA
Considerations" in the Prospectus.
Certificate Ratings .... It is a condition to the issuance of the Series
1994-1 Certificates that they be rated in the
highest long-term rating category by at least
one nationally recognized rating agency. A
security rating is not a recommendation to buy,
sell or hold securities and is subject to
revision or withdrawal in the future by the
assigning rating agency. The rating of the
Certificates does not address the likelihood of
payment of any Carry-over Amount. See "Special
Considerations -- Ratings of the Certificates"
in the Prospectus.
Series Issuance Date ... October 27, 1994.
Series Cut-Off Date .... September 30, 1994.
<PAGE>
SPECIAL CONSIDERATIONS
Payments. The shorter the Accumulation Period Length the greater the
likelihood that payment of the Series 1994-1 Certificates in full by the
Expected Payment Date will be dependent on the reallocation of Principal
Collections which are initially allocated to other Series. If one or more
other Series from which Principal Collections are expected to be available
to be reallocated to the payment of the Series 1994-1 Certificates enters
into an early amortization period or reinvestment period after the April
1999 Distribution Date, Principal Collections allocated to such Series
generally will not be available to be reallocated to make payments of
principal of the Series 1994-1 Certificates and the final payment of
principal of the Series 1994-1 Certificates may be later than the Expected
Payment Date. Upon written request, the Seller will make available to
Series 1994-1 Certificateholders Disclosure Documents relating to the
other outstanding Series which describe the events which could result in
the commencement of an early amortization period or reinvestment period
with respect to such outstanding Series. See "Maturity and Principal
Payment Considerations".
In addition, a significant decline in the amount of Receivables
generated could cause an Early Amortization Event. However, such a decline
in the amount of Receivables generated would initially be absorbed by an
increase in the Excess Funded Amount. The Receivables Purchase Agreement
will provide that CCC will be required to designate additional Accounts,
the Receivables of which will be sold to the Seller, and the Pooling and
Servicing Agreement will provide that the Seller will be required to
transfer such Receivables to the Trust in the event that the amount of the
Pool Balance is not maintained at a certain minimum level. If additional
Accounts are not designated by CCC when required, an Early Amortization
Event will occur and result in the commencement of an Early Amortization
Period, although in certain circumstances the resulting Early Amortization
Period may terminate and the Revolving Period recommence. If an insolvency
event relating to CCC, CFC, the Seller, the Trust or Chrysler were to
occur, then an Early Amortization Event would occur, additional
Receivables would not be transferred to the Trust and distributions of
principal in respect of the Series 1994-1 Certificates would not be
subject to the Controlled Deposit Amount. See "The Dealer Floorplan
Financing Business" in the Prospectus and "Maturity and Principal Payment
Considerations" herein and see also "Series Provisions -- Early
Amortization Events" for a discussion of other events which might lead to
the occurrence of an Early Amortization Period.
Trust's Relationship to Chrysler and CCC; Financial Condition of
Chrysler. Certain aspects of the Trust's relationship to Chrysler
Corporation and CCC are described in the Prospectus under "Special
Considerations -- Trust's Relationship to Chrysler and CCC". Set forth
below is certain financial information with respect to Chrysler and CFC.
Chrysler reported earnings before income taxes of $1,063 million for
the third quarter of 1994, compared with $612 million for the third
quarter of 1993. For the first nine months of 1994, Chrysler reported
earnings before income taxes and the cumulative effect of changes in
accounting principles of $4.2 billion compared with $2.6 billion for the
comparable period of 1993. Pretax earnings for the third quarter and first
nine months of 1993 included gains on sales of automotive assets and
investments of $94 million and $265 million, respectively.
The improvement in operating results in the third quarter and first
nine months of 1994 over the corresponding periods of 1993 resulted from
an increase in sales volume and pricing actions, including lower per unit
sales incentives, partially offset by increased profit-based employee
costs. Chrysler's worldwide factory car and truck sales for the three and
nine months ended September 30, 1994 increased 15 percent and 12 percent,
respectively, over the comparable 1993 periods. Combined U.S. and Canadian
dealers' days supply of vehicle inventory was 54 days at September 30,
1994, as compared to 63 days at December 31, 1993 and 54 days at September
30, 1993.
Net earnings for the third quarter of 1994 were $651 million, or
$1.76 per common share, compared with $423 million or $1.13 per common
share, in the third quarter of 1993. Net earnings for the three months
ended September 30, 1993 included a $51 million favorable adjustment to
the income tax provision to reflect the increase in the U.S. federal tax
rate to 35 percent. Net earnings for the nine months ended September 30,
1994 were $2.5 billion, compared to a net loss of $3.3 billion for the
comparable period of 1993. The net loss for the first nine months of 1993
resulted from a charge of $4.7 billion for the cumulative effect of a
change in accounting principle related to the adoption of Statement of
Financial Accounting Standards ("SFAS") No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions". Results for the first
nine months of 1993 also included a charge of $283 million for the
cumulative effect of a change in accounting principle relating to the
adoption of SFAS No. 112, "Employers' Accounting for Postemployment
Benefits".
Chrysler reported earnings before income taxes and the cumulative
effect of changes in accounting principles of $3.8 billion in 1993,
compared with $934 million in 1992. The earnings in 1993 included a gain
on sales of automotive assets and investments of $265 million. Earnings in
1992 included a gain on the sale of an automotive investment of $142
million, a $110 million charge for reducing investments of Chrysler Canada
Ltd. and certain of its employee benefit plans in a real estate investment
concern to their estimated net realizable value, and a $101 million
restructuring charge related to the realignment of Chrysler's short-term
vehicle rental subsidiaries. Excluding the effect of these items,
Chrysler's pretax earnings for 1993 and 1992 were $3.6 billion and $1.0
billion, respectively.
The improvement in 1993 over 1992 was primarily the result of a
substantial increase in unit sales volume, pricing actions, including
significantly lower per unit sales incentives, and an improved mix of
higher-margin products, partially offset by increased labor and benefit
costs. Chrysler's worldwide factory car and truck sales during 1993
increased 14 percent to 2,475,738 units. Combined U.S. and Canadian
dealers' days supply of vehicle inventory decreased to 63 days at December
31, 1993 from 72 days at December 31, 1992.
Including the provision for income taxes and the cumulative effect
of changes in accounting principles, Chrysler reported a net loss for 1993
of $2.6 billion, or $7.62 per common share, compared with net earnings of
$723 million, or $2.21 per common share for 1992. The net loss for 1993
resulted from a charge of $4.7 billion, or $13.57 per common share, for
the cumulative effect of a change in accounting principle related to the
adoption of SFAS No. 106. Also included in the 1993 results was a charge
of $283 million, or $0.82 per common share, for the cumulative effect of a
change in accounting principle relating to the adoption of SFAS No. 112.
Net earnings for 1992 included a $218 million, or $0.74 per common share,
favorable cumulative effect of a change in accounting principle relating
to the adoption of SFAS No. 109, "Accounting for Income Taxes".
During 1992 and 1993, Chrysler took various actions to strengthen
its financial condition, improve liquidity and add to its equity base in
order to ensure its ability to carry out its new product development and
facility modernization programs without significant interruption. In the
second and third quarters of 1993, Chrysler sold its remaining 50.3
million shares of Mitsubishi Motors Corporation ("MMC") stock for net
proceeds of $329 million and sold the plastics operations of its Acustar
division for net proceeds of $132 million. In February 1993, Chrysler
issued 52 million shares of common stock for net proceeds of $1.95
billion. In 1992, Chrysler sold 43.6 million shares of MMC stock for net
proceeds of $215 million and issued 1.7 million shares of convertible
preferred stock for net proceeds of $836 million.
CFC's earnings before taxes were $82 million and $226 million for
the three and nine months ended September 30, 1994, which compares to $64
million and $176 million for the comparable periods of 1993, before the
cumulative effect of changes in accounting principles. The increase in
1994 earnings before taxes and accounting changes resulted from higher
levels of automotive financing and lower costs of bank facilities,
partially offset by reduced retail automotive margins.
CFC's net earnings were $50 million and $141 million for the three
and nine months ended September 30, 1994 compared to $22 million and $73
million in the comparable periods of 1993. Net earnings for the nine
months ended September 30, 1993 included charges totaling $30 million from
the adoption of SFAS No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions", and SFAS No. 112, "Employers' Accounting
for Postemployment Benefits". Net earnings for the three and nine months
ended September 30, 1993 were reduced by a $16 million charge related to
the recognition of the retroactive increase in the U.S. corporate tax
rate.
CFC reported net earnings of $129 million for 1993, compared to $231
million for 1992. Accounting changes in 1993 and 1992 negatively impact
net earnings comparisons by $81 million. Net earnings for 1993 included a
$30 million after-tax charge from the adoption of SFAS No. 106 and SFAS
No. 112, while 1992 net earnings included a $51 million favorable
after-tax adjustment from the adoption of SFAS No. 109.
CFC's earnings before the cumulative effect of changes in accounting
principles were $159 million for 1993 and $180 million for 1992. The
decline in earnings before accounting changes resulted largely from higher
borrowing costs incurred under CFC's revolving credit agreements.
Both Chrysler and CFC regained investment grade credit ratings in
1993. The improved credit ratings reflect Chrysler's improved operating
results, the significant improvements in Chrysler's balance sheet
(including reductions in its outstanding debt and unfunded pension
obligation), and CFC's improved liquidity.
Chrysler and CFC are subject to the informational requirements of
the Exchange Act and in accordance therewith file reports and other
information with the Commission. For further information regarding
Chrysler and CFC reference is made to such reports and other information
which are available as described under "Available Information" in the
Prospectus.
Credit Enhancement. Credit enhancement of the Series 1994-1
Certificates will be provided by the subordination of the Seller's
Interest to the extent of the Available Subordinated Amount as described
herein and amounts in the Reserve Fund. The amount of such credit
enhancement is limited and will be reduced from time to time as described
herein. See "Series Provisions -- Allocation of Collections; Limited
Subordination of Seller's Interest".
Basis Risk. The Receivables bear interest at prime rates announced
by certain banks plus a margin currently ranging from 0.50% to 2.00%. The
Certificate Rate is based on the Index. If, in respect of any Distribution
Date, there does not exist a positive spread between (a) the Assets
Receivables Rate and (b) the Certificate Rate based on the Index, the
Certificate Rate for such Distribution Date will be the Assets Receivables
Rate. The Certificate Rate based on the Index may exceed the Assets
Receivables Rate as a result of (i) the Index exceeding the applicable
prime rate and (ii) if amounts are deposited in the Excess Funding Account
or the Principal Funding Account, the Index exceeding the investment
earnings on amounts on deposit therein. Any Carry-over Amount will be
reduced by the amounts, if any, on deposit in the Yield Supplement
Account. However, there can be no assurance that sufficient amounts, if
any, will be available in the Yield Supplement Account. In addition, the
amount required to be deposited in the Yield Supplement Account is not
designed to include amounts which would be required to pay any Carry-over
Amount resulting from the Index exceeding the applicable prime rate. See
"Series Provisions -- Interest" and " -- Distributions from the Collection
Account; Reserve Fund; Yield Supplement Account -- Yield Supplement
Account".
In addition, CCC may reduce the rates applicable to any of the
Receivables, so long as CCC does not reasonably expect any such reduction
to result in the creation of a Carry-over Amount. In any event, such a
reduction would have the effect of reducing or possibly eliminating the
positive spread, if any, between the Assets Receivables Rate and the
Certificate Rate.
Once amounts deposited from time to time in the Yield Supplement
Account are exhausted, any Carry-over Amount arising as a result of the
Certificate Rate being determined on the basis of the Assets Receivables
Rate will be paid to the extent funds are allocated and available therefor
after making all required distributions and deposits with respect to the
Series 1994-1 Certificates, including payments with respect to principal
(including payments to the Excess Funding Account), Monthly Interest, the
Monthly Servicing Fee, the Reserve Fund Deposit Amount and the Investor
Default Amount as described under "Series Provisions -- Distributions from
the Collection Account; Reserve Fund; Yield Supplement Account". However,
if any Carry-over Amount is outstanding for six consecutive Distribution
Dates, an Early Amortization Event will occur. See "Series Provisions --
Early Amortization Events". The rating of the Series 1994-1 Certificates
does not address the likelihood of payment of any Carry-over Amount.
USE OF PROCEEDS
The net proceeds from the sale of the Series 1994-1 Certificates
will be paid to USA. USA will use such proceeds (together with the
subordinated loan from CFC described under "U.S. Auto Receivables Company
and the Trust -- U.S. Auto Receivables Company" in the Prospectus) to
purchase Receivables from CCC or to repay certain amounts previously
borrowed to purchase Receivables. CCC will use the portion of the proceeds
paid to it for general corporate purposes.
THE DEALER FLOORPLAN FINANCING BUSINESS
Information regarding the dealer floorplan financing business is set
forth under "The Dealer Floorplan Financing Business" in the Prospectus.
In addition, the Receivables sold to the Trust by the Seller pursuant to
the Pooling and Servicing Agreement were or will be selected from
extensions of credit and advances made by Chrysler and CCC to
approximately 3,440 domestic motor "vehicle dealers". CCC financed 62.3%
of the total number of all Chrysler franchised dealers as of September 30,
1994. Furthermore, CCC has extended credit lines to 1,152
Chrysler-franchised dealers that also operate non-Chrysler franchises
(representing approximately 39.0% of the aggregate credit lines of dealers
in the U.S. Wholesale Portfolio as of September 30, 1994) and 341
non-Chrysler dealers (representing approximately 10.9% of such aggregate
credit lines). As of September 30, 1994, the balance of Principal
Receivables in the U.S. Wholesale Portfolio was approximately $6.1
billion. CCC currently services the U.S. Wholesale Portfolio through its
home office and through a network of 86 branch offices located throughout
the United States.
As of September 30, 1994, the average credit lines per dealer in the
U.S. Wholesale Portfolio for new and used vehicles (which includes Auction
Vehicles) were $2.48 million and $.24 million, respectively, and the
average balance of principal receivables per dealer was $1.78 million. The
aggregate total receivables balance as a percentage of the aggregate total
credit line was approximately 65.3%. As of September 30, 1994, 4.0% of the
aggregate total receivables balances in the U.S. Wholesale Portfolio were
in dealer accounts in respect of which the related credit lines were
initially established in 1994, 11.2% in 1993, 9.7% in 1992, 11.5% in 1991,
10.4% in 1990 and 53.2% prior to 1990 and the weighted average spread over
the Prime Rate charged to dealers in the U.S. Wholesale Portfolio was
approximately 1.0%.
As of September 30, 1994, approximately 99.8% of all dealers
eligible for the installment payment plan were remitting 100% of the
Instalment Balance following the sale of the related vehicle. Currently
CCC has elected to have Chrysler absorb credit losses on Instalment
Balances in an amount equal to 15% of the aggregate Instalment Balances
created in each calendar month (rather than sell Instalment Balances to
Chrysler) and Chrysler supports such agreement by maintaining a deposit
with CCC in an amount equal to 15% of the aggregate amount of Instalment
Balances outstanding at the end of each calendar month.
Used Vehicles represented approximately 4.7% of the aggregate
principal amount of receivables in the U.S. Wholesale Portfolio as of
September 30, 1994. As of the Series Cut-Off Date, Used Vehicles
represented approximately 4.7% of the aggregate principal amount of
Receivables in the Trust (including Excluded Receivables).
As of September 30, 1994, 1.8% of the total number of dealers in
the U.S. Wholesale Portfolio were subject to finance hold versus 3.2% as
of December 31, 1993, 6.8% as of December 31, 1992, 9.4% as of December
31, 1991, 6.8% as of December 31, 1990, and 4.6% as of December 31, 1989.
As of September 30, 1994, 15 dealers (1.4% of the total number of
dealers in the U.S. Wholesale Portfolio) were assigned to Dealer Trouble
status; and 21 dealers (0.6% of the total number of dealers in the U.S.
Wholesale Portfolio) as of December 31, 1993, 56 dealers (1.8% of the
total number of dealers in the U.S. Wholesale Portfolio) as of December
31, 1992, 100 dealers (3.1% of the total number of dealers in the U.S.
Wholesale Portfolio) as of December 31, 1991, 129 dealers (4.2% of the
total number of dealers in the U.S. Wholesale Portfolio) as of December
31, 1990, and 106 dealers (3.5% of the total number of dealers in the U.S.
Wholesale Portfolio) as of December 31, 1989 were assigned to Dealer
Trouble status.
THE ACCOUNTS
As of the Series Cut-Off Date, with respect to the Accounts in the
Trust: (a) there were 2,519 Accounts and the Principal Receivables balance
was approximately $4.3 billion; (b) the average credit lines per Dealer
for new and used vehicles (which include Auction Vehicles) were
approximately $2.45 million and $0.24 million, respectively, and the
average balance of Principal Receivables per Dealer was approximately
$1.71 million; (c) the aggregate total Receivables balance as a percentage
of the aggregate total credit line was approximately 63.6%; (d) 1.4% of
the Receivables were in Accounts which the related credit lines were
initially established in 1994, 13.5% in 1993, 11.4% in 1992, 12.1% in
1991, 11.8% in 1990 and 49.8% prior to 1990; and (e) the weighted average
spread over the Prime Rate charged to Dealers was approximately 1.0%.
Unless otherwise indicated, the statistics included in this paragraph and
under " -- Geographic Distribution" with respect to the Accounts and the
Receivables in the Trust gives effect to approximately $0.4 million of
principal receivables balances with respect to certain Dealers (the
"Excluded Receivables" and the "Excluded Dealers", respectively) that are
in voluntary or involuntary bankruptcy proceedings or voluntary or
involuntary liquidation or that, subject to certain limitations, are being
voluntarily removed by the Seller (or the Servicer on its behalf) from the
Trust. A portion of such principal receivables was created after such
Dealers entered into such status or were designated by the Seller (or the
Servicer on its behalf) for removal from the Trust and, as a result
thereof, are owned by CFC and not the Trust. Principal receivables
balances created prior to such Dealers entering into such status or being
designated for removal from the Trust are included in the Principal
Receivables balance. See "Description of the Certificates -- Removal of
Accounts" in the Prospectus for a description of the manner in which an
Account can be removed from the Trust.
LOSS EXPERIENCE
The following tables set forth CCC's average Principal Receivables
balance and loss experience for each of the periods shown on the U.S.
Wholesale Portfolio. Because the Eligible Accounts will be only a portion
of the entire U.S. Wholesale Portfolio, actual loss experience with
respect to the Eligible Accounts may be different. There can be no
assurance that the loss experience for the Receivables in the future will
be similar to the historical experience set forth below with respect to
the U.S. Wholesale Portfolio. In addition, the historical experience set
forth below reflects financial assistance provided by Chrysler to
Chrysler-franchised dealers as described under "The Dealer Floorplan
Financing Business -- Relationship with Chrysler" in the Prospectus. If
Chrysler is not able to or elects not to provide such assistance, the loss
experience in respect of the U.S. Wholesale Portfolio may be adversely
affected. See "Special Considerations -- Trust's Relationship to Chrysler
and CCC" in the Prospectus and "Special Considerations -- Trust's
Relationship to Chrysler and CCC; Financial Condition of Chrysler" in this
Prospectus Supplement.
<TABLE>
<CAPTION>
LOSS EXPERIENCE FOR THE U.S. WHOLESALE PORTFOLIO
Nine Months Ended
September 30, Year Ended December 31,
----------------- --------------------------------------------------------------
1994 1993 1993 1992 1991 1990 1989 1988 1987 1986
(Dollars in millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Average Principal
Receivables Balance(1). $ 6,593 $6,249 $6,271 $5,344 $4,826 $4,726 $4,933 $4,129 $3,787 $2,991
Net Losses
(Recoveries)(2)........ $ (1) $ 8 $ 12 $ 26 $ 36 $ 23 $ 13 $ 3 $ 2 $ 3
Net Losses (Recoveries)/
Liquidations........... (0.003)% 0.031% 0.035% 0.098% 0.163% 0.117% 0.060% 0.015% 0.015% 0.023%
Net Losses (Recoveries)/
Average Principal
Receivables Balance(3). (0.02)% 0.17% 0.19% 0.49% 0.75% 0.49% 0.26% 0.07% 0.06% 0.10%
<CAPTION>
Year Ended December 31,
------------------------------------------------------
1985 1984 1983 1982 1981 1980 1979
(Dollars in millions)
<S> <C> <C> <C> <C> <C> <C> <C>
Average Principal
Receivables
Balance(1) ............ $2,532 $2,098 $1,461 $1,451 $1,390 $1,622 $1,837
Net Losses
(Recoveries)(2)........ $ 1 $ (2) $ 2 $ 14 $ 12 $ 18 $ 11
Net Losses (Recoveries)/
Liquidations........... 0.004% (.019)% 0.023% 0.239% 0.225% 0.338% 0.163%
Net Losses (Recoveries)/
Average Principal
Receivables Balance.... 0.02% (0.09)% 0.12% 0.95% 0.85% 1.12% 0.58%
<FN>
________________
(1) Average Principal Receivables Balance is the average of the month-end
principal balances for the thirteen months ending on the last day of
the period, except for the nine months ended September 30, 1994 and
September 30, 1993, which are based on a ten-month average.
(2) Net losses in any period are gross losses less recoveries for such
period.
(3) Percentages for the nine months ended September 30, 1994 and 1993 are
expressed on an annualized basis.
</TABLE>
<PAGE>
AGING EXPERIENCE
The following table provides the age distribution of vehicle
inventory for all dealers in the U.S. Wholesale Portfolio, as a percentage
of total principal outstanding at the date indicated. Because the Eligible
Accounts will only be a portion of the entire U.S. Wholesale Portfolio,
actual age distribution with respect to the Eligible Accounts may be
different.
<TABLE>
<CAPTION>
AGE DISTRIBUTION FOR THE U.S. WHOLESALE PORTFOLIO
As of As of
September 30, December 31,
------------ -----------------------------------------------------
Days 1994 1993 1993 1992 1991 1990 1989 1988 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1-120........... 81.8% 81.1% 82.4% 77.2% 75.9% 72.2% 71.3% 78.8% 73.0% 81.5%
121-180......... 8.1 8.7 9.6 13.8 12.9 13.7 14.5 11.0 13.9 9.2
181-270......... 5.8 5.8 4.6 4.8 4.8 7.1 6.4 4.7 6.8 4.4
Over 270........ 4.3 4.4 3.4 4.2 6.4 7.0 7.8 5.5 6.3 4.9
</TABLE>
GEOGRAPHIC DISTRIBUTION
The following table provides the geographic distribution of the
vehicle inventory for all dealers in the Trust on the basis of receivables
outstanding and the number of dealers generating such portfolio.
<TABLE>
<CAPTION>
GEOGRAPHIC DISTRIBUTION OF ACCOUNTS IN THE TRUST
AS OF SEPTEMBER 30, 1994
Percentage
Percentage of Total of
Receivables Receivables Number Number of
Outstanding Outstanding of Dealers
(2) (2)(4) Dealers(3) (3)(4)
<S> <C> <C> <C> <C>
California.......... $ 383,772,070.92 8.9% 191 7.6%
Texas............... 372,449,228.20 8.6% 182 7.2%
New York............ 329,712,449.90 7.6% 175 6.9%
Michigan............ 248,513,844.06 5.8% 107 4.2%
Florida............. 229,273,286.93 5.3% 113 4.5%
Other(1)............ 2,748,749,983.60 63.7% 1,751 69.5%
Total............... $4,312,470,863.61 100.0% 2,519 100.0%
<FN>
________________
(1) No other state includes more than 5% of the outstanding Receivables.
(2) Includes Excluded Receivables.
(3) Includes Excluded Dealers.
(4) May not add to 100.0% due to rounding.
</TABLE>
CHRYSLER FINANCIAL CORPORATION AND
CHRYSLER CREDIT CORPORATION
Certain information regarding Chrysler Financial Corporation and
Chrysler Credit Corporation is set forth under "Chrysler Financial
Corporation and Chrysler Credit Corporation" in the Prospectus. In
addition, as of September 30, 1994, CFC had nearly 3,100 employees and was
servicing $30.1 billion in finance receivables. During the first nine
months of 1994, CFC and CCC financed or leased approximately 621,000
vehicles at retail, including approximately 399,000 new Chrysler passenger
cars and light duty trucks representing 24% of Chrysler's U.S. retail and
fleet deliveries. CFC and CCC also financed at wholesale approximately
1,216,000 new Chrysler passenger cars and light duty trucks representing
74% of Chrysler's U.S. factory unit sales for the nine months ended
September 30, 1994. Wholesale vehicle financing accounted for 74% of the
total automotive financing volume of CFC and CCC in the first nine months
of 1994 and represented 13% of gross automotive finance receivables
outstanding at September 30, 1994.
MATURITY AND PRINCIPAL PAYMENT CONSIDERATIONS
Principal with respect to the Series 1994-1 Certificates will be
payable if an Early Amortization Period that is not terminated as
described herein has commenced. Full amortization of the Series 1994-1
Certificates by the October 1999 Distribution Date (the "Expected Payment
Date") depends on, among other things, repayment by Dealers of the
Receivables and may not occur if Dealer payments are insufficient
therefor. Because the Receivables generally are paid upon retail sale of
the underlying Vehicle, the timing of such payments is uncertain. In
addition, there is no assurance that CCC will generate additional
Receivables under the Accounts or that any particular pattern of Dealer
payments will occur. See "Series Provisions -- Interest" and " --
Principal" herein and "The Dealer Floorplan Financing Business" in the
Prospectus and herein. In addition, the shorter the Accumulation Period
Length the greater the likelihood that payment of the Series 1994-1
Certificates in full by the Expected Payment Date will be dependent on the
reallocation of Principal Collections which are initially allocated to
other outstanding Series. If one or more other Series from which Principal
Collections are expected to be available to be reallocated to the payment
of the Series 1994-1 Certificates enters into an early amortization period
or reinvestment period after the April 1999 Distribution Date, Principal
Collections allocated to such Series generally will not be available to be
reallocated to make payments of principal of the Series 1994-1
Certificates and the final payment of principal of the Series 1994-1
Certificates may be later than the Expected Payment Date. Upon written
request, the Seller will make available to Series 1994-1
Certificateholders Disclosure Documents relating to the other outstanding
Series which describe the events which could result in the commencement of
an early amortization period or reinvestment period with respect to such
outstanding Series.
Because an Early Amortization Event with respect to the Series
1994-1 Certificates may occur which would initiate an Early Amortization
Period, the final distribution of principal on the Series 1994-1
Certificates may be made prior to the scheduled termination of the
Revolving Period or prior to the Expected Payment Date. See "Series
Provisions -- Early Amortization Events".
The amount of new Receivables generated in any month and monthly
payment rates on the Receivables may vary because of seasonal variations
in Vehicle sales and inventory levels, retail incentive programs provided
by Vehicle manufacturers and various economic factors affecting Vehicle
sales generally. The following table sets forth the highest and lowest
monthly payment rates for the U.S. Wholesale Portfolio during any month in
the periods shown and the average of the monthly payment rates for all
months during the periods shown, in each case calculated as the percentage
equivalent of a fraction, the numerator of which is the aggregate of all
collections of principal during the period and the denominator of which is
the average aggregate principal balance for such period. Monthly payment
rates reflected in the table include principal credit adjustments. The
monthly payment rates presented for 1980 through 1985 are calculated using
quarterly data while monthly payment rates for 1986 through 1994 reflect
actual monthly data. There can be no assurance that the rate of Principal
Collections will be similar to the historical experience set forth below.
Because the Eligible Accounts will be only a portion of the entire U.S.
Wholesale Portfolio, historical actual monthly payment rates with respect
to the Eligible Accounts may be different than those shown below.
<TABLE>
<CAPTION>
MONTHLY PAYMENT RATES FOR THE U.S. WHOLESALE PORTFOLIO
Nine Months Ended
September 30, Year Ended December 31,
----------------- -----------------------------------------------------
1994 1993 1993 1992 1991 1990 1989 1988 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Highest Month......... 59.7% 54.7% 54.7% 50.6% 49.0% 42.1% 41.5% 48.7% 40.3% 56.7%
Lowest Month.......... 34.2 35.9 35.9 34.4 30.2 25.3 29.5 29.5 26.8 27.7
Average of the Months
in the Period........ 51.9 46.2 46.6 41.3 38.4 35.7 35.6 41.2 34.2 37.7
<CAPTION>
Year Ended December 31,
----------------------------------------------
1985 1984 1983 1982 1981 1980 1979
<S> <C> <C> <C> <C> <C> <C> <C>
Highest Month......... 45.9% 43.7% 45.9% 35.5% 34.3% 28.9% 36.5%
Lowest Month.......... 35.8 35.7 37.7 29.0 27.4 26.7 26.0
Average of the Months
in the Period........ 40.1 39.9 42.2 32.9 32.2 28.1 30.0
</TABLE>
<PAGE>
SERIES PROVISIONS
GENERAL
The Series 1994-1 Certificates will be issued pursuant to the
Pooling and Servicing Agreement and a Series Supplement relating to the
Series 1994-1 Certificates (the "Series Supplement"). The Series 1994-1
Certificates will consist of a single Class. The Trustee will make
available for inspection a copy of the Pooling and Servicing Agreement
(without exhibits or schedules) on request. Reference should be made to
the Prospectus for additional information concerning the Series 1994-1
Certificates and the Pooling and Servicing Agreement.
INTEREST
Interest on the principal balance of the Series 1994-1 Certificates
will accrue at the Certificate Rate and will be payable to the Series
1994-1 Certificateholders on each Distribution Date, commencing
November 15, 1994. Interest payable on any Distribution Date will accrue
from and including the preceding Distribution Date (or, in the case of the
November 1994 Distribution Date, from and including the Series Issuance
Date) to but excluding such Distribution Date. Interest will be calculated
on a basis of the actual number of days in each Interest Period divided by
360. Interest due for any Distribution Date but not paid on such
Distribution Date will be due on the next Distribution Date, together with
interest on such amount at the Certificate Rate calculated on the basis of
the Index plus 2.0%, to the extent permitted by applicable law. Interest
payments on the Series 1994-1 Certificates will generally be derived from
Certificateholder Interest Collections for a Collection Period, any
withdrawals from the Reserve Fund, Investment Proceeds and, under certain
circumstances, Available Seller's Collections to the extent of the
Available Subordinated Amount and any withdrawals from the Yield
Supplement Account.
The Certificate Rate for each Interest Period will be determined on
the Adjustment Date preceding such Interest Period. The "Certificate Rate"
will be equal to the lesser of (a) the Index plus 0.18% and (b) the Assets
Receivables Rate for the related Distribution Date.
"Monthly Interest" for any Distribution Date means the amount of
interest accrued in respect of the Series 1994-1 Certificates as described
above for such Distribution Date.
"LIBOR" shall mean, with respect to any Interest Period, the offered
rates for deposits in United States dollars having a maturity of one month
(the "Index Maturity") commencing on the related Adjustment Date which
appear on the Reuters Screen LIBO Page as of approximately 11:00 a.m.,
London time, on such date of calculation. If at least two such offered
rates appear on the Reuters Screen LIBO Page, LIBOR will be the arithmetic
mean (rounded, if necessary, to the nearest 1/100,000 of 1% (.0000001),
with five one-millionths of a percentage point rounded upward) of such
offered rates. If fewer than two such quotations appear, LIBOR with
respect to such Interest Period will be determined at approximately 11:00
a.m., London time, on such Adjustment Date on the basis of the rate at
which deposits in United States dollars having the Index Maturity are
offered to prime banks in the London interbank market by four major banks
in the London interbank market selected by the Calculation Agent and in a
principal amount equal to an amount of not less than U.S. $1,000,000 and
that is representative for a single transaction in such market at such
time. The Calculation Agent will request the principal London office of
each of such banks to provide a quotation of its rate. If at least two
such quotations are provided, LIBOR will be the arithmetic mean of such
quotations (rounded as aforesaid). If fewer than two quotations are
provided, LIBOR with respect to such Interest Period will be the
arithmetic mean (rounded as aforesaid) of the rates quoted at
approximately 11:00 a.m., New York City time, on such Adjustment Date by
three major banks in New York, New York selected by the Calculation Agent
for loans in United States dollars to leading European banks having the
Index Maturity and in a principal amount equal to an amount of not less
than U.S. $1,000,000 and that is representative for a single transaction
in such market at such time; provided, however, that if the banks selected
as aforesaid are not quoting as mentioned in this sentence, LIBOR in
effect for the applicable period will be LIBOR in effect for the previous
period.
"Adjustment Date" means, with respect to any Interest Period, the
second London Business Day preceding the first day of such Interest
Period.
For purposes of calculating LIBOR, a "London Business Day" will be
any business day on which dealings in deposits in United States dollars
are transacted in the London interbank market and "Reuters Screen LIBO
Page" will be the display designated as page "LIBO" on the Reuters Monitor
Money Rates Service (or such other page as may replace the LIBO page on
that service for the purpose of displaying London interbank offered rates
of major banks). The Calculation Agent will be the Trustee.
If the Certificate Rate for a Distribution Date calculated on the
basis of the Index as described above is greater than the Assets
Receivable Rate, then the Certificate Rate for such Distribution Date will
be the Assets Receivables Rate.
The "Assets Receivables Rate" for any Interest Period shall equal
the product of (a) the quotient obtained by dividing (i) 360 by (ii) the
actual number of days elapsed in such period and (b) a percentage,
expressed as a fraction, (i) the numerator of which is the sum of (A)
Certificateholder Interest Collections for the Collection Period
immediately preceding the last day of such period (which for this purpose
only is based on interest amounts billed to the Dealers which are due
during such Collection Period) less, unless waived by the Servicer, the
Monthly Servicing Fee with respect to such immediately preceding
Collection Period and (B) the Investment Proceeds to be applied on the
Distribution Date related to such period and (ii) the denominator of which
is the sum of (A) the product of (I) the Floating Allocation Percentage,
(II) the Series Allocation Percentage and (III) the average Pool Balance
(after giving effect to any charge-offs) for such immediately preceding
Collection Period, (B) the principal balance on deposit in the Excess
Funding Account on the first day of such period (after giving effect to
all deposits to and withdrawals therefrom on such first day) and (C) the
principal balance on deposit in the Principal Funding Account on the first
day of such period (after giving effect to all deposits to and withdrawals
therefrom on such first day).
If the Certificate Rate for any Distribution Date is based on the
Assets Receivables Rate, the excess of (a) the amount of interest on the
Series 1994-1 Certificates that would have accrued in respect of the
related Interest Period had interest been calculated based on the Index
over (b) the amount of interest on the Series 1994-1 Certificates actually
accrued in respect of such period based on the Assets Receivables Rate
(such excess, together with the unpaid portion of any such excess from
prior Distribution Dates (and interest accrued thereon at the Certificate
Rate calculated on the basis of the Index plus 2.0%), is referred to as
the "Carry-over Amount") will be paid on such Distribution Date from
amounts on deposit in the Yield Supplement Account and, if such amounts
are depleted, to the extent funds are allocated and available therefor
after making all required distributions and deposits with respect to the
Series 1994-1 Certificates, including payments with respect to principal
(including payments to the Excess Funding Account), Monthly Interest, the
Monthly Servicing Fee, the Reserve Fund Deposit Amount and the Investor
Default Amount as described below under "Distributions from the Collection
Account; Reserve Fund; Yield Supplement Account". The rating of the Series
1994-1 Certificates does not address the likelihood of payment of any
Carry-over Amount.
PRINCIPAL
In general, no principal payments will be made to the Series 1994-1
Certificateholders until the Expected Payment Date or, upon the
commencement of an Early Amortization Period that is not terminated as
described herein, until the first Special Payment Date. On each
Distribution Date with respect to the Revolving Period, collections of
Principal Receivables allocable to the Series 1994-1 Certificateholders'
Interest that are not required to be deposited to the Excess Funding
Account, subject to certain limitations, will either be (a) allocated to
one or more Series which are in amortization, early amortization or
accumulation periods to cover principal payments due to the
Certificateholders of any such Series or which provides for excess funding
accounts or similar arrangements or (b) if no such Series is then
amortizing or accumulating principal or otherwise does not provide for
excess funding accounts or similar arrangements, paid to the Seller to
maintain the Series 1994-1 Certificateholders' Interest or held as
Unallocated Principal Collections. See "Allocation Percentages --
Principal Collections for all Series" and "Distributions from the
Collection Account; Reserve Fund; Yield Supplement Account -- Principal
Collections".
Unless and until an Early Amortization Period that is not terminated
as described herein shall have commenced and until the outstanding
principal balance of the Series 1994-1 Certificates is paid in full, on
each Distribution Date with respect to the Accumulation Period,
collections of Principal Receivables allocable to the Series 1994-1
Certificateholders' Interest plus certain other amounts comprising Monthly
Principal will no longer be paid for the benefit of another Series or to
the Seller as described above but instead an amount thereof up to the
Controlled Deposit Amount for each such Distribution Date will be
deposited in the Principal Funding Account. The funds deposited in the
Principal Funding Account and any amounts in the Excess Funding Account
will be used to pay the outstanding principal balance of the Series 1994-1
Certificates on the Expected Payment Date. If on such date the sum of the
Principal Funding Account Balance and any amounts in the Excess Funding
Account is less than the outstanding principal balance of the Series
1994-1 Certificates, the Early Amortization Period will commence and on
each Special Payment Date the Series 1994-1 Certificateholders will
receive distributions of Monthly Principal and Monthly Interest until the
outstanding principal balance of the Series 1994-1 Certificates has been
paid in full or the Series Termination Date has occurred. Even if the sum
of the Principal Funding Account Balance and any amounts in the Excess
Funding Account on the Expected Payment Date is insufficient to pay the
outstanding principal balance of the Series 1994-1 Certificates in full,
such balances will be distributed to the Series 1994-1 Certificateholders
at such time.
It is expected that the final principal payment with respect to the
Series 1994-1 Certificates will be made on the Expected Payment Date, but
the principal of the Series 1994-1 Certificates may be paid earlier or,
depending on the actual payment rate on the Receivables, later, as
described under "Special Considerations -- Payments" herein and in the
Prospectus.
EXCESS FUNDING ACCOUNT
Unless and until an Early Amortization Event or the April 1999
Distribution Date shall have occurred, the Excess Funded Amount will be
maintained in the Excess Funding Account established with the Trustee. The
Excess Funded Amount will initially equal the excess of the initial
principal balance of the Series 1994-1 Certificates, if any, over the
Initial Invested Amount. Funds on deposit in the Excess Funding Account
will be invested by the Trustee at the direction of the Servicer generally
in Eligible Investments. Such investments must mature on or prior to the
next Distribution Date.
Funds on deposit in the Excess Funding Account will be withdrawn and
paid to the Seller or allocated to one or more Series which are in
amortization, early amortization or accumulation periods to the extent of
any increases in the Invested Amount as a result of the addition of
Receivables to the Trust, a reduction in the Seller's Interest, or a
reduction in the initial invested amount of any other Series. Additional
amounts will be deposited in the Excess Funding Account on a Distribution
Date to the extent that the sum of the Series 1994-1 Certificateholders'
Interest in Principal Receivables (determined for this purpose by reducing
such interest by the amount, if any, by which the Required Participation
Amount exceeds the Pool Balance due to an increase in the Subordination
Factor) and the amount on deposit in the Excess Funding Account prior to
the deposit on such Distribution Date is less than the outstanding
principal balance of the Series 1994-1 Certificates, but only to the
extent that funds are available therefor as described herein. 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 investment in the Receivables, the allocation of
additional Receivables to increase the Invested Amount will generally be
based on the proportion that the amount on deposit in the Excess Funding
Account bears to the amounts on deposit in the excess funding accounts of
all Series providing for excess funding accounts or such similar
arrangements or to amounts otherwise similarly available; and the deposit
of amounts in the Excess Funding Account will be based on the proportion
that the Adjusted Invested Amount bears to the adjusted invested amounts
of all Series providing for excess funding accounts or such similar
arrangements.
