As filed with the Securities and Exchange Commission on May
REGISTRATION NO. 333-_____
_______________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
____________________________________
CHRYSLER FINANCIAL COMPANY L.L.C.
(Exact name of Registrant as specified in its charter)
MICHIGAN 52-2109803
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
27777 FRANKLIN ROAD
SOUTHFIELD, MICHIGAN 48034-8286
(248) 948-3124
(Address, including zip code, and telephone number,
including area code, of Registrant's principal
executive offices)
CHRISTOPHER A. TARAVELLA, ESQ.
CHRYSLER FINANCIAL COMPANY L.L.C.
27777 FRANKLIN ROAD
SOUTHFIELD, MICHIGAN 48034-8286
(248) 948-3062
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
____________________________________
With a Copy to:
RENWICK D. MARTIN, ESQ.
SIDLEY AUSTIN BROWN & WOOD LLP
ONE WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(212) 839-5319
____________________________________
Approximate date of commencement of proposed sale to the public: From
time to time after this Registration Statement becomes effective as determined
by market conditions.
____________________________________
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. | |
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. | |
__________________.
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. | | _________________.
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. | |
------------------------------------
CALCULATION OF REGISTRATION FEE
===================================================================================================================
Proposed
Maximum Proposed Maximum
Title of Each Class of Amount to be Offering Price Aggregate Offering Amount of
Securities to be Registered Registered Per Unit (1) Price Registration Fee
- ------------------------------ ----------------------- ---------------- --------------------- ---------------------
Asset Backed Securities... $10,000,000,000 (1) 100% $10,000,000,000 (1) $2,500,000
============================== ======================= ================ ===================== =====================
(1) Estimated solely for the purpose of calculating the registration fee.
____________________________________
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933, or until this Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
_______________________________________________________________________________
INTRODUCTORY NOTE
This Registration Statement contains (i) a form of Prospectus
relating to the offering of a series of Asset Backed Notes and/or Asset Backed
Certificates by various DaimlerChrysler Auto Trusts created from time to time
by [Chrysler Financial Company L.L.C.][DaimlerChrysler Services North America
LLC] and (ii) a form of Prospectus Supplement relating to the offering by
DaimlerChrysler Auto Trust ___-_ of the particular series of Asset Backed
Notes described therein. The form of Prospectus Supplement relates only to the
securities described therein and is a form which may be used, among others, by
[Chrysler Financial Company L.L.C.][DaimlerChrysler Services North America
LLC] to offer Asset Backed Notes and/or Asset Backed Certificates under this
Registration Statement. The features applicable to any actual series of Asset
Backed Securities may include any features specified in the Prospectus.
Information contained in this prospectus supplement is not complete and may be
changed. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This
prospectus supplement is not an offer to sell these securities, and it is not
soliciting an offer to buy these securities in any state where the offer or
sale is not permitted.
Subject to completion dated [o]
prospectus supplement
DAIMLERCHRYSLER to prospectus dated ______ __, _____
$______________
DAIMLERCHRYSLER AUTO TRUST ______
[CHRYSLER FINANCIAL COMPANY L.L.C.][DAIMLERCHRYSLER SERVICES NORTH
AMERICA LLC], Seller and Servicer
The trust will issue the following securities that will be backed by
automobile and light duty truck receivables purchased directly from [Chrysler
Financial Company L.L.C.][DaimlerChrysler Services North America LLC]
- ----------------------------------------------------------------------------------------------------------------------------
Total Securities Issued
--------------------------------------------------------------------------------------------------------------------
Original Fixed Price Proceeds
Principal Interest to the Underwriting to the
Security Amount Rate Public(2) Fees Seller(2)
--------------------------------------------------------------------------------------------------------------------
A-1 Notes(1) $ % n/a n/a n/a
A-2 Notes $ % % % %
A-3 Notes $ % % % %
A-4 Notes $ % % % %
Certificates(1) $ n/a n/a n/a n/a
Total Securities $ n/a $ $ $
(1) Not being offered publicly or in this document. The certificates are subordinated.
(2) Plus accrued interest from _________.
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Initial Credit Enhancement for the Notes(1)
------------------------- ----------------------- --------------------- ----------------
Certificates (2)
Overcollateralization (Subordinated) Reserve Fund Total
------------------------- ----------------------- --------------------- ----------------
Amount $ $ $ $
Percentage of Total % % % %
Securities
(1) The expected excess cash flows generated from the difference between the interest collections on all the receivables and
the sum of the servicing fee, the interest payments on the outstanding securities and required reserve fund deposits could
also provide credit enhancement.
(2) The certificates do not bear interest.
- ----------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Before you decide to invest in any of the offered securities, please read
this prospectus supplement and the prospectus, especially the risk factors
beginning on page S-5 of this prospectus supplement and on page 9 of the
prospectus. The securities will be obligations of the trust only and neither
the securities nor the assets of the trust will represent interest in or
obligations of DaimlerChrysler AG, [Chrysler Financial Company
L.L.C.][DaimlerChrysler Services North America LLC] or any of their
affiliates. Neither the SEC nor any state securities commission has approved
or disapproved the securities or determined that this prospectus supplement or
the prospectus is accurate or complete. Any representation to the contrary is
a criminal offense.
- -------------------------------------------------------------------------------
[Underwriters]
The date of this prospectus supplement is ____________, ____.
READING THE PROSPECTUS AND PROSPECTUS SUPPLEMENT
We provide information on the offered securities in two documents that
offer varying levels of detail:
1. Prospectus - provides general information, some of which may not
apply to the offered securities.
2. Prospectus Supplement - provides a summary of the specific terms of
the offered securities.
We suggest you read this prospectus supplement and the prospectus. The
prospectus supplement pages begin with "S". If the terms of the offered
securities described in this prospectus supplement vary with the accompanying
prospectus, you should rely on the information in this prospectus supplement.
We include cross-references to sections in these documents where you can
find further related discussions. Refer to the table of contents on page S-3
in this document and on page 4 in the prospectus to locate the referenced
sections.
The Index of Principal Terms on page 72 in the prospectus lists the
pages where capitalized terms used in the prospectus or prospectus supplement
are defined.