On each Distribution Date, all investment income earned on amounts
in the Excess Funding Account since the preceding Distribution Date will
be withdrawn from the Excess Funding Account and applied as described
herein.
Any funds on deposit in the Excess Funding Account on the earlier of
(i) the April 1999 Distribution Date and (ii) the commencement of an Early
Amortization Period will be deposited in the Principal Funding Account on
such date. No funds will be deposited in the Excess Funding Account during
any Early Amortization Period or with respect to any Collection Period
following the February 1999 Distribution Date.
ALLOCATION PERCENTAGES
Allocation between the Series 1994-1 Certificateholders and the
Seller. The Servicer will allocate amounts initially allocated to Series
1994-1 as described under "Description of the Certificates -- Allocation
Percentages -- Allocations among Series" in the Prospectus between the
Series 1994-1 Certificateholders' Interest and the Seller's Interest for
each Collection Period as follows:
(i) Series Allocable Interest Collections and the Series
Allocable Defaulted Amount will be allocated to Series 1994-1
Certificateholders based on the Floating Allocation Percentage;
(ii) during the Revolving Period, Series Allocable Principal
Collections will be allocated to Series 1994-1 Certificateholders
based on the Floating Allocation Percentage;
(iii) during the Accumulation Period and any Early
Amortization Period, Series Allocable Principal Collections will be
allocated to Series 1994-1 Certificateholders based on the Fixed
Allocation Percentage; and
(iv) Series Allocable Miscellaneous Payments will at all times
be allocated to Series 1994-1 Certificateholders.
Amounts not allocated to the Series 1994-1 Certificateholders as described
above will be allocated to the Seller.
"Floating Allocation Percentage" for any Collection Period
means the percentage equivalent (which shall never exceed 100%) of a
fraction, the numerator of which is the Invested Amount as of the
last day of the immediately preceding Collection Period and the
denominator of which is the product of (x) the Pool Balance as of
such last day and (y) the Series Allocation Percentage for the
Collection Period in respect of which the Floating Allocation
Percentage is being calculated; provided, however, that with respect
to the October 1994 Collection Period, the Floating Allocation
Percentage shall mean the percentage equivalent of a fraction, the
numerator of which is the Initial Invested Amount as of the Series
Issuance Date and the denominator of which is the Series Allocation
Percentage of the Pool Balance as of the Series Cut-Off Date.
"Fixed Allocation Percentage" for any Collection Period
generally means the percentage equivalent (which shall never exceed
100%) of a fraction, the numerator of which is the Invested Amount
as of the last day of the Revolving Period and the denominator of
which is the product of (x) the Pool Balance as of the last day of
the immediately preceding Collection Period and (y) the Series
Allocation Percentage for the Collection Period in respect of which
the Fixed Allocation Percentage is being calculated.
"Invested Amount" means for any date an amount equal to the
Initial Invested Amount, minus the amount, without duplication, of
principal payments (except principal payments made from the Excess
Funding Account) made to Series 1994-1 Certificateholders or
deposited to the Principal Funding Account prior to such date since
the Series Issuance Date, 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.
"Initial Invested Amount" means the portion of the initial
principal amount of the Series 1994-1 Certificates which is invested
in Principal Receivables on the Series Issuance Date, which is
expected to equal $500,000,000 (based on information as of the
Series Cut-Off Date), plus (x) 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 amount of any additions to the Excess
Funding Account in connection with a reduction in the Principal
Receivables in the Trust or an increase in the Subordination Factor
since the Series Issuance Date.
The Floating Allocation Percentage and the Fixed Allocation Percentage
will be adjusted for any Collection Period in which Additional Accounts
are designated to reflect the additional Receivables added to the Trust.
Principal Collections for all Series. Principal Collections
allocated to the Series 1994-1 Certificateholders' Interest for any
Collection Period will first be allocated to make required deposits to the
Excess Funding Account during the Revolving Period and to make required
payments of principal to the Principal Funding Account during the
Accumulation Period and to the Series 1994-1 Certificateholders during any
Early Amortization Period. See "Distributions from the Collection Account;
Reserve Fund; Yield Supplement Account -- Principal Collections". The
Servicer will determine the amount of Available Certificateholder
Principal Collections for any Collection Period remaining after such
required deposits and payments, if any, and the amount of any similar
excess for any other Series ("Excess Principal Collections"). The Servicer
will allocate Excess Principal Collections to cover any principal
distributions to Certificateholders for any Series which are either
scheduled or permitted and which have not been covered out of Principal
Collections and certain other amounts allocated to such Series ("Principal
Shortfalls"). See "Maturity and Principal Payment Considerations". Excess
Principal Collections will generally not be used to cover investor
charge-offs for any Series. If Principal Shortfalls exceed Excess
Principal Collections for any Collection Period, Excess Principal
Collections will be allocated pro rata among the applicable Series based
on the relative amounts of Principal Shortfalls.
ALLOCATION OF COLLECTIONS; LIMITED SUBORDINATION OF SELLER'S INTEREST
On any date on which collections are deposited in the Collection
Account, the Servicer will distribute directly to the Seller an amount
equal to (a) the Excess Seller's Percentage for the related Collection
Period of Series Allocable Interest Collections for such date and (b) the
Excess Seller's Percentage for the related Collection Period of Series
Allocable Principal Collections for such date, if the Seller's
Participation Amount (determined after giving effect to any Principal
Receivables transferred to the Trust on such date) exceeds the Trust
Available Subordinated Amount for the immediately preceding Determination
Date (after giving effect to the allocations, distributions, withdrawals
and deposits to be made on the Distribution Date immediately following
such Determination Date). In addition, during the Revolving Period,
subject to certain limitations, the Servicer will distribute directly to
the Seller on each such date of deposit an amount equal to the Available
Seller's Principal Collections for such date, if the Seller's
Participation Amount (determined after giving effect to any Principal
Receivables transferred to the Trust on such date) exceeds the Trust
Available Subordinated Amount for the immediately preceding Determination
Date (after giving effect to the allocations, distributions, withdrawals
and deposits to be made on the Distribution Date immediately following
such Determination Date).
"Available Seller's Collections" for any date means the sum of
(a) the Available Seller's Interest Collections for such date and
(b) the Available Seller's Principal Collections for such date;
provided, however, that the Available Seller's Collections will be
zero for any Collection Period with respect to which the Available
Subordinated Amount is zero on the Determination Date immediately
following the end of such Collection Period.
"Available Seller's Interest Collections" for any date means
an amount equal to the result obtained by multiplying (a) the excess
of (i) the Seller's Percentage for the related Collection Period
over (ii) the Excess Seller's Percentage for such Collection Period
by (b) Series Allocable Interest Collections for such date.
"Available Seller's Principal Collections" for any date means
an amount equal to the product of (a) the excess of (i) the Seller's
Percentage for the related Collection Period over (ii) the Excess
Seller's Percentage for such Collection Period and (b) Series
Allocable Principal Collections for such date.
"Seller's Percentage" means 100% minus (a) the Floating
Allocation Percentage, when used with respect to Interest
Collections, Defaulted Receivables and Principal Collections during
the Revolving Period, and (b) the Fixed Allocation Percentage, when
used with respect to Principal Collections during the Accumulation
Period and any Early Amortization Period.
"Excess Seller's Percentage" for any Collection Period means a
percentage (which percentage shall never be less than 0% nor more
than 100%) equal to (a) 100% minus, when used with respect to
Interest Collections and Principal Collections during the Revolving
Period, the sum of (i) the Floating Allocation Percentage with
respect to such Collection Period and (ii) the percentage equivalent
of a fraction, the numerator of which is the Available Subordinated
Amount as of the Determination Date occurring in such Collection
Period (after giving effect to the allocations, distributions,
withdrawals and deposits to be made on the Distribution Date
immediately following such Determination Date), and the denominator
of which is the product of (x) the Pool Balance as of the last day
of such immediately preceding Collection Period and (y) the Series
Allocation Percentage for the Collection Period in respect of which
the Excess Seller's Percentage is being calculated or (b) 100%
minus, when used with respect to Principal Collections during the
Accumulation Period and any Early Amortization Period, the sum of
(i) the Fixed Allocation Percentage with respect to such Collection
Period and (ii) the percentage described in clause (a)(ii) above for
such Collection Period.
"Seller's Participation Amount" for any date means an amount
equal to the Pool Balance on such date minus the aggregate invested
amounts for all outstanding Series on such date.
Deficiency Amount. On each Determination Date, the Servicer will
determine for the Series 1994-1 Certificates the amount (the "Deficiency
Amount"), if any, by which (a) the sum of (i) Monthly Interest for the
following Distribution Date, (ii) Monthly Interest accrued but not paid
with respect to prior Distribution Dates (and interest thereon), (iii) the
Monthly Servicing Fee for such Distribution Date, (iv) the Investor
Default Amount for such Distribution Date and (v) the amount of any
Adjustment Payment allocated to the Series 1994-1 Certificates for such
Distribution Date that has not been deposited in the Collection Account as
required under the Pooling and Servicing Agreement, exceeds (b) the sum of
(i) Certificateholder Interest Collections and Investment Proceeds for
such Distribution Date and (ii) the amount of funds in the Reserve Fund on
such Determination Date available to fund any portion of the Deficiency
Amount as described under "Distributions from the Collection Account;
Reserve Fund; Yield Supplement Account -- Interest Collections". The
lesser of the Deficiency Amount and the Available Subordinated Amount is
the "Draw Amount".
Available Subordinated Amount. The "Required Subordinated Amount"
shall mean, as of any date of determination, the sum of (i) the product of
the initial Subordinated Percentage, as adjusted from time to time as
described herein other than as a result of an increase therein at the
option of the Seller, and the Invested Amount and (ii) the Incremental
Subordinated Amount. Assuming that the Initial Invested Amount of the
Series 1994-1 Certificates is equal to the initial principal amount of the
Series 1994-1 Certificates and that the Incremental Subordinated Amount is
zero, such amount would initially be $55,555,555.
The Available Subordinated Amount for a Determination Date is equal
to (a) the lesser of (i) the Available Subordinated Amount for the
preceding Determination Date, minus, with certain limitations, the Draw
Amount for such preceding Determination Date, minus funds from the Reserve
Fund applied to cover any portion of the Investor Default Amount, plus the
excess, if any, of the Required Subordinated Amount for such Determination
Date over the Required Subordinated Amount for the immediately preceding
Determination Date, plus the amount of Excess Servicing available to be
paid to the Seller as described under "Distributions from the Collection
Account; Reserve Fund; Yield Supplement Account -- Excess Servicing", and
(ii) the product of the fractional equivalent of the Subordinated
Percentage and the Invested Amount, minus (b) in the case of clause (a)
(i) the Incremental Subordinated Amount for such preceding Determination
Date, plus (c) the Incremental Subordinated Amount for the current
Determination Date, plus (d) the Subordinated Percentage of funds to be
withdrawn from the Excess Funding Account on the succeeding Distribution
Date and paid to the Seller or allocated to one or more Series; provided,
however, that, once the Accumulation Period or any Early Amortization
Period that is not terminated as described herein 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
Accumulation Period or Early Amortization Period. The Available
Subordinated Amount for the first Determination Date is equal to the
Required Subordinated Amount. The "Incremental Subordinated Amount" on any
Determination Date will equal the result obtained by multiplying (a) a
fraction, the numerator of which is the sum of the Invested Amount on the
last day of the immediately preceding Collection Period and the Available
Subordinated Amount for such Determination Date (calculated without adding
the Incremental Subordinated Amount for such Determination Date as
described in clause (c) above), and the denominator of which is the Pool
Balance on such last day by (b) the excess, if any, of (x) the sum of the
Overconcentration Amount, the Instalment Balance Amount and the aggregate
amount of Ineligible Receivables on such Determination Date over (y) the
aggregate amount of Ineligible Receivables, Receivables in Accounts
containing Dealer Overconcentrations and Receivables in Instalment
Balances, in each case that became Defaulted Receivables during the
preceding Collection Period and are not subject to reassignment from the
Trust, unless certain insolvency events relating to the Seller or CCC have
occurred, as further described in the Pooling and Servicing Agreement.
The "Subordinated Percentage" will initially equal the percentage
equivalent of a fraction, the numerator of which is the Subordination
Factor and the denominator of which will be the excess of 100% over the
Subordination Factor. The Seller may, in its sole discretion, at any time
increase the Available Subordinated Amount for so long as the cumulative
amount of such discretionary increases does not exceed the lesser of (i)
$5,555,555 or (ii) 1.11% of the Invested Amount. The Seller is not under
any obligation to increase the Available Subordinated Amount at any time
except as described herein. If the Available Subordinated Amount were
reduced to less than the Required Subordinated Amount, an Early
Amortization Event would occur. The Seller could elect to increase the
Available Subordinated Amount at the time such an Early Amortization Event
would otherwise occur, thus preventing or delaying the occurrence of the
Early Amortization Event. The Subordination Factor will initially be 10%,
but will be subject to increase to 11% in the event that the rating of
CFC's long-term unsecured debt is lowered below BBB- by Standard & Poor's
or withdrawn by Standard & Poor's, unless the Seller receives written
confirmation from Standard & Poor's that the failure to so increase the
Subordination Factor would not result in such Rating Agency lowering or
withdrawing its rating of the Series 1994-1 Certificates.
DISTRIBUTIONS FROM THE COLLECTION ACCOUNT; RESERVE FUND; YIELD SUPPLEMENT
ACCOUNT
Interest Collections. On each Distribution Date, commencing with the
initial Distribution Date, the Servicer shall instruct the Trustee to
apply Certificateholder Interest Collections and Investment Proceeds, if
any, in respect of the related Collection Period to make the following
distributions in the following priority:
(i) first, an amount equal to Monthly Interest for such
Distribution Date, plus the amount of any Monthly Interest
previously due but not distributed on a prior Distribution Date
(plus, but only to the extent permitted under applicable law,
interest at the Certificate Rate calculated on the basis of the
Index plus 2.0% on Monthly Interest previously due but not so
distributed), shall be distributed to the Series 1994-1
Certificateholders;
(ii) second, an amount equal to the Monthly Servicing Fee for
such Distribution Date shall be distributed to the Servicer (unless
such amount has been netted against deposits to the Collection
Account as described in the Prospectus under "Description of the
Certificates -- Allocation of Collections; Deposits in Collection
Account" or waived by the Servicer);
(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,
if any, for such Distribution Date shall be treated as a portion of
Available Certificateholder Principal Collections for such
Distribution Date;
(v) fifth, an amount equal to any outstanding Carry-over
Amount (after giving effect to any withdrawals from the Yield
Supplement Account) shall be distributed to the Series 1994-1
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 shall constitute Excess Servicing.
If such Certificateholder Interest Collections and Investment
Proceeds are not sufficient to make the entire distributions required by
clauses (i), (ii), and (iv), the Trustee shall withdraw funds from the
Reserve Fund and apply such funds to complete the distributions pursuant
to such clauses; provided, however, that during any Early Amortization
Period funds shall not be withdrawn from the Reserve Fund to make
distributions required by clause (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.
If there is a Draw Amount for such Distribution Date, the Trustee
shall apply the amount of Available Seller's Collections for the related
Collection Period on deposit in the Collection Account on such
Distribution Date, but only up to the Draw Amount, to make the
distributions required by clauses (i), (ii) and (iv) above that have not
been made through the application of funds from the Reserve Fund as
described in the preceding paragraph. Additionally, Available Seller's
Collections will be applied to any unpaid Adjustment Payments. The
Available Subordinated Amount will be reduced by the amount of Available
Seller's Collections so applied. If the Draw Amount exceeds such Available
Seller's Collections, the Available Subordinated Amount will be reduced by
the amount of such excess, but not by more than the sum of the Investor
Default Amount and the portion of Adjustment Payments not paid by the
Seller, in order to maintain the Invested Amount, but not generally by
more than the Investor Default Amount for such Distribution Date.
"Certificateholder Interest Collections" for any Distribution
Date means the portion of Series Allocable Interest Collections for
the related Collection Period allocated to the Series 1994-1
Certificateholders' Interest as described under "Allocation
Percentages -- Allocation Between the Series 1994-1
Certificateholders and the Seller".
"Investment Proceeds" for any Distribution Date means an
amount equal to the sum of (a) the investment earnings on the
related Determination Date with respect to funds held in the Reserve
Fund, (b) the Series Allocation Percentage of investment earnings on
the related Determination Date with respect to funds held in the
Collection Account and (c) all investment income on amounts in the
Excess Funding Account, the Principal Funding Account and the Yield
Supplement Account since the preceding Distribution Date.
Reserve Fund. The "Reserve Fund" will be an Eligible Deposit Account
established and maintained in the name of the Trustee for the benefit of
the Series 1994-1 Certificateholders. On the Series Issuance Date, the
Seller will deposit $1,750,000 (0.35% of the principal balance of the
Series 1994-1 Certificates) into the Reserve Fund. The "Reserve Fund
Required Amount" for any Distribution Date will equal 0.35% of the
outstanding principal balance of the Series 1994-1 Certificates for such
Distribution Date (after giving effect to any change therein on such
Distribution Date). The "Reserve Fund Deposit Amount" is the amount, if
any, by which the Reserve Fund Required Amount exceeds the amount on
deposit in the Reserve Fund. Funds in the Reserve Fund will be invested in
Eligible Investments that will mature on or prior to the next Distribution
Date. On each Determination Date, the Servicer will apply any investment
earnings (net of losses and investment expenses) with respect to the
Reserve Fund as set forth under "Distributions from the Collection
Account; Reserve Fund; Yield Supplement Account -- Interest Collections".
After the earlier of the payment in full of the outstanding principal
balance of the Series 1994-1 Certificates and the Series Termination Date,
any funds remaining on deposit in the Reserve Fund will be paid to the
Seller.
If, after giving effect to the allocations, distributions and
deposits in the Reserve Fund described above under "Interest Collections",
the amount in the Reserve Fund is less than the Reserve Fund Required
Amount for the next following Distribution Date, the Trustee shall deposit
any remaining Available Seller's Collections for the related Collection
Period into the Reserve Fund until the amount in the Reserve Fund is equal
to such Reserve Fund Required Amount.
If, for any Distribution Date with respect to an Early Amortization
Period, after giving effect to the allocations, distributions and deposits
described in the preceding paragraph, the amount in the Reserve Fund is
less than the Excess Reserve Fund Required Amount for such Distribution
Date, the Trustee shall deposit the remaining Available Seller's
Collections for the related Collection Period into the Reserve Fund until
the amount in the Reserve Fund is equal to such Excess Reserve Fund
Required Amount. The "Excess Reserve Fund Required Amount" for any such
Distribution Date means an amount equal to the greater of (a) 5% of the
initial principal balance of the Series 1994-1 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 1994-1 Certificates on such Distribution
Date (after giving effect to any changes therein on such Distribution
Date) over (ii) the excess of (x) the Series 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.
Yield Supplement Account. The Yield Supplement Account will be an
Eligible Deposit Account established and maintained in the name of the
Trustee for the benefit of the Series 1994-1 Certificateholders. On the
Series Issuance Date, the Seller will deposit $2,000,000 (0.40% of the
principal balance of the Series 1994-1 Certificates) into the Yield
Supplement Account. The "Yield Supplement Account Required Amount" for any
Distribution Date will equal 0.40% of the outstanding principal balance of
the Series 1994-1 Certificates for such Distribution Date (after giving
effect to any change therein on such Distribution Date). On any
Distribution Date on which there is a Carry-over Amount, the amount on
deposit in the Yield Supplement Account on such Distribution Date shall be
applied by the Trustee up to the amount of such Carry-over Amount to
satisfy such Carry-over Amount. The "Yield Supplement Account Deposit
Amount" is the amount, if any, by which the Yield Supplement Account
Required Amount exceeds the amount on deposit in the Yield Supplement
Account. Funds in the Yield Supplement Account will be invested at the
direction of the Servicer in any investments consisting of financial
assets that by their terms convert to cash within a finite period of time.
On each Determination Date, the Servicer will apply any investment
earnings (net of losses and investment expenses) with respect to the Yield
Supplement Account as set forth under "Distributions from the Collection
Account; Reserve Fund; Yield Supplement Account -- Interest Collections".
After the earlier of the payment in full of the outstanding principal
balance of the Series 1994-1 Certificates and the Series Termination Date,
any funds remaining on deposit in the Yield Supplement Account will be
paid to the Seller.
Excess Servicing. On each Distribution Date, the Servicer will
allocate Excess Servicing with respect to the Collection Period
immediately preceding such Distribution Date, in the following priority:
(a) first, an amount equal to the aggregate amount of Investor
Charge-Offs which have not been previously reimbursed (after giving
effect to the allocation on such Distribution Date of Series
Allocable Miscellaneous Payments with respect to such Distribution
Date) will be allocated in the same manner as Available
Certificateholder Principal Collections for such Distribution Date;
(b) second, an amount equal to the aggregate outstanding
amounts of the Monthly Servicing Fee which have been previously
waived as described under "Servicing Compensation and Payment of
Expenses" in the Prospectus will be distributed to the Servicer; and
(c) third, the balance, if any, shall be distributed to the
Seller and shall increase the Available Subordinated Amount as
described in the definition thereof.
Principal Collections. On each Distribution Date, the Servicer will
allocate Available Certificateholder Principal Collections as follows:
(a) for each Distribution Date with respect to the Revolving
Period, all Available Certificateholder Principal Collections will
be allocated first, to make a deposit to the Excess Funding Account
if the sum of (i) the Series 1994-1 Certificateholders' Interest in
Principal Receivables (determined for this purpose by reducing such
interest by the amount, if any, by which the Required Participation
Amount exceeds the Pool Balance due to an increase in the
Subordination Factor) and (ii) the amount on deposit in the Excess
Funding Account prior to the allocation on such Distribution Date is
less than the outstanding principal balance of the Series 1994-1
Certificates and second to Excess Principal Collections as described
under "Allocation Percentages -- Principal Collections for all
Series"; and
(b) for each Distribution Date with respect to the
Accumulation Period or any Early Amortization Period:
(i) an amount equal to Monthly Principal for such
Distribution Date will be deposited to the Principal Funding
Account, in the case of the Accumulation Period, or
distributed to Series 1994-1 Certificateholders, in the case
of any Early Amortization Period; and
(ii) the balance, if any, will be allocated to Excess
Principal Collections.
In the event that the aggregate Invested Amount is greater than zero
on the Series Termination Date, any funds remaining in the Reserve Fund
(after the application of funds in the Reserve Fund as described above
under "Interest Collections") will be treated as a portion of Available
Certificateholder Principal Collections for the Distribution Date
occurring on the Series Termination Date.
"Available Certificateholder Principal Collections" for any
Distribution Date means the sum of (a) the product of (i) the
Floating Allocation Percentage, with respect to the Revolving
Period, or the Fixed Allocation Percentage, with respect to the
Accumulation Period or any Early Amortization Period, for the
related Collection Period and (ii) Series Allocable Principal
Collections deposited in the Collection Account for the related
Collection Period, (b) the amount, if any, of Interest Collections,
funds in the Reserve Fund, Available Seller's Collections and Excess
Servicing allocated to cover the Investor Default Amount or
reimburse Investor Charge-Offs, (c) Series Allocable Miscellaneous
Payments on deposit in the Collection Account for such Distribution
Date and (d) Excess Principal Collections, if any, from other Series
allocated to Series 1994-1.
"Monthly Principal" with respect to any Distribution Date
relating to the Accumulation Period or any Early Amortization Period
will equal Available Certificateholder Principal Collections for
such Distribution Date; provided, however, that for each
Distribution Date with respect to the Accumulation Period, Monthly
Principal may not exceed the Controlled Deposit Amount; and
provided, further, that Monthly Principal shall not exceed the
Invested Amount of the Series 1994-1 Certificates.
"Controlled Deposit Amount" for a Distribution Date means the
excess, if any, of (a) the sum of (i) the product of the Controlled
Accumulation Amount and the number of Distribution Dates from and
including the first Distribution Date with respect to the
Accumulation Period through and including such Distribution Date
(but not in excess of the Accumulation Period Length) and (ii) the
amount on deposit in the Excess Funding Account as of the April 1999
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 and the Principal Funding Account, in each case
before giving effect to any withdrawals from or deposits to such
accounts on such Distribution Date.
"Controlled Accumulation Amount" means an amount equal to the
Invested Amount as of the April 1999 Distribution Date (after giving
effect to any changes therein on such date) divided by the
Accumulation Period Length.
PRINCIPAL FUNDING ACCOUNT
The Servicer will establish and maintain in the name of the Trustee,
on behalf of the Trust, an Eligible Deposit Account for the benefit of the
Series 1994-1 Certificateholders (the "Principal Funding Account"). On
each Distribution Date with respect to the Accumulation Period, Monthly
Principal will be deposited in the Principal Funding Account as provided
above under "Distributions from the Collection Account; Reserve Fund;
Yield Supplement Account -- Principal Collections"; provided, that, if an
Early Amortization Period that is not terminated as described herein
commences during the Accumulation Period, the Principal Funding Account
Balance shall be paid to the Series 1994-1 Certificateholders on the first
Special Payment Date.
All amounts on deposit in the Principal Funding Account on any
Distribution Date (after giving effect to distributions to be made on such
Distribution Date) (the "Principal Funding Account Balance") will be
invested from the date of their deposit to on or prior to the Expected
Payment Date by the Trustee at the direction of the Servicer in Eligible
Investments that will mature on or prior to the following Distribution
Date. The Servicer may select an appropriate agent as representative of
the Servicer for the purpose of designating such investments. On each
Distribution Date, the interest and other investment income on the
Principal Funding Account Balance will be applied as provided above under
"Distributions from the Collection Account; Reserve Fund; Yield Supplement
Account".
DISTRIBUTIONS
Payments to Series 1994-1 Certificateholders will be made from the
Collection Account, the Reserve Fund, the Principal Funding Account, the
Yield Supplement Account and the Excess Funding Account.
(a) The Servicer shall instruct the Trustee to apply funds on
deposit in the Collection Account and the Reserve Fund and shall
instruct the Trustee to make the following distributions at the
following times:
(i) on each Distribution Date all amounts on deposit in
the Collection Account and the Reserve Fund as are payable to
the Series 1994-1 Certificateholders with respect to accrued
interest will be distributed to the Series 1994-1
Certificateholders.
(b) The Servicer shall instruct the Trustee to apply the funds
on deposit in the Principal Funding Account, the Collection Account
and the Excess Funding Account and shall instruct the Trustee to
make, without duplication, the following distributions at the
following times:
(i) on each Special Payment Date and on the Expected
Payment Date, the Principal Funding Account Balance, the
amount on deposit in the Excess Funding Account and all
amounts on deposit in the Collection Account as are payable to
Series 1994-1 Certificateholders with respect to principal
shall be distributed to the Series 1994-1 Certificateholders
up to a maximum amount on any such date equal to the excess of
the outstanding principal amount of the Series 1994-1
Certificates over unreimbursed Investor Charge-Offs, each on
such date.
(c) On each Distribution Date on which there is an unpaid
Carry-over Amount, the Servicer shall instruct the Trustee to
distribute to the Series 1994-1 Certificateholders such Carry-over
Amount to the extent funds are available therefor first from amounts
on deposit in the Yield Supplement Account and second to the extent
funds are available therefor after making all required distributions
and deposits with respect to the Series 1994-1 Certificates as
provided above under "Distributions from the Collection Account;
Reserve Fund; Yield Supplement Account".
INVESTOR CHARGE-OFFS
If the Available Subordinated Amount is reduced to zero and on any
Distribution Date the Deficiency Amount is greater than zero, the
outstanding principal balance of the Series 1994-1 Certificates will be
reduced by the Deficiency Amount, but not by more than the Investor
Default Amount for such Distribution Date (an "Investor Charge-Off"). Any
reduction in the outstanding principal balance of the Series 1994-1
Certificates will have the effect of slowing or reducing the return of
principal to the Series 1994-1 Certificateholders. If the outstanding
principal balance of the Series 1994-1 Certificates has been reduced by
any Investor Charge-Offs, it will thereafter be increased on any
Distribution Date (but not by an amount in excess of the aggregate
unreimbursed Investor Charge-Offs) by the sum of (a) Series Allocable
Miscellaneous Payments for such Distribution Date and (b) the amount of
Excess Servicing allocated and available for such purpose as described
above.
EARLY AMORTIZATION EVENTS
The Early Amortization Events with respect to the Series 1994-1
Certificates will include each of the events so defined in the Prospectus,
plus the following:
1. failure on the part of USA, the Servicer or CCC, as
applicable, (i) to make any payment or deposit required by the
Pooling and Servicing Agreement or the Receivables Purchase
Agreement, including but not limited to any Transfer Deposit Amount
or Adjustment Payment, on or before the date occurring two business
days after the date such payment or deposit is required to be made
therein; or (ii) to deliver a Distribution Date Statement on the
date required under the Pooling and Servicing Agreement (or within
the applicable grace period which will not exceed five business
days); (iii) to comply with its covenant not to create any lien on a
Receivable; or (iv) to observe or perform in any material respect
any other covenants or agreements set forth in the Pooling and
Servicing Agreement or the Receivables Purchase Agreement, which
failure continues unremedied for a period of 45 days after written
notice of such failure;
2. any representation or warranty made by CCC in the
Receivables Purchase Agreement or by USA in the Pooling and
Servicing Agreement or any information required to be given by USA
to the Trustee to identify the Accounts proves to have been
incorrect in any material respect when made and continues to be
incorrect in any material respect for a period of 60 days after
written notice and as a result the interests of the
Certificateholders are materially and adversely affected; provided,
however, that an Early Amortization Event shall not be deemed to
occur thereunder if USA has repurchased the related Receivables or
all such Receivables, if applicable, during such period in
accordance with the provisions of the Pooling and Servicing
Agreement;
3. the occurrence of certain events of bankruptcy, insolvency
or receivership relating to any of CFC, CCC or Chrysler;
4. a failure by USA to convey Receivables in Additional
Accounts to the Trust within five business days after the day on
which it is required to convey such Receivables pursuant to the
Pooling and Servicing Agreement;
5. on any Determination Date, the Available Subordinated
Amount for the next Distribution Date will be reduced to an amount
less than the Required Subordinated Amount on such Determination
Date after giving effect to the distributions to be made on the next
Distribution Date;
6. any Service Default with respect to the Series 1994-1
Certificates occurs;
7. on any Determination Date, as of the last day of the
preceding Collection Period, the aggregate amount of Principal
Receivables relating to Used Vehicles exceeds 20% of the Pool
Balance on such last day;
8. on any Determination Date, the average of the Monthly
Payment Rates for the three preceding Collection Periods, is less
than 20%; and
9. any Carry-over Amount is outstanding on six consecutive
Distribution Dates.
In the case of any event described in clause 1, 2 or 6 above, an
Early Amortization Event with respect to Series 1994-1 will be deemed to
have occurred only if, after the applicable grace period described in such
clauses, if any, either the Trustee or Series 1994-1 Certificateholders
holding Series 1994-1 Certificates evidencing more than 50% of the
aggregate unpaid principal amount of the Series 1994-1 Certificates by
written notice to the Seller and the Servicer (and the Trustee, if given
by Certificateholders) declare that an Early Amortization Event has
occurred as of the date of such notice. In the case of any Early
Amortization Event described in the Prospectus or any event described in
clause 3, 4, 5, 7, 8 or 9 above, an Early Amortization Event with respect
to Series 1994-1 will be deemed to have occurred without any notice or
other action on the part of the Trustee or the Series 1994-1
Certificateholders immediately upon the occurrence of such event.
Under certain limited circumstances, an Early Amortization Period
which commences prior to the scheduled end of the Revolving Period may
terminate and the Revolving Period recommence. If an Early Amortization
Period results from the failure by USA to convey Receivables in Additional
Accounts to the Trust, as described in paragraph 4 above, during the
Revolving Period and no other Early Amortization Event that has not been
cured or waived as described herein has occurred, the Early Amortization
Period resulting from such failure will terminate and the Revolving Period
will recommence (unless the scheduled termination date of the Revolving
Period has occurred) as of the end of the first Collection Period during
which the Seller would no longer be required to convey Receivables to the
Trust. The Seller may no longer be required to convey Receivables as
described above as a result of a reduction in the Invested Amount
occurring due to principal payments made in respect of the Series 1994-1
Certificates and the Certificates of other outstanding Series during the
Early Amortization Period or as a result of the subsequent addition of
Receivables to the Trust. Notwithstanding the foregoing, if any Early
Amortization Event (other than an Early Amortization Event descibed in
clause 3 above or in the Prospectus) occurs, the Revolving Period will
recommence following receipt of (i) written confirmation by each Rating
Agency (other than Moody's) that its rating of the Series 1994-1
Certificates will not be withdrawn or lowered as a result of such
recommencement and (ii) the consent of Series 1994-1 Certificateholders
holding Series 1994-1 Certificates evidencing more than 50% of the
aggregate unpaid principal amount of the Series 1994-1 Certificates to
such recommencement, provided that no other Early Amortization Event that
has not been cured or waived as described herein has occurred and the
scheduled termination of the Revolving Period has not occurred.
SERIES TERMINATION
The last payment of principal and interest on the Series 1994-1
Certificates will be due and payable no later than the September 2001
Distribution Date (the "Series Termination Date"). In the event that the
aggregate Invested Amount is greater than zero on the Series Termination
Date (after giving effect to deposits and distributions otherwise to be
made on such Series Termination Date), the Trustee will sell or cause to
be sold (and apply the proceeds to the extent necessary to pay such
remaining amounts to all Series 1994-1 Certificateholders) an interest in
the Receivables or certain Receivables, as specified in the Pooling and
Servicing Agreement, in an amount equal to (a) 110% of the aggregate
Invested Amount on such Series Termination Date (after giving effect to
such deposits and distributions) and (b) the Available Subordinated Amount
on the preceding Determination Date (after giving effect to the
allocations, distributions, withdrawals and deposits to be made on the
Distribution Date following such Determination Date); provided, however,
that in no event shall such amount exceed the Series Allocation Percentage
(for the Collection Period in which such Series Termination Date occurs)
of Receivables on such Series Termination Date. The net proceeds of such
sale and any collections on the Receivables will be paid pro rata to
Series 1994-1 Certificateholders on the Series Termination Date as the
final payment of the Series 1994-1 Certificates.
REPORTS
On each Distribution Date (including each Distribution Date that
corresponds to the Expected Payment Date or any Special Payment Date),
commencing with the initial Distribution Date, the Trustee will forward to
each Series 1994-1 Certificateholder of record a statement (the
"Distribution Date Statement") prepared by the Servicer setting forth the
following information (which, in the case of (c), (d) and (e) below, will
be stated on the basis of an original principal amount of $1,000 per
Series 1994-1 Certificate if the Accumulation Period or an Early
Amortization Period has commenced): (a) the aggregate amount of
collections, the aggregate amount of Interest Collections and the
aggregate amount of Principal Collections processed during the immediately
preceding Collection Period; (b) the Series Allocation Percentage, the
Floating Allocation Percentage and the Fixed Allocation Percentage for
such Collection Period; (c) the total amount, if any, distributed on the
Series 1994-1 Certificates; (d) the amount of such distribution allocable
to principal on the Series 1994-1 Certificates; (e) the amount of such
distribution allocable to interest on the Series 1994-1 Certificates; (f)
the Investor Default Amount for such Distribution Date; (g) the Draw
Amount, if any, for such Collection Period; (h) the amount of the Investor
Charge-Offs and the amounts of reimbursements thereof for such Collection
Period; (i) the amount of the Monthly Servicing Fee for such Collection
Period; (j) the Controlled Distribution Amount for the following
Distribution Date; (k) the Invested Amount, the Excess Funding Amount and
the outstanding principal balance of the Series 1994-1 Certificates for
such Distribution Date (after giving effect to all distributions which
will occur on such Distribution Date); (1) the "pool factor" for the
Series 1994-1 Certificates as of the Determination Date with respect to
such Distribution Date (consisting of an eleven-digit decimal expressing
the Invested Amount as of such Determination Date (determined after taking
into account any reduction in the Invested Amount which will occur on such
Distribution Date) as a proportion of the Initial Invested Amount); (m)
the Available Subordinated Amount for such Determination Date; (n) the
Reserve Fund balance for such date; and (o) the Principal Funding Account
Balance and the Yield Supplement Account balance with respect to such
date.
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement (the "Underwriting Agreement"), the Seller has agreed to sell to
the underwriters named below (the "Underwriters"), and each of the
Underwriters has severally agreed to purchase from the Seller, the
principal amount of the Series 1994-1 Certificates set forth opposite its
name:
<TABLE>
<CAPTION>
Series 1994-1
Underwriters Certificates
<S> <C>
Salomon Brothers Inc ...................................... $166,700,000
Bear, Stearns & Co. Inc. .................................. 166,650,000
J.P. Morgan Securities Inc. ............................... 166,650,000
Total................................................ $500,000,000
</TABLE>
In the Underwriting Agreement, the Underwriters have agreed, subject
to the terms and conditions set forth therein, to purchase all the Series
1994-1 Certificates offered hereby if any of the Series 1994-1
Certificates are purchased.
The Seller has been advised by the Underwriters that the
Underwriters propose to initially offer the Series 1994-1 Certificates to
the public at the price set forth on the cover page of this Prospectus
Supplement, and to certain dealers at such price less a concession not in
excess of 0.20% of the Certificate denominations. The Underwriters may
allow and such dealers may reallow a concession not in excess of 0.15% of
the Certificate denominations to certain other dealers. After the initial
public offering, the public offering price and such concessions may be
changed.
The Underwriting Agreement provides that USA and CFC will indemnify
the Underwriters against certain liabilities, including liabilities under
the Securities Act, or contribute to payments which the Underwriters may
be required to make in respect thereof.
LEGAL MATTERS
Certain legal matters relating to the Series 1994-1 Certificates
will be passed upon for the Underwriters by Cravath, Swaine & Moore, New
York, New York. Certain federal income tax and ERISA matters will be
passed upon for USA and the Trust by Cravath, Swaine & Moore. In addition
to representing the Underwriters, Cravath, Swaine & Moore from time to
time represents Chrysler Financial Corporation and its affiliates. See
"Legal Matters" in the Prospectus.