- -------------------------------------------------------------------------------------------------------------------
table of contents
- -------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------- ----------------------------------------------------
Section Page Section Page
- ---------------------------------------------------- ----------------------------------------------------
- Principal Payments S-14
TRANSACTION ILLUSTRATION S-4 ----------------------------------------------------
- ---------------------------------------------------- - Optional Redemption S-15
TRANSACTION OVERVIEW S-5 ----------------------------------------------------
- ---------------------------------------------------- o FLOW OF FUNDS S-15
o PARTIES TO THE TRANSACTION S-5 ----------------------------------------------------
- ---------------------------------------------------- - Sources of Funds Available for
o SECURITIES OFFERED S-6 Distribution S-15
- ---------------------------------------------------- ----------------------------------------------------
o RECEIVABLES POOL S-6 - Application of Available Funds S-16
- ---------------------------------------------------- ----------------------------------------------------
- Composition of the o CREDIT ENHANCEMENT S-17
Receivables Pool S-7 ----------------------------------------------------
- ---------------------------------------------------- - Overcollateralization S-17
- New/Used Distribution S-7 ----------------------------------------------------
- ---------------------------------------------------- - Excess Interest Collections S-18
- Distribution by APR S-8 ----------------------------------------------------
- ---------------------------------------------------- - Reserve Fund S-19
- Geographic Distribution S-9 ----------------------------------------------------
- ---------------------------------------------------- - Subordinated Certificates S-19
- Selection Criteria S-10 ----------------------------------------------------
- ---------------------------------------------------- o SERVICING S-19
o NET CREDIT LOSS AND DELINQUENCY ----------------------------------------------------
EXPERIENCE S-10 - Compensation S-19
- ---------------------------------------------------- ----------------------------------------------------
- [CFC][DCS] Net Credit Loss and o THE TRUST S-19
Repossession Experience S-11 ----------------------------------------------------
- ---------------------------------------------------- - Activities S-19
- [CFC][DCS]Delinquency Experience S-12 ----------------------------------------------------
- ---------------------------------------------------- - Capitalization S-20
o PAYMENTS ON THE SECURITIES S-13 ----------------------------------------------------
- ---------------------------------------------------- UNDERWRITING S-20
- Payment Dates S-13 ----------------------------------------------------
- ---------------------------------------------------- FEDERAL INCOME TAX CONSEQUENCES S-21
- Interest Payments S-13 ----------------------------------------------------
- ---------------------------------------------------- LEGAL OPINIONS S-21
----------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
TRANSACTION ILLUSTRATION
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
on or before [closing date]
(approximate $ thousands)
GRAPHICS OMITTED
(1) Not being offered publicly or in this document. The certificates are
subordinated.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
TRANSACTION OVERVIEW
- -------------------------------------------------------------------------------------------------------------------
PARTIES TO THE TRANSACTION
- ------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Entity Description
---------------------------------------------------------------------------------------------
DaimlerChrysler Auto o Issuer of the securities
Trust ______
o A Delaware business trust
o Principal office is in [city, state]
---------------------------------------------------------------------------------------------
[Chrysler Financial Company o Seller of the receivables to the trust
L.L.C.][DaimlerChrysler
Services North America LLC] o Servicer of the receivables
o An indirect wholly-owned subsidiary of
DaimlerChrysler AG
o A Michigan limited liability company
o Originator of [CFC][DCS] receivables
---------------------------------------------------------------------------------------------
_____________________ (1) o Indenture trustee
o Performs duties for the benefit of the
noteholders
---------------------------------------------------------------------------------------------
_____________________ (1) o Owner trustee
o Performs duties on behalf of the trust and
certificateholders
---------------------------------------------------------------------------------------------
DaimlerChrysler Retail o A special-purpose financing entity
Receivables LLC
o A Michigan limited liability company, formerly
named Premier Receivables L.L.C.
o An indirect wholly-owned subsidiary of [CFC][DCS]
o Initial holder of the subordinated certificates
o Initial owner of rights to overcollateralization
distributions and residual cash flows
--------------------------------- -----------------------------------------------------------
(1) The seller and its affiliates may maintain normal commercial banking relations with the
indenture trustee, the owner trustee and their affiliates.
- ------------------------------------------------------------------------------------------------------
SECURITIES OFFERED
The trust will issue $ ___________ of securities, comprised of both
notes and certificates. This prospectus supplement provides information on the
following securities:
- ----------------------------------------------------------------------------------------------------
Offered Securities
------------------------------------------------------------------------------------------
Fixed Per Annum
Note Class Principal Amount Interest Rate Legal Final
------------------------------------------------------------------------------------------
A-2 Notes $___________ % _____________
------------------------------------------------------------------------------------------
A-3 Notes $___________ % _____________
------------------------------------------------------------------------------------------
A-4 Notes $___________ % _____________
------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
The trust will also issue $_________ of Class A-1, ___% asset-backed
notes, due on ________ and $________ of subordinated certificates. Other
points to consider include:
o the outstanding principal of each class of notes is due by its
maturity date (each a "Legal Final"),
o by [closing date] at least two nationally recognized rating agencies
will rate the offered securities in the highest investment rating
category,
o the offered securities will be issued on or about [closing date] in
book-entry form through the facilities of DTC, Cedelbank and the
Euroclear System, and
o the offered securities are generally eligible for purchase by
employee benefit plans, subject to important considerations; refer
to the "ERISA Considerations" section of the prospectus.
RECEIVABLES POOL
On [closing date] the trust will use the proceeds from the issuance of
the securities to purchase a pool of automobile and light duty truck
receivables from the seller. Collections on this pool of receivables will be
the trust's principal source of funds for making payments on the securities.
The following information about the receivables is as of ___________ (the
"Cut-off Date").
- -------------------------------------------------------------------------------
The receivables pool had the following characteristics:
---------------------------------------------------------------------------
Composition of the Receivables Pool
As of [Cut-off Date]
Aggregate Principal Balance $
-----------------------------------------------------------------
Number of Receivables
-----------------------------------------------------------------
Average Principal Balance $
-----------------------------------------------------------------
Weighted Average APR %
-----------------------------------------------------------------
Weighted Average Original Term months
-----------------------------------------------------------------
Weighted Average Remaining Term months
-----------------------------------------------------------------
As a Percentage of the Aggregate
Principal Balance:
-----------------------------------------------------------------
Receivables with Recourse to Dealers %
-----------------------------------------------------------------
---------------------------------------------------------------------------
The receivables pool had the following new vehicle/used vehicle
distribution:
-----------------------------------------------------------------------------
New/Used Distribution of the Receivables Pool
As of [Cut-off Date]
New Used
----------------------
Aggregate Principal Balance $ $
----------------------------------------------------------------------
Percentage of Aggregate Principal Balance % %
----------------------------------------------------------------------
Number of Receivables
----------------------------------------------------------------------
Percentage of Receivables % %
-----------------------------------------------------------------------------
The receivables pool had the following distribution by APR:
- ----------------------------------------------------------------------------------------
Distribution by APR of the Receivables Pool
As of [Cut-off Date]
- ----------------------------------------------------------------------------------------
APR Range Number of Aggregate Principal Percent of Aggregate
Receivables Balance Principal Balance(1)
- ----------------------------------------------------------------------------------------
0.00% to 5.00% $___,___,___.__ %
- ----------------------------------------------------------------------------------------
5.01% to 6.00%
- ----------------------------------------------------------------------------------------
6.01% to 7.00%
- ----------------------------------------------------------------------------------------
7.01% to 8.00%
- ----------------------------------------------------------------------------------------
8.01% to 9.00%
- ----------------------------------------------------------------------------------------
9.01% to 10.00%
- ----------------------------------------------------------------------------------------
10.01% to 11.00%
- ----------------------------------------------------------------------------------------
11.01% to 12.00%
- ----------------------------------------------------------------------------------------
12.01% to 13.00%
- ----------------------------------------------------------------------------------------
13.01% to 14.00%
- ----------------------------------------------------------------------------------------
14.01% to 15.00%
- ----------------------------------------------------------------------------------------
15.01% to 16.00%
- ----------------------------------------------------------------------------------------
16.01% to 17.00%
- ----------------------------------------------------------------------------------------
17.01% to 18.00%
- ----------------------------------------------------------------------------------------
18.01% to 19.00%
- ----------------------------------------------------------------------------------------
19.01% to 20.00%
- ----------------------------------------------------------------------------------------
Greater than 20.00%
- ----------------------------------------------------------------------------------------
Totals $_,___,___,___.__ %
- ----------------------------------------------------------------------------------------
(1) Percentages may not add to 100.0% because of rounding.
- ----------------------------------------------------------------------------------------
The following table lists the ten states with the largest percentage
concentration of the aggregate principal balance of the receivables pool based
on the physical address of the dealer originating the receivable. No other
state accounts for more than [ ]% of the aggregate principal balance of the
receivables pool as of [Cut-off Date].
- -------------------------------------------------------------------------------
Geographic Distribution of the Receivables Pool
As of [Cut-off Date]
- -------------------------------------------------------------------------------
Percentage of Aggregate
State Principal Balance(1)
- -------------------------------------------------------------------------------
Texas %
- -------------------------------------------------------------------------------
New York
- -------------------------------------------------------------------------------
Illinois
- -------------------------------------------------------------------------------
California
- -------------------------------------------------------------------------------
Michigan
- -------------------------------------------------------------------------------
New Jersey
- -------------------------------------------------------------------------------
Massachusetts
- -------------------------------------------------------------------------------
Florida
- -------------------------------------------------------------------------------
Pennsylvania
- -------------------------------------------------------------------------------
Maryland
- -------------------------------------------------------------------------------
Total %
(1) Percentages may not add to 100.0% because of rounding.
- -------------------------------------------------------------------------------
Selection Criteria
We used the following criteria to select the receivables pool:
o Each receivable was originally purchased by the seller from
dealers in the ordinary course of its business.
o Interest on each receivable is computed using the simple interest
method.
o As of [Cut-off Date]:
- no receivable was more than 30 days past due (an account
is not considered past due if the amount past due is less
than 10% of the scheduled monthly payment);
- no receivable was the subject of a bankruptcy proceeding;
- each receivable had a principal balance of at least
$300.00; and
- each receivable had a scheduled maturity after ________,
20__ and on or before ______, 20__.
The seller believes its selection procedures are not adverse to
securityholders.
Refer to the "Receivable Pools" section in the prospectus for additional
selection criteria.
NET CREDIT LOSS AND DELINQUENCY EXPERIENCE
Net credit loss experience is dependent upon general economic
conditions, the number of repossessions, the amount of principal and accrued
interest outstanding on the receivable at the time of repossession, and the
resale values of the repossessed vehicles. [The net credit loss and
delinquency experience information in this section is presented separately for
CFC and Mercedes-Benz Credit Corporation ("MBCC")]
The following tables detail the net credit loss, repossession and
delinquency experience of [CFC][DCS]'s United States portfolio of new and used
automobile and light duty truck retail receivables. The information includes:
o an immaterial amount of retail receivables secured by vehicles
other than automobiles and light duty trucks, and
o previously sold contracts which [CFC][DCS] continues to service.
Unless otherwise indicated, all amounts and percentages are based on estimated
gross collections, including principal and interest.
We cannot assure you that the delinquency, repossession and net credit
loss experience on the receivables sold to the trust will be comparable to the
following historical experience.
- -----------------------------------------------------------------------------------------------------------
[CFC][DCS] Net Credit Loss and Repossession
Experience
Year Ended December 31,
-----------------------------------------------------------------------
2000 1999 1998 1997 1996
-----------------------------------------------------------------------
Average Portfolio $30,590 $26,191 $23,581 $21,485 $21,062
Outstanding During the
Period ($ Millions)
----------------------------------------------------------------------------------------------------
Average Number of 2,004,982 1,835,534 1,747,846 1,688,525 1,671,405
Contracts Outstanding
During the Period
----------------------------------------------------------------------------------------------------
Repossessions as a 1.82% 2.16% 2.77% 3.40% 3.82%
Percentage of Average
Number of Contracts
Outstanding
----------------------------------------------------------------------------------------------------
Net Credit Losses as 1.77% 1.91% 2.77% 3.36% 3.17%
Percentage of
Liquidations (1) (2)
----------------------------------------------------------------------------------------------------
Net Credit Losses as a 0.78% 0.98% 1.39% 1.80% 1.68%
Percentage of Average
Portfolio Outstanding
(1)
- -----------------------------------------------------------------------------------------------------------
(1) Net credit losses are equal to the aggregate of the balances of all
receivables which are determined to be uncollectible in the period,
less any amounts realized from the sale of repossessed vehicles and
any recoveries on receivables charged off in the current or prior
period, net of any disposition expenses and any dealer commissions
which [CFC][DCS] failed to recover on receivables that were prepaid
or charged off.
(2) Liquidations represent monthly cash payments and charge-offs which
reduce the outstanding balance of a receivable.
------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
[CFC][DCS] Delinquency Experience
At December 31,
-------------------------------------------------------------------
2000 1999 1998 1997 1996
-------------------------------------------------------------------
Portfolio ($ Millions) $33,776 $27,255 $24,854 $21,879 $21,197
-----------------------------------------------------------------------------------------------------
Delinquencies as a
Percentage of the Portfolio
-----------------------------------------------------------------------------------------------------
31 - 60 Days 1.53% 1.78% 2.27% 3.24% 3.98%
-----------------------------------------------------------------------------------------------------
61 Days or More 0.17% 0.17% 0.20% 0.46% 0.55%
-----------------------------------------------------------------------------------------------------
Total 1.70% 1.95% 2.47% 3.70% 4.53%
-----------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
[The following will be used if any of the receivables in the pool are
originated by Mercedes-Benz Credit Corporation.] The following tables detail
the net credit loss, repossession and delinquency experience of MBCC's new and
used retail automobile receivables, including those previously sold which MBCC
continues to service. We cannot assure you that the delinquency, repossession
and net credit loss experience on the receivables sold to the trust will be
comparable to the following historical experience.