<PAGE>
INDEX OF PRINCIPAL TERMS
Term Page
Accounts.......................................................... S-1
Accumulation Period Commencement Date............................. S-5
Accumulation Period Length........................................ S-4
Adjustment Date................................................... S-3
Assets Receivables Rate........................................... S-19
Available Certificateholder Principal Collections................. S-27
Available Seller's Collections.................................... S-22
Available Seller's Interest Collections........................... S-23
Available Seller's Principal Collections.......................... S-23
Calculation Agent................................................. S-19
Carry-over Amount................................................. S-4
CCC............................................................... S-1
Certificate Rate.................................................. S-1
Certificateholder Interest Collections............................ S-25
Controlled Accumulation Amount.................................... S-27
Controlled Deposit Amount......................................... S-27
Deficiency Amount................................................. S-23
Distribution Date................................................. S-1
Distribution Date Statement....................................... S-30
Draw Amount....................................................... S-23
Early Amortization Period......................................... S-5
Excess Funding Account............................................ S-4
Excess Principal Collections...................................... S-22
Excess Reserve Fund Required Amount............................... S-26
Excess Seller's Percentage........................................ S-23
Excluded Dealers.................................................. S-15
Excluded Receivables.............................................. S-15
Expected Payment Date............................................. S-17
Fixed Allocation Percentage....................................... S-21
Floating Allocation Percentage.................................... S-21
Incremental Subordinated Amount................................... S-7
Index............................................................. S-1
Index Maturity.................................................... S-18
Initial Invested Amount........................................... S-22
Interest Period................................................... S-3
Invested Amount................................................... S-21
Investment Proceeds............................................... S-25
Investor Charge-Off............................................... S-28
LIBOR............................................................. S-18
London Business Day............................................... S-19
MMC............................................................... S-12
Monthly Interest.................................................. S-18
Monthly Principal................................................. S-27
Principal Funding Account......................................... S-27
Principal Funding Account Balance................................. S-28
Principal Shortfalls.............................................. S-22
Receivables....................................................... S-1
Required Participation Percentage................................. S-8
Required Subordinated Amount...................................... S-7
Reserve Fund...................................................... S-25
Reserve Fund Deposit Amount....................................... S-25
Reserve Fund Required Amount...................................... S-25
Seller............................................................ S-1
Seller's Interest................................................. S-1
Seller's Participation Amount..................................... S-23
Seller's Percentage............................................... S-23
Series............................................................ S-1
Series 1994-1 Certificates........................................ S-1
Series 1994-1 Invested Amount..................................... S-3
Series 1994-1 Termination Date.................................... S-10
Series Cut-Off Date............................................... S-10
Series Issuance Date.............................................. S-10
Series Supplement................................................. S-18
Series Termination Date........................................... S-30
Servicer.......................................................... S-1
Servicing Fee Rate................................................ S-9
SFAS.............................................................. S-12
Subordinated Percentage........................................... S-7
Subordination Factor.............................................. S-24
Trust............................................................. S-1
Underwriters...................................................... S-31
Underwriting Agreement............................................ S-31
USA............................................................... S-1
Yield Supplement Account.......................................... S-4
Yield Supplement Account Deposit Amount........................... S-26
Yield Supplement Account Required Amount.......................... S-26
<PAGE>
ANNEX I
OUTSTANDING SERIES OF INVESTOR CERTIFICATES
This Annex I sets forth the principal characteristics of (i) the
Floating Rate Auto Loan Asset Backed Certificates, Series 1991-1, (ii) the
7 7/8% Auto Loan Asset Backed Certificates, Series 1991-3, (iii) Revolving
Certificates, Long Term Bank Series, (iv) Revolving Certificates, Short Term
Bank Series, (v) the Floating Rate Auto Loan Asset Backed Certificates, Series
1992-2, (vi) the Floating Rate Auto Loan Asset Backed Certificates, Series
1993-1, and (vii) the Floating Rate Auto Loan Asset Backed Certificates,
Series 1993-2, ("Series 1991-1", "Series 1991-3", "Long Term Bank Series",
"Short Term Bank Series", "Series 1992-2", "Series 1993-1", and "Series
1993-2", respectively). For more specific information with respect to any
Series, any prospective investor should contact USA at (810) 948-3031. USA
will provide, without charge, to any prospective purchaser, a copy of the
Disclosure Document with respect to such Series.
1. Series 1991-1
Initial Principal Amount............ $400,000,000
Scheduled Interest Payment Date..... Monthly, on or about the fifteenth day
of each month
Current Principal Amount............ $400,000,000
Required Participation Percentage... 103%
Initial Subordinated Amount......... $54,545,455
Revolving Period.................... May 31, 1991 to the earlier of May 31,
1994 or an Early Amortization Event
Expected Payment Date............... December 1994 Distribution Date
Termination Date.................... June 1996 Distribution Date
2. Series 1991-3
Initial Principal Amount............ $750,000,000
Scheduled Interest Payment Date..... Semiannually, on or about the fifteenth
day of January and July
Required Participation Percentage... 103%
Subordinated Amount................. Approximately 13.6% of the Invested
Amount
Initial Swap Subordinated Amount.... $34,090,909
Revolving Period.................... June 30, 1991 to the earlier of February
28, 1996 or an Early Amortization Event
Expected Payment Date............... August 1996 Distribution Date
Termination Date.................... March 1998 Distribution Date
3. Long Term Bank Series
Initial Principal Amount............ Fluctuates from time to time based on
utilization
Scheduled Interest Payment Date..... Monthly, on or about the fifteenth day
of each month
Current Principal Amount............ $0
Required Participation Percentage... 104%
Initial Subordinated Amount......... Approximately 9.45% of the Invested
Amount
Revolving Period.................... May 23, 1994 to the earlier of April
1998 or an Early Amortization Event
Termination Date.................... April 1998
4. Short Term Bank Series
Initial Principal Amount............ Fluctuates from time to time based on
utilization
Scheduled Interest Payment Date..... Monthly, on or about the fifteenth day
of each month
Current Principal Amount............ $0
Required Participation Percentage... 104%
Initial Subordinated Amount......... Approximately 9.45% of the Invested
Amount
Revolving Period.................... May 23, 1994 to the earlier of May 22,
1995 or an Early Amortization Event
Termination Date.................... May 22, 1998
5. Series 1992-2
Initial Principal Amount............ $400,000,000
Scheduled Interest Payment Date..... Monthly, on or about the fifteenth day
of each month
Current Principal Amount............ $400,000,000
Required Participation Percentage... 103%
Initial Subordinated Amount......... Approximately 13.6% of the Invested
Amount
Revolving Period.................... September 30, 1992 to the earlier of May
1, 1997 (or later in certain
circumstances) or an Early Amortization
Event
Expected Payment Date............... October 1997 Distribution Date
Termination Date.................... September 1999 Distribution Date
<PAGE>
6. Series 1993-1
Initial Principal Amount............ $250,000,000
Scheduled Interest Payment Date..... Monthly, on or about the fifteenth day
of each month
Current Principal Amount............ $250,000,000
Required Participation Percentage... 103%
Initial Subordinated Amount......... Approximately 13.6% of the Invested
Amount
Revolving Period.................... January 31, 1993 to the earlier of
September 1, 1997 (or later in certain
circumstances) or an Early Amortization
Event
Expected Payment Date............... February 1998 Distribution Date
Termination Date.................... January 2000 Distribution Date
7. Series 1993-2
Initial Principal Amount............ $500,000,000
Scheduled Interest Payment Date..... Monthly, on or about the fifteenth day
of each month
Current Principal Amount............ $500,000,000
Required Participation Percentage... 103%
Initial Subordinated Amount......... Approximately 13.6% of the Invested
Amount
Revolving Period.................... September 30, 1993 to the earlier of
June 1, 1998 (or later in certain
circumstances) or an Early Amortization
Event
Expected Payment Date............... November 15, 1998
Termination Date.................... October 2000 Distribution Date
<PAGE>
PROSPECTUS
CARCO Auto Loan Master Trust
Auto Loan Asset Backed Certificates
----------------
U.S. AUTO RECEIVABLES COMPANY, Seller
CHRYSLER CREDIT CORPORATION, Servicer
----------------
U.S. Auto Receivables Company ("USA" or the "Seller") has previously
sold and may sell from time to time one or more series (each a "Series")
of auto loan asset backed certificates (the "Certificates") evidencing
undivided interests in certain assets of Carco Auto Loan Master Trust (the
"Trust") created pursuant to a Pooling and Servicing Agreement among USA,
Chrysler Credit Corporation, as servicer ("CCC" or the "Servicer"), and
Manufacturers and Traders Trust Company, as trustee. The Trust assets
include wholesale receivables (the "Receivables") generated from time to
time in a portfolio of revolving financing arrangements (the "Accounts")
with automobile dealers to finance their automobile and light duty truck
inventory and collections on the Receivables, as more fully described
herein and, with respect to any Series, in an accompanying prospectus
supplement (a "Prospectus Supplement") relating to such Series.
Certificates have previously been sold by the Trust and additional
Certificates will be sold from time to time under this Prospectus on terms
determined for each Series or Class at the time of the sale and described
in the related Prospectus Supplement. Each Series will consist of one or
more classes of Certificates (each a "Class"). Certain assets of the Trust
will be allocated to the Certificateholders of each Series or Class
including the right to receive a varying percentage of each month's
collections with respect to the Receivables at the times and in the manner
described herein and, with respect to any Series offered hereby, in the
related Prospectus Supplement. The Seller will own the remaining interest
in the Trust not represented by the Certificates (the "Seller's
Interest"). The Seller's Interest will be subordinated to the rights of
the Certificateholders of each Series to the limited extent described,
with respect to any Series offered hereby, in the related Prospectus
Supplement. In addition, each Series offered hereby may be entitled to the
benefits of a letter of credit, surety bond, cash collateral account or
other form of enhancement as specified in the Prospectus Supplement
relating to such Series.
While the specific terms of any Series in respect of which this
Prospectus is being delivered will be described in the related Prospectus
Supplement, the terms of such Series will not be subject to prior review
by, or consent of, the holders of the Certificates of any previously
issued Series.
Prospective investors should consider, among other things, the
information set forth in "Special Considerations" herein.
----------------
THE CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST ONLY AND DO
NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF THE SELLER, THE SERVICER
OR ANY AFFILIATE THEREOF. NEITHER THE CERTIFICATES NOR THE
RECEIVABLES ARE INSURED OR GUARANTEED BY ANY
GOVERNMENTAL AGENCY.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
----------------
Certificates may be sold by the Seller directly to purchasers,
through agents designated from time to time, through underwriting
syndicates led by one or more managing underwriters or through one or more
underwriters acting alone. If underwriters or agents are involved in the
offering of the Certificates of any Series offered hereby, the name of the
managing underwriter or underwriters or agents will be set forth in the
related Prospectus Supplement. If an underwriter, agent or dealer is
involved in the offering of the Certificates of any Series offered hereby,
the underwriter's discount, agent's commission or dealer's purchase price
will be set forth in, or may be calculated from, the related Prospectus
Supplement, and the net proceeds to the Seller from such offering will be
the public offering price of such Certificates less such discount in the
case of an underwriter, the purchase price of such Certificates less such
commissions in the case of an agent or the purchase price of such
Certificates in the case of a dealer, and less, in each case, the other
expenses of the Seller associated with the issuance and distribution of
such Certificates. See "Plan of Distribution".
This Prospectus may not be used to consummate sales of Certificates of any
Series unless accompanied by the related Prospectus Supplement.
The date of this Prospectus is October 20, 1994.
<PAGE>
AVAILABLE INFORMATION
The Seller has filed a Registration Statement (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"), with the Securities and Exchange Commission (the "Commission") with
respect to the Certificates offered pursuant to this Prospectus. This
Prospectus, which forms part of the Registration Statement, does not
contain all of the information contained in the Registration Statement and
the exhibits thereto. For further information, reference is made to the
Registration Statement and amendments thereof and exhibits thereto, which
are available for inspection without charge at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549; 75 Park Place, New York, New York 10007; and
Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois
60661. Copies of the Registration Statement and amendments thereof and
exhibits thereto may be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates.
REPORTS TO CERTIFICATEHOLDERS
Unless and until Definitive Certificates are issued, monthly and
annual unaudited reports, containing information concerning the Trust and
prepared by the Servicer, will be sent on behalf of the Trust to Cede &
Co. ("Cede"), as nominee of The Depository Trust Company ("DTC") and
registered holder of the Certificates, pursuant to the Pooling and
Servicing Agreement. Such reports may be available to holders of interests
in the Certificates (the "Certificateholders") upon request to their
respective Participants. See "Description of the Certificates -- Reports"
and " -- Evidence as to Compliance". The Trust will file with the
Commission such periodic reports with respect to the Trust as are required
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations of the Commission thereunder.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Servicer, on
behalf of the Trust, are incorporated in this Prospectus by reference: the
Trust's Annual Report on Form 10-K for the year ended December 31, 1993;
and the Trust's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1994 and June 30, 1994. All reports and other documents filed by the
Seller, as originator of any Trust, pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the Certificates offered hereby
shall be deemed to be incorporated by reference in this Prospectus and to
be part hereof. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Seller will provide without charge to each person, including any
beneficial owner of Certificates, to whom a copy of this Prospectus is
delivered, on the written or oral request of any such person, a copy of
any or all of the documents incorporated herein or in any related
Prospectus Supplement by reference, except the exhibits to such documents
(unless such exhibits are specifically incorporated by reference in such
documents). Requests for such copies should be directed to Secretary,
Chrysler Financial Corporation, 27777 Franklin Road, Southfield, Michigan
48034-8286 (telephone: 810-948-3060).
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to
the detailed information appearing elsewhere in this Prospectus and by
reference to the information with respect to the Certificates of any
Series or Class offered hereby contained in the related Prospectus
Supplement to be prepared and delivered in connection with the offering of
such Certificates. Reference is made to the Index of Principal Terms for
the location herein of the definitions of certain capitalized terms used
herein.
Title of Securities .... Auto Loan Asset Backed Certificates (the
"Certificates").
Issuer ................. CARCO Auto Loan Master Trust (the "Trust").
Seller ................. The "Seller" is U.S. Auto Receivables Company
("USA"), a special-purpose wholly-owned
subsidiary of Chrysler Financial Corporation
("CFC").
Servicer ............... Chrysler Credit Corporation ("CCC"), a
wholly-owned subsidiary of CFC.
Trustee ................ Manufacturers and Traders Trust Company (the
"Trustee").
The Trust .............. The Trust was formed pursuant to a Pooling and
Servicing Agreement dated as of May 31, 1991, as
assigned by Chrysler Auto Receivables Company
("CARCO") to USA on August 8, 1991, among USA,
CCC, as Servicer, and the Trustee (as
supplemented and amended from time to time, the
"Pooling and Servicing Agreement"). The assets
of the Trust include (a) certain Receivables
existing under the Accounts at the close of
business on May 31, 1991 (the "Initial Cut-Off
Date"), certain Receivables generated under the
Accounts from time to time thereafter during the
term of the Trust as well as certain Receivables
generated under any Accounts added to the Trust
from time to time (but excluding Receivables
generated in any Accounts removed from the Trust
from time to time after the Initial Cut-Off
Date), (b) all funds collected or to be
collected in respect of such Receivables, (c)
all funds on deposit in certain accounts of the
Trust, (d) any other Enhancement issued with
respect to any particular Series or Class and
(e) a security interest in certain motor
vehicles (the "Vehicles") and certain parts
inventory, equipment, fixtures, service accounts
and, in some cases, realty and/or a personal
guarantee (collectively, the "Collateral
Security") securing the Receivables. The term
"Enhancement" shall mean, with respect to any
Series or Class, any letter of credit, surety
bond, cash collateral account, spread account,
guaranteed rate agreement, swap or other
interest rate protection agreement, maturity
liquidity facility, tax protection agreement, or
other arrangement for the benefit of
Certificateholders of such Series or Class.
CARCO Transfer ......... On August 8, 1991, CARCO, in accordance with the
terms of the Pooling and Servicing Agreement and
the Receivables Purchase Agreement, transferred
the Seller's Interest and all its rights and
obligations under (a) the Pooling and Servicing
Agreement (including rights and obligations as
seller thereunder) and (b) the Receivables
Purchase Agreement (including rights and
obligations as buyer thereunder) to USA, such
transfer being the "CARCO Transfer". See "U.S.
Auto Receivables Company and the Trust".
The Accounts ........... The Accounts pursuant to which the Receivables
have been or will be generated are revolving
credit agreements entered into with CCC by
dealers to finance the purchase of their
automobile and light duty truck inventory. The
Accounts are selected from all such credit
agreements of CCC which meet the criteria
provided in the Pooling and Servicing Agreement
(the "Eligible Accounts"). Under certain
circumstances Accounts may be added to, or
removed from, the Trust. See "The Accounts",
"Description of the Certificates -- Eligible
Accounts and Eligible Receivables", " --
Addition of Accounts" and " -- Removal of
Accounts".
The Receivables ........ The Receivables have arisen or will arise in the
Accounts. The Receivables consist of advances
made directly or indirectly by CCC to domestic
automobile dealers franchised by Chrysler
Corporation ("Chrysler") and/or other automobile
manufacturers (the "Dealers"). Such advances are
used by the Dealers to purchase the Vehicles,
which consist primarily of new automobiles,
light duty trucks and certain other vehicles
manufactured or distributed by such automobile
manufacturers. Generally, the principal amount
of an advance in respect of a Vehicle is equal
to the wholesale purchase price of the Vehicle
plus destination charges and, subject to certain
exceptions, is due upon the retail sale of the
Vehicle. See "The Dealer Floorplan Financing
Business -- Creation of Receivables" and " --
Payment Terms". Collections of principal under
the Receivables are herein referred to as
"Principal Collections", and collections of
interest and other nonprincipal charges
(including insurance service fees, amounts
recovered with respect to Defaulted Receivables
and insurance proceeds) are referred to herein
as "Interest Collections". The Receivables bear
interest at a floating rate based on the prime
rates of certain United States banks plus a
spread generally based on the amount of the
related Dealer's credit line. See "The Dealer
Floorplan Financing Business -- Revenue
Experience".
USA has entered into a Receivables Purchase
Agreement, dated as of the date of the Pooling
and Servicing Agreement, between USA, as
purchaser, and CCC, as seller (the "Receivables
Purchase Agreement"). Pursuant to the
Receivables Purchase Agreement, CCC has (a) sold
to USA all of its right, title and interest in
and to all Receivables meeting certain
eligibility criteria contained in the
Receivables Purchase Agreement and the Pooling
and Servicing Agreement ("Eligible Receivables")
and (b) assigned its interests in the Vehicles
and the Collateral Security to USA. USA in turn
transferred such Receivables and Collateral
Security to the Trust pursuant to the Pooling
and Servicing Agreement. USA has also assigned
to the Trust its rights with respect to the
Receivables under the Receivables Purchase
Agreement. See "Description of the Receivables
Purchase Agreement".
All new Receivables arising under the Accounts
during the term of the Trust will be sold by CCC
to USA and transferred by USA to the Trust.
Accordingly, the aggregate amount of Receivables
in the Trust will fluctuate from day to day as
new Receivables are generated and as existing
Receivables are collected, charged off as
uncollectible or otherwise adjusted.
The Certificates ....... The Certificates will be issued in Series, each
of which will consist of one or more Classes.
While the specific terms of any Series or Class
offered hereby will be described in the related
Prospectus Supplement, the terms of such Series
or Class will not be subject to prior review by,
or consent of, the holders of the Certificates
of any previously issued Series. There can be no
assurance that the terms of any Series issued
from time to time hereafter might not have an
impact on the timing or amount of payments
received by a Certificateholder. See
"Description of the Certificates -- New
Issuances".
Unless otherwise specified in the related
Prospectus Supplement, the Certificates of a
Series offered hereby will be available for
purchase in minimum denominations of $1,000 and
in integral multiples thereof and will only be
available in book-entry form except in certain
limited circumstances as described herein under
"Description of the Certificates -- Definitive
Certificates". The Trust's assets will be
allocated in part to the Certificateholders of
each Series (with respect to any particular
Series or all Series, the "Certificateholders'
Interest"), with the remainder allocated to the
Seller (the "Seller's Interest"). A portion of
the Seller's Interest will be subordinated to
the Certificateholders' Interest of each Series
to the extent described, with respect to any
Series offered hereby, in the related Prospectus
Supplement. The Certificates of each Series will
evidence an undivided beneficial interest in the
assets of the Trust allocated to the
Certificateholders' Interest of such Series and
will represent the right to receive from such
assets funds up to (but not in excess of) the
amounts required to make payments of interest on
and principal of such Series as described, with
respect to any Series offered hereby, in the
related Prospectus Supplement.
The principal amount of the Seller's Interest
may fluctuate as the aggregate amount of the
Receivables balance changes from time to time,
as new Series are issued and as outstanding
Series amortize.
The Certificates will represent beneficial
interests in the Trust only and will not
represent interests in or obligations of CCC,
CFC or USA or any affiliate thereof. Neither the
Certificates nor the Receivables are insured or
guaranteed by CFC, CCC or USA or any affiliate
thereof or any governmental agency.
Registration of
Certificates ......... Unless otherwise specified in the related
Prospectus Supplement, the Certificates of a
Series offered hereby will initially be
represented by one or more Certificates
registered in the name of Cede & Co., as the
nominee of DTC. Unless otherwise specified in
the related Prospectus Supplement,
Certificateholders may elect to hold their
Certificates through DTC (in the United States)
or CEDEL or Euroclear (in Europe) and no person
acquiring an interest in the Certificates will
be entitled to receive a definitive certificate
representing such person's interest except in
the event that Definitive Certificates are
issued under certain limited circumstances. See
"Description of the Certificates -- Definitive
Certificates".
Issuances of
New Series ........... The Pooling and Servicing Agreement provides
that, pursuant to any one or more supplements
thereto (each, a "Series Supplement"), the
Seller may cause the Trustee to issue one or
more new Series of Certificates (a "New
Issuance"). However, at all times, the interest
in the balance of principal Receivables
("Principal Receivables") represented by the
Seller's Interest must equal or exceed a
specified amount. The Pooling and Servicing
Agreement also provides that the Seller may
specify, with respect to any Series, the
Principal Terms of the Series. The Seller may
offer any Series to the public or other
investors under a prospectus or other disclosure
document in transactions either registered under
the Securities Act or exempt from registration
thereunder, directly or through one or more
underwriters or placement agents.
Under the Pooling and Servicing Agreement and
pursuant to a Series Supplement, a New Issuance
may only occur upon delivery to the Trustee of,
among other things, the following: (a) a Series
Supplement specifying the Principal Terms of
such Series, (b) an opinion of counsel to the
effect that, for federal income and Michigan
income and single business tax purposes, (x)
such issuance will not adversely affect the
characterization of the Certificates of any
outstanding Series or Class as debt of the
Seller, (y) such issuance will not cause or
constitute a taxable event to any
Certificateholders and (z) such new Series will
be characterized as debt of the Seller and (c)
letters from the Rating Agencies confirming that
the issuance of the new Series will not result
in the reduction or withdrawal of the rating of
any other Series or Class of Certificates then
outstanding. See "Description of the
Certificates -- New Issuances".
Allocations ............ The Certificateholders' Interest of each Series
will include the right to receive (but only to
the extent needed to make required payments
under the Pooling and Servicing Agreement)
varying percentages of Interest Collections and
Principal Collections allocated to such
Certificates during each calendar month (a
"Collection Period"). Interest Collections,
Principal Collections and Defaulted Receivables
for any Collection Period will be allocated to
each Series based on that Series' Series
Allocation Percentage. The Series Allocation
Percentage for any Collection Period and any
Series is the percentage obtained by dividing
(x) the Adjusted Invested Amount for that Series
as of the last day of the immediately preceding
Collection Period by (y) the sum of the
aggregate Adjusted Invested Amounts for all
outstanding Series as of such last day. The
Adjusted Invested Amount for any Collection
Period and any Series is the sum of (x) the
Initial Invested Amount of such Series, minus
unreimbursed investor charge-offs allocated to
that Series as of the last day of the
immediately preceding Collection Period and (y)
the Available Subordinated Amount with respect
to such Series on 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 following such Determination
Date). Interest Collections, Principal
Collections and Defaulted Receivables allocated
to a Series will be further allocated between
the Certificateholders' Interest of that Series
(and, if applicable, of each Class thereof) and
the Seller's Interest as provided in the related
Series Supplement and, with respect to any
Series offered hereby, described in the related
Prospectus Supplement.
Interest ............... Interest on the principal balance of
Certificates of a Series or Class offered hereby
will accrue at the per annum rate either
specified in or determined in the manner
specified in the related Prospectus Supplement
and will be payable to Certificateholders of
such Series or Class as and on the dates
("Interest Payment Dates") specified in the
related Prospectus Supplement. If the Prospectus
Supplement for a Series or Class of Certificates
offered hereby so specifies, the interest rate
and Interest Payment Dates applicable to each
Certificate of that Series or Class may be
subject to adjustment from time to time,
including as a result of a decline in the
interest rate borne by the Receivables. Except
as otherwise provided herein or in the related
Prospectus Supplement, Interest Collections and
certain other amounts allocable to the
Certificateholders' Interest of a Series offered
hereby will be used to make interest payments to
Certificateholders of such Series on each
Interest Payment Date with respect thereto,
provided that during any Early Amortization
Period with respect to such Series, interest
will be distributed to such Certificateholders
monthly on each Special Payment Date.
If the Interest Payment Dates for a Series or
Class occur less frequently than monthly, such
collections or other amounts (or the portion
thereof allocable to such Class) will be
deposited in one or more trust accounts (each an
"Interest Funding Account") and used to make
interest payments to Certificateholders of such
Series or Class on the following Interest
Payment Date with respect thereto. If a Series
has more than one Class of Certificates, each
such Class may have a separate Interest Funding
Account.
Principal .............. The principal of the Certificates of each Series
offered hereby will be scheduled to be paid
either in full on an expected date specified in
the related Prospectus Supplement (the "Expected
Payment Date"), in which case such Series will
have an Accumulation Period as described below
under "Accumulation Period", or in installments
commencing on a date specified in the related
Prospectus Supplement (the "Principal
Commencement Date"), in which case such Series
will have a Controlled Amortization Period as
described below under "Controlled Amortization
Period". If a Series has more than one Class of
Certificates, a different method of paying
principal, Expected Payment Date and/or
Principal Commencement Date may be assigned to
each Class. The payment of principal with
respect to the Certificates of a Series or Class
offered hereby may commence earlier than the
applicable Expected Payment Date or Principal
Commencement Date, and the final principal
payment with respect to the Certificates of a
Series or Class may be made later than the
applicable Expected Payment Date or other
expected date if an Early Amortization Event
occurs with respect to such Series or Class or
under certain other circumstances described
herein or in the related Prospectus Supplement.
Certificates of a Series or Class offered hereby
may also be subject to purchase from time to
time, generally at their respective principal
amounts, in connection with a remarketing
thereof if so specified in the related
Prospectus Supplement. A purchase of
Certificates of such a Series or Class may
result in a decrease in the outstanding
principal amount of such Series or Class prior
to the commencement of the Controlled
Amortization Period or Early Amortization Period
with respect thereto or the Expected Payment
Date therefor. The Prospectus Supplement for any
Series subject to purchase as described above
will describe the conditions to and procedures
for any such purchase. The proceeds of any such
purchase would be paid to the holders of the
Certificates so purchased.
Excess Funding Account . If and to the extent described in the Prospectus
Supplement relating to a Series offered hereby,
and, except to the extent so described, during
any Early Amortization Period, Reinvestment
Period, Accumulation Period or Controlled
Amortization Period with respect to such Series
or any Class thereof, proceeds of the issuance
of the Certificates of such Series not invested
in Receivables (the "Excess Funded Amount"), if
any, will be maintained in a trust account to be
established with the Trustee for the benefit of
such Series (an "Excess Funding Account"). The
Excess Funded Amount for a Series will initially
equal the excess, if any, of the initial
principal amount of such Series over the Initial
Invested Amount of such Series on the Series
Issuance Date therefor.
Except as provided below, any funds on deposit
in the Excess Funding Account for a Series will
be withdrawn and paid to the Seller or allocated
to one or more other Series which are in
amortization, early amortization, reinvestment
or accumulation periods to the extent of any
increases in the Invested Amount of the Series
in question generally as a result of the
addition of Receivables to the Trust. Under
certain circumstances, a portion of Principal
Collections allocable to a Series will be
deposited into the Excess Funding Account
therefor. Upon the earliest of (a) the
commencement of a Reinvestment Period with
respect to a Series, (b) the commencement of an
Early Amortization Period with respect to a
Series and (c) the Distribution Date or
Distribution Dates, if any, specified in or
determined in the manner provided in the Series
Supplement for such Series, funds on deposit in
the Excess Funding Account for such Series will
be distributed to the Certificateholders of such
Series or a Class thereof or deposited into the
Principal Funding Account for such Series or a
Class thereof, if and to the extent the Series
Supplement for such Series so provides.
Revolving Period ....... The Certificates of each Series offered hereby
will have a revolving period (the "Revolving
Period"). During the Revolving Period with
respect to a Series, Principal Collections and
certain other amounts otherwise allocable to the
Certificateholders' Interest of such Series
generally will be paid to the Seller, deposited
to the Excess Funding Account, if any, for such
Series or allocated to another Series (in
effect, in exchange for the allocation to the
Certificateholders' Interest of the Series in
question of an equal interest in the Receivables
balances that are new or that would otherwise be
part of the Seller's Interest or the interest of
the Certificateholders of such other Series) in
order to maintain the sum of the Invested Amount
of such Series and the Excess Funded Amount, if
any, with respect to such Series at a constant
level. The "Revolving Period" with respect to a
Series offered hereby shall be the period
beginning on the date specified in the related
Prospectus Supplement (the "Series Cut-off
Date") and ending on the earlier of (a) the day
immediately preceding the Accumulation Period
Commencement Date or the Principal Commencement
Date for such Series and (b) the business day
immediately preceding the day on which an Early
Amortization Event or a Reinvestment Event
occurs with respect to such Series. See
"Description of the Certificates -- Reinvestment
Events and Early Amortization Events" for a
discussion of certain events which might lead to
the early termination of the Revolving Period
and, in certain circumstances, the
recommencement of the Revolving Period. If a
Series has more than one Class of Certificates,
each such Class may have a different Revolving
Period.
Accumulation Period .... If the related Prospectus Supplement so
specifies, unless an Early Amortization Period
or Reinvestment Period that is not terminated in
accordance with the provisions of the related
Series Supplement commences with respect to a
Series offered hereby, the Certificates of such
Series will have an accumulation period (the
"Accumulation Period"), which will commence at
the close of business on the date specified in
or determined in the manner specified in such
Prospectus Supplement and continue until the
earliest of (a) the commencement of a
Reinvestment Period with respect to such Series,
(b) the commencement of an Early Amortization
Period with respect to such Series and (c)
payment in full of the outstanding principal
amount of the Certificates of such Series.
During the Accumulation Period with respect to a
Series, Principal Collections and certain other
amounts allocable to the Certificateholders'
Interest of such Series will be deposited on
each Distribution Date in a trust account
established for the benefit of the
Certificateholders of such Series (a "Principal
Funding Account") and, together, to the extent
provided in the related Series Supplement, with
any amounts in the Excess Funding Account, if
any, for such Series, used to make principal
distributions to the Certificateholders of such
Series when due. The amount to be deposited in
the Principal Funding Account for any Series
offered hereby on any Distribution Date during
the Accumulation Period for such Series may, but
will not necessarily, be limited to an amount
(the "Controlled Deposit Amount") equal to an
amount specified in the related Prospectus
Supplement plus, in the case of the Distribution
Date or Distribution Dates specified in or
determined in the manner provided in the related
Series Supplement, amounts in the Excess Funding
Account, if any, for such Series (after giving
effect to any changes therein on such date), if
and to the extent so provided in the related
Series Supplement. If a Series has more than one
Class of Certificates, each Class may have a
different Accumulation Period and a separate
Principal Funding Account and Controlled Deposit
Amount. In addition, the related Prospectus
Supplement may describe certain priorities among
such Classes with respect to deposits of
principal into such Principal Funding Accounts.
Controlled Amortization
Period ............... If the related Prospectus Supplement so
specifies, unless an Early Amortization Period
or Reinvestment Period that is not terminated in
accordance with the provisions of the related
Series Supplement commences with respect to a
Series offered hereby, the Certificates of such
Series will have an amortization period (the
"Controlled Amortization Period"), which will
commence at the close of business on the date
specified in or determined in the manner
specified in such Prospectus Supplement and
continue until the earliest of (a) the
commencement of a Reinvestment Period with
respect to such Series, (b) the commencement of
an Early Amortization Period with respect to
such Series and (c) payment in full of the
outstanding principal amount of the Certificates
of such Series. During the Controlled
Amortization Period with respect to a Series,
Principal Collections and certain other amounts
allocable to the Certificateholders' Interest of
such Series, together with, to the extent
provided in the related Series Supplement,
amounts in the Excess Funding Account, if any,
for such Series, will be used on each
Distribution Date to make principal
distributions to Certificateholders of such
Series or any Class of such Series then
scheduled to receive such distributions. The
amount to be distributed to Certificateholders
of any Series offered hereby on any Distribution
Date may, but will not necessarily, be limited
to an amount (the "Controlled Amortization
Amount") equal to an amount specified in the
related Prospectus Supplement. If a Series has
more than one Class of Certificates, each Class
may have a different Controlled Amortization
Period and a separate Controlled Amortization
Amount. In addition, the related Prospectus
Supplement may describe certain priorities among
such Classes with respect to such distributions.
Reinvestment Period .... If the related Prospectus Supplement so
specifies, unless an Early Amortization Period
that is not terminated in accordance with the
provisions of the related Series Supplement
commences with respect to a Series, if a
Reinvestment Event occurs with respect to such
Series, the Certificates of that Series will
have a reinvestment period (the "Reinvestment
Period") which will commence on the day (the
"Reinvestment Period Commencement Date") on
which such event has occurred and continue until
the earliest of (a) the commencement of an Early
Amortization Period with respect to such Series,
(b) the recommencement of the Revolving Period
with respect to such Series in accordance with
the related Series Supplement and (c) payment of
the outstanding principal amount of the
Certificates of such Series in full. Unless
otherwise provided in the related Series
Supplement, during the Reinvestment Period with
respect to a Series, Principal Collections and
certain other amounts allocable to the
Certificateholders' Interest of that Series will
be deposited on each Distribution Date in the
Principal Funding Account for such Series and,
together with, to the extent provided in the
related Series Supplement, amounts in the Excess
Funding Account, if any, for such Series, will
be used to make principal distributions to
Certificateholders of that Series when due. The
amount to be deposited in the Principal Funding
Account for any Series on any Distribution Date
during the Reinvestment Period for such Series
will not be limited to any Controlled Deposit
Amount. If a Series has more than one Class of
Certificates, the related Prospectus Supplement
may describe certain priorities among such
Classes with respect to deposits of principal
into the Principal Funding Accounts therefor.
After the date on which the amount on deposit in
the Principal Funding Account with respect to a
Series equals the outstanding principal amount
of the Certificates of such Series (the "Fully
Reinvested Date"), Certificateholders of such
Series will no longer have any interest in the
Receivables and all the representations and
covenants of the Seller and the Servicer
relating to the Receivables, as well as certain
other provisions of the Pooling and Servicing
Agreement and all remedies for breaches thereof,
will no longer accrue to the benefit of the
Certificateholders of such Series, in each case
unless the Revolving Period with respect to such
Series recommences as provided in the related
Series Supplement. In addition, upon the
occurrence of the Fully Reinvested Date with
respect to a Series, no Interest Collections,
Principal Collections, Defaulted Receivables or
Miscellaneous Payments will be allocated to that
Series unless the Revolving Period with respect
thereto recommences as described above.
Notwithstanding the foregoing, when the final
distribution has been made with respect to each
Series of Certificates or the Fully Reinvested
Date has occurred with respect thereto, all
right, title and interest in the Receivables
will be conveyed and transferred to USA. See
"Description of the Certificates -- Termination;
Fully Reinvested Date".
Early Amortization
Period ............... During the period beginning on the day on which
an Early Amortization Event has occurred with
respect to a Series offered hereby and ending on
the earliest of the payment in full of the
outstanding principal balance of the
Certificates of such Series, the recommencement
of the Revolving Period with respect to such
Series in accordance with the related Series
Supplement and the Termination Date for such
Series (the "Early Amortization Period"), the
Revolving Period, the Reinvestment Period, the
Controlled Amortization Period or the
Accumulation Period, as the case may be, with
respect to such Series, will terminate and
Principal Collections and certain other amounts
allocable to the Certificateholders' Interest of
that Series will no longer be paid to the Seller
or the holders of any other outstanding Series
or deposited in a Principal Funding Account as
described above but instead will be distributed
to the Certificateholders of such Series monthly
on each Distribution Date beginning with the
Distribution Date following the Collection
Period in which an Early Amortization Period
commences with respect to such Series. See
"Description of the Certificates -- Reinvestment
Events and Early Amortization Events" for a
description of events that might result in the
commencement of an Early Amortization Period
with respect to a Series of Certificates. During
an Early Amortization Period with respect to a
Series, distributions of principal on the
Certificates of that Series will not be subject
to a Controlled Distribution Amount. In
addition, on the first Special Payment Date with
respect to a Series amounts on deposit in the
Excess Funding Account, if any, to the extent
provided in the related Series Supplement, and
the Principal Funding Account with respect to
such Series or a Class thereof will be paid to
the Certificateholders of such Series or Class
up to the outstanding principal balance of the
Certificates of such Series or Class. Each
Distribution Date with respect to any Early
Amortization Period is defined as a "Special
Payment Date".
Subordination of the
Seller's Interest;
Enhancements ......... The Seller's Interest will be subordinated to
the rights of the Certificateholders of each
Series offered hereby to the limited extent
described in the related Prospectus Supplement.
If and to the extent specified in the related
Series Supplement, additional credit enhancement
with respect to a Series or Class of
Certificates may include any one or more of the
following: letters of credit, surety bonds, cash
collateral accounts, spread accounts, guaranteed
rate agreements, swaps or other interest rate
protection agreements, repurchase obligations,
other agreements with respect to third party
payments or other support, cash deposits or
other arrangements. Enhancement may also be
provided to a Series or Class of a Series by
subordination provisions which require that
distributions of principal and/or interest be
made with respect to the Certificates of that
Series or Class before distributions are made to
another Series or Class. Unless otherwise
specified in the related Prospectus Supplement,
any form of Enhancement will have certain
limitations and exclusions from coverage
thereunder, which will be described in the
related Prospectus Supplement.
Excluded Series ........ A Series of Certificates may be designated as an
excluded series (an "Excluded Series") with
respect to a Series of Certificates previously
issued by the Trust as to which the Accumulation
Period or Controlled Amortization Period has
commenced (a "Paired Series").
Each Excluded Series will be prefunded with an
initial deposit to a prefunding account in an
amount equal to the initial principal balance of
such Excluded Series and primarily from the
proceeds of the offering of such Excluded
Series. Any such prefunding account will be held
for the benefit of such Excluded Series and not
for the benefit of the Paired Series. As funds
are accumulated in the Principal Funding Account
for such Paired Series or distributed to holders
of Certificates of such Paired Series, an equal
amount of funds on deposit in any prefunding
account for such prefunded Excluded Series will
be released (which funds will be distributed to
the Seller). Until payment in full of the Paired
Series, no Interest Collections, Principal
Collections, Defaulted Amounts or Miscellaneous
Payments will be allocated to the related
Excluded Series. In addition, it is expected
that any Excluded Series will be excluded from
the calculation of the Required Participation
Amount as described under "Description of the
Certificates -- Addition of Accounts".