- ---------------------------------------------------------------------------------------------------------------------
MBCC Net Credit Loss and Repossession Experience
At December 31,
-------------------------------------------------------------------------
2000 1999 1998 1997 1996
-------------------------------------------------------------------------
Average Portfolio
Outstanding During the Period
($ Millions) $ 2,436 $ 2,095 $ 1,683 $ 1,291 $ 1,005
-----------------------------------------------------------------------------------------------------------
Average Number of
Contracts Outstanding During the
Period $ 98,925 $ 87,810 73,674 59,215 48,275
-----------------------------------------------------------------------------------------------------------
Repossessions as a Percentage
of Average Number of
Contracts Outstanding(2) 1.52% 1.53% 2.04% 2.01% 1.43%
-----------------------------------------------------------------------------------------------------------
Net Credit Losses as a
Percentage of Average Portfolio
Outstanding 0.64% 0.79% 0.98% 0.71% 0.68%
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
MBCC Delinquency Experience
At December 31,
-----------------------------------------------------------------
2000 1999 1998 1997 1996
-----------------------------------------------------------------
Portfolio ($ Millions) $3,186 $2,741 $2,352 $1,792 $1,403
- -------------------------------------------------------------------------------------------------------------------
Delinquencies as a Percentage of the Portfolio
- -------------------------------------------------------------------------------------------------------------------
31 - 60 Days 1.81% 1.90% 1.95% 2.28% 2.20%
- -------------------------------------------------------------------------------------------------------------------
61 Days or More 0.76% 0.77% 0.75% 1.52% 0.55%
- -------------------------------------------------------------------------------------------------------------------
Total 2.57% 2.67% 2.70% 3.80% 2.75%
- ---------------------------------------------------------------------------------------------------------------------
Refer to the "Net Credit Loss and Delinquency Experience" section in the
prospectus for additional information.
PAYMENTS ON THE SECURITIES
Payment Dates
o Interest and principal will be payable on the 8th of
each month. If the 8th is not a business day, then interest and
principal will be payable on the next business day.
o The first payment will be on ________, ____.
o Payments will be payable to securityholders of record on the
business day before the payment date.
Interest Payments
o The first interest payment will be calculated on the
original principal amount of each class of notes at the
applicable per annum interest rate.
o Subsequent interest payments will be calculated on the
outstanding principal balance of each note class as of the prior
payment date (after giving effect to any payment of principal on
that date) at the applicable per annum interest rate.
o To calculate interest due on the A-1 notes on a payment
date, the per annum interest rates will be converted from an
annual rate as follows:
- -----------------------------------------------------------------------------
Days in Initial Days in Subsequent Day Count
Interest Accrual Period Interest Accrual Periods Convention
- ----------------------------------------------------------------------------
From To
(including) (excluding)
- ----------------------------------------------------------------------------
Prior Current
__ days payment payment actual/360
date date
- ----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
o To calculate the interest due on the A-2, A-3 and A-4 notes on a payment
date, the per annum interest rates will be converted from an annual rate
as follows:
- -----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Days in Initial For Subsequent Interest Day Count
Interest Accrual Period Accrual Periods Convention
- ----------------------------------------------------------------------------
1/12th of per annum
__ days interest rate 30/360
- ----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
o Interest payments on all classes of notes will have the same priority. If
the available amount for interest payments, including the balance in the
reserve fund, is less than the amount due, each class of notes will
receive their pro rata share.
Refer to the "Flow of Funds" section for information on how the amount
available for interest payments is determined. Also refer to the "Credit
Enhancement - Reserve Fund" section for information on how the reserve fund
may be used to make interest payments.
Principal Payments
o The amount of principal payments on the securities on each payment
date will generally equal the amount of principal that was collected
on the receivables during the prior calendar month plus Excess
Interest Collections minus the overcollateralization distribution
amount.
o Principal of each class of notes will generally be repaid over a
span of several consecutive months.
o The trust will pay principal sequentially to the earliest maturing
class of notes then outstanding until such class is paid in full.
o The certificates will not receive any principal payments until all
notes are paid in full.
o The trust is required to pay the outstanding principal of each class
of notes by the applicable Legal Final.
o The final principal payment on any class of notes could occur
significantly earlier than its Legal Final.
o The rate of principal payment on the notes will increase to the
extent Excess Interest Collections are applied to pay note
principal.
Refer to the "Flow of Funds" section for information on how the amount
available for principal payments is determined. Refer to the "Credit
Enhancement" section for information on Excess Interest Collections. Refer to
the "Payments on the Securities-Principal Payments-Weighted Average Life of
the Securities" section in the prospectus for information regarding certain
maturity and prepayment considerations for the securities.
Optional Redemption
The servicer will have the option to purchase all of the remaining
receivables from the trust when their aggregate principal balance declines to
an amount that is less than or equal to 10% of the initial aggregate principal
balance of the receivables, or $__________ or less. If the servicer decides to
exercise this option, then the outstanding principal amounts of the A-4 notes
and the certificates, together with any accrued and unpaid interest, will be
repaid in a lump sum payment. The lump sum payment under this optional
redemption will shorten the maturity of the A-4 notes and certificates.
FLOW OF FUNDS
Sources of Funds Available for Distribution
Funds from the following sources may be available to make payments on
the securities on each payment date:
o collections received on the receivables during the prior calendar
month,
o net recoveries received during the prior calendar month on
receivables that were charged off as losses in prior months,
o investment earnings on the reserve fund received during the prior
calendar month,
o administrative and/or warranty repurchases, and
o the reserve fund.
Application of Available Funds
On each monthly payment date the total funds available (except for the
reserve fund) will be distributed in the following order of priority:
- -------------------------------------------------------------------------------
Monthly Flow of Funds
----------------------------------------------------
pay servicing fee
----------------------------------------------------
----------------------------------------------------
pay accrued and unpaid interest on the notes
----------------------------------------------------
----------------------------------------------------
replenish reserve fund,
if necessary, up to the initial amount
----------------------------------------------------
----------------------------------------------------
pay up to the outstanding principal
amount of the A-1 notes
----------------------------------------------------
----------------------------------------------------
pay the overcollateralization
distribution amount , if any,
to DaimlerChrysler Retail Receivables LLC
----------------------------------------------------
----------------------------------------------------
pay up to the outstanding principal
amount of the A-2 notes
----------------------------------------------------
----------------------------------------------------
pay up to the outstanding principal
amount of the A-3 notes
----------------------------------------------------
----------------------------------------------------
pay up to the outstanding principal
amount of the A-4 notes
----------------------------------------------------
----------------------------------------------------
pay up to the outstanding principal
amount of the certificates
----------------------------------------------------
----------------------------------------------------
distribute remaining balance, if any,
to DaimlerChrysler Retail Receivables LLC
----------------------------------------------------
- --------------------------------------------------------------------------------
CREDIT ENHANCEMENT
The following forms of credit enhancement are intended to enhance the
likelihood of full payment of principal and interest due to the noteholders
and to decrease the likelihood that the noteholders will experience losses of
principal or interest on their notes.
Overcollateralization
Overcollateralization is represented by the amount by which the
principal balance of receivables exceeds the principal balance of the
securities. The initial overcollateralization amount of $_______________ is
equal to the initial receivables balance of $_______________ minus the initial
principal amount of the securities of $_______________. This excess collateral
is intended to protect noteholders from losses on the receivables.
The trust will attempt to maintain an overcollateralization amount
(i.e., the amount by which the principal balance of the receivables exceeds
the principal balance of the securities) at least equal to [___]% of the
principal balance of the receivables the receivables as of the prior calendar
month end. Once the A-1 notes are paid in full, total funds available (except
funds in the reserve fund) after paying the servicing fee, accrued and unpaid
interest on the notes and any reserve fund deposit will be applied (i) to the
payment of principal of the securities and (ii) to pay the
overcollateralization distribution amount to DaimlerChrysler Retail
Receivables LLC. As illustrated in the "Application of Available Funds"
section, the trust may begin making payments of the overcollateralization
distribution amount to DaimlerChrysler Retail Receivables LLC on the same
payment date on which the A-1 notes are paid in full. No overcollateralization
distribution will be made in any month in which the balance of the reserve
fund is below $ [initial amount]. The overcollateralization distribution
amount to be distributed on each payment date will be the greater of:
(i) $0.00
or
(ii) the lesser of (a) D - [S - (P x [ ]%)] or (b) D minus the A-1 notes
balance immediately prior to the current payment date
where:
total funds available accrued and
D = for distribution (except minus servicing + unpaid interest + reserve fund
for the reserve fund) fee on the notes deposit
S = the outstanding principal amount of the securities as of the
prior payment date, after giving effect to payments made on that date
P = the outstanding principal balance of the receivables as of the
prior calendar month end.
Excess Interest Collections
"Excess Interest Collections" are generally equal to (A) the sum of (i)
interest collections received on the receivables during the prior calendar
month and (ii) investment earnings on the reserve fund received during the
prior calendar month minus (B) the sum of (i) the servicing fee for the prior
calendar month, (ii) accrued and unpaid interest on the notes and (iii) the
amount, if any, required to replenish the reserve fund to $ [initial amount].
Excess Interest Collections provide an additional form of credit
enhancement since they will be applied to the payment of principal of the
securities to the extent described above under "Flow of Funds - Application of
Available Funds" section.
If credit losses on receivables and delinquent receivables decrease the
amount of interest collections received on the receivables in a month, Excess
Interest Collections will be reduced or eliminated for such month. Prepayments
on the higher APR receivables will have a greater effect in reducing Excess
Interest Collections than will prepayments on the low APR receivables.
Reserve Fund
o On [closing date] the seller will provide funds from the proceeds of
its sale of receivables to establish a $____________ reserve fund.
o The indenture trustee will hold the reserve fund for the benefit of
the noteholders.
o The reserve fund will be invested in high quality, short term
investments which mature on or prior to each monthly payment date.
o If the total funds available for distribution minus the servicing
fee is less than accrued interest on the notes, the reserve fund
will be available to make interest payments.
o If a class of notes has not been paid in full on its Legal Final,
the reserve fund will be applied to the payment of principal for
that class of notes.
o If the aggregate outstanding principal amount of the notes exceeds
the outstanding principal balance of the receivables as of the prior
calendar month end, the reserve fund will be applied to the payment
of principal of the notes.
o As illustrated in the "Flow of Funds" section above, on each payment
date the reserve fund will be reinstated up to the initial balance
to the extent funds are available.
o After full payment of all accrued interest on the notes and the
outstanding principal balance of the securities, the reserve fund
will be distributed to DaimlerChrysler Retail Receivables LLC.
Subordinated Certificates
As additional credit enhancement, the certificates do not bear interest
and will not receive any principal payments until the notes are paid in full.
The payments on the certificates are subordinated to payments on the notes to
decrease the likelihood that the trust will default in making payments due on
the notes.
SERVICING
Compensation
o The servicer will be compensated on a monthly basis.
o The first servicing fee will be calculated on the original principal
amount of the receivables at 1/12th of 1% per month.
o For the first servicing fee calculation, the per annum servicing fee
rate will be converted from an annual rate using the number of days
from and including [Cut-off Date] to but excluding [last day of
month in which closing date occurs] on a 30/360 basis, or __ days
over 360.
o Subsequent servicing fees will be calculated on the principal
balance of the receivables as of the first day of the prior calendar
month at 1/12th of 1%.
o As illustrated in the "Flow of Funds" section above, the servicing
fee will be paid out of the total funds available for distribution
each month.
Refer to the "Servicing -- Servicing Compensation" section in the
prospectus for additional information on servicer compensation. Refer to the
"Servicing -- Servicer" section in the prospectus for additional information
regarding the servicer.
THE TRUST
Activities
The trust will only engage in the following activities:
o acquiring, holding and managing the receivables, their proceeds, the
reserve fund and other assets of the trust;
o issuing the securities;
o making payments on the securities; and
o other activities that are necessary, suitable or incidental to the
above activities.
The trust's office is at the owner trustee's principal office, located at
______, Delaware _______.
Capitalization
The following balance sheet illustrates the capitalization of the trust
as of [closing date]. It is assumed that the notes have been issued and sold
on [closing date]. DaimlerChrysler Retail Receivables LLC holds the equity
interests and may transfer or sell such interests. [CFC][DCS] will initially
purchase and may later sell the A-1 notes.