Servicing .............. The Servicer (initially, CCC) is responsible for
servicing, managing and making collections on
the Receivables and will, in most circumstances,
deposit such collections in the Collection
Account within two business days following the
receipt thereof, generally up to the amount of
such collections required to be distributed to
Certificateholders with respect to the related
Collection Period. In certain limited
circumstances, the Servicer will be permitted to
use for its own benefit and not segregate
collections on the Receivables received by it
during each Collection Period until no later
than the business day prior to the related
Distribution Date or, provided that no Series
issued prior to the date of this Prospectus is
outstanding, no later than such Distribution
Date. See "Description of the Certificates --
Allocation of Collections; Deposits in
Collection Account".
On the second business day preceding each
Distribution Date (each a "Determination Date"),
the Servicer will calculate the amounts to be
allocated in respect of collections on
Receivables received with respect to the related
Collection Period to the Certificateholders of
each outstanding Series or Class or to the
Seller in accordance with the Series
Supplements. See "Description of the
Certificates -- Allocation of Collections;
Deposits in Collection Account" and "Special
Considerations -- Certain Legal Aspects".
In certain limited circumstances CCC may resign
or be removed as Servicer, in which event either
the Trustee or, so long as it meets certain
eligibility standards set forth in the Pooling
and Servicing Agreement, a third-party servicer
may be appointed as successor servicer (CCC or
any such successor Servicer is referred to
herein as the "Servicer"). CCC is permitted to
delegate any of its duties as Servicer to any of
its affiliates, but any such delegation will not
relieve the Servicer of its obligations under
the Pooling and Servicing Agreement. The
Servicer will receive a monthly servicing fee
and certain other amounts as described herein as
servicing compensation from the Trust. See
"Description of the Certificates -- Servicing
Compensation and Payment of Expenses".
Mandatory Reassignment
and Transfer of
Certain Receivables .. The Seller has made certain representations and
warranties in the Pooling and Servicing
Agreement with respect to the Receivables in its
capacity as Seller and CCC has made certain
representations and warranties in the Pooling
and Servicing Agreement in its capacity as
Servicer. Such representations and warranties
will be reaffirmed as of each Series Cut-Off
Date. If the Seller breaches certain of its
representations and warranties with respect to
any Receivables and such breach remains uncured
for a specified period and has a materially
adverse effect on the Certificateholders'
Interest, the Certificateholders' Interest in
such Receivables will, subject to certain
conditions specified herein, be reassigned to
the Seller. If CCC, as Servicer, fails to comply
in all material respects with certain covenants
or warranties with respect to any Receivables
and such noncompliance is not cured within a
specified period after CCC becomes aware or
receives notice thereof from the Trustee and
such noncompliance has a materially adverse
effect on the Certificateholders' Interest
therein, the Certificateholders' Interest in all
Receivables affected will be purchased by CCC.
In the event of a transfer of servicing
obligations to a successor Servicer, such
successor Servicer, rather than CCC, would be
responsible for any failure to comply with the
Servicer's covenants and warranties arising
thereafter.
Tax Matters ............ In the opinion of special tax counsel for the
Seller and the Trust, the Certificates of each
Series offered hereby will be characterized as
debt of the Seller for federal income tax
purposes and, in the opinion of Michigan counsel
for the Seller and the Trust, the Certificates
will be characterized as debt of the Seller for
Michigan income and single business tax
purposes. Each Certificateholder, by the
acceptance of a Certificate offered hereby, will
agree to treat such Certificates as indebtedness
of the Seller for federal, state and local
income and single business tax purposes. The
Certificates might be issued with original issue
discount. See "Certain Tax Matters" for
additional information concerning the
application of federal and Michigan tax laws.
ERISA Considerations ... Under a regulation issued by the Department of
Labor, and unless otherwise specified in the
related Prospectus Supplement, the Trust's
assets would not be deemed "plan assets" of any
employee benefit plan holding interests in the
Certificates of any Series offered hereby or, if
such Series has more than one Class, any such
Class if certain conditions are met, including
that interests in the Certificates of such
Series or, in the case of a Series with more
than one Class, such Class be held by at least
100 independent persons upon completion of the
public offering of such Certificates being made
hereby. Based on information provided by the
underwriter or placement agent for a Series, the
Seller will notify the Trustee as to whether or
not Certificates of that Series or, in the case
of a Series with more than one Class, each such
Class will be held by at least 100 separately
named persons at the conclusion of the offering
thereof. The Seller will not, however, determine
whether the 100-investor requirement of the
exception for publicly offered securities is
satisfied as to the Certificates of any Series
or Class. If the Trust's assets were deemed to
be "plan assets" of such a plan, there is
uncertainty as to whether existing exemptions
from the "prohibited transaction" rules of the
Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), would apply to all
transactions involving the Trust's assets.
Accordingly, employee benefit plans
contemplating purchasing interests in the
Certificates of any Series or Class should
consult their counsel before making a purchase.
See "ERISA Considerations".
Certificate Ratings .... Unless otherwise specified in the related
Prospectus Supplement, it will be a condition to
the issuance of the Certificates of each Series
offered hereby that they be rated in the highest
long-term rating category by at least one
nationally recognized rating agency. A security
rating is not a recommendation to buy, sell or
hold securities and is subject to revision or
withdrawal in the future by the assigning rating
agency. See "Special Considerations -- Ratings
of the Certificates".
<PAGE>
SPECIAL CONSIDERATIONS
Limited Liquidity. It is anticipated that, to the extent permitted,
the underwriters of any Series of Certificates offered hereby will make a
market in such Certificates, but will not be under any obligation to do
so. There can be no assurance that a secondary market will develop with
respect to the Certificates of any Series offered hereby or, if such a
secondary market does develop, that it will provide the holders of such
Certificates with liquidity of investment or that it will continue for the
life of such Certificates.
Certain Legal Aspects. There are certain limited circumstances under
the Uniform Commercial Code (the "UCC") and applicable federal law in
which prior or subsequent transferees of Receivables could have an
interest in such Receivables with priority over the Trust's interest. See
"Certain Legal Aspects of the Receivables -- Transfer of Receivables".
Under the Receivables Purchase Agreement, CCC has warranted to the Seller
and, under the Pooling and Servicing Agreement, the Seller has warranted
to the Trust that the Receivables have been or will be transferred free
and clear of the lien of any third party. Each of CCC and the Seller has
also covenanted that it will not sell, pledge, assign, transfer or grant
any lien on any Receivable or, except as described under "Description of
the Certificates -- The Seller's Certificate", the Seller's Certificate
(or any interest therein) other than to the Trust.
CCC has warranted to the Seller in the Receivables Purchase
Agreement that the sale of the Receivables by it to the Seller is a valid
sale of the Receivables to the Seller. In addition, CCC, CFC and the
Seller have and will treat the transactions described herein as a sale of
the Receivables to the Seller and CCC has and will take all actions that
are required under Michigan law to perfect the Seller's ownership interest
in the Receivables. See "Certain Legal Aspects of the Receivables --
Transfer of Receivables". Notwithstanding the foregoing, if CCC or CFC
were to become a debtor in a bankruptcy case and a creditor or
trustee-in-bankruptcy of such debtor or such debtor itself were to take
the position that the sale of Receivables to the Seller should be
recharacterized as a pledge of such Receivables to secure a borrowing of
such debtor, then delays in payments of collections of Receivables to the
Seller could occur or (should the court rule in favor of any such trustee,
debtor or creditor) reductions in the amount of such payments could
result. If the transfer of Receivables to the Seller is recharacterized as
a pledge, a tax or government lien on the property of CCC or CFC arising
before any Receivables come into existence may have priority over the
Seller's interest in such Receivables. See "Certain Legal Aspects of the
Receivables -- Certain Matters Relating to Bankruptcy". If the
transactions contemplated herein are treated as a sale, except in certain
limited circumstances, the Receivables would not be part of either CFC's
or CCC's bankruptcy estate and would not be available to CFC's or CCC's
creditors.
In addition, if CFC or CCC were to become a debtor in a bankruptcy
case and a creditor or trustee-in-bankruptcy of such debtor or such debtor
itself were to request a bankruptcy court to order that CFC and/or CCC be
substantively consolidated with the Seller, delays in and reductions in
the amount of distributions on the Certificates could occur.
The Seller has warranted in the Pooling and Servicing Agreement that
the transfer of the Receivables to the Trust is a sale of the Receivables
to the Trust. The Seller has and will take all actions that are required
under Michigan law to perfect the Trust's interest in the Receivables and
the Seller has warranted that the Trust will at all times have a first
priority perfected ownership interest therein and, with certain
exceptions, in the proceeds thereof. However, the transfer of the
Receivables to the Trust could be deemed to create a security interest
therein. If the transfer of the Receivables to the Trust were deemed to
create a security interest therein under the UCC as in effect in Michigan,
a tax or statutory lien on property of CCC, CFC or the Seller arising
before a Receivable is transferred to the Trust may have priority over the
Trust's interest in such Receivables. If the Seller were to become a
debtor in a bankruptcy case and a bankruptcy trustee or the Seller as
debtor in possession or a creditor of the Seller were to take the position
that the transfer of the Receivables from the Seller to the Trust should
be recharacterized as a pledge of such Receivables, then delays in
distributions on the Certificates or, should the bankruptcy court rule in
favor of any such trustee, debtor in possession or creditor, reductions in
such distributions could result.
In a recent case decided by the U.S. Court of Appeals for the Tenth
Circuit, Octagon Gas System, Inc. v. Rimmer, the court determined that
"accounts", as defined under the Uniform Commercial Code, would be
included in the bankruptcy estate of a transferor regardless of whether
the transfer is treated as a sale or a secured loan. Although the
Receivables are likely to be viewed as "chattel paper", as defined under
the Uniform Commercial Code, rather than as accounts, the rationale behind
the Octagon holding is equally applicable to chattel paper. The
circumstances under which the Octagon ruling would apply are not fully
known and the extent to which the Octagon decision will be followed in
other courts or outside of the Tenth Circuit is not certain. If the
holding in the Octagon case were applied in a CCC bankruptcy, however,
even if the transfer of Receivables to the Seller and the Trust were
treated as a sale, the Receivables would be part of CCC's bankruptcy
estate and would be subject to claims of certain creditors, and delays and
reductions in payments to the Seller and Certificateholders could result.
See "Certain Legal Aspects of the Receivables -- Certain Matters Relating
to Bankruptcy".
If certain events relating to the bankruptcy of Chrysler, CFC, CCC
or the Seller were to occur, then a Reinvestment Event or Early
Amortization Event would occur with respect to each Series and, pursuant
to the terms of the Pooling and Servicing Agreement, additional
Receivables would not be transferred to the Trust. See "Certain Legal
Aspects of the Receivables -- Transfer of Receivables" and " -- Certain
Matters Relating to Bankruptcy".
Payments made in respect of repurchases of Receivables by CCC or the
Seller pursuant to the Pooling and Servicing Agreement may be recoverable
by CCC or the Seller as debtor in possession or by a creditor or a
trustee-in-bankruptcy of CCC or the Seller as a preferential transfer from
CCC or the Seller if such payments are made within one year prior to the
filing of a bankruptcy case in respect of CCC or the Seller.
Application of federal and state bankruptcy and debtor relief laws
could affect the interests of the Certificateholders in the Receivables if
such laws result in any Receivables being written off as uncollectible or
result in delays in payments due on such Receivables. See "Description of
the Certificates -- Defaulted Receivables and Recoveries".
The Seller has represented and warranted in the Pooling and
Servicing Agreement that each Receivable is at the time of creation
secured by a first priority perfected security interest in the related
Vehicle. Generally, under applicable state laws, a security interest in an
automobile or light duty truck which secures wholesale financing
obligations may be perfected by the filing of UCC financing statements.
CCC takes all actions necessary under applicable state laws to perfect
CCC's security interest in the Vehicles. However, at the time a Vehicle is
sold, CCC's security interest in the Vehicle will terminate. Therefore, if
a Dealer fails to remit to CCC amounts owed with respect to Vehicles that
have been sold, the related Receivables will no longer be secured by
Vehicles.
Payments. Receivables are generally paid by Dealers upon retail sale
of the underlying Vehicle. The timing of such sales is uncertain. In
addition, there is no assurance that there will be additional Receivables
created under the Accounts or that any particular pattern of Dealer
repayments will occur. The payment of principal on the Certificates is
dependent on Dealer repayments. As a result the Certificates of any Series
or Class may not be fully amortized by the Expected Payment Date, if any,
with respect to such Series or Class and the payment to Certificateholders
or deposit in a Principal Funding Account of principal during the
Controlled Amortization Period or Accumulation Period, if any, with
respect to a Series of Certificates or a Class thereof may not equal the
Controlled Amortization Amount or Controlled Deposit Amount, if any, with
respect to such Series or Class.
Social, Economic and Other Factors. Payment of the Receivables is
largely dependent upon the retail sale of the related Vehicles. The level
of retail sales of cars and light duty trucks may change as the result of
a variety of social and economic factors. Economic factors include
interest rates, unemployment levels, the rate of inflation and consumer
perception of economic conditions generally. The use of incentive programs
(e.g., manufacturers' rebate programs) may affect retail sales. However,
the Seller is unable to determine and has no basis to predict whether or
to what extent economic or social factors will affect the level of Vehicle
sales.
Trust's Relationship to Chrysler and CCC. Neither CFC, CCC nor
Chrysler is obligated to make any payments in respect of the Certificates
of any Series or the Receivables (other than the obligation of CCC to
purchase certain Receivables from the Trust due to the failure to comply
with certain covenants, as described under "Description of the
Certificates -- Servicer Covenants"). However, the Trust is completely
dependent upon CCC for the generation of new Receivables. The ability of
CCC to generate Receivables is in turn dependent to a large extent on the
sales of automobiles and light duty trucks manufactured or distributed by
Chrysler. There can, therefore, be no assurance that CCC will continue to
generate Receivables at the same rate as in prior years. In addition, if
CCC were to cease acting as Servicer, delays in processing payments on the
Receivables and information in respect thereof could occur and result in
delays in payments to the Certificateholders.
In connection with the transfer of Receivables by CCC to the Seller
and the transfer of such Receivables by the Seller to the Trust, each of
CCC and the Seller make representations and warranties with respect to the
characteristics of such Receivables. CCC and the Seller are required to
determine the accuracy of such representations and warranties and, in
certain circumstances, they are required to purchase Receivables with
respect to which such representations and warranties have been breached.
See "Description of the Certificates -- Representations and Warranties"
and "Description of the Receivables Purchase Agreement -- Representations
and Warranties". In addition, subject to certain limitations, CCC has the
ability to change the terms of the Accounts, including the rate and the
credit line, as well as change its underwriting procedures.
Under franchise agreements between Chrysler and Chrysler-franchised
dealers, Chrysler is committed to purchase unmiled vehicles from such
dealers upon dealership termination. In addition, Chrysler has
historically provided certain financial assistance to Chrysler-franchised
dealers, but has no obligation to do so. If Chrysler is unable, or elects
not, to provide any such financial assistance to Dealers or is unable to
fulfill the terms of the franchise agreements with Dealers, losses with
respect to the Receivables may increase. See "The Dealer Floorplan
Financing Business -- Relationship with Chrysler". In addition, because a
substantial number of the Vehicles to be sold by the Dealers are
manufactured or distributed by Chrysler, if Chrysler were temporarily or
permanently no longer manufacturing or distributing vehicles, the rate of
sales of Chrysler-manufactured Vehicles owned by the Dealers would
decrease, adversely affecting payment rates with respect to the
Receivables, and the loss experience with respect to the Receivables will
be adversely affected. See "The Dealer Floorplan Financing Business".
The Prospectus Supplement for any Series offered hereby may set
forth certain additional information regarding CFC, CCC and Chrysler. In
addition, Chrysler and CFC are subject to the informational requirements
of the Exchange Act and in accordance therewith file reports and other
information with the Commission. For further information regarding
Chrysler and CFC reference is made to such reports and other information
which are available as described under "Available Information".
Credit Enhancement. Credit enhancement of each Series of
Certificates offered hereby will be provided by the subordination of the
Seller's Interest to the extent of the Available Subordinated Amount for
such Series as described in the related Prospectus Supplement. The amount
of such credit enhancement is limited and will be reduced from time to
time as described in the related Prospectus Supplement. In addition, any
Enhancement provided with respect to a Series or Class of Certificates is
expected to be limited. See "Limited Subordination of Seller's Interest;
Enhancements".
Control. Under certain circumstances, the consent or approval of the
holders of a specified percentage of the aggregate unpaid principal amount
of all outstanding Certificates of all outstanding Series will be required
to direct certain actions, including amending the Pooling and Servicing
Agreement in certain circumstances and directing a reassignment of the
entire portfolio of Receivables. In addition, following the occurrence of
an insolvency event with respect to the Seller, the holders of
Certificates evidencing more than 50% of the aggregate unpaid principal
amount of each Series or each Class of each Series (and any holder of a
Supplemental Certificate) will be required to direct the Trustee not to
sell or otherwise liquidate the Receivables.
Additional Series. The Trust, as a master trust, previously issued
Series and is expected to issue additional Series (which may be
represented by different Classes within a Series) from time to time. A
Series Supplement delivered in connection with the issuance of other
Series will specify certain Principal Terms applicable to such Series.
Such Principal Terms may include methods for determining applicable
allocation percentages and allocating collections, provisions creating
different or additional security or other credit enhancement, different
Classes of Certificates (including subordinated Classes of Certificates)
and any other amendment or supplement to the Pooling and Servicing
Agreement which is made applicable only to such Series. No Series
Supplement, however, may change the terms of the Certificates of another
Series or the terms of the Pooling and Servicing Agreement as applied to
the Certificate of another Series. See "Description of the Certificates --
New Issuances". As long as the Certificates of any Series are outstanding,
a condition to the execution of any Series Supplement will be that the
Rating Agencies shall have advised the Trustee that the issuance of such
Additional Series will not result in the reduction or withdrawal of their
rating of the Certificates of any outstanding Series or Class of
Certificates. There can be no assurance, however, that the terms of any
one Series might not have an impact on the timing or amount of payments
received by a Certificateholder of any other Series. The issuance of an
additional Series does not require the consent of any Certificateholders.
Ratings of the Certificates. Unless otherwise specified in the
related Prospectus Supplement, it will be a condition to the issuance of
the Certificates of each Series offered hereby that they be rated in the
highest long-term rating category by at least one nationally recognized
rating agency (such rating agency and each other rating agency designated
by the Seller in the related Series Supplement in respect of any
outstanding Series or Class, a "Rating Agency"). Any rating assigned to
the Certificates of a Series or a Class by a Rating Agency will reflect
such Rating Agency's assessment of the likelihood that Certificateholders
of such Series or Class will receive the payments of interest and
principal required to be made under the Pooling and Servicing Agreement
and will be based primarily on the value of the Receivables in the Trust,
the level of subordination of the Seller's Interest and the availability
of any Enhancement with respect to such Series or Class. However, any such
rating will not, unless otherwise specified in the related Prospectus
Supplement with respect to any Series or Class offered hereby, address the
likelihood that the principal of, or interest on, any Certificates of such
Series or Class will be paid on a scheduled date. The rating will not be a
recommendation to buy, hold or sell Certificates of such Series or Class,
inasmuch as such rating will not comment as to the market price or
suitability for a particular investor. There is no assurance that a rating
will remain for any given period of time or that a rating will not be
lowered or withdrawn by a Rating Agency if in its judgment circumstances
in the future so warrant.
Book-Entry Registration. Unless otherwise specified in the
Prospectus Supplement relating to a Series of Certificates offered hereby,
the Certificates of each such Series will be initially represented by one
or more certificates registered in the name of Cede, the nominee for DTC,
and will not be registered in the names of the Certificateholders or their
nominees. Accordingly, unless and until Definitive Certificates are issued
Certificateholders will not be recognized by the Trustee as
"Certificateholders" (as that term is used in the Pooling and Servicing
Agreement) and will only be able to exercise the rights of
Certificateholders indirectly through DTC and its participating
organizations, and unless the Prospectus Supplement for a Series offered
hereby provides otherwise, through Euroclear or CEDEL and their respective
participating organizations. See "Description of the Certificates --
General", " -- Book-Entry Registration" and " -- Definitive Certificates".
U.S. AUTO RECEIVABLES COMPANY AND THE TRUST
U.S. AUTO RECEIVABLES COMPANY
USA was incorporated in the State of Delaware on June 18, 1991, as a
wholly owned subsidiary of CFC. USA is organized for the limited purpose
of purchasing wholesale, retail and other receivables from either CFC, CCC
or CARCO and transferring such receivables to third parties or issuing
indebtedness secured by receivables to third parties. Similarly, CARCO was
incorporated in the State of Delaware on May 30, 1986, for the limited
purpose of purchasing wholesale and retail receivables from either CFC or
CCC and transferring such receivables to third parties. On August 8, 1991,
CARCO transferred the Seller's Interest and all its rights and obligations
under the Pooling and Servicing Agreement and the Receivables Purchase
Agreement to USA. Such transfer (the "CARCO Transfer") was made in
accordance with the terms of the Pooling and Servicing Agreement and the
Receivables Purchase Agreement and was subject to certain conditions,
including, among others that (a) CARCO, USA and the Trustee execute and
deliver an assignment and assumption agreement; (b) CARCO deliver certain
required opinions of counsel (including an opinion of counsel that the
CARCO Transfer would not adversely affect the characterization of any
outstanding Series or Class of Certificates as debt of USA); (c) the CARCO
Transfer would not result in a reduction or withdrawal of the rating of
any outstanding Series or Class of Certificates; and (d) all filings
required to continue the perfected interest of the Trustee in the
Receivables and the Collateral Security be made.
On August 8, 1991, USA was deemed to have made all representations
and warranties of the Seller in the Pooling and Servicing Agreement and
any Series Supplement with respect to any Series or Class of Certificates
outstanding at such time. In addition, upon such transfer, USA assumed the
obligations of CARCO under the Certificates with respect to any
outstanding Series, the Pooling and Servicing Agreement and the
Receivables Purchase Agreement and agreed to hold CARCO harmless from any
liability related to such obligations. Obligations transferred to and
assumed by USA include CARCO's obligation with respect to the subordinated
note issued to CFC (the owner of all the common stock of CARCO), the
proceeds of which note were used to fund a portion of the purchase price
of Receivables from CCC on the Initial Closing Date. CFC has made
additional subordinated loans to USA to fund a portion of the purchase
price of the Receivables arising in the Additional Accounts added to the
Trust on Addition Dates subsequent to the Initial Closing Date and may
make additional subordinated loans to USA in the future.
In addition to purchasing the Receivables in connection with the
offering of the Certificates, the Seller has also purchased other
receivables from CFC and CCC in connection with other financings.
The Seller has taken steps in structuring the transactions
contemplated hereby that are intended to insure that the voluntary or
involuntary application for relief by CFC or CCC under the United States
Bankruptcy Code or similar applicable state laws ("Insolvency Laws") will
not result in the consolidation of the assets and liabilities of the
Seller with those of CFC or CCC. These steps include the creation of the
Seller as a separate, limited-purpose subsidiary pursuant to a certificate
of incorporation containing certain limitations (including restrictions on
the nature of the Seller's business, as described above, and restrictions
on the Seller's ability to commence a voluntary case or proceeding under
any Insolvency Law without the unanimous affirmative vote of all its
directors). However, there can be no assurance that the activities of the
Seller would not result in a court concluding that the assets and
liabilities of the Seller should be consolidated with those of CFC or CCC
in a proceeding under any Insolvency Law. See "Special Considerations --
Certain Legal Aspects" and "Certain Legal Aspects of the Receivables --
Certain Matters Relating to Bankruptcy".
In addition, tax and certain other statutory liabilities, such as
liabilities to the Pension Benefit Guaranty Corporation relating to the
underfunding of pension plans, of Chrysler, CFC or CCC can be asserted
against the Seller. To the extent that any such liabilities arise after
the transfer of Receivables to the Trust, the Trust's interest in the
Receivables would be prior to the interest of the claimant with respect to
any such liabilities. However, the existence of a claim against the Seller
could permit the claimant to subject the Seller to an involuntary
proceeding under the Bankruptcy Code or other Insolvency Law. See "Special
Considerations -- Certain Legal Aspects" and "Certain Legal Aspects of the
Receivables -- Certain Matters Relating to Bankruptcy" and "Special
Considerations -- Trust's Relationship to Chrysler and CCC".
USA's executive offices are located at 27777 Franklin Road,
Southfield, Michigan 48034-8286, and its telephone number is (810)
948-3031.
THE TRUST
The Trust was formed in accordance with the laws of the State of New
York pursuant to the Pooling and Servicing Agreement. CARCO, as the
initial Seller, and USA, as CARCO's assignee, have conveyed to the Trust,
without recourse, the Receivables arising under the Accounts. The property
of the Trust consists of the Receivables existing in the Accounts on the
Initial Cut-Off Date, all Receivables generated in the Accounts from time
to time thereafter during the term of the Trust as well as Receivables
generated in any Accounts added to the Trust from time to time (but
excluding Receivables in any Accounts that are removed from the Trust from
time to time after the Initial Cut-Off Date), an assignment of all the
Seller's rights and remedies under the Receivables Purchase Agreement, all
funds collected or to be collected in respect of the Receivables, all
funds on deposit in certain accounts of the Trust, any Enhancement issued
with respect to any particular Series or Class of Certificates and a
security interest in the Vehicles and any other Collateral Security. See
"Description of the Certificates -- Addition of Accounts". See
"Description of the Receivables Purchase Agreement" for a summary of
certain terms of the Receivables Purchase Agreement.
CCC will generally not convey to the Trust receivables ("Fleet
Receivables") originated in connection with multiple new vehicle orders of
at least five vehicles by certain specified Dealers. The terms Receivables
and Principal Receivables as used herein will not refer to Fleet
Receivables.
The property of the Trust may also include Enhancements for the
benefit of Certificateholders of a particular Series or Class. The
Certificateholders of a particular Series or Class will not have any
interest in any Enhancements provided for the benefit of the
Certificateholders of another Series or Class, unless so provided in the
related Series Supplement or Series Supplements. Pursuant to the Pooling
and Servicing Agreement, the Seller will be allowed (subject to certain
limitations and conditions), and in some circumstances will be obligated,
to designate from time to time Additional Accounts to be included as
Accounts and to convey to the Trust the Receivables of such Additional
Accounts, and to designate from time to time certain Accounts to be
removed and to require the Trustee to convey receivables in such Removed
Accounts to the Seller.
The Trust was formed for this and like transactions pursuant to the
Pooling and Servicing Agreement and prior to formation had no assets or
obligations. The Trust will not engage in any business activity other than
acquiring and holding the Receivables and the other assets of the Trust
and proceeds therefrom, issuing the Certificates and the Seller's
Certificate (and any Supplemental Certificates) and making payments
thereon and related activities. As a consequence, the Trust is not
expected to have any need for, or source of, capital resources other than
the assets of the Trust.
USE OF PROCEEDS
Unless otherwise provided in the related Prospectus Supplement: (i)
the net proceeds from the sale of the Certificates of a given Series
offered hereby will be paid to USA and used to make the deposit of the
Excess Funded Amount, if any, for such Series, to the Excess Funding
Account for such Series; (ii) USA will use the portion of such proceeds
paid to it (together with the subordinated loan from CFC described under
"U.S. Auto Receivables Company and the Trust -- U.S. Auto Receivables
Company") to purchase Receivables from CCC or to repay certain amounts
previously borrowed to purchase Receivables; and (iii) CCC will use the
portion of the proceeds paid to it for general corporate purposes.
THE DEALER FLOORPLAN FINANCING BUSINESS
GENERAL
The Receivables sold to the Trust by the Seller pursuant to the
Pooling and Servicing Agreement were or will be selected from extensions
of credit and advances (known generally as "wholesale" or "floorplan"
financing) made by Chrysler and CCC to domestic motor "vehicle dealers".
Funds so advanced are used by dealers to purchase new and used vehicles
manufactured or distributed by Chrysler and other manufacturers pending
sale to retail buyers. As described herein, receivables sold to the Trust
are secured by the Vehicles and, in many cases, certain parts inventory,
equipment, fixtures and service accounts of the vehicle dealers. In some
cases, the Receivables are also secured by realty owned by, and/or a
personal guarantee of, a vehicle dealer.
CCC is the primary wholesale financing source for
Chrysler-franchised dealers in the United States. Chrysler vehicles for
which CCC provides wholesale financing include vehicles manufactured under
the CHRYSLER, PLYMOUTH, DODGE, JEEP and EAGLE trademarks. CCC has extended
credit lines to Chrysler-franchised dealers that also operate non-Chrysler
franchises and non-Chrysler dealers. CCC services the accounts of domestic
dealers financed by it (the "U.S. Wholesale Portfolio") through its home
office located in Southfield, Michigan and through a network of branch
offices located throughout the United States.
Vehicles financed by any dealer under the floor plan program are
categorized by CCC, under its policies and procedures, as New Vehicles or
Used Vehicles based on whether such vehicles qualify for the new or used
wholesale and retail interest rate chargeable to such dealer in connection
with the vehicles financed. Currently, (a) "New Vehicles" consist of (i)
current and prior model year unmiled vehicles and (ii) current model year
miled vehicles purchased at a closed auction conducted by Chrysler and (b)
"Used Vehicles" consist of previously owned vehicles (other than current
model year miled vehicles purchased at a closed auction conducted by
Chrysler). Vehicles purchased by a dealer at a closed auction conducted by
Chrysler are referred to, collectively, as "Auction Vehicles". The
categorization of New Vehicles and Used Vehicles may change in the future
based on CCC's practices and policies.
CREATION OF RECEIVABLES
CCC finances 100% of the wholesale invoice price of new vehicles,
including destination charges. Receivables in respect of
Chrysler-manufactured or distributed vehicles are originated by Chrysler
concurrently with the shipment of such vehicles to the financed dealer.
Such receivables are sold by Chrysler to CCC on a daily basis. In the case
of new vehicles not manufactured by Chrysler, CCC advances funds directly
to the manufacturer on behalf of the dealer. At the end of each day, all
receivables owned by CCC (i.e., receivables which have not been sold to
nonaffiliated parties) are sold to CFC.
Once a dealer has commenced the floorplanning of a manufacturer's
vehicles through CCC, CCC will finance all purchases of vehicles by such
dealer from such manufacturer. CCC will cancel this arrangement, however,
if a dealer's inventory is considered by CCC to be seriously overstocked,
if a dealer is experiencing financial difficulties or if a dealer requests
controlled vehicle releases. In such circumstances (known as "finance
hold"), the branch or area office of CCC assumes control of vehicle
releases to the dealer. Special arrangements are made by CCC to finance
inter-dealer sales of vehicles.
CREDIT UNDERWRITING PROCESS
CCC extends credit to dealers from time to time based upon
established credit lines. Lines of credit may be established by dealers to
finance purchases of new, used and auction vehicles. All
Chrysler-franchised dealers that have a new vehicle line of credit in
place are also eligible for a used vehicle and an auction vehicle credit
line. A new vehicle credit line relates to New Vehicles (other than
current model year miled vehicles purchased at a closed auction conducted
by Chrysler); a used vehicle credit line relates to Used Vehicles; and an
auction vehicle credit line relates to Auction Vehicles.
A newly franchised dealer requesting the establishment of a new
vehicle credit line must submit an application to a CCC branch office.
After receipt of such application, the local branch office investigates
the prospective dealer by reviewing the prospective dealer's credit
reports and bank references and evaluating the dealer's marketing
capabilities and start-up financial resources and credit requirements.
When an existing dealer requests the establishment of a wholesale new
vehicle credit line, the local branch office reviews the dealer's credit
reports (including the experience of the dealer's current financing
source) and bank references and investigates the dealer's current state of
operations and management (including evaluating a factory reference) and
marketing capabilities. The local branch office prepares a written
recommendation either approving or disapproving the dealer's request and
transmits such recommendation with the requisite documentation to the area
office for final approval or disapproval. CCC applies the same
underwriting standards for dealers franchised by other manufacturers.
Upon approval, dealers execute a series of financing agreements with
CCC and, in the case of Chrysler-franchised dealers, Chrysler. Such
agreements provide CCC a first priority security interest in the vehicles
and certain other collateral and a demand master promissory note in favor
of CCC. Pursuant to such agreements, all dealers are required by CCC to
maintain insurance coverage for each vehicle for which it provided
floorplan financing, with CCC designated as loss payee.
The size of a credit line initially offered to a dealer is based
upon the dealer's sales record (or, in the case of a prospective dealer,
expected annual sales) and the dealer's effective net worth. The amount of
a dealer's credit line for new vehicles is adjusted quarterly by CCC based
upon such dealer's average new vehicle sales during the prior 180 days and
is, generally, in an amount sufficient to finance a 75-day supply of
vehicles. The amount of a dealer's credit line for used vehicles is also
adjusted periodically based upon such dealer's average used vehicle sales
for the prior 180 days and is, generally, in an amount sufficient to
finance 50% of a 30 to 45-day supply of vehicles. The size of a dealer's
auction vehicle credit line is determined on a case by case basis and is
adjusted periodically based on CCC's practices and procedures.
The aggregate amount advanced for each Used Vehicle is equal to the
National Automotive Dealers Association's Official Wholesale Used Car
Trade-in Guide wholesale book value for such vehicle. However, the
aggregate amount of the credit line for such used vehicles may not exceed
50% of the value of such dealer's total inventory of used vehicles. The
amount advanced for New Vehicles and all Auction Vehicles is equal to the
amount invoiced with respect to such vehicles and the auction purchase
price (including auction fees) of such Auction Vehicles, respectively.
PAYMENT TERMS
Upon the sale of a vehicle for which it has provided floorplan
financing, CCC generally is entitled to receive payment in full of the
related advance. Under an available instalment payment plan for new
Chrysler vehicles, eligible Chrysler-franchised dealers are obligated to
remit to CCC only 90% of the amount of the related advance upon retail
sale of the related vehicle. Payment of the remaining 10% balance (the
"Instalment Balance") is due in the second month following the date of
sale of such related vehicles. The security interest in the vehicle is
terminated at the time of its sale. A dealer has the option to pay the
Instalment Balance to CCC at the time of sale of the related vehicle. In
such case, CCC credits such amount to a cash management account maintained
for such dealer and automatically applies such credit to the payment of
the Instalment Balance on the due date thereof. Pursuant to an agreement
with Chrysler, CCC has two options with respect to the Instalment
Balances. CCC may elect to sell to Chrysler, without recourse, the
Instalment Balance of each such receivable when the related vehicle is
sold at retail. Alternatively, CCC may elect not to sell the Instalment
Balances to Chrysler and to retain a portion of the credit risk associated
therewith. In the latter case, Chrysler has agreed to absorb the credit
losses on Instalment Balances in each month in an amount equal to 15% of
the aggregate Instalment Balances created in such calendar month.
BILLING AND COLLECTION PROCEDURES
A statement setting forth billing and related account information is
prepared by CCC and distributed on a monthly basis to each dealer. Each
dealer's bills are generated and mailed on the sixth or seventh calendar
day of the month. Interest and other nonprincipal charges are required to
be paid by the end of the month in which they are billed. Interest and
handling fees are billed by CCC in arrears, while insurance costs are
billed in advance. Dealers remit payments by check directly to CCC's local
branch offices.
REVENUE EXPERIENCE
CCC charges dealers interest at a floating rate based on the rate
(the "Prime Rate") designated as the "prime rate" from time to time by
certain financial institutions selected by CFC, plus a designated spread
ranging from 0.50% to 1.25% on New Vehicles. The Prime Rate is reset by
CCC on the first and sixteenth days of every month and is applied to all
balances outstanding during the applicable period. The actual spread for
each dealer is determined according to the total amount of such dealer's
credit lines. CCC generally increases the spreads charged on Used Vehicle
balances by an additional 0.75%; however, previously owned vehicles
purchased at a Chrysler closed auction are financed at the applicable New
Vehicle rate.
RELATIONSHIP WITH CHRYSLER
Chrysler provides to certain Chrysler-franchised dealers financial
assistance in the form of working capital loans. Chrysler has recently
increased the aggregate amount of its working capital and other loans to
such dealers. In addition, Chrysler provides floorplan assistance to all
Chrysler-franchised dealers through a number of formal and informal
programs. On all new vehicle financings, Chrysler reimburses dealers
directly for the finance costs for a specified period from the date of
shipment. Chrysler also has a supplemental floorplan assistance program,
whereby dealers are reimbursed, at the time of retail sale, for a specified
amount depending upon the vehicle model.
Under an agreement between Chrysler and each Chrysler-franchised
dealer, Chrysler commits to repurchase unsold new vehicles in inventory
upon dealership termination, at such vehicles' wholesale prices less a
specified margin. Chrysler only repurchases current model year vehicles
that are new, undamaged and unused. Chrysler also agrees to repurchase
from dealers, at the time of franchise termination, parts inventory at
specified percentages of the invoice price. If CCC takes possession of a
dealer's parts inventory, Chrysler is only obligated to pay CCC 55% of the
invoice price of such inventory. All of such assistance, however, is
provided by Chrysler for the benefit of its dealers, and does not relieve
such dealers of any of their obligations to CCC.
Much of such assistance is provided at the option of Chrysler, which
may terminate any of such optional programs in whole or in part at any
time. If Chrysler is unable to or elects not to provide such assistance,
the loss experience of CCC in respect of the U.S. Wholesale Portfolio may
be adversely affected. In addition, because a substantial number of the
vehicles sold by the dealers are manufactured or distributed by Chrysler,
if Chrysler were temporarily or permanently no longer in such business,
the rate of sales of Chrysler-manufactured vehicles would decrease,
adversely affecting payment rates and the loss experience of the U.S.
Wholesale Portfolio. See "Payment Terms" for a discussion of an instalment
payment plan made available to dealers. See also "Special Considerations
- -- Trust's Relationship to Chrysler and CCC".
DEALER MONITORING
The level of each dealer's wholesale credit line is monitored on a
periodic basis by CCC's local branch offices. Dealers are permitted to
exceed such lines on a temporary basis. For example, a dealer may,
immediately prior to a seasonal sales peak, purchase more vehicles than it
is otherwise permitted to finance under its existing credit lines. As
another example, because of slow inventory turnover, a dealer's credit
lines may be reduced prior to its liquidating a sufficient portion of its
vehicle inventory. If at any time CCC learns that a dealer's balance
exceeds its approved credit lines, CCC will evaluate such dealer's
financial position and may temporarily increase such dealer's credit lines
or place such dealer in a disciplinary category known as "finance hold".
See "Creation of Receivables".
Audits of dealer vehicle inventories are conducted on a regular
basis by branch office personnel. The timing of each visit is varied and
no advance notice is given to the audited dealer. Auditors review dealers'
financial records and conduct a physical inventory of the vehicles on the
dealers' premises. Through the audit process, CCC reconciles each dealer's
physical inventory with its records of financed vehicles. Audits are
intended to identify instances where a dealer sold vehicles but did not
immediately repay the related advances. The audit process also aids CCC in
determining in such instance whether a dealer received sale proceeds but
diverted such proceeds to uses other than the repayment of the obligations
to CCC.
"DEALER TROUBLE" STATUS AND CCC'S WRITE-OFF POLICY
Under certain circumstances, CCC will classify a dealer under
"Dealer Trouble" status. Such circumstances include failure to remit any
principal or interest payment when due, any notifications of liens, levies
or attachments and a general deterioration of its financial condition.
Once a dealer is assigned to Dealer Trouble status, any further extension
of credit is determined by CCC on a case-by-case basis.
CCC attempts to work with dealers to resolve instances of Dealer
Trouble status. If, however, a dealer remains on such status, it can
result in one of the following: (a) an orderly liquidation in which the
dealer voluntarily liquidates its inventory through normal sales to retail
customers, (b) a forced liquidation in which the dealer's inventory is
repossessed and, in the case of Chrysler-franchised dealers, the franchise
is closed, (c) a voluntary surrender of the dealer's inventory and, in the
case of Chrysler-franchised dealers, franchise closure, or (d) a forced
sale of the dealership. Generally, CCC works with franchised dealers to
find third parties to purchase a troubled dealership. The proceeds of such
sales are used to repay amounts due to CCC. Once liquidation has
commenced, CCC performs an analysis of its position, writes off any
amounts identified at such time as uncollectible and attempts to liquidate
all possible collateral remaining. During the course of a liquidation, CCC
may recognize additional losses or recoveries.
ADDITIONAL INFORMATION
The Prospectus Supplement for each Series offered hereby will set
forth additional information with respect to the Dealer Floorplan
Financing Business.
THE ACCOUNTS
GENERAL
The Receivables arise in the Accounts. The Accounts were selected
from all the wholesale accounts in the U.S. Wholesale Portfolio that are
Eligible Accounts (the "Eligible Portfolio"). In order to be included in
the Eligible Portfolio, each Account must be an account established by CCC
in the ordinary course of business and meet certain other criteria
provided in the Pooling and Servicing Agreement. See "Description of the
Certificates -- Representations and Warranties". CCC and the Seller have
represented that each believes that the Accounts will be representative of
the accounts in the Eligible Portfolio and that the inclusion of the
Accounts, as a whole, will not represent an adverse selection from the
Eligible Portfolio.
From time to time, Dealers deposit funds with CCC in cash management
accounts, limited in amount to the amount of the wholesale accounts. Funds
deposited by a Dealer in its cash management account are applied to reduce
the Dealer's outstanding Principal Receivables balance and may, under
certain circumstances, be reborrowed by the Dealer.
Pursuant to the Pooling and Servicing Agreement, the Seller, and
pursuant to the Receivables Purchase Agreement, CCC, has the right
(subject to certain limitations and conditions), and in some circumstances
is obligated, to designate from time to time additional qualifying
wholesale accounts to be included as Accounts and to convey to the Trust
certain of the Receivables of such Additional Accounts, including
Receivables thereafter created. These accounts must meet the eligibility
criteria set forth above as of the date such accounts are designated as
Additional Accounts. CCC will convey the Receivables then existing, with
certain exceptions, or thereafter created under such Additional Accounts
to the Seller, which will in turn convey them to the Trust. See
"Description of the Certificates -- Addition of Accounts". In addition, as
of any Additional Cut-off Date in respect of Additional Accounts and the
date any new Receivables are generated, CCC will represent and warrant to
the Seller, and the Seller will represent and warrant to the Trust, that
the Receivables meet the eligibility requirements set forth in the Pooling
and Servicing Agreement. See "Description of the Certificates --
Conveyance of Receivables". Under certain circumstances specified in the
Pooling and Servicing Agreement, the Seller has the right to remove
Accounts, and the Receivables arising therefrom, from the Trust. See
"Description of the Certificates -- Removal of Accounts". Throughout the
term of the Trust, the Accounts from which the Receivables arise will be
the same Accounts designated by the Seller on the Initial Cut-Off Date
plus any Additional Accounts, minus any Accounts removed from the Trust.
Information with respect to the Accounts will be set forth in each
Prospectus Supplement.
CHRYSLER FINANCIAL CORPORATION AND
CHRYSLER CREDIT CORPORATION
CFC is a financial services organization, all of the common stock of
which is owned by Chrysler. CFC, a Michigan corporation, is the continuing
corporation resulting from a merger on June 1, 1967, of a financial
services subsidiary of Chrysler into a newly acquired, previously
nonaffiliated finance company incorporated in 1926. CFC is engaged in
automotive retail, wholesale and fleet financing, servicing commercial
leases and loans, secured small business financing, and property, casualty
and other insurance and automotive dealership facility development and
management. CFC's business is substantially dependent upon the operations
of Chrysler. In particular, lower levels of production and sale of
Chrysler's automotive products could result in a reduction in the level of
finance and insurance operations of CFC. See "Special Considerations --
Trust's Relationship to Chrysler and CCC". CFC's executive offices are
located at 27777 Franklin Road, Southfield, Michigan 48034-8286 and its
telephone number is (810) 948-3060.
CCC, a wholly owned subsidiary of CFC, provides retail, wholesale
and lease financing services to automobile dealers and their customers
throughout the United States.
The Prospectus Supplement for each Series offered hereby will set
forth certain additional information with respect to CFC and CCC.
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates of a Series will be issued pursuant to a Pooling
and Servicing Agreement (as supplemented and amended from time to time,
the "Pooling and Servicing Agreement"), among USA, as seller of the
Receivables, CCC, as servicer of the Receivables, and the Trustee,
substantially in the form filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The Trustee will make
available for inspection a copy of the Pooling and Servicing Agreement
(without exhibits or schedules) to Certificateholders of a Series offered
hereby on written request. The following summary describes certain terms
generally applicable to the Certificates of each Series, does not purport
to be complete and is qualified in its entirety by reference to the
Pooling and Servicing Agreement and the applicable Series Supplement.
The Certificates of each Series offered hereby will evidence
undivided beneficial interests in certain assets of the Trust allocated to
the Certificateholders' Interest of such Series, representing the right to
receive from such Trust assets funds up to (but not in excess of) the
amounts required to make payments of interest on and principal of the
Certificates of such Series pursuant to the Pooling and Servicing
Agreement as described in the related Prospectus Supplement.
The Certificates of each Series offered hereby will initially be
represented by Certificates registered in the name of the nominee of DTC
(together with any successor depository selected by the Seller, the
"Depository"), except as set forth below. Unless otherwise specified in
the related Prospectus Supplement, the Certificates of each Series offered
hereby will be available for purchase in minimum denominations of $1,000
and integral multiples thereof in book-entry form only. The Seller has
been informed by DTC that DTC's nominee will be Cede. Accordingly, Cede is
expected to be the holder of record of the Certificates. Unless and until
Definitive Certificates are issued under the limited circumstances
described herein, no Certificateholder will be entitled to receive a
physical certificate representing a Certificate. All references herein to
actions by Certificateholders shall refer to actions taken by DTC upon
instructions from Participants and all references herein to distributions,
notices, reports and statements to Certificateholders shall refer to
distributions, notices, reports and statements to DTC or Cede, as the
registered holder of the Certificates, as the case may be. See "Book-Entry
Registration" and "Definitive Certificates".
INTEREST
Interest on the principal balance of the Certificates of a Series or
Class offered hereby will accrue at the per annum rate either specified in
or determined in the manner specified in the related Prospectus Supplement
and will be payable to the Certificateholders of such Series or Class as
and on the Interest Payment Dates specified in the related Prospectus
Supplement. If the Prospectus Supplement for a Series or Class of
Certificates so provides, the interest rate and the Interest Payment Dates
applicable to each Certificate of that Series or Class may be subject to
adjustment from time to time, including as a result of a decline in the
interest rate borne by the Receivables.
Except as otherwise provided herein or in the related Prospectus
Supplement, Interest Collections and certain other amounts allocable to
the Certificateholders' Interest of a Series offered hereby will be used
to make interest payments to Certificateholders of such Series on each
Interest Payment Date with respect thereto, provided that during any Early
Amortization Period with respect to such Series, interest will be
distributed to such Certificateholders monthly on each Special Payment
Date.
If the Interest Payment Dates for a Series or Class occur less
frequently than monthly, such collections or other amounts (or the portion
thereof allocable to such Class) will be deposited in one or more trust
accounts (each an "Interest Funding Account") and used to make interest
payments to Certificateholders of such Series or Class on the following
Interest Payment Date with respect thereto. If a Series has more than one
Class of Certificates, each such Class may have a separate Interest
Funding Account.
PRINCIPAL
The Certificates of each Series and Class will have a Revolving
Period during which Principal Collections and certain other amounts
otherwise allocable to the Certificateholders' Interest of such Series or
Class will be paid to the Seller, deposited to the Excess Funding Account,
if any, for such Series or distributed to, or for the benefit of, the
Certificateholders of other Classes or Series. Unless a Reinvestment
Period or an Early Amortization Period, in each case that is not
terminated in accordance with the provisions of the related Series
Supplement, commences with respect to a Series, following the Revolving
Period with respect to such Series or a Class thereof, such Series or
Class will have either an Accumulation Period or a Controlled Amortization
Period.
During the Accumulation Period, if any, with respect to a Series,
Principal Collections and certain other amounts allocable to the
Certificateholders' Interest of such Series (including, if and to the
extent the Series Supplement therefor so provides, Excess Principal
Collections, if any, allocable to such Series) will be deposited on each
Distribution Date in a Principal Funding Account and, together, to the
extent provided in the related Series Supplement, with any amounts in the
Excess Funding Account, if any, for such Series, used to make principal
distributions to the Certificateholders of such Series when due. The
amount to be deposited in a Principal Funding Account for any Series
offered hereby on any Distribution Date may, but will not necessarily, be
limited to the Controlled Deposit Amount specified in the related
Prospectus Supplement. If a Series has more than one Class of
Certificates, each Class may have a different Accumulation Period and a
separate Principal Funding Account and Controlled Deposit Amount. In
addition, the related Prospectus Supplement may describe certain
priorities among such Classes with respect to deposits of principal into
such Principal Funding Accounts.
During the Controlled Amortization Period, if any, with respect to a
Series, Principal Collections and certain other amounts allocable to the
Certificateholders' Interest of such Series (including, if and to the
extent the Supplement for such Series so provides, Excess Principal
Collections, if any, allocable to such Series) will be used, together, to
the extent provided in the related Series Supplement, with any amounts in
the Excess Funding Account, if any, for such Series, on each Distribution
Date to make principal distributions to any Class of Certificateholders of
such Series then scheduled to receive such distributions. The amount to be
distributed to Certificateholders of any Series offered hereby on any
Distribution Date may, but will not necessarily, be limited to the
Controlled Amortization Amount for such Series specified in the related
Prospectus Supplement. If a Series has more than one Class of
Certificates, each Class may have a different Controlled Amortization
Period and a separate Controlled Amortization Amount. In addition, the
related Prospectus Supplement may describe certain priorities among such
Classes with respect to such distributions.
During the Reinvestment Period, if any, with respect to a Series,
Principal Collections and certain other amounts allocable to the
Certificateholders' Interest of such Series (including, if and to the
extent the Series Supplement for such Series so provides, Excess Principal
Collections, if any, allocable to such Series) will be deposited on each
Distribution Date in a Principal Funding Account and, together, to the
extent provided in the related Series Supplement, with any amounts in the
Excess Funding Account, if any, for such Series, used to make principal
distributions to the Certificateholders of such Series when due, in each
case unless the related Series Supplement provides otherwise. The amount
to be deposited in a Principal Funding Account for any Series offered
hereby on any Distribution Date will not be limited to any Controlled
Deposit Amount or Controlled Amortization Amount. If a Series has more
than one Class of Certificates, each Class may have a separate Principal
Funding Account and the related Prospectus Supplement may describe certain
priorities among such Classes with respect to deposits of principal into
such Principal Funding Accounts.
During the Early Amortization Period, if any, with respect to a
Series, Principal Collections and certain other amounts allocable to the
Certificateholders' Interest of such Series (including, if and to the
extent the Series Supplement for such Series so provides, Excess Principal
Collections, if any, allocable to such Series) will be distributed as
principal payments to the applicable Certificateholders monthly on each
Distribution Date beginning with the first Special Payment Date. During
the Early Amortization Period with respect to a Series, distributions of
principal to Certificateholders of such Series will not be limited to any
Controlled Deposit Amount or Controlled Amortization Amount. In addition,
with respect to any Series, to the extent provided in the related Series
Supplement, any funds on deposit in the Excess Funding Account, if any,
with respect to such Series and any funds on deposit in the Principal
Funding Account with respect to such Series will be paid to the
Certificateholders of the relevant Class or Series. See "Reinvestment
Events and Early Amortization Events" for a discussion of the events which
might lead to the commencement of the Early Amortization Period with
respect to a Series.
Funds on deposit in any Principal Funding Account established with
respect to a Class or Series offered hereby will be invested in Eligible
Investments, and may be subject to a guarantee or guaranteed investment
contract or other mechanism specified in the related Prospectus Supplement
intended to assure a minimum rate of return on the investment of such
funds. In order to enhance the likelihood of the payment in full of the
principal amount of a Series or Class of Certificates offered hereby at
the end of an Accumulation Period with respect thereto, such Series or
Class may be subject to a maturity liquidity facility or other similar
mechanism specified in the relevant Prospectus Supplement. A maturity
liquidity facility is a financial contract that generally provides that
sufficient principal will be available to retire the Certificates at a
certain date.
Certificates of a Series or Class offered hereby may also be subject
to purchase from time to time, generally at their respective principal
amounts, in connection with a remarketing thereof if so specified in the
related Prospectus Supplement. A purchase of Certificates of such a Series
or Class may result in a decrease in the outstanding principal amount of
such Series or Class prior to the commencement of any Controlled
Amortization Period or Early Amortization Period with respect thereto. The
Prospectus Supplement for any Series offered hereby subject to purchase as
described in this paragraph will describe the conditions to and procedures
for any such purchase. The proceeds of any such purchase would be paid to
the holders of the Certificates so purchased.
BOOK-ENTRY REGISTRATION
Unless otherwise specified in the related Prospectus Supplement,
Certificateholders may hold Certificates of a Series offered hereby
through DTC (in the United States) or CEDEL or Euroclear (in Europe) if
they are participants of such systems, or indirectly through organizations
which are participants in such systems.
Cede, as nominee for DTC, will be the registered holder of the
global Certificates. Except as described herein, no Certificateholder will
be entitled to receive a certificate representing such person's interest
in the Certificates. Unless and until Definitive Certificates are issued
under the limited circumstances described below, all references herein to
actions by Certificateholders shall refer to actions taken by DTC upon
instructions from its Participants, and all references herein to
distributions, notices, reports and statements to Certificateholders shall
refer to distributions, notices, reports and statements to Cede, as the
registered holder of the Certificates, for distribution to the
Certificateholders in accordance with DTC procedures.
CEDEL and Euroclear will hold omnibus positions on behalf of their
participants through customers' securities accounts in CEDEL's and
Euroclear's names on the books of their respective depositaries which in
turn will hold such positions in customers' securities accounts in the
depositaries' names on the books of DTC. Citibank, N.A. ("Citibank") will
act as depositary for CEDEL and Morgan Guaranty Trust Company of New York
("Morgan") will act as depositary for Euroclear (in such capacities, the
"Foreign Agency Depositaries").
Transfers between DTC participants will occur in the ordinary way in
accordance with DTC rules. Transfers between CEDEL Participants and
Euroclear Participants will occur in the ordinary way in accordance with
their applicable rules and operating procedures.
Cross-market transfers between persons holding directly or
indirectly through DTC, on the one hand, and directly or indirectly
through CEDEL or Euroclear participants, on the other, will be effected in
DTC in accordance with DTC rules on behalf of the relevant European
international clearing system by its Foreign Agency Depositary; however,
such cross-market transactions will require delivery of instructions to
the relevant European international clearing system by the counterparty in
such system in accordance with its rules and procedures and within its
established deadlines (European time). The relevant European international
clearing system will, if the transaction meets its settlement
requirements, deliver instructions to its Foreign Agency Depositary to
take action to effect final settlement on its behalf by delivering or
receiving securities in DTC, and making or receiving payment in accordance
with normal procedures for same-day funds settlement applicable to DTC.
CEDEL Participants and Euroclear Participants may not deliver instructions
directly to the Foreign Agency Depositaries.
Because of time-zone difference, credits of securities received in
CEDEL or Euroclear as a result of a transaction with a DTC participant
will be made during subsequent securities settlement processing and dated
the business day following the DTC settlement date. Such credits or any
transactions in such securities settled during such processing will be
reported to the relevant Euroclear or CEDEL participant on such business
day. Cash received in CEDEL or Euroclear as a result of sales of
securities by or through a CEDEL Participant or a Euroclear Participant to
a DTC participant will be received with value on the DTC settlement date
but will be available in the relevant CEDEL or Euroclear cash account only
as of the business day following settlement in DTC. For additional
information regarding clearance and settlement procedures for the
Certificates, see Annex I hereto and for information with respect to tax
documentation procedures relating to the Certificates, see Annex I hereto
and "Tax Matters -- Certain Federal Income Tax Consequences -- Foreign
Investors".
DTC is a limited-purpose trust company organized under the laws of
the State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the UCC and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act.
DTC was created to hold securities for its participating organizations
("Participants") and facilitate the clearance and settlement of securities
transactions between Participants through electronic book-entry changes in
their accounts, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers, banks,
trust companies and clearing corporations and may include certain other
organizations. Indirect access to the DTC system also is available to
others such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a Participant, either
directly or indirectly ("Indirect Participants").
Certificateholders that are not Participants or Indirect
Participants but desire to purchase, sell or otherwise transfer ownership
of, or other interests in, Certificates may do so only through
Participants and Indirect Participants. In addition, Certificateholders
will receive all distributions of principal of and interest on the
Certificates from the Trustee through DTC and its Participants. Under a
book-entry format, Certificateholders will receive payments after the
related Distribution Date because, while payments are required to be
forwarded to Cede, as nominee for DTC, on each such date, DTC will forward
such payments to its Participants which thereafter will be required to
forward them to Indirect Participants or Certificateholders. It is
anticipated that the only "Certificateholder" (as such term is used in the
Pooling and Servicing Agreement) will be Cede, as nominee of DTC, and that
Certificateholders will not be recognized by the Trustee as
Certificateholders under the Pooling and Servicing Agreement.
Certificateholders will only be permitted to exercise the rights of
Certificateholders under the Pooling and Servicing Agreement indirectly
through DTC and its Participants who in turn will exercise their rights
through DTC.
Under the rules, regulations and procedures creating and affecting
DTC and its operations, DTC is required to make book-entry transfers among
Participants on whose behalf it acts with respect to the Certificates and
is required to receive and transmit distributions of principal of and
interest on the Certificates. Participants and Indirect Participants with
which Certificateholders have accounts with respect to the Certificates
similarly are required to make book-entry transfers and receive and
transmit such payments on behalf of their respective Certificateholders.
Because DTC can only act on behalf of Participants, who in turn act
on behalf of Indirect Participants and certain banks, the ability of a
Certificateholder to pledge Certificates to persons or entities that do
not participate in the DTC system, or otherwise take actions in respect of
such Certificates, may be limited due to the lack of a physical
certificate for such Certificates.
DTC has advised the Seller that it will take any action permitted to
be taken by a Certificateholder under the Pooling and Servicing Agreement
only at the direction of one or more Participants to whose account with
DTC the Certificates are credited.
CEDEL, Societe Anonyme ("CEDEL"), 67 Bd Grande-Duchesse Charlotte,
L-1420, Luxembourg (R.C. Luxembourg B9248) was incorporated in 1970 as a
limited company under Luxembourg law. CEDEL is owned by banks, securities
dealers, and financial institutions and currently has over 100
shareholders, including U.S. financial institutions or their subsidiaries.
No single entity may own more than five percent of CEDEL's stock.
CEDEL is registered as a "Depositaire professional de titre" in
Luxembourg, and as such is subject to regulation by the Luxembourg
Monetary Authority ("IML"), which also supervises Luxembourg's banks.
CEDEL provides clearance and settlement services for its customers
and currently accepts over 40,000 securities issues for clearance,
settlement, and custody. CEDEL's customers consist of broker-dealers,
financial institutions, and other securities professionals involved in the
movement and/or custody of securities. CEDEL's U.S. customers are limited
to brokers, dealers, and banks. Currently, CEDEL has approximately 3,000
customers located in over 60 countries, including all major European
countries, Canada, and the United States.
The Euroclear System was created in 1968 to hold securities for
participants of the Euroclear System ("Euroclear Participants") and to
clear and settle transactions between Euroclear Participants through
simultaneous electronic book-entry delivery against payment, thereby
eliminating the need for physical movement of certificates and any risk
from lack of simultaneous transfers of securities and cash. Transactions
may now be settled in any of 27 currencies, including United States
dollars. The Euroclear System includes various other services, including
securities lending and borrowing, and interfaces with domestic markets in
several countries generally similar to the arrangements for cross-market
transfers with DTC described above. The Euroclear System is operated by
Morgan Guaranty Trust Company of New York, Brussels, Belgium office (the
"Euroclear Operator" or "Euroclear"), under contract with Euroclear S.C.,
a Belgian cooperative corporation (the "Cooperative"). All operations are
conducted by the Euroclear Operator, and all Euroclear securities
clearance accounts and Euroclear Clearance System cash accounts are
accounts with the Euroclear Operator, not the Cooperative. The Cooperative
establishes policy for the Euroclear System on behalf of Euroclear
Participants. Euroclear Participants include banks (including central
banks), securities brokers and dealers and other professional financial
intermediaries and may include any underwriters, agents or dealers
involved in the distribution of the Certificates. Indirect access to the
Euroclear System is also available to other firms that clear through or
maintain a custodial relationship with a Euroclear Participant, either
directly or indirectly.
The Euroclear Operator is the Belgian branch of New York banking
corporation which is a member of the Federal Reserve System. As such, it
is regulated and examined by the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well as the Belgian
Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of
Euroclear and the related Operative Procedures of the Euroclear System,
and applicable Belgian law (collectively, the "Terms and Conditions"). The
Terms and Conditions govern transfers of securities and cash within the
Euroclear System, withdrawals of securities and cash from the Euroclear
System, and receipts of payments with respect to securities in the
Euroclear System. All securities in the Euroclear System are held on a
fungible basis without attribution of specific certificates to specific
securities clearance accounts. The Euroclear Operator acts under the Terms
and Conditions only on behalf of Euroclear Participants, and has no record
of or relationship with persons holding through Euroclear Participants.
Distributions with respect to Certificates held through CEDEL or
Euroclear will be credited to the cash accounts of CEDEL Participants or
Euroclear Participants in accordance with the relevant system's rules and
procedures, to the extent received by its Foreign Agency Depositary. Such
distributions will be subject to tax reporting in accordance with relevant
United States tax laws and regulations. See "Certain Tax Matters". CEDEL
or the Euroclear Operator, as the case may be, will take any other action
permitted to be taken by a Certificateholder under the Pooling and
Servicing Agreement or the applicable Series Supplement on behalf of a
CEDEL Participant or Euroclear Participant only in accordance with its
relevant rules and procedures and subject to its Foreign Agency
Depositary's ability to effect such actions on its behalf through DTC.
Although DTC, CEDEL and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Certificates among
participants of DTC, CEDEL and Euroclear, they are under no obligation to
perform or continue to perform such procedures and such procedures may be
discontinued at any time.
DEFINITIVE CERTIFICATES
Unless otherwise stated in the related Prospectus Supplement, the
Certificates of a Series or Class offered hereby will be issued in fully
registered, certificated form to Certificateholders or their nominees
("Definitive Certificates"), rather than to DTC or its nominee only if (i)
the Seller advises the Trustee in writing that DTC is no longer willing or
able to properly discharge its responsibilities as Depository with respect
to the Certificates of such Series or Class and the Seller is unable to
locate a qualified successor, (ii) the Seller, at its option, elects to
terminate the book-entry system through DTC with respect to such Series or
Class or (iii) after the occurrence of a Service Default,
Certificateholders representing not less than 50% of the aggregate unpaid
principal amount of the Certificates of such Series or Class advise the
Trustee and DTC through Participants in writing that the continuation of a
book-entry system through DTC (or a successor thereto) is no longer in the
best interests of such Certificateholders.
Upon the occurrence of any of the events described in the
immediately preceding paragraph, DTC is required to notify all
Participants of the availability through DTC of Definitive Certificates
for such Certificates. Upon surrender by DTC of the certificate or
certificates representing such Certificates and instructions for
re-registration, the Trustee will issue such Certificates in the form of
Definitive Certificates, and thereafter the Trustee will recognize the
holders of such Definitive Certificates as Certificateholders under the
Pooling and Servicing Agreement ("Holders"). In the event that Definitive
Certificates are issued or DTC ceases to be the clearing agency for any
Series or Class of Certificates, the Pooling and Servicing Agreement
provides that the applicable Certificateholders will be notified of such
event.
Distributions of principal of and interest on the Certificates will
be made by the Trustee directly to Holders in accordance with the
procedures set forth herein and in the Pooling and Servicing Agreement.
Distributions on each Distribution Date will be made to Holders in whose
names the Definitive Certificates were registered at the close of business
on the related record date. Distributions will be made by check mailed to
the address of such Holder as it appears on the register maintained by the
Trustee. The final distribution on any Certificate (whether Definitive
Certificates or the certificate or certificates registered in the name of
Cede representing the Certificates), however, will be made only upon
presentation and surrender of such Certificate on the final payment date
at such office or agency as is specified in the notice of final
distribution to Certificateholders. The Trustee will provide such notice
to registered Certificateholders not later than the fifth day of the month
of the final distribution.
Definitive Certificates will be transferable and exchangeable at the
offices of the Trustee, which shall initially be 50 Broadway (7th Floor),
New York, New York 10004. No service charge will be imposed for any
registration of transfer or exchange, but the Trustee may require payment
of a sum sufficient to cover any tax or other governmental charge imposed
in connection therewith.
THE SELLER'S CERTIFICATE
The Pooling and Servicing Agreement provides that the Seller may
exchange a portion of the certificate evidencing the Seller's Interest
(the "Seller's Certificate") for another certificate (a "Supplemental
Certificate") for transfer or assignment to a person designated by the
Seller upon the execution and delivery of a supplement to the Pooling and
Servicing Agreement (which supplement shall be subject to the amendment
section of the Pooling and Servicing Agreement to the extent that it
amends any of the terms of the Pooling and Servicing Agreement); provided
that (a) the Seller shall at the time of such exchange and after giving
effect thereto have an interest in the Pool Balance of not less than 2% of
the aggregate amount of the principal balances of the Receivables (the
"Pool Balance"), (b) the Seller shall have delivered to the Trustee, the
Rating Agencies and any Enhancement Provider a Tax Opinion with respect to
such exchange and (c) the Seller shall have delivered to the Trustee
written confirmation from the applicable Rating Agencies that such
exchange will not result in a reduction or withdrawal of the rating of any
outstanding Series or Class of Certificates. Any subsequent transfer or
assignment of a Supplemental Certificate is also subject to the conditions
described in clauses (b) and (c) in the preceding sentence.
NEW ISSUANCES
The Pooling and Servicing Agreement provides that pursuant to any
one or more Supplements, the Trustee may issue two types of certificates:
(i) one or more Series of Certificates which are transferable and have the
characteristics described below and (ii) the Seller's Certificate (and any
Supplemental Certificate) which will evidence the Seller's Interest and
will be transferable only upon the satisfaction of certain conditions
described under "The Seller's Certificate". The Pooling and Servicing
Agreement also provides that, pursuant to one or more Supplements, the
Seller may cause the Trustee to issue one or more new Series. Under the
Pooling and Servicing Agreement, the Seller may specify, among other
things, with respect to any Series: (a) its name or designation, (b) its
initial principal amount (or method for calculating such amount), (c) its
certificate rate (or the method for determining its certificate rate), (d)
a date on which it will begin its Accumulation Period or Controlled
Amortization Period, if any, (e) the method for allocating principal and
interest to Certificateholders of such Series, (f) the percentage used to
calculate monthly servicing fees, (g) the issuer and terms of any
Enhancement with respect thereto or the level of subordination provided by
the Seller's Interest, (h) the terms on which the Certificates of such
Series may be exchanged for Certificates of another Series, be subject to
repurchase, optional redemption or mandatory redemption by the Seller or
be remarketed by any remarketing agent, (i) the Series Termination Date
and (j) any other terms permitted by the Pooling and Servicing Agreement
(all such terms, the "Principal Terms" of such Series). The Seller may
offer any Series to the public under a prospectus or other disclosure
document (a "Disclosure Document") in transactions either registered under
the Securities Act or exempt from registration thereunder, directly or
through one or more underwriters or placement agents. There is no limit to
the number of Series that may be issued under the Pooling and Servicing
Agreement.
The Pooling and Servicing Agreement provides that the Seller may
specify Principal Terms of a new Series such that each Series has a
Controlled Amortization Period or Accumulation Period which may have a
different length and begin on a different date than the Controlled
Amortization Period or Accumulation Period for any other Series. Further,
one or more Series may be in their Reinvestment Periods, Early
Amortization Periods, Controlled Amortization Periods or Accumulation
Periods while other Series are not. Thus, certain Series may be amortizing
or accumulating principal, while other Series are not. Moreover, different
Series may have the benefits of different forms of Enhancement issued by
different entities. Under the Pooling and Servicing Agreement, the Trustee
will hold each form of Enhancement only on behalf of the Series (or a
particular Class within a Series) with respect to which it relates, unless
otherwise provided in the related Series Supplement or Series Supplements.
The Pooling and Servicing Agreement also provides that the Seller may
specify different certificate rates and Monthly Servicing Fees with
respect to each Series (or a particular Class within a Series). In
addition, the Seller has the option under the Pooling and Servicing
Agreement to vary among Series (or Classes within a Series) the terms upon
which a Series (or Classes within a Series) may be repurchased by the
Seller.
Under the Pooling and Servicing Agreement and pursuant to a Series
Supplement, a new Series may be issued only upon the satisfaction of
certain specified conditions. The Seller may cause the issuance of a new
Series by notifying the Trustee at least five business days in advance of
the applicable Series Issuance Date. The notice shall state the
designation of any Series (and Classes within a Series, if any). The
Pooling and Servicing Agreement provides that the Trustee will issue any
such Series only upon delivery to it of the following: (i) a Series
Supplement in form satisfactory to the Trustee signed by the Seller and
the Servicer and specifying the Principal Terms of such Series, (ii) the
form of any Enhancement and any related agreement, (iii) an opinion of
counsel to the effect that, for federal income and Michigan income and
single business tax purposes, (x) such issuance will not adversely affect
the characterization of the Certificates of any outstanding Series or
Class as debt of the Seller, (y) such issuance will not cause a taxable
event to any Certificateholders (an opinion of counsel to the effect
referred to in clauses (x) and (y) with respect to any action is referred
to herein as a "Tax Opinion") and (z) such new Series will be
characterized as debt of the Seller, and (iv) written confirmation from
the applicable Rating Agencies that such issuance will not result in a
reduction or withdrawal of the rating of any outstanding Series or Class
of Certificates. Such issuance is also subject to the conditions that (a)
the Seller shall have represented and warranted that such issuance shall
not, in the reasonable belief of the Seller, cause an Early Amortization
Event or Reinvestment Event to occur with respect to any outstanding
Series and (b) after giving effect to such issuance, the Seller's interest
in the Pool Balance shall not be less than 2% of the Pool Balance. Upon
satisfaction of all such conditions, the Trustee will issue such Series.
CONVEYANCE OF RECEIVABLES AND COLLATERAL SECURITY
On the date on which the Certificates related to the Series 1991-1
were originally issued (the "Initial Closing Date"), CARCO sold and
assigned to the Trust all of its right, title and interest in and to the
Receivables and the related Collateral Security as of the Initial Cut-Off
Date, all Receivables thereafter created in the Accounts and its interests
in the related Collateral Security and the Receivables Purchase Agreement,
and the proceeds of all of the foregoing. On August 8, 1991, CARCO, in
accordance with the terms of the Pooling and Servicing Agreement and the
Receivables Purchase Agreement, transferred the Seller's Interest and all
its rights and obligations under the Pooling and Servicing Agreement and
the Receivables Purchase Agreement to USA. See "U.S. Auto Receivables
Company and the Trust". In addition, the Seller has previously designated
Additional Accounts to be added to the Accounts and has previously
conveyed to the Trust the Receivables in such Additional Accounts
(together with the related Collateral Security) as of the applicable
Additional Cut-Off Date and all Receivables (and related Collateral
Security) created thereafter.
In connection with the sale of the Receivables to the Seller by CCC
and the transfer of the Receivables to the Trust, USA, CFC and CCC are
required to indicate in their computer records that the Receivables in the
Accounts and the related Collateral Security have been conveyed to the
Trust. In addition, the Seller is required to provide to the Trustee a
computer file or microfiche or written list containing a true and complete
list showing for each Account, as of the Initial Cut-Off Date and the
applicable Additional Cut-Off Date, (i) its account number, (ii) the
outstanding balance of the Receivables in such Account and (iii) the
outstanding balance of Principal Receivables in such Account. CCC and CFC
will retain and will not deliver to the Trustee any other records or
agreements relating to the Receivables. Except as set forth above, the
records and agreements relating to the Receivables have not and will not
be segregated from those relating to other accounts of CCC and CFC, and
the physical documentation relating to the Receivables has not and will
not be stamped or marked to reflect the transfer of the Receivables to the
Trust. The Seller will file one or more financing statements in accordance
with applicable state law to perfect the Trust's interest in the
Receivables, the Collateral Security, the Receivables Purchase Agreement
and the proceeds thereof. See "Special Considerations" and "Certain Legal
Aspects of the Receivables".
As contemplated above and as described below under "Addition of
Accounts", the Seller has the right (subject to certain limitations and
conditions), and in some circumstances is obligated, to designate from
time to time additional accounts to be included as Additional Accounts, to
purchase from CCC the Receivables then existing or thereafter created in
such Additional Accounts and to convey such Receivables to the Trust. Each
such Additional Account must be an Eligible Account. In respect of any
conveyance of Receivables in Additional Accounts, the Seller will follow
the procedures set forth in the preceding paragraph, except the list will
show information for such Additional Accounts as of the date such
Additional Accounts are identified and selected (the "Additional Cut-Off
Date").
REPRESENTATIONS AND WARRANTIES
The Seller will make representations and warranties to the Trust
relating to the Accounts, the Receivables and the Collateral Security to
the effect, among other things, that (a) as of each Series Cut-Off Date,
and the date of issuance of any Series (a "Series Issuance Date") (or, in
the case of the Additional Accounts, as of the Additional Cut-Off Date and
the date the related Receivables are transferred to the Trust (an
"Addition Date")), each Account or Additional Account was an Eligible
Account, (b) as of the Series Cut-Off Date (or as of the Additional
Cut-Off Date, in the case of any Additional Accounts) or as of the date
any future Receivable is generated (a "Transfer Date"), each Receivable is
an Eligible Receivable or, if such Receivable is not an Eligible
Receivable, such Receivable is conveyed to the Trust as described below
under "Ineligible Receivables, the Instalment Balance Amount and the
Overconcentration Amount", (c) each Receivable and all Collateral Security
conveyed to the Trust on the Transfer Date or, in the case of Additional
Accounts, on the Addition Date, and all of the Seller's right, title and
interest in the Receivables Purchase Agreement, have been conveyed to the
Trust free and clear of any liens and (d) all appropriate consents and
governmental authorizations required to be obtained by the Seller in
connection with the conveyance of each such Receivable or Collateral
Security have been duly obtained. If the Seller breaches any
representation and warranty described in this paragraph and such breach
remains uncured for 30 days or such longer period as may be agreed to by
the Trustee, after the earlier to occur of the discovery of such breach by
the Seller or the Servicer or receipt of written notice of such breach by
the Seller or the Servicer, and such breach has a materially adverse
effect on the Certificateholders' Interest in any Receivable or Account,
the Certificateholders' Interest in such Receivable or, in the case of a
breach relating to an Account, all Receivables in the related Account
("Ineligible Receivables") will be reassigned to the Seller on the terms
and conditions set forth below and such Account shall no longer be
included as an Account.
Each such Receivable shall be reassigned to the Seller on or before
the end of the Collection Period in which such reassignment obligation
arises by the Seller directing the Servicer to deduct the principal
balance of such Receivable from the Pool Balance. In the event that such
deduction would cause the Seller's Participation Amount, which is an
amount equal to the Pool Balance minus the aggregate Invested Amounts for
all outstanding Series, to be less than the aggregate Available
Subordinated Amounts for all Outstanding Series (the "Trust 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), on the date on which such reassignment is
to occur the Seller will be obligated to make a deposit into the
Collection Account in immediately available funds in an amount equal to
the amount by which the Seller's Participation Amount would be less than
the Trust Available Subordinated Amount (the amount of any such deposit
being referred to herein as a "Transfer Deposit Amount"), provided that if
the Transfer Deposit Amount is not so deposited, the principal balance of
the related Receivables will be deducted from the Pool Balance only to the
extent the Seller's Participation Amount is not reduced below the Trust
Available Subordinated Amount and any principal balance not so deducted
will not be reassigned and will remain part of the Trust. The reassignment
of any such Receivable to the Seller and the payment of any related
Transfer Deposit Amount will be the sole remedy respecting any breach of
the representations and warranties described in the preceding paragraph
with respect to such Receivable available to Certificateholders or the
Trustee on behalf of Certificateholders.
The Seller will also make representations and warranties to the
Trust to the effect, among other things, that as of each Series Issuance
Date (a) it is duly incorporated and in good standing, it has the
authority to consummate the transactions contemplated by the Pooling and
Servicing Agreement and the Pooling and Servicing Agreement constitutes a
valid, binding and enforceable agreement of the Seller and (b) the Pooling
and Servicing Agreement constitutes a valid sale, transfer and assignment
to the Trust of all right, title and interest of the Seller in the
Receivables and the Collateral Security, whether then existing or
thereafter created, the Receivables Purchase Agreement, and the proceeds
thereof (including proceeds in any of the accounts established for the
benefit of the Certificateholders of any Series), subject to the rights of
the Purchasers with respect to certain of the Collateral Security, under
the UCC as then in effect in the State of Michigan, which is effective as
to each Receivable existing on the Initial Closing Date (or as of the
Addition Date, if applicable) or, as to each Receivable arising
thereafter, upon the creation thereof and until termination of the Trust.
In the event that the breach of any of the representations and warranties
described in this paragraph has a materially adverse effect on the
Certificateholders' Interest in the Receivables, either the Trustee or the
holders of Certificates of all outstanding Series evidencing not less than
a majority of the aggregate unpaid principal amount of all outstanding
Series, by written notice to the Seller and the Servicer (and to the
Trustee and the issuer or provider of any Enhancement (an "Enhancement
Provider") if given by Certificateholders), may direct the Seller to
accept the reassignment of the Certificateholders' Interest of all Series
within 60 days of such notice, or within such longer period specified in
such notice. The Seller will be obligated to accept the reassignment of
the Certificateholders' Interest on a Distribution Date occurring within
such 60-day period. Such reassignment will not be required to be made,
however, if at the end of such applicable period, the representations and
warranties shall then be true and correct in all material respects and any
materially adverse effect caused by such breach shall have been cured. The
price for such reassignment will generally be equal to the aggregate
"Invested Amounts" (as specified in the related Series Supplements) of all
Series on the Determination Date preceding the Distribution Date on which
the purchase is scheduled to be made plus accrued and unpaid interest on
the unpaid principal amount of the Certificates at the applicable
certificate rate (together with interest on overdue interest) plus, with
respect to any particular Series, any other amounts specified in the
Series Supplement therefor. The payment of the reassignment price for all
outstanding Series, in immediately available funds, will be considered a
payment in full of the Certificateholders' Interest. Such funds will be
distributed to the Certificateholders entitled thereto upon presentation
and surrender of the Certificates. If the Trustee or the
Certificateholders give a notice as provided above, the obligation of the
Seller to make any such deposit will constitute the sole remedy respecting
a breach of the representations and warranties available to
Certificateholders or the Trustee on behalf of the Certificateholders.