- --------------------------------------------------------------------------------------------------------------------
Balance Sheet
As of [closing date]
------------------------------------------------- -------------------------------------------------
Assets Liabilities
------------------------------------------------- -------------------------------------------------
Receivables $ A-1 Notes $
------------------------------------------------- -------------------------------------------------
Reserve Fund A-2 Notes
------------------------------------------------- -------------------------------------------------
A-3 Notes
-------------------------------------------------
A-4 Notes
-------------------------------------------------
Total $
------------------------------------------------- -------------------------------------------------
-------------------------------------------------
Equity
-------------------------------------------------
Certificates $
-------------------------------------------------
Overcollateralization
-------------------------------------------------
Reserve Fund
-------------------------------------------------
Total $
-------------------------------------------------
Total Liabilities and
Total Assets $ Equity $
------------------------------------------------- -------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
UNDERWRITING
- --------------------------------------------------------------------------------------------------------------------
The trust will sell the following amounts of the offered securities to
the underwriters named below. The underwriters have agreed to purchase these
amounts:
- --------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
Underwriter A-2 A-3 A-4 Total
----------------------------------------------------------------------------------------------------------
$ $ $ $
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
Total $ $ $ $
----------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
The underwriters propose to sell the offered securities to the public at
the initial offering prices listed on the cover page and to certain dealers at
the same prices less an initial selling concession. These selling concessions
will not be greater than the selling concessions listed in the table below.
The underwriters may allow and those certain dealers may reallow another
concession. These reallowances will not be greater than the reallowances
listed in the table below. After the initial public offering, the price to the
public, the concessions and the reallowances may change.
- -------------------------------------------------------------------------------
---------------------------------------------------------------------
Selling
Class Concession Reallowance
---------------------------------------------------------------------
A-2 Notes ______% ______%
---------------------------------------------------------------------
A-3 Notes ______% ______%
---------------------------------------------------------------------
A-4 Notes ______% ______%
---------------------------------------------------------------------
- -------------------------------------------------------------------------------
Refer to the "Plan of Distribution" section in the prospectus for
additional information about the distribution of the offered securities.
- -------------------------------------------------------------------------------
FEDERAL INCOME TAX CONSEQUENCES
- -------------------------------------------------------------------------------
In the opinion of Sidley Austin Brown & Wood LLP, counsel for the
underwriters and special tax counsel for the trust, for federal income tax
purposes the offered securities will be characterized as debt and the trust
will not be characterized as an association (or a publicly traded partnership)
taxable as a corporation.
For additional information refer to the "Certain Federal Income Tax
Consequences" section in the prospectus.
- -------------------------------------------------------------------------------
LEGAL OPINIONS
- -------------------------------------------------------------------------------
In addition to the legal opinions described in the prospectus, Sidley
Austin Brown & Wood LLP, New York, New York will review or opine on certain
legal matters relating to the offered securities for the underwriters and
certain federal income tax and other matters for the trust. Also, Sidley Austin
Brown & Wood LLP from time to time renders legal services to [CFC][DCS] and its
affiliates.
===============================================================================
No dealer, salesperson or other person has been authorized to give any
information or to make any representations, other than those contained in the
prospectus or prospectus supplement. Any such information or any such
representations are not authorized by the seller or by the underwriters. Do
not rely on any such information or any such representations.
We only intend the prospectus supplement to be an offer to sell or a
solicitation of an offer to buy the offered securities if:
o used in a jurisdiction in which such offer or solicitation is
authorized,
o the person making such offer or solicitation is qualified to do so,
and
o such offer or solicitation is made to anyone to whom it is lawful to
make such offer or solicitation.
The information in the prospectus or prospectus supplement is only
accurate as of the date of this prospectus supplement.
All dealers effecting transactions in the offered securities within 90
days after the date of this prospectus supplement may be required to deliver
the prospectus and prospectus supplement, regardless of their participation in
this distribution. This is in addition to the obligation of dealers to deliver
the prospectus and prospectus supplement when acting as underwriters or when
selling their unsold allotments or subscriptions.
===============================================================================
===============================================================================
DaimlerChrysler
$______________
DAIMLERCHRYSLER
AUTO TRUST ______
$_____________
A-2, ____% Asset-Backed Notes
$_____________
A-3, ____% Asset-Backed Notes
$_____________
A-4, ____% Asset-Backed Notes
[CHRYSLER FINANCIAL COMPANY
L.L.C.][DAIMLERCHRYSLER SERVICES
NORTH AMERICA LLC]
Seller and Servicer
PROSPECTUS SUPPLEMENT
Dated_____________
[underwriters]
===============================================================================
Subject to completion dated May [___], 2001
prospectus
DAIMLERCHRYSLER AUTO TRUSTS
Asset Backed Notes
Asset Backed Certificates
[CHRYSLER FINANCIAL COMPANY L.L.C.][DAIMLERCHRYSLER SERVICES NORTH
AMERICA LLC]
SELLER AND SERVICER
MERCEDES-BENZ CREDIT CORPORATION
SUBSERVICER
[Chrysler Financial Company L.L.C.][DaimlerChrysler Services North
America LLC] may form trusts at various times. A trust may purchase automobile
and light duty truck retail installment sales contracts directly from
[Chrysler Financial Company L.L.C.][DaimlerChrysler Services North America
LLC] or indirectly from Mercedes-Benz Credit Corporation. A trust will issue
securities to fund its purchase. Securities issued by a trust
o may consist of one or more classes of notes and/or certificates;
o will be payable only from the assets of that trust;
o will be entitled to receive payments that will vary by class as to
timing, amount and priority, as described in the related prospectus
supplement; and
o may have the benefit of some form of credit or other enhancement.
The main source of funds for making payments on the trust's
securities will be collections on the purchased receivables.
Before you decide to invest in any of the securities, please read
this prospectus and the related prospectus supplement, especially the risk
factors beginning on page 9 of the prospectus. The securities will be
interests in or obligations of a trust only and neither the securities nor the
assets of the trust will represent interest in or obligations of
DaimlerChrysler AG, [Chrysler Financial Company L.L.C.][DaimlerChrysler
Services North America LLC], or any of their affiliates. Neither the SEC nor
any state securities commission has approved or disapproved the securities or
determined that this prospectus or any prospectus supplement is accurate or
complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is [__________], 2001.
READING THIS PROSPECTUS AND THE
ACCOMPANYING PROSPECTUS SUPPLEMENT
We provide information on your securities in two separate documents
that offer varying levels of detail:
o this prospectus provides general information, some of which may not
apply to a particular series of securities, including your
securities, and
o the accompanying prospectus supplement is a summary of the specific
terms of your securities.
If the terms of the securities described in this prospectus vary with
the accompanying prospectus supplement, you should rely on the information in
the prospectus supplement.
We include cross-references to sections in these documents where you
can find further related discussions. Refer to the table of contents in the
front of each document to locate the referenced sections.
The Index of Principal Terms on page 71 in this prospectus lists the
pages where capitalized terms used in this prospectus are defined.
You should rely only on the information contained in this prospectus
and the accompanying prospectus supplement, including any information
incorporated by reference. We have not authorized anyone to provide you with
different information. The information in this prospectus or the accompanying
prospectus supplement is only accurate as of the dates on their respective
covers.