As of the effective date of the CARCO Transfer, USA was deemed to
have made all the representations and warranties of the Seller (including
the Seller's representations and warranties set forth above) in the
Pooling and Servicing Agreement and in any Series Supplement with respect
to any Series or Class of Certificates.
ELIGIBLE ACCOUNTS AND ELIGIBLE RECEIVABLES
An "Eligible Account" is defined to mean each wholesale financing
line of credit extended by CCC to a Dealer, which line of credit, as of
the date of determination thereof: (a) is established by CCC in the
ordinary course of business pursuant to a floorplan financing agreement,
(b) is in favor of an Eligible Dealer, (c) is in existence and maintained
and serviced by CCC and (d) in respect of which no amounts have been
charged off as uncollectible or are classified as past due or delinquent.
An "Eligible Dealer" is a Dealer: (a) which is located in the United
States of America (including its territories and possessions), (b) which
has not been identified by the Servicer as being the subject of any
voluntary or involuntary bankruptcy proceeding or in voluntary or
involuntary liquidation, (c) in which Chrysler or any affiliate thereof
does not have an equity investment and (d) which has not been classified
by the Servicer as being under Dealer Trouble status.
An "Eligible Receivable" is defined to mean each Receivable: (a)
which was originated or acquired by CCC in the ordinary course of
business, (b) which has arisen under an Eligible Account and is payable in
United States dollars, (c) which is owned by CCC at the time of sale by
CCC to the Seller, (d) which represents the obligation of a Dealer to
repay an advance made to such Dealer to finance the acquisition of
Vehicles, (e) which at the time of creation and at the time of transfer to
the Trust is secured by a perfected first priority security interest in
the Vehicle relating thereto, (f) which was created in compliance in all
respects with all requirements of law applicable thereto and pursuant to a
floorplan financing agreement which complies in all respects with all
requirements of law applicable to any party thereto, (g) with respect to
which all consents and governmental authorizations required to be obtained
by Chrysler, CCC, CFC or the Seller in connection with the creation of
such Receivable or the transfer thereof to the Trust or the performance by
CCC of the floorplan financing agreement pursuant to which such Receivable
was created, have been duly obtained, (h) as to which at all times
following the transfer of such Receivable to the Trust, the Trust will
have good and marketable title thereto free and clear of all liens arising
prior to the transfer or arising at any time, other than liens permitted
pursuant to the Pooling and Servicing Agreement, (i) which has been the
subject of a valid transfer and assignment from the Seller to the Trust of
all the Seller's interest therein (including any proceeds thereof), (j)
which will at all times be the legal and assignable payment obligation of
the Dealer relating thereto, enforceable against such Dealer in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy or other similar laws, (k) which at the time of transfer to the
Trust is not subject to any right of rescission, setoff, or any other
defense (including defenses arising out of violations of usury laws) of
the Dealer, (1) as to which, at the time of transfer of such Receivable to
the Trust, Chrysler, CCC, CFC and the Seller have satisfied all their
respective obligations with respect to such Receivable required to be
satisfied at such time, (m) as to which, at the time of transfer of such
Receivable to the Trust, neither Chrysler, CCC, CFC nor the Seller has
taken or failed to take any action which would impair the rights of the
Trust or the Certificateholders therein, (n) which constitutes "chattel
paper" as defined in Article 9 of the UCC as then in effect in the State
of Michigan and (o) which was transferred to the Trust with all applicable
governmental authorization.
The Trustee did not and it is not required or anticipated that the
Trustee will make any initial or periodic general examination of the
Receivables or any records relating to the Receivables for the purpose of
establishing the presence or absence of defects, compliance with
representations and warranties of the Seller or for any other purpose. In
addition, it is not anticipated or required that the Trustee will make any
initial or periodic general examination of the Servicer for the purpose of
establishing the compliance by the Servicer with its representations or
warranties, the observation of its obligations under the Pooling and
Servicing Agreement or for any other purpose. The Servicer, however, will
deliver to the Trustee on or before March 31 of each calendar year, an
opinion of counsel with respect to the validity of the interest of the
Trust in and to the Receivables and certain other components of the Trust.
INELIGIBLE RECEIVABLES, THE INSTALMENT BALANCE AMOUNT AND THE
OVERCONCENTRATION AMOUNT
For the purpose of facilitating the administration and reporting
requirements of the Servicer under the Pooling and Servicing Agreement,
all Ineligible Receivables arising in an Eligible Account shall be
transferred to the Trust, provided that, if the Series Supplement for a
Series so provides, the Incremental Subordinated Amount for such Series
will be adjusted by the portion of the aggregate principal amount of
Receivables included therein allocable to the Certificateholders' Interest
of such Series. In addition, if the Series Supplement for a Series so
provides, the Incremental Subordinated Amount for such Series shall be
adjusted to reflect, on each Distribution Date, the aggregate principal
amount of Receivables in the Trust on such Distribution Date which are
Dealer Overconcentrations (the "Overconcentration Amount") allocable to
the Certificateholders' Interest of such Series and the portion of the
aggregate amount of Instalment Balances in respect of which CCC has not
received an offsetting payment from the related Dealer on such
Distribution Date (the "Instalment Balance Amount") allocable to the
Certificateholders' Interest of such Series. As used herein, "Dealer
Overconcentrations" on any Distribution Date means, with respect to any
Dealer or group of affiliated Dealers, the excess of (x) the aggregate
principal amount of Receivables due from such Dealer or group of
affiliated Dealers on the last day of the Collection Period immediately
preceding such Distribution Date over (y) 2% of the Pool Balance on the
last day of such immediately preceding Collection Period.
ADDITION OF ACCOUNTS
Subject to the conditions described below, the Seller has the right
to designate from time to time additional accounts to be included as
Accounts (the "Additional Accounts"). In addition, the Seller is required
to add the Receivables of Additional Accounts if the Pool Balance on the
last day of any Collection Period is less than the Required Participation
Amount as of the following Distribution Date (after giving effect to the
allocations, distributions, withdrawals and deposits to be made on such
Distribution Date). In that case, unless certain insolvency events have
occurred with respect to the Seller, CCC, CFC or Chrysler, CCC under the
Receivables Purchase Agreement will be required to sell to the Seller, and
the Seller under the Pooling and Servicing Agreement will be required to
transfer and assign to the Trust, within 10 business days after the end of
such Collection Period, interests in all Receivables arising in such
Additional Accounts, whether such Receivables are then existing or
thereafter created. Any designation of Additional Accounts is subject to
the following conditions, among others: (i) each such Additional Account
must be an Eligible Account; (ii) the Seller shall represent and warrant
that the addition of such Additional Accounts shall not, in the reasonable
belief of the Seller, cause an Early Amortization Event or Reinvestment
Event to occur with respect to any Series; (iii) the Seller shall not
select such Additional Accounts in a manner that it believes is adverse to
the interests of the Certificateholders or any Enhancement Provider; (iv)
the Seller shall deliver a Tax Opinion, other than in the case of a
required addition, and certain other opinions of counsel with respect to
the addition of such Additional Accounts to the Trustee, the Rating
Agencies and any Enhancement Provider; and (v) the applicable Rating
Agencies shall have provided written confirmation that such addition will
not result in a reduction or withdrawal of the rating of any outstanding
Series or Class of Certificates.
Notwithstanding the foregoing, from and after the date on which no
Series issued prior to the date of this Prospectus is outstanding the
Seller may from time to time, at its discretion, and subject only to the
limitations specified in this paragraph, designate Additional Accounts.
(Additional Accounts designated in accordance with the provisions
described in this paragraph are referred to herein as "Automatic
Additional Accounts".) Unless each Rating Agency otherwise consents, the
number of Automatic Additional Accounts designated with respect to any of
the three consecutive Collection Periods beginning in January, April, July
and October of each calendar year shall not exceed 8% of the number of
Accounts as of the first day of the calendar year during which 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. 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. On or before January 31 and
July 31 of each calendar year (or on or before the last day of each month
in certain circumstances), the Seller shall have delivered to the Trustee,
each Rating Agency and any Enhancement Provider an opinion of counsel with
respect to the Automatic Additional Accounts included as Accounts during
the preceding calendar year confirming the validity and perfection of each
transfer of such Automatic Additional Accounts. If such Rating Agency
confirmation or opinion of counsel with respect to any Automatic
Additional Accounts is not so received, such Automatic Additional Accounts
will be removed from the Trust.
Each Additional Account (including each Automatic Additional
Account) must be an Eligible Account at the time of its addition. However,
since Additional Accounts may not have been a part of the initial
portfolio of CCC and CFC, they may not be of the same credit quality as
the initial Accounts. Additional Accounts may have been originated by CCC
and CFC at a later date using credit criteria different from those which
were applied to the initial Accounts or may have been acquired by CCC or
CFC from another wholesale lender that had different credit criteria. In
addition, the Seller will be permitted to designate as Additional Accounts
accounts which contain receivables that have been sold or pledged to third
parties; however, following the applicable Additional Cut-Off Date, no
Receivables thereafter arising in any such accounts shall be sold or
pledged to any third parties.
"Required Participation Amount" for any date means an amount
equal to (a) the sum of the amounts for each Series (other than any
Series or portion thereof which is designated in the relevant Series
Supplement as being an Excluded Series until the Invested Amount of
the Series relating to such Excluded Series is reduced to $0)
obtained by multiplying the Required Participation Percentage for
such Series by the Initial Invested Amount for such Series at such
time, plus (b) the Trust Available Subordinated Amount on the
immediately preceding Determination Date (after giving effect to the
allocations, distributions, withdrawals and deposits to be made on
the Distribution Date following such Determination Date).
"Required Participation Percentage" shall mean, with respect
to a particular Series, the percentage provided in the related
Series Supplement.
REMOVAL OF ACCOUNTS
The Seller shall have the right at any time to require the removal
from the Trust of Eligible Accounts. To remove any Eligible Account, the
Seller (or the Servicer on its behalf) shall, among other things,
(a) furnish to the Trustee, any Enhancement Provider and the Rating
Agencies a written notice (the "Removal Notice") specifying the
Determination Date on which removal of one or more Accounts will commence
(a "Removal Commencement Date") and the Accounts to be removed from the
Trust (the "Designated Accounts"), (b) determine on the Removal
Commencement Date the aggregate principal balance of Receivables in
respect of each such Designated Account (the "Designated Balance"), (c)
from and after such Removal Commencement Date, cease to transfer to the
Trust all Receivables arising in the Designated Accounts, (d) from and
after such Removal Commencement Date, allocate all Principal Collections
in respect of each Designated Account, first to the oldest outstanding
principal balance of such Designated Account, until the Determination Date
on which the Designated Balance in such Designated Account is reduced to
zero (the "Removal Date"), (e) on each business day from and after such
Removal Commencement Date to and until the related Removal Date, allocate
(i) to the Trust (to be further allocated pursuant to the Pooling and
Servicing Agreement), Interest Collections in respect of each Designated
Account with respect to Receivables in all Designated Accounts sold to the
Trust and (ii) to the Seller the remainder of the Interest Collections in
all such Designated Accounts, (f) represent and warrant that the removal
of any such Eligible Account on any Removal Date shall not, in the
reasonable belief of the Seller, cause an Early Amortization Event or
Reinvestment Event to occur with respect to any Series or cause the Pool
Balance to be less than the Required Participation Amount, (g) represent
and warrant that no selection procedures believed by the Seller to be
adverse to the interests of the Certificateholders were utilized in
selecting the Designated Accounts, (h) represent and warrant that such
removal will not result in a reduction or withdrawal of the rating of any
outstanding Series or Class of Certificates and (i) on or before the
related Removal Date, deliver to the Trustee and any Enhancement Provider
an officers' certificate confirming the items set forth in clauses (f),
(g) and (h) above and a Tax Opinion with respect to such removal. No
Designated Accounts shall be removed if such removal will result in a
reduction or withdrawal of the rating of any outstanding Series or Class
of Certificates.
On any date on which an Account becomes an Ineligible Account (which
date will be deemed the Removal Commencement Date for such Account), the
Seller will commence the removal of such Account from the Trust by taking
each of the actions specified in clauses (a) through (e) of the preceding
paragraph with respect to such Ineligible Account.
Upon satisfaction of the above conditions, on the Removal Date with
respect to any such Designated Account, the Seller will cease such
allocation of collections of Receivables therefrom and such Designated
Account shall be deemed removed from the Trust for all purposes (a
"Removed Account").
In addition to the removal rights described above, the Seller shall
have the right at any time to remove Accounts from the Trust and, in
connection therewith, repurchase the then existing Receivables in such
Accounts. To remove Accounts and repurchase the then existing Receivables
in such Accounts, the Seller (or the Servicer on its behalf) shall, among
other things: (a) furnish to the Trust, each Enhancement Provider and the
Rating Agencies a Removal Notice specifying the Designated Accounts which
are to be removed, and the then existing Receivables in such Designated
Accounts (the "Designated Receivables") which are to be repurchased from
the Trust and the Determination Date on which the removal of such
Designated Accounts and the purchase of such Designated Receivables will
occur (a "Removal and Repurchase Date"), (b) deliver to the Trustee on the
Removal and Repurchase Date a computer file or microfiche or written list
containing a true and complete list of the Removed Accounts specifying for
each such Account its account number and the aggregate amount of
Receivables outstanding in such Account, (c) if any Series issued prior to
the date hereof is then outstanding, deposit into the Collection Account
on the Removal and Repurchase Date funds in an amount equal to the
aggregate outstanding balance of the Designated Receivables on such date
(the "Repurchased Receivables Purchase Price"), (d) represent and warrant
that the removal of any such Eligible Account and the repurchase of the
Receivables then existing in such Account on any Removal and Repurchase
Date shall not, in the reasonable belief of the Seller, cause an Early
Amortization Event or Reinvestment Event to occur with respect to any
Series or cause the Pool Balance to be less than the Required
Participation Amount, (e) represent and warrant that no selection
procedures believed by the Seller to be adverse to the interests of the
Certificateholders were utilized in selecting the Designated Accounts, (f)
represent and warrant as of the Removal and Repurchase Date that the list
of Removed Accounts delivered pursuant to clause (b) above, as of the
Removal and Repurchase Date, is true and complete in all material
respects, (g) represent and warrant that such removal and repurchase will
not result in a reduction or withdrawal of the rating of any outstanding
Series or Class of Certificates by the applicable Rating Agency, (h)
deliver to the Trustee, each Rating Agency and any Enhancement Providers a
Tax Opinion, dated the Removal and Repurchase Date, with respect to such
removal and repurchase, and (i) deliver to the Trustee and any Enhancement
Providers an officers' certificate confirming the items set forth in
clauses (d) through (g) above. No Designated Accounts shall be removed and
no Designated Receivables shall be repurchased unless each Rating Agency
shall have notified the Seller, the Servicer and the Trustee in writing
that such removal and repurchase will not result in a reduction or
withdrawal of such Rating Agency's rating of any outstanding Series or
Class of Certificates.
Upon satisfaction of the above conditions, on the Removal and
Repurchase Date with respect to any such Designated Account and Designated
Receivables, such Designated Account shall be deemed removed, and such
Designated Receivables ("Repurchased Receivables") shall be deemed
repurchased, from the Trust for all purposes.
On each Distribution Date, any amounts on deposit in the Collection
Account on such Distribution Date resulting from payment by the Seller of
the Repurchased Receivables Purchase Price will be applied first, to fund
any unpaid Miscellaneous Payment due on or prior to such Distribution Date
and second, an amount equal to the product of (i) the amount of any
Repurchased Receivables Purchase Price initially deposited by the Seller
in the Collection Account pursuant to such repurchase and (ii) the Monthly
Payment Rate for the immediately preceding Collection Period, which is the
percentage obtained by dividing Principal Collections for such Collection
Period by the daily average Pool Balance for such Collection Period, shall
be treated as Principal Collections collected in the immediately preceding
Collection Period.
Notwithstanding the provisions described above, from and after the
date on which no Series issued prior to the date of this Prospectus is
outstanding, 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 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 Ratings 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 or Reinvestment 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.
EXCLUDED SERIES
A Series of Certificates may be designated as an excluded series (an
"Excluded Series") with respect to a Series of Certificates previously
issued by the Trust as to which the Accumulation Period or Controlled
Amortization Period has commenced (a "Paired Series").
Each Excluded Series will be prefunded with an initial deposit to a
prefunding account in an amount equal to the initial principal balance of
such Excluded Series and primarily from the proceeds of the offering of
such Excluded Series. Any such prefunding account will be held for the
benefit of such Excluded Series and not for the benefit of the Paired
Series. As funds are accumulated in the Principal Funding Account for such
Paired Series or distributed to holders of Certificates of such Paired
Series, an equal amount of funds on deposit in any prefunding account for
such prefunded Excluded Series will be released (which funds will be
distributed to the Seller). Until payment in full of the Paired Series, no
Interest Collections, Principal Collections, Defaulted Amounts or
Miscellaneous Payments will be allocated to the related Excluded Series.
In addition, it is expected that any Excluded Series will be excluded from
the calculation of the Required Participation Amount as described under
" -- Addition of Accounts".
COLLECTION ACCOUNT
The Servicer has established and will maintain an Eligible Deposit
Account for the benefit of the Certificateholders in the name of the
Trustee, on behalf of the Trust (the "Collection Account"). "Eligible
Deposit Account" means either (a) a segregated account with an Eligible
Institution or (b) a segregated trust account with the corporate trust
department of a depository institution organized under the laws of the
United States or any one of the states thereof (or any domestic branch of
a foreign bank), having corporate trust powers and acting as trustee for
funds deposited in such account, so long as any of the securities of such
depository institution has a credit rating from each Rating Agency in one
of its generic rating categories which signifies investment grade.
"Eligible Institution" means (a) the corporate trust department of the
Trustee or (b) a depository institution organized under the laws of the
United States or any one of the states thereof, or the District of
Columbia (or a domestic branch of a foreign bank), which at all times (i)
has either (x) a long-term unsecured debt rating of A2 or better by
Moody's Investors Service, Inc. ("Moody's") and of AAA or better by
Standard & Poor's Ratings Group ("Standard & Poor's") or (y) a certificate
of deposit rating of P-1 by Moody's or A-1+ by Standard & Poor's and (ii)
is a member of the FDIC. Funds in the Collection Account generally will be
invested in Eligible Investments. "Eligible Investments" are:
(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, but in
no event occurring later than the Distribution Date next succeeding
the Trustee's acquisition thereof, except as otherwise provided,
with respect to any Series offered hereby, in the related Series
Supplement, 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 depositary institution or trust company incorporated
under the laws of the United States of America or any state thereof
(or any domestic branch of a foreign bank) and subject to
supervision and examination by Federal or state banking or
depository institution authorities; provided, however, that at the
time of the Trust's investment or contractual commitment to invest
therein, the commercial paper or other short-term unsecured debt
obligations (other than such obligations the rating of which is
based on the credit of a person or entity other than such depository
institution or trust company) thereof shall have a credit rating
from each of the Rating Agencies in 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) except during a Reinvestment Period with respect to any
Series, investments in money market funds having a rating from each
of the Rating Agencies in 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; and
(vi) certain repurchase obligations, including those of
appropriately rated broker-dealers and financial institutions; 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.
The foregoing notwithstanding, so long as any Series previously
issued by the Trust remains outstanding, funds in the Collection Account
will be invested only in (i) obligations fully guaranteed by the United
States, (ii) demand deposits, time deposits or certificates of deposit of
depository institutions or trust companies, the commercial paper of which
has the highest rating from the applicable Rating Agency, (iii) commercial
paper having at the time of the Trust's investment, a rating in the
highest rating category from the applicable Rating Agency, (iv) demand
deposits, time deposits and certificates of deposit which are fully
insured by the FDIC, (v) bankers' acceptances issued by any depository
institution or trust company described in (ii) above, (vi) except during a
Reinvestment Period with respect to any Series, investments in money
market funds which have the highest rating from, or have otherwise been
approved in writing by, each Rating Agency and (vii) certain repurchase
obligations (collectively, "Eligible Investments"). Any earnings (net of
losses and investment expenses) on funds in the Collection Account will be
credited to the Collection Account. The Servicer will have the revocable
power to instruct the Trustee to make withdrawals and payments from the
Collection Account for the purpose of carrying out its duties under the
Pooling and Servicing Agreement. The Servicer may select an appropriate
agent as representative of the Servicer for the purpose of designating
such investments.
EXCESS FUNDING ACCOUNT
Except, to the extent provided in the related Series Supplement,
during an Early Amortization Period or Reinvestment Period with respect to
a Series, the Excess Funded Amount, if any, for such Series will be
maintained in the Excess Funding Account established with the Trustee with
respect to such Series. The Excess Funded Amount with respect to a Series
will initially equal the excess, if any, of the initial principal balance
of the Certificates of such Series over the Initial Invested Amount
thereof. Funds on deposit in the Excess Funding Account for a Series will
be invested by the Trustee at the direction of the Servicer generally in
Eligible Investments. Such investments must mature on or prior to the next
Distribution Date. The Servicer may select an appropriate agent as
representative of the Servicer for the purpose of designating such
investments.
Funds on deposit in the Excess Funding Account for a Series will be
withdrawn and paid to the Seller or allocated to one or more other Series
which are in Controlled Amortization, Early Amortization, Reinvestment or
Accumulation Periods to the extent of any increases in the Invested Amount
of the Series in question as a result of the addition of Receivables to
the Trust, a reduction in the Seller's Interest, or a reduction in the
Initial Invested Amount of any other Series. Additional amounts will be
deposited in the Excess Funding Account for a Series on a Distribution
Date to the extent that the sum of the Certificateholders' Interest of
such Series in Principal Receivables and the amount on deposit in the
Excess Funding Account, if any, for such Series prior to the deposit on
such Distribution Date is less than the outstanding principal balance of
the Certificates of such Series, but only to the extent that funds are
available therefor as provided in the related Series Supplement. The
allocation of additional Receivables to increase the Invested Amount of
each Series that provides for an Excess Funding Account or similar
arrangement involving fluctuating levels of investment in the Receivables
will generally be based on the proportion that the amount on deposit in
the Excess Funding Account for that Series bears to the amounts on deposit
in the Excess Funding Accounts of all Series providing for Excess Funding
Accounts or such similar arrangements or to amounts otherwise similarly
available; and the deposit of amounts in the Excess Funding Accounts for
each such Series will be based on the proportion that the Adjusted
Invested Amount of that Series bears to the Adjusted Invested Amounts of
all Series providing for Excess Funding Accounts or such similar
arrangements.
On each Distribution Date, all investment income earned on amounts
in the Excess Funding Account for any Series since the preceding
Distribution Date will be withdrawn from such Excess Funding Account and
applied as described herein and in the related Prospectus Supplement.
Funds on deposit in the Excess Funding Account for a Series on the
earliest of (i) the commencement of a Reinvestment Period with respect to
such Series, (ii) the commencement of an Early Amortization Period with
respect to such Series and (iii) the Distribution Date or Distribution
Dates specified in or determined in the manner provided in the Series
Supplement for such Series will be distributed to the Certificateholders
of such Series or a Class thereof or deposited in the Principal Funding
Account for such Series or a Class thereof, in each case if and to the
extent the related Series Supplement so provides. In addition, except as
otherwise provided in the related Series Supplement, no funds will be
deposited in the Excess Funding Account for a Series during any Early
Amortization Period or Reinvestment Period with respect to such Series or
with respect to any Collection Period following the Collection Period
specified in or determined in the manner provided in the Series Supplement
for such Series.
ALLOCATION PERCENTAGES
Allocations among Series. Pursuant to the Pooling and Servicing
Agreement, during each Collection Period the Servicer will allocate to
each outstanding Series its share of Interest Collections, Principal
Collections, Defaulted Receivables and Miscellaneous Payments based on the
applicable Series Allocable Interest Collections, Series Allocable
Principal Collections, Series Allocable Defaulted Amount and Series
Allocable Miscellaneous Payments.
"Series Allocable Interest Collections", "Series Allocable
Principal Collections", "Series Allocable Defaulted Amount" and
"Series Allocable Miscellaneous Payments" mean, with respect to any
Series of Certificates for any Collection Period, the product of the
Series Allocation Percentage for such Series and the amount of
Interest Collections and Principal Collections, the Defaulted Amount
and Miscellaneous Payments, respectively, with respect to such
Collection Period.
"Miscellaneous Payments" for any Collection Period means the
sum of (a) Adjustment Payments and Transfer Deposit Amounts received
with respect to such Collection Period and (b) Unallocated Principal
Collections on such Distribution Date available to be treated as
Miscellaneous Payments as described below under "Principal
Collections for all Series".
"Series Allocation Percentage" means, with respect to a Series
of Certificates for any Collection Period, the percentage equivalent
of a fraction, the numerator of which is the Adjusted Invested
Amount of such Series as of the last day of the immediately
preceding Collection Period and the denominator of which is the
Trust Adjusted Invested Amount as of such last day.
"Adjusted Invested Amount" means, with respect to a Series for
any date, an amount equal to the sum of (a) the Initial Invested
Amount of such Series, minus unreimbursed Investor Charge-Offs for
such Series and (b) the Available Subordinated Amount with respect
to such Series (after giving effect to the allocations,
distributions, withdrawals and deposits to be made on the
Distribution Date during the Collection Period in which such date
occurs).
"Trust Adjusted Invested Amount" means, with respect to any
Collection Period, the sum of the Adjusted Invested Amounts for all
outstanding Series.
"Initial Invested Amount" means, with respect to any Series
and for any date, the amount specified in the related Series
Supplement. The Initial Invested Amount for any Series may be
increased or decreased from time to time as specified in the related
Series Supplement, including as a result of deposits to or
withdrawals from the Excess Funding Account, if any, for such
Series.
Allocation Between the Certificateholders and the Seller. The
Servicer will allocate amounts initially allocated to each Series between
the Certificateholders' Interest and the Seller's Interest for each
Collection Period as provided in the related Series Supplement and, with
respect to a Series offered hereby, described in the related Prospectus
Supplement. If a Series consists of more than one Class, such amounts
allocated to the Certificateholders' Interest of such Series will be
further allocated between such Classes as provided in the related Series
Supplement and, with respect to a Series offered hereby, as described in
the related Prospectus Supplement.
Principal Collections for all Series. Principal Collections
allocated to the Certificateholders' Interest of any Series, for any
Collection Period with respect to any Accumulation Period, Controlled
Amortization Period, Reinvestment Period or Early Amortization Period with
respect to such Series or a Class thereof, will first be allocated to make
required payments of principal to the Principal Funding Account or to the
Certificateholders of such Series or a Class thereof, in each case if and
to the extent specified in the Series Supplement for such Series. The
Servicer will determine the amount of available certificateholder
principal collections for each Series and any Collection Period remaining
after such required payments, if any ("Excess Principal Collections"). The
Servicer will allocate Excess Principal Collections to cover any principal
distributions to Certificateholders of any Series which are either
scheduled or permitted and which have not been covered out of Principal
Collections and certain other amounts allocated to such Series ("Principal
Shortfalls"). Excess Principal Collections will generally not be used to
cover Investor Charge-Offs for any Series. If Principal Shortfalls exceed
Excess Principal Collections for any Collection Period, Excess Principal
Collections will be allocated pro rata among the applicable Series based
on the relative amounts of Principal Shortfalls, unless otherwise provided
in the applicable Series Supplements. To the extent that Excess Principal
Collections exceed Principal Shortfalls, the balance will be paid to the
Seller if the Seller's Participation Amount (determined after giving
effect to any Principal Receivables transferred to the Trust on such date)
exceeds the Trust Available Subordinated Amount for the immediately
preceding Determination Date (after giving effect to the allocations,
distributions, withdrawals and deposits to be made on the Distribution
Date immediately following such Determination Date). Any amount not
allocated to the Seller because the Seller's Participation Amount does not
exceed the Trust Available Subordinated Amount will be held unallocated
("Unallocated Principal Collections") until the Seller's Participation
Amount exceeds the Trust Available Subordinated Amount, at which time such
amount will be allocated to the Seller, or until an Early Amortization
Period, Accumulation Period, Controlled Amortization Period or
Reinvestment Period commences for any Series, after which such amount will
be treated as a Series Allocable Miscellaneous Payment.
ALLOCATION OF COLLECTIONS; DEPOSITS IN COLLECTION ACCOUNT
The Servicer, no later than two business days after the processing
date, will deposit all collections received with respect to the
Receivables (excluding, with certain exceptions, certain portions thereof
allocable to the Seller) in each Collection Period into the Collection
Account. Notwithstanding the foregoing requirement for daily deposits, for
so long as (i) CCC remains the Servicer under the Pooling and Servicing
Agreement, (ii) no Service Default has occurred and is continuing and
(iii) (x) CCC is a wholly-owned subsidiary of CFC and CFC has and
maintains a short-term debt rating of at least A-1 by Standard & Poor's
and P-1 by Moody's, (y) CCC arranges for and maintains a letter of credit
or other form of Enhancement in respect of the Servicer's obligation to
make deposits of collections on the Receivables in the Collection Account
that is acceptable in form and substance to each Rating Agency or (z) CCC
otherwise obtains the Rating Agency confirmations described below, then,
subject to any limitations in the confirmations referred to below, CCC
need not deposit collections into the Collection Account on the day
indicated in the preceding sentence but may use for its own benefit all
such collections until the business day immediately preceding the related
Distribution Date or, provided that no Series issued prior to the date of
this Prospectus is outstanding, until such Distribution Date, at which
time CCC will make such deposits in an amount equal to the net amount of
such deposits and withdrawals which would have been made had the
conditions of this sentence not applied; provided, however, that prior to
ceasing daily deposits as described above the Seller shall have delivered
to the Trustee written confirmation from the applicable Rating Agencies
that the failure by CCC to make daily deposits will not result in a
reduction or withdrawal of the rating of any outstanding Series or Class
of Certificates. In addition, during any Collection Period the Servicer
will generally be required to deposit Interest Collections and Principal
Collections into the Collection Account only to the extent of the
distributions required to be made to Certificateholders, the amounts
required to be deposited into any deposit, trust, reserve or similar
account maintained for the benefit of Certificateholders of any Series and
certain other parties and the amounts required to be paid to any
Enhancement Provider on the Distribution Date relating to such Collection
Period and if, at any time prior to such Distribution Date, the amount of
collections deposited in the Collection Account exceeds the amount
required to be deposited, the Servicer will be permitted to withdraw such
excess from the Collection Account.
On any date on which collections are deposited in the Collection
Account, the Servicer will distribute directly to the Seller the amount of
such Interest Collections allocable to each Series specified in the
related Series Supplement and, with respect to a Series offered hereby,
described in the related Prospectus Supplement if the Seller's
Participation Amount (determined after giving effect to any Principal
Receivables transferred to the Trust on such date) exceeds the Trust
Available Subordinated Amount for the immediately preceding Determination
Date (after giving effect to the allocations, distributions, withdrawals
and deposits to be made on the Distribution Date immediately following
such Determination Date). In addition, during the Revolving Period for any
Series, subject to certain limitations, the Servicer will distribute
directly to the Seller on each such date of deposit the amount of
Principal Collections allocable to each Series specified in the related
Series Supplement and, with respect to a Series offered hereby, described
in the related Prospectus Supplement if the Seller's Participation Amount
(determined after giving effect to any Principal Receivables transferred
to the Trust on such date) exceeds the Trust Available Subordinated Amount
for the immediately preceding Determination Date (after giving effect to
the allocations, distributions, withdrawals and deposits to be made on the
Distribution Date immediately following such Determination Date).
LIMITED SUBORDINATION OF SELLER'S INTEREST; ENHANCEMENTS.
SUBORDINATION OF SELLER'S INTEREST. Credit enhancement with respect
to any Series of Certificates offered hereby will be provided by
subordination of the Seller's Interest to the rights of Certificateholders
of such Series to the extent described in the related Prospectus
Supplement. The amount of such subordination with respect to any Series is
referred to herein as the Available Subordinated Amount for such Series.
The Available Subordinated Amount for any Series offered hereby will be
subject to decrease and increase from time to time if and to the extent
described in the related Prospectus Supplement. The Prospectus Supplement
for each Series offered hereby will describe the manner in which
collections attributable to the Available Subordinated Amount for such
Series may be drawn upon to make payments to or for the benefit of the
holders of Certificates of such Series. If so provided in the related
Series Supplements, the Available Subordinated Amount for a Series may be
structured so as to be available to more than one Series of Certificates.
ENHANCEMENTS. In addition to the subordination described above, for
any Series, Enhancements may be provided with respect to one or more
Classes thereof. Enhancements with respect to one or more Classes of a
Series offered hereby may include a letter of credit, surety bond, cash
collateral account, spread account, guaranteed rate agreement, swap or
other interest protection agreement, repurchase obligation, cash deposit
or another form of credit enhancement described in the related Prospectus
Supplement or any combination of the foregoing. Enhancements may also be
provided to a Series or Class or Classes of a Series by subordination
provisions which require that distributions of principal and/or interest
be made with respect to the Certificates of such Series or such Class or
Classes before distributions are made to one or more Series or one or more
Classes of such Series, if the Series Supplements with respect thereto so
provide. If so specified in the related Prospectus Supplement, any form of
Enhancement may be structured so as to be available to more than one Class
or Series to the extent described therein.
If Enhancement is provided with respect to a Series offered hereby,
the related Prospectus Supplement will include a description of (a) the
amount payable under such Enhancement, (b) any conditions to payment
thereunder not otherwise described herein, (c) the conditions (if any)
under which the amount payable under such Enhancement may be reduced and
under which such Enhancement may be terminated or replaced and (d) any
material provisions of any agreement applicable relating to such Credit
Enhancement. Additionally, in certain cases, the related Prospectus
Supplement may set forth certain information with respect to the
applicable Enhancement Provider, including (i) a brief description of its
principal business activities, (ii) its principal place of business, place
of incorporation and the jurisdiction under which it is chartered or
licensed to do business, (iii) if applicable, the identity of regulatory
agencies which exercise primary jurisdiction over the conduct of its
business and (iv) its total assets, and its stockholders' equity or
policyholders' surplus, if applicable, as of a date specified in the
Prospectus Supplement.
LIMITATIONS ON SUBORDINATION AND ENHANCEMENTS. The presence of an
Available Subordinated Amount and/or Enhancement with respect to a Series
or Class is intended to enhance the likelihood of receipt by
Certificateholders of such Series or Class of the full amount of principal
and interest with respect thereto and to decrease the likelihood that such
Certificateholders will experience losses. However, unless otherwise
specified in the Prospectus Supplement for a Series offered hereby,
neither subordination of the Seller's Interest nor the Enhancement, if
any, with respect thereto will provide protection against all risks of
loss or will guarantee repayment of the entire principal balance of the
Certificates and interest thereon. If losses occur which exceed the amount
covered by such subordination or Enhancement or which are not covered by
such subordination or Enhancement, Certificateholders will bear their
allocable share of deficiencies. In addition, if specific Enhancement is
provided for the benefit of more than one Class or Series,
Certificateholders of any such Class or Series will be subject to the risk
that such Enhancement will be exhausted by the claims of
Certificateholders of other Classes or Series.
DISTRIBUTIONS
Payments to Certificateholders of a Series offered hereby or a Class
thereof will be made from the Collection Account and any accounts
established for the benefit of such Certificateholders as described in the
related Prospectus Supplement.
DEFAULTED RECEIVABLES AND RECOVERIES
"Defaulted Receivables" on any Determination Date are (i) all
Receivables which were charged off as uncollectible in respect of the
immediately preceding Collection Period and (ii) all Receivables which
were Eligible Receivables when transferred to the Trust, which arose in an
Account which became an Ineligible Account after the date of transfer of
such Receivables to the Trust and which were not Eligible Receivables for
any six consecutive Determination Dates thereafter. The "Defaulted Amount"
for any Collection Period will be an amount (which shall not be less than
zero) equal to (a) the principal amount of Receivables that became
Defaulted Receivables during the preceding Collection Period minus (b) the
sum of (i) the full amount of any Defaulted Receivables subject to
reassignment to the Seller or purchase by the Servicer for such Collection
Period unless certain events of bankruptcy, insolvency or receivership
have occurred with respect to either of the Seller or the Servicer, in
which event the Defaulted Amount will not be reduced for those Defaulted
Receivables and (ii) the excess, if any, for the immediately preceding
Determination Date of the amount determined pursuant to this clause (b)
for such Determination Date over the amount determined pursuant to clause
(a) for such Determination Date. Receivables will be charged off as
uncollectible in accordance with the Servicer's customary and usual
policies and procedures for servicing its own comparable revolving dealer
wholesale loan accounts. A portion of the Series Allocable Defaulted
Amount for each Series and Collection Period will be allocated between the
Certificateholders of such Series and the Seller as provided in the
related Series Supplement. The portion of the Defaulted Amount allocated
to the Certificateholders of a Series is referred to as the "Investor
Default Amount" for such Series. The Investor Default Amount for any
Series that consists of more than one Class will be further allocated
between such Classes as provided in the related Series Supplement.
If the Servicer adjusts the amount of any Receivable because of a
rebate, billing error or certain other noncash items to a Dealer, or
because such Receivable was created in respect of inventory which was
refused or returned by a Dealer, the principal amount of each of the
Seller's Interest and the Pool Balance will be reduced by the amount of
the adjustment or charge-off. Furthermore, to the extent that the
reduction in the Seller's Interest would reduce the Seller's Participation
Amount below the Trust Available Subordinated Amount for the immediately
preceding Determination Date (after giving effect to the allocations,
distributions, withdrawals and deposits to be made on the Distribution
Date immediately following such Determination Date), the Seller will
deposit a cash amount equal to such deficiency into the Collection Account
in immediately available funds (an "Adjustment Payment") on the day on
which such adjustment occurs.
OPTIONAL REPURCHASE
If so provided in a Prospectus Supplement relating to a Series of
Certificates offered hereby, on any Distribution Date occurring after the
Invested Amount of the Certificates of such Series is reduced to the
percentage of the initial outstanding principal amount of the Certificates
of such Series specified therein, the Seller will have the option, subject
to certain conditions, to repurchase the Certificateholders' Interest of
such Series. The purchase price will generally be equal to the Invested
Amount of such Series on the Determination Date preceding the Distribution
Date on which such repurchase will be made plus accrued and unpaid
interest on the unpaid principal amount of the Certificates of such Series
at the applicable certificate rate (together with interest on overdue
interest), plus any other amounts specified in the related Series
Supplement. The purchase price will be deposited in the Collection Account
in immediately available funds on the Distribution Date on which the
Seller exercises such option. Following any such purchase, the
Certificateholders of such Series will have no further rights with respect
to the Certificateholders' Interest of such Series, other than the right
to receive the final distribution on the Certificates of that Series. In
the event that the Seller fails for any reason to deposit such purchase
price, payments will continue to be made to the Certificateholders of such
Series as described in the related Prospectus Supplement.
REINVESTMENT EVENTS AND EARLY AMORTIZATION EVENTS
Commencing on the first Distribution Date following the Collection
Period in which a Reinvestment Event has occurred with respect to any
Series, Principal Collections allocable to the Certificateholders'
Interest of such Series will no longer be paid to USA or allocated to any
other Series but instead will be deposited to the Principal Funding
Account for such Series monthly on each Distribution Date, and the
Controlled Deposit Amount or Controlled Amortization Amount, if any, will
no longer apply to distributions of principal in respect of the
Certificates of such Series, in each case except as described below or
provided in the related Series Supplement. A "Reinvestment Event" refers
to, for any Series, any of the events so defined in the Series Supplement
relating to that Series and, with respect to any Series offered hereby,
described in the related Prospectus Supplement.
Upon the occurrence of any event so defined, a Reinvestment Event
will be deemed to have occurred with respect to such Series without any
notice or other action on the part of any other party immediately upon the
occurrence of such event. The Reinvestment Period with respect to such
Series will commence as of the close of business on the business day
immediately preceding the day on which the Reinvestment Event is deemed to
have occurred. Monthly deposits of principal to the Principal Funding
Account for such Series will, except as described below or provided in the
related Series Supplement, begin on the first Distribution Date following
the Collection Period in which a Reinvestment Period has commenced with
respect to such Series.
Commencing on the first Distribution Date following the Collection
Period in which an Early Amortization Event has occurred with respect to
any Series, Principal Collections allocable to the Certificateholders'
Interest of such Series will no longer be paid to USA, allocated to any
other Series or retained in the Principal Funding Account for such Series
but instead will be distributed to Certificateholders of such Series
monthly on each Distribution Date and the Controlled Deposit Amount or
Controlled Amortization Amount, if any, will no longer apply to
distributions of principal on the Certificates of such Series, in each
case except as described below or provided in the related Series
Supplement. An "Early Amortization Event" refers to, for any Series, any
of the events so defined in the Series Supplement relating to the Series
and, with respect to any Series offered hereby, described in the related
Prospectus Supplement, as well as either of the following events:
1. the occurrence of certain events of bankruptcy, insolvency
or receivership relating to the Trust or the Seller; and
2. the Trust or USA becomes an investment company within the
meaning of the Investment Company Act of 1940, as amended.
Upon the occurrence of any event described above or in the
Prospectus Supplement for a Series offered hereby, an Early Amortization
Event will be deemed to have occurred with respect to such Series without
any notice or other action on the part of any other party immediately upon
the occurrence of such event. The Early Amortization Period with respect
to such Series will commence as of the close of business on the business
day immediately preceding the day on which the Early Amortization Event is
deemed to have occurred. Monthly distributions of principal to the
Certificateholders of such Series will begin on the first Distribution
Date following the Collection Period in which an Early Amortization Period
has commenced with respect to such Series, except as described below. The
failure of the Trust to pay the outstanding principal amount of the
Certificates of any Series or Class by the Expected Payment Date therefor
will have the same consequences as the occurrence of an Early Amortization
Event with respect to such Series or Class; and all references herein to
Early Amortization Events shall be deemed to include such a failure.
Notwithstanding the commencement of a Reinvestment Period or an
Early Amortization Period with respect to Series of Certificates, such
period may terminate and the Revolving Period with respect to such Series
and any Class thereof may commence when the event giving rise to the
commencement of such Reinvestment Period or Early Amortization Period no
longer exists, whether as a result of the distribution of principal to
Certificateholders of such Series or otherwise, in each case if and to the
extent provided in the Series Supplement for such Series.
In addition to the consequences of a Reinvestment Event or Early
Amortization Event with respect to any Series discussed above, if an
insolvency event occurs with respect to USA, or USA violates its covenant
not to create any lien on any Receivable, in each case as provided in the
Pooling and Servicing Agreement, on the day of such insolvency event or
such violation, as applicable, USA will (subject to the actions of the
Certificateholders) immediately cease to transfer Receivables to the Trust
and promptly give notice to the Trustee of such insolvency event or
violation, as applicable. Under the terms of the Pooling and Servicing
Agreement, within 15 days the Trustee will publish a notice of such
insolvency event or violation stating that the Trustee intends to sell,
liquidate or otherwise dispose of the Receivables in a commercially
reasonable manner and on commercially reasonable terms, unless within a
specified period of time holders of Certificates of each outstanding
Series representing more than 50% of the aggregate unpaid principal amount
of the Certificates of each such Series (or, with respect to any Series
with two or more Classes, the Certificates of each such Class) and each
person holding a Supplemental Certificate, instruct the Trustee not to
sell, dispose of or otherwise liquidate the Receivables and to continue
transferring Receivables as before such insolvency event or violation, as
applicable. If the portion of such proceeds allocated to the
Certificateholders' Interest and the proceeds of any collections on the
Receivables in the Collection Account allocable to the Certificateholders'
Interest are not sufficient to pay the aggregate unpaid principal balance
of the Certificates in full plus accrued and unpaid interest thereon,
Certificateholders will incur a loss.
TERMINATION; FULLY REINVESTED DATE
TERMINATION. The Trust will terminate on the earlier to occur of (a)
the day following the Distribution Date on which the aggregate Invested
Amounts for all Series is zero, (b) May 31, 2012 and (c) the date on which
proceeds from the sale, disposal or other liquidation of the Receivables
are distributed to the Certificateholders following an insolvency event
with respect to USA or any violation by USA of its covenant not to create
any lien on any Receivable, in each case as provided in the Pooling and
Servicing Agreement and as described above under "Reinvestment Events and
Early Amortization Events". Upon termination of the Trust, all right,
title and interest in the Receivables and other funds of the Trust (other
than amounts in the Collection Account, any Principal Funding Account,
Interest Funding Account, Excess Funding Account or other account for the
final distribution of principal and interest to Certificateholders) will
be conveyed and transferred to USA.
In any event, the last payment of principal and interest on any
Series of Certificates will be due and payable no later than the date
specified in the related Prospectus Supplement (the "Series Termination
Date").
FULLY REINVESTED DATE. Following the occurrence of the Fully
Reinvested Date with respect to any Series, Certificateholders of that
Series will no longer have any interest in the Receivables and all the
representations and covenants of the Seller and the Servicer relating to
the Receivables, as well as certain other provisions of the Pooling and
Servicing Agreement and all remedies for breaches thereof, will no longer
accrue to the benefit of the Certificateholders of that Series, in each
case unless the Revolving Period with respect to such Series recommences
as provided in the related Series Supplement. Those representations,
covenants and other provisions include the conditions to the exchange of
the Seller's Certificate described under "The Seller's Certificate", the
conditions to the issuance of a new Series described under "New
Issuances", the representations described under "Representations and
Warranties" to the extent they relate to the Receivables and the
Collateral Security, the limitations on additions and removals of Accounts
described under "Addition of Accounts" and "Removal of Accounts",
respectively, and the obligations of the Servicer with respect to
servicing the Receivables described under "Collection and Other Servicing
Procedures" and "Servicer Covenants". In addition, upon the occurrence of
the Fully Reinvested Date with respect to any Series, no Interest
Collections, Principal Collections, Defaulted Receivables or Miscellaneous
Payments will be allocated to that Series, unless the Revolving Period
with respect thereto recommences as described above. Notwithstanding the
foregoing, when the final distribution has been made with respect to each
Series of Certificates or the Fully Reinvested Date has occurred with
respect thereto, all right, title and interest in the Receivables will be
conveyed and transferred to USA.
INDEMNIFICATION
The Pooling and Servicing Agreement provides that the Servicer will
indemnify the Trust and the Trustee from and against any loss, liability,
expense, damage or injury suffered or sustained arising out of any acts,
omissions or alleged acts or omissions arising out of activities of the
Trust, the Trustee or the Servicer pursuant to the Pooling and Servicing
Agreement; provided, that, the Trust or the Trustee will not be so
indemnified if such acts, omissions or alleged acts or omissions
constitute fraud, gross negligence, breach of fiduciary duty or willful
misconduct by the Trustee. However, the Servicer will not indemnify the
Trust, the Trustee or the Certificateholders for any act taken by the
Trustee at the request of the Certificateholders or for any tax required
to be paid by the Trust or the Certificateholders.
The Pooling and Servicing Agreement provides that, except as
described above and with certain other exceptions, neither the Seller, the
Servicer nor any of their directors, officers, employees or agents will be
under any liability to the Trust, the Trustee, the Certificateholders or
any other person for taking any action, or for refraining from taking any
action, pursuant to the Pooling and Servicing Agreement. However, neither
the Seller, the Servicer nor any of their directors, officers, employees
or agents will be protected against any liability which would otherwise be
imposed by reason of willful misfeasance, bad faith or gross negligence of
any such person in the performance of their duties or by reason of
reckless disregard of their obligations and duties thereunder.
In addition, the Pooling and Servicing Agreement provides that the
Servicer is not under any obligation to appear in, prosecute or defend any
legal action which is not incidental to its servicing responsibilities
under the Pooling and Servicing Agreement. The Servicer may, in its sole
discretion, undertake any such legal action which it may deem necessary or
desirable for the benefit of the Certificateholders with respect to the
Pooling and Servicing Agreement and the rights and duties of the parties
thereto and the interest of the Certificateholders thereunder.
COLLECTION AND OTHER SERVICING PROCEDURES
Pursuant to the Pooling and Servicing Agreement, the Servicer is
responsible for servicing, collecting, enforcing and administering the
Receivables in accordance with customary and usual procedures for
servicing its own revolving credit line dealer wholesale loans, except
where the failure to so act would not materially and adversely affect the
rights of the Trust.
CCC covenants that it may only change the terms relating to the
Accounts if (i) in the Servicer's reasonable judgment, no Early
Amortization Event or Reinvestment Event will occur with respect to any
Series as a result of the change and (ii) the change is made applicable to
the comparable segment of the portfolio of revolving credit line dealer
wholesale loan accounts with similar characteristics owned or serviced by
CCC and not only to the Accounts.
Servicing activities to be performed by the Servicer include
collecting and recording payments, communicating with dealers,
investigating payment delinquencies, evaluating the increase of credit
limits, and maintaining internal records with respect to each Account.
Managerial and custodial services performed by the Servicer on behalf of
the Trust include providing assistance in any inspections of the documents
and records relating to the Accounts and Receivables by the Trustee
pursuant to the Pooling and Servicing Agreement, maintaining the
agreements, documents and files relating to the Accounts and Receivables
as custodian for the Trust and providing related data processing and
reporting services for Certificateholders and on behalf of the Trustee.
SERVICER COVENANTS
In the Pooling and Servicing Agreement the Servicer covenants that:
(a) it will duly satisfy all obligations on its part to be fulfilled under
or in connection with the Receivables and the Accounts, will maintain in
effect all qualifications required in order to service the Receivables and
the Accounts and will comply in all material respects with all
requirements of law in connection with servicing the Receivables and the
Accounts, the failure to comply with which would have a materially adverse
effect on the Certificateholders of any outstanding Series; (b) it will
not permit any rescission or cancellation of a Receivable except as
ordered by a court of competent jurisdiction or other government
authority; (c) it will do nothing to impair the rights of the
Certificateholders in the Receivables or the Accounts; and (d) it will not
reschedule, revise or defer payments due on any Receivable except in
accordance with its guidelines for servicing revolving credit line dealer
wholesale loans.
Under the terms of the Pooling and Servicing Agreement, if the
Seller or the Servicer discovers, or receives written notice, that any
covenant of the Servicer set forth above has not been complied with in all
material respects and such noncompliance has not been cured within 30 days
thereafter (or such longer period as the Trustee may agree to) and has a
materially adverse effect on the interests of all Certificateholders in
any Receivable or Account, CCC, as Servicer, will purchase such Receivable
or all Receivables in such Account, as applicable. If CCC is the Servicer,
such purchase will be made on the Determination Date following the
expiration of the 30-day cure period and the Servicer will be obligated to
deposit into the Collection Account an amount equal to the amount of such
Receivable plus accrued and unpaid interest thereon. The amount of such
deposit shall be deemed a Transfer Deposit Amount. The purchase by the
Servicer constitutes the sole remedy available to the Certificateholders
if such covenant or warranty of the Servicer is not satisfied and the
Trust's interest in any such purchased Receivables shall be automatically
assigned to the Servicer.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Unless otherwise provided in the related Series Supplement and, with
respect to a Series offered hereby, described in the related Prospectus
Supplement, the Servicer's compensation with respect to the Certificates
of a Series for its servicing activities and reimbursement for its
expenses will be a monthly servicing fee (the "Servicing Fee") in an
amount payable in arrears on each Distribution Date on or before the
Series Termination Date of that Series and the Fully Reinvested Date, if
any, of that Series (and thereafter during the Revolving Period with
respect to such Series, if such Revolving Period recommences) generally
equal to one-twelfth of the product of (a) the "Servicing Fee Rate" set
forth in such Series Supplement, (b) the Pool Balance as of the last day
of the second preceding Collection Period and (c) the Series Allocation
Percentage for such Series for the immediately preceding Collection
Period. Unless otherwise specified in a related Series Supplement and,
with respect to a Series offered hereby, described in the related
Prospectus Supplement, the share of the Servicing Fee allocable to
Certificateholders of any Series with respect to any Distribution Date
(the "Monthly Servicing Fee") shall generally be equal to one-twelfth of
the product of (a) the Servicing Fee Rate and (b) the Invested Amount of
such Series as of the last day of the second preceding Collection Period.
The remainder of the Servicing Fee with respect to any Series shall be
paid by the Seller. The Monthly Servicing Fee with respect to any Series
shall be payable to the Servicer solely to the extent amounts are
available for distribution therefor in accordance with the terms of the
Pooling and Servicing Agreement.
The Servicer will be permitted to waive its right to receive the
Servicing Fee with respect to any Series on any Distribution Date, so long
as it believes that sufficient Interest Collections will be available on a
future Distribution Date to pay the Monthly Servicing Fee relating to such
waived Servicing Fee, in which case the Servicing Fee and the Monthly
Servicing Fee for such Series and such Distribution Date shall be deemed
to be zero.
The Servicer will pay from its servicing compensation certain
expenses incurred in connection with servicing the Accounts and the
Receivables including, without limitation, payment of fees and
disbursements of the Trustee and independent accountants and all other
fees and expenses which are not expressly stated in the Pooling and
Servicing Agreement to be payable by the Trust or the Certificateholders
other than federal, state and local income and franchise taxes, if any, of
the Trust or the Certificateholders.
CERTAIN MATTERS REGARDING THE SERVICER
The Servicer may not resign from its obligations and duties under
the Pooling and Servicing Agreement, except upon determination that such
duties are no longer permissible under applicable law. No such resignation
will become effective until the Trustee or a successor to the Servicer has
assumed the Servicer's responsibilities and obligations under the Pooling
and Servicing Agreement.
Any person into which, in accordance with the Pooling and Servicing
Agreement, the Servicer may be merged or consolidated or any person
resulting from any merger or consolidation to which the Servicer is a
party, or any person succeeding to the business of the Servicer, will be
the successor to the Servicer under the Pooling and Servicing Agreement.
SERVICE DEFAULT
In the event of any Service Default (as defined below), the Trustee,
by written notice to the Servicer, may terminate all of the rights and
obligations of the Servicer, as servicer, under the Pooling and Servicing
Agreement and in and to the Receivables and the proceeds thereof and
appoint a new Servicer (a "Service Transfer"). The rights and interest of
the Seller under the Pooling and Servicing Agreement in the Seller's
Interest will not be affected by any Service Transfer. The Trustee shall
as promptly as possible appoint a successor Servicer and if no successor
Servicer has been appointed by the Trustee and has accepted such
appointment by the time the Servicer ceases to act as Servicer, all
rights, authority, power and obligations of the Servicer under the Pooling
and Servicing Agreement shall pass to and be vested in the Trustee. Prior
to any Service Transfer, the Trustee will review any bids obtained from
potential servicers meeting certain eligibility requirements set forth in
the Pooling and Servicing Agreement to serve as successor Servicer for
servicing compensation not in excess of the Servicing Fee, plus certain
excess amounts payable to the Seller.
A "Service Default" refers to any of the following events:
1. failure by the Servicer to make any payment, transfer or
deposit, or to give instructions to the Trustee to make any payment,
transfer or deposit, on the date the Servicer is required to do so
under the Pooling and Servicing Agreement, which is not cured within
a five business day grace period;
2. failure on the part of the Servicer duly to observe or
perform any other covenants or agreements of the Servicer in the
Pooling and Servicing Agreement which failure has a materially
adverse effect on the Certificateholders of any outstanding Series
and which continues unremedied for a period of 30 days after the
date written notice of such failure shall have been given to the
Servicer by the Trustee, or the Servicer delegates its duties under
the Pooling and Servicing Agreement, except as specifically
permitted thereunder;
3. any representation, warranty or certification made by the
Servicer in the Pooling and Servicing Agreement or in any
certificate delivered pursuant to the Pooling and Servicing
Agreement proves to have been incorrect in any material respect when
made, has a materially adverse effect on the rights of the
Certificateholders of any outstanding Series, and which materially
adverse effect continues for a period of 60 days after written
notice thereof shall have been given to the Servicer by the Trustee;
or
4. the occurrence of certain events of bankruptcy, insolvency
or receivership with respect to the Servicer.
Notwithstanding the foregoing, a delay in or failure of performance
referred to under clause (1) above for a period of ten business days or
referred to under clauses (2) or (3) for a period of 60 business days,
shall not constitute a Service Default if such delay or failure was caused
by an act of God or other similar occurrence. Upon the occurrence of any
such event, the Servicer shall not be relieved from using its best efforts
to perform its obligations in a timely manner in accordance with the terms
of the Pooling and Servicing Agreement and the Servicer shall provide the
Trustee, any Enhancement Provider, the Seller and the Certificateholders
prompt notice of such failure or delay by it, together with a description
of its efforts to so perform its obligations. The Servicer shall
immediately notify the Trustee in writing of any Service Default.
REPORTS
On each Distribution Date (including each Distribution Date that
corresponds to an Interest Payment Date or any Special Payment Date), the
Trustee will forward to each Certificateholder of record of any Series a
statement (the "Distribution Date Statement") prepared by the Servicer
setting forth certain information with respect to the Trust and the
Certificates of such Series, as specified in the related Series Supplement
and, with respect to any Series offered hereby, described in the related
Prospectus Supplement.
With respect to each Interest Payment Date or Special Payment Date,
the Distribution Date Statement with respect to any Series will include
the following information with respect to the Certificates of such Series:
(a) the total amount distributed on the Certificates of such Series; (b)
the amount of such distribution allocable to principal on the Certificates
of such Series; and (c) the amount of such distribution allocable to
interest on the Certificates of such Series.
On or before January 31 of each calendar year, the Trustee will
furnish (or cause to be furnished) to each person who at any time during
the preceding calendar year was a Certificateholder of record a statement
containing the information required to be provided by an issuer of
indebtedness under the Code for such preceding calendar year or the
applicable portion thereof during which such person was a
Certificateholder, together with such other customary information as is
required to be provided by an issuer of indebtedness under the Code and
such other customary information as is necessary to enable the
Certificateholders to prepare their tax returns. See "Certain Tax
Matters".
EVIDENCE AS TO COMPLIANCE
The Pooling and Servicing Agreement provides that on or before March
31 of each calendar year, the Servicer will cause a firm of nationally
recognized independent public accountants (who will also render other
services to the Servicer or the Seller) to furnish a report relating to
certain matters in connection with the servicing of CCC's portfolio of
wholesale receivables.
The Pooling and Servicing Agreement provides for delivery to the
Trustee on or before March 31 of each calendar year, of a statement signed
by an officer of the Servicer to the effect that the Servicer has fully
performed, or caused to be fully performed its obligations in all material
respects under the Pooling and Servicing Agreement throughout the
preceding year or, if there has been a default in the performance of any
such obligation, specifying the nature and status of the default.
Copies of all statements, certificates and reports furnished to the
Trustee may be obtained by a request in writing delivered to the Trustee.
AMENDMENTS
The Pooling and Servicing Agreement and any Series Supplement may be
amended by the Seller, the Servicer and the Trustee, without
Certificateholder consent, so long as any such action shall not, as
evidenced by an opinion of counsel, adversely affect in any material
respect the interests of the Certificateholders.
The Pooling and Servicing Agreement and any Series Supplement may be
amended by the Seller, the Servicer and the Trustee with the consent of
the holders of Certificates evidencing not less than 66 2/3% of the
aggregate unpaid principal amount of the Certificates of all adversely
affected Series for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of the Pooling and
Servicing Agreement or of modifying in any manner the rights of
Certificateholders. No such amendment, however, may (a) reduce in any
manner the amount of or delay the timing of distributions required to be
made to Certificateholders or deposits of amounts to be so distributed
without the consent of each affected Certificateholder, (b) change the
definition or the manner of calculating any Certificateholders' Interest
without the consent of each affected Certificateholder, (c) reduce the
amount available under any Enhancement without the consent of each
affected Certificateholder, (d) adversely affect the rating of any Series
or Class by each Rating Agency without the consent of the holders of
Certificates of such Series or Class evidencing not less than 66 2/3% of
the aggregate unpaid principal amount of the Certificates of such Series
or Class or (e) reduce the aforesaid percentage of the unpaid principal
amount of Certificates the holders of which are required to consent to any
such amendment without the consent of each Certificateholder. Promptly
following the execution of any amendment to the Pooling and Servicing
Agreement (other than an amendment described in the preceding paragraph),
the Trustee will furnish written notice of the substance of such amendment
to each Certificateholder.
The foregoing notwithstanding, each holder of a Certificate offered
hereby, by its acceptance thereof, will be deemed to have consented to an
amendment to the Pooling and Servicing Agreement that (i) provides that
funds in the Collection Account may be invested in any Eligible
Investments, (ii) provides that the Seller need not make any deposit to
the Collection Account in respect of the Repurchased Receivables Price of
any Designated Receivables repurchased from the Trust, (iii) otherwise
changes the procedures for removing Receivables from the Trust as
described under "Removal of Accounts", (iv) provides that, subject to the
limitations described herein, CCC need not deposit collections with
respect to any Collection Period in the Collection Account until the
related Distribution Date and (v) permits the designation of Automatic
Additional Accounts as described herein.
The Pooling and Servicing Agreement may not be amended in any manner
which materially adversely affects the interests of any Enhancement
Provider without its prior consent.
LIST OF CERTIFICATEHOLDERS
Upon written request of any three or more Certificateholders of
record the Trustee will afford such Certificateholders access during
business hours to the current list of Certificateholders of a Series or
all outstanding Series, as applicable, for purposes of communicating with
other Certificateholders of such Series or all outstanding Series, as
applicable, with respect to their rights under the Pooling and Servicing
Agreement. See "Book-Entry Registration" and "Definitive Certificates".
The Pooling and Servicing Agreement will not provide for any annual
or other meetings of Certificateholders.
THE TRUSTEE
Manufacturers and Traders Trust Company, a New York banking
corporation, will act as Trustee under the Pooling and Servicing
Agreement. The Trustee is located at One M&T Plaza, Buffalo, New York
14203. The Seller, the Servicer and their respective affiliates may from
time to time enter into normal banking and trustee relationships with the
Trustee and its affiliates. The Trustee may hold Certificates in its own
name with the same rights it would have if it were not the Trustee. In
addition, for purposes of meeting the legal requirements of certain local
jurisdictions, the Trustee shall have the power to appoint a co-trustee or
separate trustees of all or a part of the Trust. In the event of such
appointments, all rights, powers, duties and obligations shall be
conferred or imposed upon the Trustee and such separate trustee or
co-trustee jointly, or, in any jurisdiction in which the Trustee shall be
incompetent or unqualified to perform certain acts, singly upon such
separate trustee or co-trustee, who shall exercise and perform such
rights, powers, duties and obligations solely at the direction of the
Trustee.
The Trustee may resign at any time, in which event the Seller will
be obligated to appoint a successor Trustee. The Servicer may also remove
the Trustee if the Trustee ceases to be eligible to continue as such under
the Pooling and Servicing Agreement or if the Trustee becomes insolvent.
In such circumstances, the Servicer may appoint a successor Trustee. Any
resignation or removal of the Trustee and appointment of a successor
Trustee does not become effective until the acceptance of the appointment
by the successor Trustee.
DESCRIPTION OF THE RECEIVABLES PURCHASE AGREEMENT
The Receivables initially transferred to the Trust by CARCO were
acquired by CARCO and, subsequent to the CARCO Transfer, were acquired by
USA from CCC pursuant to the Receivables Purchase Agreement. The following
summary describes certain terms of the Receivables Purchase Agreement and
is qualified in its entirety by reference to the Receivables Purchase
Agreement.
SALE OR TRANSFER OF RECEIVABLES
Pursuant to the Receivables Purchase Agreement, CCC sold or
transferred to the Seller all of its right, title and interest in and to
all of the Receivables and the Collateral Security as of the Initial
Cut-Off Date and all of the Receivables thereafter created. In addition,
CCC has previously designated Additional Accounts, and has previously
conveyed to the Seller the Principal Receivables in such Additional
Accounts (together with the related Collateral Security) as of the
applicable Additional Cut-Off Date and all Receivables (and related
Collateral Security) created thereafter. As described herein, pursuant to
the Pooling and Servicing Agreement, the Seller has transferred to the
Trust all of its right, title and interest in and to the Receivables
Purchase Agreement.
In connection with the sale or transfer of the Receivables to the
Seller, CCC is required to indicate in its computer files that the
Receivables have been sold or transferred to the Seller, and that such
Receivables have been transferred by the Seller to the Trust. In addition,
CCC is required to provide to the Seller a computer file or microfiche or
written list containing a true and complete list of all such Receivables.
The records and agreements relating to the Accounts and Receivables have
not and will not be segregated by CCC from other documents and agreements
relating to other accounts and receivables and are not and will not be
stamped or marked to reflect the sale or transfer of the Receivables to
the Seller, but the computer records of CCC have been and will be marked
to evidence such sale or transfer. CCC has filed UCC financing statements
with respect to the Receivables meeting the requirements of Michigan state
law. See "Special Considerations -- Certain Legal Aspects" and "Certain
Legal Aspects of the Receivables -- Transfer of Receivables".
REPRESENTATIONS AND WARRANTIES
CCC has or will make certain representations and warranties to the
Seller to the effect, among other things, that as of the Initial Closing
Date and each Series Issuance Date, it was duly incorporated and in good
standing and that it has the authority to consummate the transactions
contemplated by the Receivables Purchase Agreement.
CCC has or will also make representations and warranties to the
Seller relating to the Receivables to the effect, among other things, that
(a) as of the Initial Closing Date and each Series Issuance Date, each of
the Accounts is an Eligible Account and (b) as of the date any new
Receivable is created, such Receivable is an Eligible Receivable. In the
event of a breach of any representation and warranty set forth in this
paragraph which results in an Ineligible Receivable and the requirement
that the Seller accept retransfer of such Ineligible Receivable pursuant
to the Pooling and Servicing Agreement, CCC shall repurchase such
Ineligible Receivable from the Seller on the date of such retransfer. The
purchase price for such Ineligible Receivable shall be the face amount
thereof, of which at least the amount of any cash deposit required to be
made by the Seller under the Pooling and Servicing Agreement in respect of
the retransfer of such Ineligible Receivable shall be paid in cash.
CCC has or will also make representations and warranties to the
Seller to the effect, among other things, that as of the Initial Closing
Date and each Series Issuance Date (a) the Receivables Purchase Agreement
constitutes a legal, valid and binding obligation of CCC and (b) the
Receivables Purchase Agreement constitutes a valid sale or transfer to the
Seller of all right, title and interest of CCC in and to the Receivables,
whether then existing or thereafter created in the Accounts, the
Collateral Security and the proceeds thereof which is effective as to each
Receivable upon the creation thereof. If the breach of any of the
representations and warranties described in this paragraph results in the
obligation of the Seller under the Pooling and Servicing Agreement to
accept retransfer of the Receivables, CCC will repurchase the Receivables
retransferred to CCC for an amount of cash equal to the amount of cash the
Seller is required to deposit under the Pooling and Servicing Agreement in
connection with such retransfer.
CCC has agreed to indemnify the Seller and to hold the Seller
harmless from and against any and all losses, damages and expenses
(including reasonable attorneys' fees) suffered or incurred by the Seller
if the foregoing representations and warranties are materially false.
CERTAIN COVENANTS
In the Receivables Purchase Agreement, CCC has covenanted that it
will perform its obligations under the agreements relating to the
Receivables and the Accounts in conformity with its current policies and
procedures relating to the Receivables and the Accounts.
CCC has covenanted further that, except for the sale and conveyances
under the Receivables Purchase Agreement and the interests created under
the Pooling and Servicing Agreement, CCC will not sell, pledge, assign or
transfer any interest in the Receivables to any other person. CCC also has
covenanted to defend and indemnify the Seller for any loss, liability or
expense incurred by the Seller in connection with a breach by CCC of any
of its representations, warranties or covenants contained in the
Receivables Purchase Agreement.
In addition, CCC has expressly acknowledged and consented to the
Seller's assignment of its rights relating to the Receivables under the
Receivables Purchase Agreement to the Trustee.
TERMINATION
The Receivables Purchase Agreement will terminate immediately after
the Trust terminates. In addition, if pursuant to certain provisions of
federal law CCC becomes party to any bankruptcy or similar proceeding
(other than as a claimant) and, if such proceeding is not voluntary and is
not dismissed within 60 days of its institution, CCC will immediately
cease to sell or transfer Receivables to the Seller and will promptly give
notice of such event to the Seller and to the Trustee.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES
On the Initial Closing Date, CCC sold and assigned the Receivables
to the Seller, which Receivables were immediately sold and assigned to the
Trust. The Seller has represented and warranted and will represent and
warranty on the Series Issuance Date with respect to each Series that such
sale to the Trust constituted a valid transfer and assignment to the Trust
of all right, title and interest of the Seller in and to the Receivables
and that, under the UCC (as in effect in Michigan), there exists a valid,
subsisting and enforceable first-priority perfected ownership interest in
the Receivables, in existence at the time of the formation of the Trust or
at the date of addition of any Additional Accounts, in favor of the Trust
and a valid, subsisting and enforceable first-priority perfected ownership
interest in the Receivables created thereafter in favor of the Trust on
and after their creation. However, the transfer of Receivables by the
Seller to the Trust could be deemed to create a security interest under
the UCC. For a discussion of the Trust's rights arising from these
representations and warranties not being satisfied, see "Description of
the Certificates -- Representations and Warranties".
Each of CCC and the Seller has represented that the Receivables are
"chattel paper" for purposes of the UCC as in effect in Michigan. If the
Receivables are deemed to be chattel paper and the transfer thereof by
either CCC to the Seller or by the Seller to the Trust is deemed either to
be a sale or to create a security interest, the UCC as in effect in
Michigan applies and the transferee must either take possession of the
chattel paper or file an appropriate financing statement or statements in
order to perfect its interest therein. Financing statements covering the
Receivables have been filed under the UCC as in effect in Michigan by both
the Seller and the Trust to perfect their respective interests in the
Receivables and continuation statements will be filed as required to
continue the perfection of such interests. The Receivables have not and
will not be stamped to indicate the interest of the Seller or the Trustee.
There are certain limited circumstances under the UCC and applicable
federal law in which prior or subsequent transferees of Receivables could
have an interest in such Receivables with priority over the Trust's
interest. A purchaser of the Receivables who gives new value and takes
possession of the instruments which evidence the Receivables (i.e., the
chattel paper) in the ordinary course of such purchaser's business may,
under certain circumstances, have priority over the interest of the Trust
in the Receivables. A tax or other government lien on property of CCC or
the Seller arising prior to the time a Receivable is conveyed to the Trust
may also have priority over the interest of the Trust in such Receivable.
Under the Receivables Purchase Agreement, CCC will warrant to the Seller,
and under the Pooling and Servicing Agreement, the Seller has warranted to
the Trust, that the Receivables have been transferred free and clear of
the lien of any third party. Each of CCC and the Seller has also
covenanted that it will not sell, pledge, assign, transfer or grant any
lien on any Receivable or, except as described under "Description of the
Certificates -- The Seller's Certificate", the Seller's Certificate (or
any interest therein) other than to the Trust. In addition, while CCC is
the Servicer, cash collections on the Receivables may, under certain
circumstances, be commingled with the funds of CCC prior to each
Distribution Date and, in the event of the bankruptcy of CCC, the Trust
may not have a perfected interest in such collections.
CERTAIN MATTERS RELATING TO BANKRUPTCY
CCC has warranted to the Seller in the Receivables Purchase
Agreement that the sale of the Receivables by it to the Seller is a valid
sale of the Receivables to the Seller. In addition, CFC, CCC and the
Seller have agreed to treat the transactions described herein as a sale of
the Receivables to the Seller, and CCC has or will take all actions that
are required under Michigan law to perfect the Seller's ownership interest
in the Receivables. Notwithstanding the foregoing, if CCC or CFC were to
become a debtor in a bankruptcy case and a creditor or
trustee-in-bankruptcy of such debtor or such debtor itself were to take
the position that the sale of Receivables from such debtor to the Seller
should be recharacterized as a pledge of such Receivables to secure a
borrowing from such debtor, then delays in payments of collections of
Receivables to the Seller could occur or (should the court rule in favor
of any such trustee, debtor in possession or creditor) reductions in the
amount of such payments could result. See "Special Considerations --
Certain Legal Aspects".
In a recent case decided by the U.S. Court of Appeals for the Tenth
Circuit, Octagon Gas System, Inc. v. Rimmer, the court determined that
"accounts", a defined under the Uniform Commercial Code, would be included
in the bankruptcy estate of a transferor regardless of whether the
transfer is treated as a sale or a secured loan. Although the Receivables
are likely to be viewed as "chattel paper", as defined under the Uniform
Commercial Code, rather than as accounts, the Octagon holding is equally
applicable to chattel paper. The circumstances under which the Octagon
ruling would apply are not fully known and the extent to which the Octagon
decision will be followed in other courts or outside of the Tenth Circuit
is not certain. If the holding in the Octagon case were applied in a CCC
bankruptcy, however, even if the transfer of Receivables to the Seller and
the Trust were treated as a sale, the Receivables would be part of CCC's
bankruptcy estate and would be subject to claims of certain creditors, and
delays and reductions in payments to the Seller and Certificateholders
could result.
In addition, if CFC or CCC were to become a debtor in a bankruptcy
case and a creditor or trustee-in-bankruptcy of such debtor or such debtor
itself were to request a court to order that CFC and/or CCC should be
substantively consolidated with the Seller, delays in payments on the
Certificates could result. Should the bankruptcy court rule in favor of
any such creditor, trustee-in-bankruptcy or such debtor, reductions in
such payments could result.
The Seller has warranted to the Trust that the transfer of the
Receivables to the Trust is a sale of the Receivables to the Trust. The
Seller has or will take all actions that are required under Michigan law
to perfect the Trust's ownership interest in the Receivables and the
Seller has warranted to the Trust that the Trust will at all times have a
first priority perfected ownership interest therein and, with certain
exceptions, in proceeds thereof. Nevertheless, a tax or government lien on
property of CCC or the Seller arising prior to the time a Receivable is
conveyed to the Trust may have priority over the interest of the Trust in
such Receivable. Each of CARCO's and USA's certificate of incorporation
provides that it shall not file a voluntary application for relief under
Title 11 of the United States Code (the "Bankruptcy Code") without the
affirmative vote of its two independent directors. Pursuant to the Pooling
and Servicing Agreement, the Trustee, all Certificateholders and any
Enhancement Provider will covenant that they will not at any time
institute against the Seller any bankruptcy, reorganization or other
proceedings under any federal or state bankruptcy or similar law. In
addition, certain other steps will be taken to avoid the Seller's becoming
a debtor in a bankruptcy case. Notwithstanding such steps, if the Seller
were to become a debtor in a bankruptcy case, and a bankruptcy trustee for
the Seller or the Seller as debtor in possession or a creditor of the
Seller were to take the position that the transfer of the Receivables from
the Seller to the Trust should be recharacterized as a pledge of such
Receivables, then delays in payments on the Certificates or (should the
court rule in favor of any such trustee, debtor in possession or creditor)
reductions in the amount of such payments could result.
The Seller does not intend to file, and CFC has agreed that it will
not cause the Seller to file, a voluntary application for relief under the
Bankruptcy Code or any similar applicable state law with respect to the
Seller so long as the Seller is solvent and does not foresee becoming
insolvent.
If CFC, CCC or the Seller were to become a debtor in a bankruptcy
case causing a Reinvestment Event or an Early Amortization Event to occur
with respect to the Certificates of each Series, then, pursuant to the
Receivables Purchase Agreement, new Receivables would no longer be
transferred to the Seller and, pursuant to the Pooling and Servicing
Agreement, only collections on Receivables theretofore sold to the Seller
and transferred to the Trust would be available to be applied to pay
interest accruing on the Certificates and to pay the principal amount of
the Certificates. Under such circumstances, the Servicer is obligated to
allocate all collections on Principal Receivables to the oldest principal
balance first. If such allocation method were to be altered by the
bankruptcy court, the rate of payment on the Certificates might be
adversely affected. In addition, distributions in respect of principal on
each Certificate would not be subject to any applicable Controlled
Distribution Amount.
The occurrence of certain events of bankruptcy, insolvency or
receivership with respect to the Servicer will result in a Service
Default, which Service Default, in turn, may result in a Reinvestment
Event or an Early Amortization Event with respect to a Series. If no other
Service Default other than the commencement of such bankruptcy or similar
event exists, a trustee-in-bankruptcy of the Servicer may have the power
to prevent either the Trustee or the Certificateholders from appointing a
successor Servicer.
Payments made in respect of repurchases of Receivables by CCC or the
Seller pursuant to the Pooling and Servicing Agreement may be recoverable
by CCC or the Seller, as debtor in possession, or by a creditor or a
trustee-in-bankruptcy of CCC or the Seller as a preferential transfer from
CCC or the Seller if such payments are made within one year prior to the
filing of a bankruptcy case in respect of CCC.
CARCO does not intend to file, and CFC has agreed that it will not
cause CARCO to file, a voluntary application for relief under the
Bankruptcy Code or any similar applicable state law with respect to CARCO
so long as CARCO is solvent and does not foresee becoming insolvent.
CERTAIN TAX MATTERS
FEDERAL INCOME TAX CONSEQUENCES
Set forth below is a discussion of federal income tax consequences
to holders of the Certificates. This discussion does not purport to deal
with all aspects of federal income taxation that may be relevant to
holders of the Certificates in light of their personal investment
circumstances, nor to certain types of holders subject to special
treatment under the federal income tax laws (for example, banks, life
insurance companies and tax-exempt organizations). Prospective investors
are advised to consult their own tax advisors with regard to the federal
income tax consequences of holding and disposing of the Certificates, as
well as the tax consequences arising under the laws of any state, foreign
country or other jurisdiction. This discussion is based upon present
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
the regulations promulgated thereunder, and judicial or ruling authority,
all of which are subject to change, which change may be retroactive. No
ruling on any of the issues discussed below will be sought from the
Internal Revenue Service (the "IRS").
The discussion assumes that a Certificate is issued in registered
form, has all payments denominated in U.S. dollars, has a term that
exceeds one year, and does not bear "contingent interest" as defined in
Section 871(h)(4) of the Code. Moreover, except as provided below, the
discussion assumes that the interest on the Certificate meets the
requirements for "qualified stated interest" under Treasury regulations
(the "OID regulations") relating to original issue discount ("OID"), and
that any OID on the Certificate (i.e., any excess of the principal amount
of the Certificate over its issue price) does not exceed a de minimis
amount (i.e., 1/4% of its principal amount multiplied by the number of
full years until its maturity date), all within the meaning of the OID
regulations. If those conditions are not satisfied, additional tax
considerations will be disclosed in the applicable Prospectus Supplement.