AVAILABLE INFORMATION
[Chrysler Financial Company L.L.C.][DaimlerChrysler Services North
America LLC], as the originator of each trust, has filed a Registration
Statement (together with all amendments and exhibits thereto, referred to
herein as the "Registration Statement") with the Securities and Exchange
Commission ("SEC") under the Securities Act of 1933, as amended. The
Registration Statement relates to any notes and certificates offered in this
prospectus.
The Registration Statement may be inspected and copied at:
o the public reference facilities maintained by the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549 (telephone 1-800-732-0330),
o at the SEC's regional office at Citicorp Center, 500 West Madison
Street, 14th Floor, Chicago, Illinois 60661, and
o at the SEC's regional office at Seven World Trade Center, New York,
New York 10048.
Also, the SEC maintains a Web site at http://www.sec.gov containing
reports, proxy and information statements and other information regarding
registrants, including Chrysler Financial Company L.L.C., that file
electronically with the SEC.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed by [Chrysler Financial Company
L.L.C.][DaimlerChrysler Services North America LLC], as originator of the
trust referred to in the accompanying prospectus supplement, pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended, subsequent to the date of this prospectus and prior to the
termination of the offering of the securities offered by such trust shall be
deemed to be incorporated by reference in this prospectus.
For purposes of this prospectus, any statement in this prospectus, an
incorporated document or a document incorporated by reference may be modified
or superseded. Such statements may be modified or superseded by any other
statement in this prospectus, an incorporated document or a document
incorporated by reference. The statement may only be modified or superseded to
a limited extent. The original form of any such statement will no longer be a
part of this prospectus. Only the modified form of any such statement will
constitute a part of this prospectus.
Copies of the Documents
You will receive a free copy of any or all of the documents
incorporated in this prospectus or incorporated by reference into the
accompanying prospectus supplement if:
o you received this prospectus and
o you request such copies from Assistant Secretary, [Chrysler
Financial Company L.L.C.][DaimlerChrysler Services North America
LLC], 1000 Chrysler Drive, CIMS 485-14-78, Auburn Hills, Michigan
48236-2766 (Telephone: 248-512-3990).
This offer only includes the exhibits to such documents, if such
exhibits are specifically incorporated by reference in such documents. You may
also read and copy these materials at the public reference facilities of the
SEC in Washington, D.C., referred to previously.
TABLE OF CONTENTS
Section Page
SUMMARY 7
PARTIES 7
SECURITIES ISSUED 8
TRUST PROPERTY 9
ENHANCEMENT 10
TAX STATUS 11
ERISA CONSIDERATIONS 11
FORM, DENOMINATION AND RECORD DATE 11
RISK FACTORS 12
A TRUST'S ONLY SOURCES OF FUNDS FOR MAKING PAYMENTS ON ITS
SECURITIES ARE COLLECTIONS ON ITS RECEIVABLES AND ANY
ENHANCEMENT THE SECURITIES MAY HAVE 12
PREPAYMENTS MAY ADVERSELY AFFECT AVERAGE LIFE AND YIELDS OF THE
SECURITIES 12
RATINGS OF THE OFFERED SECURITIES 13
LIMITED ABILITY TO RESELL SECURITIES 13
BOOK-ENTRY REGISTRATION MAY LIMIT YOUR ABILITY TO RESELL YOUR
SECURITIES 13
CHANGE IN SERVICER MAY RESULT IN LATE PAYMENTS ON SECURITIES 13
COMMINGLING OF MONIES BY THE SERVICER MAY RESULT IN A LOSS
FOR SECURITYHOLDERS 13
CERTIFICATEHOLDERS DO NOT HAVE RIGHTS TO ACT UPON SERVICER DEFAULT 14
INSOLVENCY OF THE SELLER MAY RESULT IN DELAYS, REDUCTIONS OR LOSS
OF PAYMENTS TO SECURITYHOLDERS 14
TRUSTS MAY NOT HAVE A PERFECTED SECURITY INTEREST IN CERTAIN
FINANCED VEHICLES 15
RELIANCE ON REPRESENTATIONS AND WARRANTIES BY THE SELLER OR
THE SERVICER WHICH PROVES TO BE INADEQUATE MAY RESULT IN LOSSES
TO SECURITYHOLDERS 15
FAILURE TO COMPLY WITH CONSUMER PROTECTION LAW REQUIREMENTS MAY
MAKE A TRUST LIABLE 15
SUBORDINATION OF CERTAIN SECURITIES MAY RESULT IN REDUCED
PAYMENTS TO THOSE SECURITIES 16
ISSUANCE OF A SUBSEQUENT SERIES OF SECURITIES MAY ADVERSELY
AFFECT ANY PRIOR SERIES OF SECURITIES 16
PRINCIPAL DOCUMENTS 17
THE TRUSTS 17
SECURITIES ISSUANCE 18
TRUST PROPERTY 18
USE OF PROCEEDS 19
RECEIVABLE POOLS 19
UNDERWRITING 20
SIMPLE INTEREST RECEIVABLES 20
PRECOMPUTED RECEIVABLES 21
[CFC][DCS] GOLD KEY PLUS RECEIVABLES 21
SELECTION CRITERIA 22
RECOURSE TO [CFC][DCS] DEALERS 22
RECOURSE TO MBCC DEALERS 23
NET CREDIT LOSS AND DELINQUENCY EXPERIENCE 23
FLOW OF FUNDS 23
SOURCES OF FUNDS 23
APPLICATION OF AVAILABLE FUNDS 24
NET DEPOSITS 24
CREDIT ENHANCEMENT 24
RESERVE FUND 25
PAYMENTS ON THE SECURITIES 25
PRINCIPAL PAYMENTS 25
WEIGHTED AVERAGE LIFE OF THE SECURITIES 25
INDEXED SECURITIES 26
OPTIONAL REDEMPTION 26
INTEREST PAYMENTS 27
FIXED RATE SECURITIES 27
FLOATING RATE SECURITIES 27
FORM OF SECURITIES AND TRANSFERS 29
BOOK-ENTRY REGISTRATION 29
DEFINITIVE SECURITIES 32
LIST OF SECURITYHOLDERS 33
SALE PROVISIONS 34
SERVICING 35
THE SERVICER 35
THE SUBSERVICER 35
ACCOUNTS 36
SERVICING PROCEDURES 36
COLLECTIONS 37
[CFC][DCS] SERVICING AND COLLECTIONS 38
MBCC SERVICING AND COLLECTIONS 38
SERVICING COMPENSATION AND PAYMENT OF EXPENSES 38
REPORTS TO SECURITYHOLDERS 39
STATEMENTS TO TRUSTEES AND TRUST 39
EVIDENCE AS TO COMPLIANCE 41
CERTAIN MATTERS REGARDING THE SERVICER 41
SERVICER DEFAULT 42
RIGHTS UPON SERVICER DEFAULT 42
WAIVER OF PAST DEFAULTS 42
THE INDENTURE 43
INDENTURE; MASTER INDENTURE 43
ANNUAL COMPLIANCE STATEMENT 46
INDENTURE TRUSTEE'S ANNUAL REPORT 47
SATISFACTION AND DISCHARGE OF INDENTURE 47
THE INDENTURE TRUSTEE 47
MISCELLANEOUS PROVISIONS OF PRINCIPAL DOCUMENTS 48
AMENDMENT 48
THE OWNER TRUSTEE 48
INSOLVENCY EVENT 49
PAYMENT OF NOTES 49
TERMINATION 49
ADMINISTRATION AGREEMENT 49
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES 50
SECURITY INTEREST IN VEHICLES 50
REPOSSESSION 51
NOTICE OF SALE; REDEMPTION RIGHTS 51
DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS 51
CONSUMER PROTECTION LAWS 52
OTHER LIMITATIONS 53
CERTAIN FEDERAL INCOME TAX CONSEQUENCES 53
TRUSTS FOR WHICH A PARTNERSHIP ELECTION IS MADE 54
TRUSTS IN WHICH ALL CERTIFICATES ARE RETAINED BY THE SELLER OR