Treatment of the Certificates as Indebtedness of the Seller. The
Seller and the holders of Certificates offered hereby will express in the
Pooling and Servicing Agreement the intent that, for federal, state and
local income and franchise tax purposes and Michigan single business tax
purposes, the Certificates will be indebtedness of the Seller secured by
the Receivables and any other Trust assets allocable to the Certificates.
USA, by the acceptance of the assignment of the Pooling and Servicing
Agreement agreed, and each Certificateholder, by the acceptance of a
Certificate will agree, to treat the Certificates as indebtedness of the
Seller for federal, state and local income and franchise tax purposes and
Michigan single business tax purposes. However, the Pooling and Servicing
Agreement generally refers to the transfer of the Receivables as a "sale",
and because different criteria are used in determining the nontax
accounting treatment of the transaction, the Seller will treat the Pooling
and Servicing Agreement, for certain nontax purposes, as effecting a
transfer of an ownership interest in the Receivables and not as creating a
debt obligation of the Seller.
A basic premise of federal income tax law is that the economic
substance of a transaction generally determines the tax consequences. The
form of a transaction, while a relevant factor, is not conclusive evidence
of its economic substance. In appropriate circumstances, the courts have
allowed taxpayers, as well as the IRS, to treat a transaction in
accordance with its economic substance, as determined under federal income
tax law, even though the participants in the transaction have
characterized it differently for nontax purposes.
The determination of whether the economic substance of a property
transfer is a sale or a loan secured by the transferred property has been
made by the IRS and the courts on the basis of numerous factors designed
to determine whether the transferor has relinquished (and the transferee
has obtained) substantial incidents of ownership in the property. Among
those factors, the primary factors examined are whether the transferee has
the opportunity to gain if the property increases in value, and has the
risk of loss if the property decreases in value. Based upon its analysis
of such factors, Cravath, Swaine & Moore, special tax counsel to the
Seller and the Trust ("Tax Counsel"), is of the opinion that for federal
income tax purposes the Seller will properly be treated as the owner of
the Receivables and any other Trust assets allocable to the Certificates
and, accordingly, the Certificates will properly be characterized as
indebtedness of the Seller that is secured by the Receivables and such
other assets.
Interest Income to Certificateholders. Assuming the Certificates are
debt obligations for federal income tax purposes, they will not be
considered issued with OID (except as discussed below or in the applicable
Prospectus Supplement). Interest thereon will be taxable as ordinary
interest income when received by Certificateholders utilizing the
cash-basis method of accounting and when accrued by Certificateholders
utilizing the accrual method of accounting. Under the OID regulations, a
holder of a Certificate issued with a de minimis amount of OID must
include such OID in income, on a pro rata basis, as principal payments are
made on the Certificate. It is believed that any Asset Composition Premium
paid as a result of an Asset Composition Event will be taxable as
contingent interest when it becomes fixed and unconditionally payable. A
Certificateholder who buys a Certificate for less than its principal
amount will be subject to the "market discount" rules of the Code, and a
Certificateholder who buys a Certificate for more than its principal
amount will be subject to the premium amortization rules of the Code.
The Certificates of a particular Series or Class would probably be
treated under the OID regulations as being issued with OID if the interest
rate payable on the Certificates for any particular period is limited
(notwithstanding the otherwise applicable interest formula) to the average
interest rate currently payable on the Receivables. This result would not
significantly affect an accrual basis holder of Certificates (which holder
would accrue interest income without regard to the limitation) but would
somewhat accelerate taxable income to a cash basis holder by in effect
requiring such holder to report interest income on the accrual basis.
The Trustee will be required to report annually to the IRS, and to
each Certificateholder of record, the amount of interest paid on the
Certificates (and the amount of interest withheld for federal income
taxes, if any) for each calendar year, except as to exempt holders
(generally, holders that are corporations, tax-exempt organizations,
qualified pension and profit-sharing trusts, individual retirement
accounts, or nonresident aliens who provide certification as to their
status as nonresidents). Accordingly, each nonexempt Certificateholder
will be required to provide, under penalties of perjury, a certificate on
IRS Form W-9 containing such holder's name, address, federal taxpayer
identification number and a statement that such holder is not subject to
backup withholding. Should a nonexempt Certificateholder fail to provide
the required certification, the Trustee (or the Participants or Indirect
Participants) will be required to withhold (or cause to be withheld) 31%
of the interest (and principal) otherwise payable to the holder, and remit
the withheld amounts to the IRS as a credit against the holder's federal
income tax liability.
Possible Classification of the Trust as a Partnership or
Association. As described above, it is the opinion of Tax Counsel that the
Certificates offered hereby will properly be characterized as debt of the
Seller for federal income tax purposes. However, such opinion is not
binding on the IRS and thus no assurance can be given that such a
characterization will prevail.
For example, if the IRS were to contend successfully that the
Certificates offered hereby were not debt of the Seller for federal income
tax purposes, the Trust might be classified for federal income tax
purposes as a partnership, an association taxable as a corporation or a
"publicly traded partnership" taxable as a corporation. If the
Certificates are treated as interests in such a partnership, the
partnership would in all likelihood be treated as a "publicly traded
partnership". A publicly traded partnership is, in general, taxable as a
corporation. If the partnership were nevertheless not taxable as a
corporation (because of an exception for an entity whose income is
interest income that is not derived in the conduct of a financial
business) it would not be subject to federal income tax. Rather, each item
of income, gain, loss, deduction and credit generated through the
ownership of the Receivables by the partnership would be passed through to
the partners in the partnership (including the Certificateholders)
according to their respective interests therein.
The income reportable by the Certificateholders as partners in such
a partnership could differ from the income reportable by the
Certificateholders as holders of debt. However, except as provided below,
it is not expected that such differences would be material. If the
Certificateholders were treated as partners, a cash basis
Certificateholder might be required to report income when it accrues to
the partnership rather than when it is received by the Certificateholder.
Moreover, if the Certificates are interests in a partnership, an
individual's share of expenses of the partnership would be miscellaneous
itemized deductions that in the aggregate are allowed only to the extent
they exceed two percent of the individual's adjusted gross income (and are
subject to certain other limitations), meaning that the individual might
be taxed on a greater amount of income than the stated interest on the
Certificates. Finally, if any Certificates are treated as equity interests
in a partnership in which other Certificates are debt, all or part of a
tax-exempt investor's share of income from the Certificates that are
treated as equity would be treated as unrelated debt-financed income under
the Code taxable to the investor.
If, alternatively, the Trust were treated as either an association
taxable as a corporation or a "publicly traded partnership" taxable as a
corporation, the resulting entity would be subject to federal income taxes
at corporate tax rates on its taxable income generated by ownership of the
Receivables. Moreover, distributions by the entity would probably not be
deductible in computing the entity's taxable income and all or part of
distributions to Certificateholders would probably be treated as dividend
income to the Certificateholders. Such an entity-level tax could result in
reduced distributions to Certificateholders and the Certificateholders
could be liable for a share of such a tax.
Because the Seller will treat the Certificates offered hereby as
indebtedness for federal income tax purposes, the Trustee (and
Participants and Indirect Participants) will not comply with the tax
reporting requirements that would apply under these alternative
characterizations of the Certificates.
Foreign Investors. Tax Counsel has given its opinion that the
Certificates will properly be classified as debt of the Seller for federal
income tax purposes. If the Certificates are so treated:
(a) interest paid or accrued to a nonresident alien or foreign
corporation or partnership would be exempt from U.S. withholding
taxes (including backup withholding taxes); provided that the holder
complies with applicable identification requirements (and does not
actually or constructively own 10% or more of the voting stock of
the Seller and is not a controlled foreign corporation with respect
to the Seller). Applicable identification requirements will be
satisfied if there is delivered to a securities clearing
organization (or bank or other financial institution that holds the
Certificates on behalf of the customer in the ordinary course of its
trade or business) (i) IRS Form W-8 signed under penalties of
perjury by the beneficial owner of such Certificates stating that
the holder is not a U.S. person and providing such holder's name and
address, (ii) IRS Form 1001 signed by the beneficial owner of such
Certificates or such owner's agent claiming exemption from
withholding under an applicable tax treaty, or (iii) IRS Form 4224
signed by the beneficial owner of such Certificates or such owner's
agent claiming exemption from withholding of tax on income connected
with the conduct of a trade or business in the United States;
provided that in any such case (x) the applicable form is delivered
pursuant to applicable procedures and is properly transmitted to the
United States entity otherwise required to withhold tax and (y) none
of the entities receiving the form has actual knowledge that the
holder is a U.S. person or that any certification on the form is
false;
(b) a holder of a Certificate who is a nonresident alien or
foreign corporation will not be subject to United States federal
income tax on gain realized on the sale, exchange or redemption of
such Certificate, provided that (i) such gain is not effectively
connected to a trade or business carried on by the holder in the
United States, (ii) in the case of a holder that is an individual,
such holder is not present in the United States for 183 days or more
during the taxable year in which such sale, exchange or redemption
occurs and (iii) in the case of gain representing accrued interest,
the conditions described in clause (a) are satisfied; and
(c) a Certificate held by an individual who at the time of
death is a nonresident alien will not be subject to United States
federal estate tax as a result of such individual's death if,
immediately before his death, (i) the individual did not actually or
constructively own 10% or more of the voting stock of the Seller and
(ii) the holding of such Certificate was not effectively connected
with the conduct by the decedent of a trade or business in the
United States.
If the IRS were to contend successfully that the Certificates are
interests in a partnership (not taxable as a corporation), a
Certificateholder that is a nonresident alien or foreign corporation might
be required to file a U.S. individual or corporate income tax return and
pay tax on its share of partnership income at regular U.S. rates,
including, in the case of a corporation, the branch profits tax (and would
be subject to withholding tax on its share of partnership income). If the
Certificates are recharacterized as interests in an association taxable as
a corporation or a "publicly traded partnership" taxable as a corporation,
to the extent distributions on the Certificates were treated as dividends,
a nonresident alien individual or foreign corporation would generally be
taxed on the gross amount of such dividends (and subject to withholding)
at a rate of 30% unless such rate were reduced by an applicable treaty.
STATE AND LOCAL TAX CONSEQUENCES
The activities to be undertaken by the Servicer in servicing and
collecting the Receivables will take place in Michigan. The State of
Michigan imposes a state individual income tax and a single business tax
which is based partially upon the net income of corporations, partnerships
and other entities doing business in the State of Michigan. This
discussion is based upon present provisions of Michigan statutes and the
regulations promulgated thereunder, and applicable judicial or ruling
authority, all of which are subject to change, which change may be
retroactive. No ruling on any of the issues discussed below will be sought
from the Michigan Department of Treasury.
If the Certificates are treated as debt of the Seller for federal
income tax purposes, in the opinion of Allan L. Ronquillo, Esq., Vice
President and General Counsel of the Seller, Michigan tax counsel to the
Seller and the Trust ("Michigan Tax Counsel"), this treatment will also
apply for Michigan tax purposes. Pursuant to this treatment, the Trust
will not be subject to the Michigan single business tax and
Certificateholders not otherwise subject to Michigan tax would not become
subject to such tax solely because of their ownership of the Certificates.
Certificateholders already subject to taxation in Michigan, however, could
be required to pay tax on the income generated from ownership of these
Certificates.
In the alternative, if the Trust is treated as a partnership (not
taxable as a corporation) for federal income tax purposes, in the opinion
of Michigan Tax Counsel, the same treatment should also apply for Michigan
tax purposes. In such case, the resulting constructive partnership should
not be treated as doing business in Michigan but rather should be treated
as a passive holder of investments and, as a result, should not be subject
to the Michigan single business tax (which, if applicable, could result in
reduced distributions to Certificateholders). The Certificateholders also
should not be subject to Michigan single business tax on the income
received through the partnership.
Under current law, Certificateholders that are nonresidents of
Michigan and that are not otherwise subject to Michigan income tax should
not be subject to Michigan income tax on the income from the constructive
partnership. Under current law corporate Certificateholders are not
subject to Michigan income tax. In any event, classification of the
arrangement as a "partnership" would not cause a Certificateholder not
otherwise subject to taxation in Michigan to pay Michigan tax on income
beyond that derived from the Certificates.
If the Certificates are instead treated as ownership interests in an
association or "publicly traded partnership", the hypothetical entity
should not be subject to the Michigan single business tax (which, if
applicable, could result in reduced distributions to Certificateholders).
A Certificateholder not otherwise subject to tax in Michigan would not
become subject to Michigan tax as a result of its mere ownership of such
an interest.
Because each state's income tax laws vary, it is impossible to
predict the income tax consequences to the Certificateholders in all of
the state taxing jurisdictions in which they are already subject to tax.
Certificateholders are urged to consult their own tax advisors with
respect to state income and franchise taxes.
ERISA CONSIDERATIONS
GENERAL
Section 406 of ERISA and Section 4975 of the Code prohibit a
pension, profit-sharing or other employee benefit plan from engaging in
certain transactions involving "plan assets" with persons that are
"parties in interest" under ERISA or "disqualified persons" under the Code
with respect to the plan. A violation of these "prohibited transaction"
rules may generate excise tax and other liabilities under ERISA and the
Code for such person. For example, a prohibited transaction would arise,
unless an exemption were available, if the Certificates of a Series or
Class were viewed as debt of the Seller and the Seller were a disqualified
person or party in interest with respect to a plan that acquired
Certificates of such Series or Class.
Moreover, additional prohibited transactions could arise if the
assets of the Trust were deemed to constitute assets of any plan that
owned Certificates. The Department of Labor ("DOL") has issued a final
regulation (the "Plan Assets Regulation") concerning the definition of
what constitutes the "plan assets" of an employee benefit plan subject to
ERISA, the Code or an individual retirement account ("IRA") (collectively
referred to as "Benefit Plans"). Under the Plan Assets Regulation the
assets and properties of certain corporations, partnerships and certain
other entities in which a Benefit Plan acquires an "equity interest" could
be deemed to be assets of the Benefit Plan in certain circumstances.
Accordingly, if Benefit Plans purchase Certificates, the Trust could be
deemed to hold plan assets of such Benefit Plan unless one of the
exceptions under the Plan Assets Regulation is applicable to the Trust.
The Plan Assets Regulation only applies to the purchase by a Benefit
Plan of an "equity interest" in an entity. Assuming that the Certificates
of a Series or Class are equity interests, the Plan Assets Regulation
contains an exception that provides that if a Benefit Plan acquires a
"publicly-offered security", the issuer of the security is not deemed to
hold plan assets. A publicly-offered security is a security that is (i)
freely transferable, (ii) part of a class of securities that is owned by
100 or more investors independent of the issuer and of one another and
(iii) either is (A) part of a class of securities registered under Section
12(b) or 12(g) of the Exchange Act or (B) sold to the plan as part of an
offering of securities to the public pursuant to an effective registration
statement under the Securities Act and the class of securities of which
such security is a part is registered under the Exchange Act within 120
days (or such later time as may be allowed by the Securities and Exchange
Commission) after the end of the fiscal year of the issuer during which
the offering of such securities to the public occurred.
The Certificates of each Series and Class must be separately tested
under, and may each meet, the criteria of publicly-offered securities as
described above. There are no restrictions imposed on the transfer of the
Certificates offered hereby; and such Certificates will be sold as part of
an offering pursuant to an effective registration statement under the
Securities Act, and then will be timely registered under the Exchange Act.
Based on information provided by the underwriter or placement agent for
Certificates of any Series or Class offered hereby, the Seller will notify
the Trustee as to whether or not Certificates of such Series or, if such
Series consists of more than one Class, each such Class will be held by at
least 100 separately named persons at the conclusion of the offering,
unless the related Prospectus Supplement otherwise provides. The Seller
will not determine whether the 100-investor requirement of the exception
for publicly offered securities is satisfied as to the Certificates of any
Series or Class. Prospective purchasers may obtain a copy of the
notification described in the third preceding sentence from the Trustee at
One M&T Plaza, Buffalo, New York 14203.
If the Certificates of any Series or Class offered hereby fail to
meet the criteria of publicly-offered securities and the Trust's assets
are deemed to include assets of Benefit Plans that are holders of such
Certificates, transactions involving the Trust and "parties in interest"
or "disqualified persons" with respect to such plans might be prohibited
under Section 406 of ERISA and Section 4975 of the Code unless an
exemption is applicable. Thus, for example, if a participant in any
Benefit Plan is an obligor or guarantor of one of the Receivables, under
DOL interpretations the purchase of such Certificates by such plan could
constitute a prohibited transaction. There are three class exemptions
issued by the DOL that may apply in such event: DOL Prohibited Transaction
Exemption 84-14 (Class Exemption for Plan Asset Transactions Determined by
Independent Qualified Professional Asset Managers), 91-38 (Class Exemption
for Certain Transactions Involving Bank Collective Investment Funds) and
90-1 (Class Exemption for Transactions Involving Insurance Company Pooled
Separate Accounts). These exemptions, even if all of the conditions
specified therein are satisfied, would probably not apply to all
transactions involving the Trust's assets.
In light of the foregoing, fiduciaries of a Benefit Plan considering
the purchase of Certificates of any Series or Class offered hereby should
consult their own counsel as to whether the assets of the Trust which are
represented by such Certificates would be considered plan assets, and the
consequences that would apply if the Trust's assets were considered plan
assets.
In addition, based on the reasoning of the United States Supreme
Court's recent decision in John Hancock Life Ins. Co. v. Harris Trust and
Sav. Bank, 144 S.Ct. 517 (1993), under certain circumstances assets in the
general account of an insurance company may be deemed to be plan assets
for certain purposes, and under such reasoning a purchase of Certificates
with assets of an insurance company's general account might be subject to
the prohibited transaction rules described above.
Unless otherwise provided in the applicable Prospectus Supplement,
if the Seller does not notify the Trustee, as described above, that the
Certificates of any particular Series or Class will be expected to be held
by at least 100 persons, the Certificates of such Series or Class, as the
case may be, may not be acquired by any Benefit Plan or by any entity
investing assets that are treated as assets of a Benefit Plan.
Furthermore, in that case, the Pooling and Servicing Agreement, the Series
Supplement and each such Certificate will provide that each holder of such
Certificate shall be deemed to have represented and warranted that it is
not a Benefit Plan and is not purchasing such Certificate on behalf of a
Benefit Plan or with assets that are treated as assets of a Benefit Plan.
EXPERTS
The financial statements of the Trust as of December 31, 1993 and
1992 and for each of the two years in the period ended December 31, 1993
and for the period May 31, 1991 (inception) through December 31, 1991
incorporated in this Prospectus by reference from the Trust's Annual
Report on Form 10-K for the year ended December 31, 1993, have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, which is incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
PLAN OF DISTRIBUTION
The Seller may sell Certificates offered hereby in any of three
ways: (i) through underwriters or dealers; (ii) directly to one or more
purchasers; or (iii) through agents. The related Prospectus Supplement
will set forth the terms of the offering of any Series Certificates
offered hereby, including, without limitation, the names of any
underwriters, the purchase price of such Certificates and the proceeds to
the Seller from such sale, any underwriting discounts and other items
constituting underwriter's compensation, any initial public offering price
and any discounts or concessions allowed or reallowed or paid to dealers.
If underwriters are used in a sale of any Certificates of a Series
offered hereby, such Certificates will be acquired by the underwriters for
their own account and may be resold from time to time in one or more
transactions, including negotiated transactions, at a fixed public
offering price or at varying prices to be determined at the time of sale
or at the time of commitment therefor. Such Certificates may be offered to
the public either through underwriting syndicates represented by managing
underwriters or by underwriters without a syndicate. Unless otherwise set
forth in the related Prospectus Supplement, the obligations of the
underwriters to purchase such Certificates will be subject to certain
conditions precedent, and the underwriters will be obligated to purchase
all of such Certificates if any of such Certificates are purchased. Any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
Certificates of a Series offered hereby may also be offered and
sold, if so indicated in the related Prospectus Supplement, in connection
with a remarketing upon their purchase, in accordance with a redemption or
repayment pursuant to their terms, by one or more firms ("remarketing
firms") acting as principals for their own accounts or as agents for the
seller. Any remarketing firm will be identified and the terms of its
agreement, if any, with the Seller and its compensation will be described
in the related Prospectus Supplement. Remarketing firms may be deemed to
be underwriters in connection with the Certificates remarketed thereby.
Certificates may also be sold directly by the Seller or through
agents designated by the Seller from time to time. Any agent involved in
the offer or sale of Certificates will be named, and any commissions
payable by the Seller to such agent will be set forth, in the related
Prospectus Supplement. Unless otherwise indicated in the related
Prospectus Supplement, any such agent will act on a best efforts basis for
the period of its appointment.
Any underwriters, agents or dealers participating in the
distribution of Certificates may be deemed to be underwriters, and any
discounts or commissions received by them on the sale or resale of
Certificates may be deemed to be underwriting discounts and commissions,
under the Securities Act. Agents and underwriters may be entitled under
agreements entered into with the Seller and CFC to indemnification by the
Seller and CFC against certain civil liabilities, including liabilities
under the Securities Act, or to contribution with respect to payments that
the agents or underwriters may be required to make in respect thereof.
Agents and underwriters may be customers of, engage in transactions with,
or perform services for, the Seller or its affiliates in the ordinary
course of business.
LEGAL MATTERS
Certain legal matters relating to the Certificates offered hereby
will be passed upon for USA by Allan L. Ronquillo, Esq., Vice President
and General Counsel of Chrysler Financial Corporation, and for any
underwriters, agents or dealers by the counsel named in the applicable
Prospectus Supplement. Certain federal income tax and ERISA matters will
be passed upon for USA and the Trust by the counsel named in the
applicable Prospectus Supplement.
<PAGE>
INDEX OF PRINCIPAL TERMS
Term Page
Accounts.......................................................... 1
Accumulation Period............................................... 9
Addition Date..................................................... 32
Additional Accounts............................................... 35
Additional Cut-Off Date........................................... 32
Adjusted Invested Amount.......................................... 41
Adjustment Payment................................................ 44
Auction Vehicles.................................................. 21
Automatic Additional Accounts..................................... 35
Automatic Removal Date............................................ 38
Automatic Removed Accounts........................................ 38
Bankruptcy Code................................................... 54
Benefit Plans..................................................... 59
CARCO............................................................. 3
CARCO Transfer.................................................... 18
CCC............................................................... 1
Cede.............................................................. 2
CEDEL............................................................. 28
Certificateholder................................................. 28
Certificateholders................................................ 2
Certificateholders' Interest...................................... 5
Certificates...................................................... 1
CFC............................................................... 3
Chrysler.......................................................... 4
Citibank.......................................................... 27
Class............................................................. 1
Code.............................................................. 55
Collateral Security............................................... 3
Collection Account................................................ 38
Collection Period................................................. 6
Commission........................................................ 2
Controlled Amortization Amount.................................... 10
Controlled Amortization Period.................................... 9
Controlled Deposit Amount......................................... 9
Cooperative....................................................... 29
Dealer Overconcentrations......................................... 35
Dealer Trouble.................................................... 23
Dealers........................................................... 4
Defaulted Amount.................................................. 43
Defaulted Receivables............................................. 43
Definitive Certificates........................................... 30
Depository........................................................ 25
Designated Accounts............................................... 36
Designated Balance................................................ 36
Designated Receivables............................................ 37
Determination Date................................................ 12
Disclosure Document............................................... 31
Distribution Date Statement....................................... 49
DOL............................................................... 59
DTC............................................................... 2
Early Amortization Event.......................................... 45
Early Amortization Period......................................... 11
Eligible Account.................................................. 34
Eligible Accounts................................................. 4
Eligible Dealer................................................... 34
Eligible Deposit Account.......................................... 38
Eligible Institution.............................................. 38
Eligible Investments.............................................. 38
Eligible Portfolio................................................ 24
Eligible Receivable............................................... 34
Eligible Receivables.............................................. 4
Enhancement....................................................... 3
Enhancement Provider.............................................. 33
ERISA............................................................. 14
Euroclear......................................................... 29
Euroclear Operator................................................ 29
Euroclear Participants............................................ 29
Excess Funded Amount.............................................. 8
Excess Funding Account............................................ 8
Excess Principal Collections...................................... 41
Exchange Act...................................................... 2
Excluded Series................................................... 12
Expected Payment Date............................................. 7
finance hold...................................................... 21
<PAGE>
Term Page
Fleet Receivables................................................. 20
Foreign Agency Depositaries....................................... 27
Fully Reinvested Date............................................. 10
Holders........................................................... 30
IML............................................................... 28
Indirect Participants............................................. 28
Ineligible Receivables............................................ 32
Initial Closing Date.............................................. 31
Initial Cut-Off Date.............................................. 3
Initial Invested Amount........................................... 41
Insolvency Laws................................................... 19
Instalment Balance................................................ 22
Instalment Balance Amount......................................... 35
Interest Collections.............................................. 4
Interest Funding Account.......................................... 7
Interest Payment Dates............................................ 7
Invested Amounts.................................................. 33
Investor Defaulted Amount......................................... 44
IRA............................................................... 59
IRS............................................................... 55
Michigan Tax Counsel.............................................. 58
Miscellaneous Payments............................................ 40
Monthly Payment Rate.............................................. 37
Monthly Servicing Fee............................................. 48
Moody's........................................................... 38
Morgan............................................................ 27
New Issuance...................................................... 5
New Vehicles...................................................... 21
OID............................................................... 55
OID Regulations................................................... 55
Overconcentration Amount.......................................... 35
Paired Series..................................................... 12
Participants...................................................... 28
Plan Assets Regulation............................................ 59
Pool Balance...................................................... 30
Pooling and Servicing Agreement................................... 3
Prime Rate........................................................ 22
Principal Shortfalls.............................................. 41
Principal Collections............................................. 4
Principal Commencement Date....................................... 7
Principal Funding Account......................................... 9
Principal Receivables............................................. 6
Principal Terms................................................... 31
Prospectus Supplement............................................. 1
Rating Agency..................................................... 18
Receivables....................................................... 1
Receivables Purchase Agreement.................................... 4
Registration Statement............................................ 2
Reinvestment Event................................................ 44
Reinvestment Period............................................... 10
Reinvestment Period Commencement Date............................. 10
remarketing firms................................................. 60
Removal and Repurchase Date....................................... 37
Removal Commencement Date......................................... 36
Removal Date...................................................... 36
Removal Notice.................................................... 36
Removed Account................................................... 37
Repurchased Receivables........................................... 37
Repurchased Receivables Purchase Price............................ 37
Required Participation Amount..................................... 36
Required Participation Percentage................................. 36
Revolving Period.................................................. 8
Securities Act.................................................... 2
Seller............................................................ 1
Seller's Certificate.............................................. 30
Seller's Interest................................................. 1
Series............................................................ 1
Series Allocable Defaulted Amount................................. 40
Series Allocable Interest Collections............................. 40
Series Allocable Miscellaneous Payments........................... 40
Series Allocable Principal Collections............................ 40
Series Allocation Percentage...................................... 41
Series Cut-off Date............................................... 8
Series Issuance Date.............................................. 32
Series Supplement................................................. 5
Series Termination Date........................................... 46
Service Default................................................... 48
<PAGE>
Term Page
Service Transfer.................................................. 48
Servicer.......................................................... 1
Servicing Fee..................................................... 47
Special Payment Date.............................................. 11
Standard & Poor's................................................. 38
Supplemental Certificate.......................................... 30
Tax Counsel....................................................... 55
Tax Opinion....................................................... 31
Terms and Conditions.............................................. 29
Transfer Date..................................................... 32
Transfer Deposit Amount........................................... 33
Trust............................................................. 1
Trust Adjusted Invested Amount.................................... 41
Trust Available Subordinated Amount............................... 33
Trustee........................................................... 3
U.S. Wholesale Portfolio.......................................... 20
UCC............................................................... 15
Unallocated Principal Collections................................. 41
USA............................................................... 1
Used Vehicles..................................................... 21
Vehicles.......................................................... 3
<PAGE>
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT
AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered
Certificates (the "Global Securities") will be available only in
book-entry form. Unless otherwise specified in a Prospectus Supplement for
a Series, investors in the Global Securities may hold such Global
Securities through any of The Depository Trust Company ("DTC"), CEDEL or
Euroclear. The Global Securities will be tradeable as home market
instruments in both the European and U.S. domestic markets. Initial
settlement and all secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities
through CEDEL and Euroclear will be conducted in the ordinary way in
accordance with their normal rules and operating procedures and in
accordance with conventional eurobond practice (i.e., seven calendar day
settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures
applicable to U.S. corporate debt obligations.
Secondary cross-market trading between CEDEL or Euroclear and DTC
participants holding Global Securities will be effected on a
delivery-against-payment basis through Citibank, N.A. ("Citibank") and
Morgan Guaranty Trust Company of New York ("Morgan") as the respective
depositaries of CEDEL and Euroclear and as participants in DTC.
Non-U.S. holders of Global Securities will be exempt from U.S.
withholding taxes, provided that such holders meet certain requirements
and deliver appropriate U.S. tax documents to the securities clearing
organizations or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the
name of Cede Co. as nominee of DTC. Investors' interests in the Global
Securities will be represented through financial institutions acting on
their behalf as direct and indirect participants in DTC. As a result,
CEDEL and Euroclear will hold positions on behalf of their participants
through their respective depositaries, Citibank and Morgan, which in turn
will hold such positions in accounts as participants of DTC.
Investors electing to hold their Global Securities through DTC will
follow the settlement practices applicable to securities previously issued
by the Trust. Investor securities custody accounts will be credited with
their holdings against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through CEDEL or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global
security and no "lock-up" or restricted period. Global Securities will be
credited to the securities custody accounts on the settlement date against
payment in same-day funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is
important to establish at the time of the trade where both the purchaser's
and seller's accounts are located to ensure that settlement can be made on
the desired value date.
Trading between DTC participants. Secondary market trading between
DTC participants will be settled using the procedures applicable to
securities previously issued by the Trust in same-day funds.
Trading between CEDEL and/or participants. Secondary market trading
between CEDEL participants and/or Euroclear participants will be settled
using the procedures applicable to conventional eurobonds in same-day
funds.
Trading between DTC seller and CEDEL or Euroclear purchaser. When
Global Securities are to be transferred from the account of a DTC
participant to the account of a CEDEL participant or a Euroclear
participant the purchaser will send instructions to CEDEL or Euroclear
through a participant at least one business day prior to settlement. CEDEL
or Euroclear will instruct Citibank or Morgan, respectively, as the case
may be, to receive the Global Securities against payment. Payment will
include interest accrued on the Global Securities from and including the
last coupon payment date to and excluding the settlement date. For
transactions settling on the 31st day of the month, payment will include
interest accrued to and excluding the first day of the following month.
Payment will then be made by Citibank or Morgan to the DTC participant's
account against delivery of the Global Securities. After settlement has
been completed, the Global Securities will be credited to the respective
clearing system and by the clearing system, in accordance with its usual
procedures, to the CEDEL participant's or Euroclear participant's account.
The Global Securities credit will appear the next day (European time) and
the cash debit will be back-valued to, and the interest on the Global
Securities will accrue from, the value date (which would be the preceding
day when settlement occurred in New York). If settlement is not completed
on the intended value date (i.e., the trade fails), the CEDEL or Euroclear
cash debit will be valued instead as of the actual settlement date.
CEDEL participants and Euroclear participants will need to make
available to the respective clearing systems the funds necessary to
process same-day funds settlement. The most direct means of doing so is to
preposition funds for settlement, either from cash on hand or existing
lines of credit, as they would for any settlement occurring within CEDEL
or Euroclear. Under this approach, they may take on credit exposure to
CEDEL or Euroclear until the Global Securities are credited to their
accounts one day later.
As an alternative, if CEDEL or Euroclear has extended a line of
credit to them, participants can elect not to preposition funds and allow
that credit line to be drawn upon to finance settlement. Under this
procedure, CEDEL participants or Euroclear participants purchasing Global
Securities would incur overdraft charges for one day, assuming they
cleared the overdraft when the Global Securities were credited to their
accounts. However, interest on the Global Securities would accrue from the
value date. Therefore, in many cases the investment income on the Global
Securities earned during that one-day period may substantially reduce or
offset the amount of such overdraft charges, although this result will
depend on each participant's particular cost of funds.
Since the settlement is taking place during New York business hours,
DTC participants can employ their usual procedures for sending Global
Securities to Citibank or Morgan for the benefit of CEDEL participants or
Euroclear participants. The sale proceeds will be available to the DTC
seller on the settlement date. Thus, to the DTC participant a cross-market
transaction will settle no differently than a trade between two DTC
participants.
Trading between CEDEL or Euroclear seller and DTC purchaser. Due to
time zone differences in their favor, CEDEL and Euroclear participants may
employ their customary procedures for transactions in which Global
Securities are to be transferred by the respective clearing system,
through Citibank or Morgan, to a DTC participant. The seller will send
instructions to CEDEL or Euroclear through a participant at least one
business day prior to settlement. In these cases, CEDEL or Euroclear will
instruct Citibank or Morgan, as appropriate, to deliver the bonds to the
DTC participant's account against payment. Payment will include interest
accrued on the Global Securities from and including the last coupon
payment date to and excluding the settlement date. For transactions
settling on the 31st day of the month, payment will include interest
accrued to and excluding the first day of the following month. The payment
will then be reflected in the account of the CEDEL participant or
Euroclear participant the following day, and receipt of the cash proceeds
in the CEDEL or Euroclear participant's account would be back-valued to
the value date (which would be the preceding day, when settlement occurred
in New York). Should the CEDEL or Euroclear participant have a line of
credit with its respective clearing system and elect to be in debit in
anticipation of receipt of the sale proceeds in its account, the
back-valuation will extinguish any overdraft charges incurred over that
one-day period. If settlement is not completed on the intended value date
(i.e., the trade fails), receipt of the cash proceeds in the CEDEL or
Euroclear participant's account would instead be valued as of the actual
settlement date.
Finally, day traders that use CEDEL or Euroclear and that purchase
Global Securities from DTC participants for delivery to CEDEL participants
or Euroclear participants should note that these trades would
automatically fail on the sale side unless affirmative action were taken.
At least three techniques should be readily available to eliminate this
potential problem:
(1) borrowing through CEDEL or Euroclear for one day (until
the purchase side of the day trade is reflected in their CEDEL or
Euroclear accounts) in accordance with the clearing system's
customary procedures;
(2) borrowing the Global Securities in the U.S. from a DTC
participant no later than one day prior to settlement, which would
give the Global Securities sufficient time to be reflected in their
CEDEL or Euroclear account in order to settle the sale side of the
trade; or
(3) staggering the value dates for the buy and sell sides of
the trade so that the value date for the purchase from the DTC
participant is at least one day prior to the value date for the sale
to the CEDEL participant or Euroclear participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A holder of Global Securities holding securities through CEDEL or
Euroclear (or through DTC if the holder has an address outside the U.S.)
will be subject to the 30% U.S. withholding tax that generally applies to
payments of interest (including original issue discount) on registered
debt issued by U.S. persons, unless such holder takes one of the following
steps to obtain an exemption or reduced tax rate:
Exemption for non-U.S. persons (Form W-8). Non-U.S. persons that are
beneficial owners can obtain a complete exemption from the withholding tax
by filing a signed Form W-8 (Certificate of Foreign Status).
Exemption for non-U.S. persons with effectively connected income
(Form 4224). A non-U.S. person, including a non-U.S. corporation or bank
with a U.S. branch, for which the interest income is effectively connected
with its conduct of a trade or business in the United States, can obtain
an exemption from the withholding tax by filing Form 4224 (Exemption from
Withholding of Tax on Income Effectively Connected with the Conduct of a
Trade or Business in the United States).
Exemption or reduced rate for non-U.S. persons resident in treaty
countries (Form 1001). Non-U.S. persons that are beneficial owners
residing in a country that has a tax treaty with the United States can
obtain an exemption or reduced tax rate (depending on the treaty terms) by
filing Form 1001 (Ownership, Exemption or Reduced Rate Certificate). If
the treaty provides only for a reduced rate, withholding tax will be
imposed at that rate unless the filer alternatively files Form W-8. Form
1001 may be filed by the beneficial owner or his agent.
Exemption for U.S. persons (Form W-9). U.S. persons can obtain a
complete exemption from the withholding tax by filing Form W-9 (Request
for Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Global Security
holder, or in the case of a Form 1001 or a Form 4224 filer, his agent,
files by submitting the appropriate form to the person through whom he
holds (the clearing agency, in the case of persons holding directly on the
books of the clearing agency). Form W-8 and Form 1001 are effective for
three calendar years and Form 4224 is effective for one calendar year.
This summary does not deal with all aspects of federal income tax
withholding that may be relevant to foreign holders of these Global
Securities. Investors are advised to consult their own tax advisors for
specific tax advice concerning their holding and disposing of these Global
Securities.
<PAGE>
[ Outside back cover; left-hand column ]
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED
BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE SELLER OR THE UNDERWRITERS.
NEITHER THIS PROSPECTUS SUPPLEMENT NOR THE ACCOMPANYING PROSPECTUS
CONSTITUTES AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS, NOR ANY SALE MADE
HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE SELLER
SINCE THE DATE HEREOF OR THEREOF OR THAT THE INFORMATION CONTAINED OR
INCORPORATED BY REFERENCE HEREIN OR THEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
-----------------
Table of Contents
Page
Prospectus Supplement
Summary of Series Terms............................................. S-3
Special Considerations.............................................. S-11
Use of Proceeds..................................................... S-14
The Dealer Floorplan Financing Business............................. S-14
The Accounts........................................................ S-15
Chrysler Financial Corporation and Chrysler Credit Corporation...... S-17
Maturity and Principal Payment Considerations....................... S-17
Series Provisions................................................... S-18
Underwriting........................................................ S-31
Legal Matters....................................................... S-31
Index of Principal Terms............................................ S-32
Annex I............................................................. A-1
Prospectus
Available Information............................................... 2
Reports to Certificateholders....................................... 2
Incorporation of Certain Documents by Reference..................... 2
Prospectus Summary.................................................. 3
Special Considerations.............................................. 15
U.S. Auto Receivables Company and the Trust......................... 18
Use of Proceeds..................................................... 20
The Dealer Floorplan Financing Business............................. 20
The Accounts........................................................ 24
Chrysler Financial Corporation and Chrysler Credit Corporation...... 24
Description of the Certificates..................................... 25
Description of the Receivables Purchase Agreement................... 51
Certain Legal Aspects of the Receivables............................ 52
Certain Tax Matters................................................. 55
ERISA Considerations................................................ 58
Experts............................................................. 60
Plan of Distribution................................................ 60
Legal Matters....................................................... 61
Index of Principal Terms............................................ 62
Annex I............................................................. A-1
-----------------
UNTIL JANUARY 18, 1995 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS
SUPPLEMENT), ALL DEALERS EFFECTING TRANSACTIONS IN THE SERIES 1994-1
CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF
DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH
RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
<PAGE>
[ Outside back cover; right-hand column ]
$500,000,000
CARCO
Auto Loan
Master Trust
Floating Rate Auto Loan
Asset Backed Certificates,
Series 1994-1
U.S. AUTO RECEIVABLES COMPANY
Seller
CHRYSLER CREDIT CORPORATION
Servicer
Salomon Brothers Inc
Bear, Stearns & Co. Inc.
J.P. Morgan Securities Inc.
Prospectus Supplement
Dated October 20, 1994