AN AFFILIATE OF THE SELLER 60
FASITS 62
CERTAIN STATE TAX CONSEQUENCES 62
ERISA CONSIDERATIONS 63
SENIOR CERTIFICATES 64
PLAN OF DISTRIBUTION 67
LEGAL OPINIONS 68
INDEX OF PRINCIPAL TERMS 69
ANNEX I-GLOBAL CLEARANCE A-1
OVERVIEW A-1
INITIAL SETTLEMENT A-1
SECONDARY MARKET TRADING\ A-2
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS A-3
SUMMARY
The following summary is a short, concise description of the main
structural features that a class of securities may have. For this reason, this
summary does not contain all the information that may be important to you or
that describes all of the terms of a security. You will find a detailed
description of the possible terms of a security following this summary.
PARTIES
Party Description
Issuer and Trust o Generally, each series of securities will be issued by a
separate trust
o Some trusts may issue more than one series of securities
[Chrysler Financial o Seller of receivables to a trust
Company L.L.C. o Servicer of receivables
("CFC")]
[DaimlerChrysler o [CFC's][DCS's] address is 27777 Franklin Road, Southfield,
Services Michigan 48034-8286 (telephone 248-512-3990)
North America LLC o Indirect wholly-owned subsidiary of DaimlerChrysler AG
("DCS")] o Originator of [CFC][DCS] receivables
Mercedes-Benz Credit Corporation
("MBCC") o Seller of MBCC receivables to [CFC][DCS]
o Subservicer of the MBCC receivables, if any
o Indirect wholly-owned subsidiary of DaimlerChrysler AG
o Originator of MBCC receivables
Indenture Trustee o Specified in the related prospectus supplement
o Performs duties for the benefit of
noteholders
Owner Trustee o Specified in the related prospectus supplement
o Performs duties on behalf of a trust and certificateholders
DaimlerChrysler o A special-purpose financing entity, formerly named Premier
Retail Receivables L.L.C.
Receivables o An indirect wholly-owned subsidiary of [CFC][DCS]
LLC o Generally, owner of the equity in a trust
SECURITIES ISSUED
A series of securities may include one or more classes of notes
and/or certificates. You will find the following information about each class
of securities in the prospectus supplement:
o its principal amount;
o its interest rate, which may be fixed or floating or a combination;
o the timing, amount and priority or subordination of payments of
principal and interest;
o the method for calculating the amount of principal payments;
o its final payment date;
o whether it may be redeemed prior to its final payment date; and
o other relevant factors.
Some classes of securities may be entitled to:
o principal payments with disproportionate, nominal or no interest
payments or
o interest payments with disproportionate, nominal or no principal
payments.
TRUST PROPERTY
The property of each trust will include a pool of motor vehicle
retail installment sale contracts secured by new or used automobiles or light
duty trucks. These receivables include:
o rights to receive certain payments made on the receivables;
o security interests in the underlying financed vehicles;
o certain accounts and the related proceeds, and
o any proceeds from claims on certain related insurance policies.
In addition, the property of a trust may include:
o notes and/or certificates that were issued by a prior trust but were
not then offered and/or
o distributions from one or more prior trusts that would otherwise be
made to DaimlerChrysler Retail Receivables LLC.
In a trust that issues more than one series of securities, the trust
will allocate a group of its assets to a single series. This allocated series
trust property will support only the single series of securities to which it
has been allocated. This series trust property will not benefit or result in
any payments on any other series of securities issued by that trust or any
other trust.
You will find a description of the receivables in the prospectus
supplement.
[CFC][DCS] will have purchased the receivables from the originating
automobile and light duty truck dealers or from its affiliate, MBCC, which
purchased them from the originating dealers. [CFC][DCS] may sell these MBCC
receivables to the trust.
If a trust has not purchased all of its receivables at the time you
purchase your securities, it will purchase the remainder of its receivables
from [CFC][DCS] over a period specified in the prospectus supplement. Some
trusts may, during a specified period, use principal collections on its
receivables to purchase additional receivables.
ENHANCEMENT
Some classes of securities may have the benefit of any of the
following enhancements which are intended to increase the likelihood of
payments on those securities:
o subordination of one or more classes of securities;
o overcollateralization (i.e., the amount by which the principal
amount of the receivables exceeds the principal amount of all of the
trust's securities);
o excess interest collections (i.e., the excess of interest
collections on the receivables over servicing fees, interest on the
trust's securities and any amounts required to be deposited in a
reserve fund, if any);
o reserve funds that will be applied to cover payments on the
securities not covered by collections on the receivables;
o letter of credit or other credit facility;
o surety bond;
o liquidity arrangements;
o swaps (including currency swaps) and other derivative instruments
and interest rate protection agreements;
o repurchase or put obligations;
o yield supplement agreements; and
o other arrangements similar to those described above.
The prospectus supplement will describe the limitation of any
enhancement that applies to the securities. Enhancements cannot guarantee that
losses will not be incurred on the securities.
TAX STATUS
If the trust issues notes, federal tax counsel to the trust will
deliver an opinion at the time of initial issuance that for federal income tax
purposes:
o the notes will be characterized as debt unless otherwise stated in
the prospectus supplement and
o the trust will not be characterized as an association (or a publicly
traded partnership) taxable as a corporation.
If the trust issues certificates, you will find a discussion of the
federal income tax characterization of the certificates and the related trust
in this prospectus and the related prospectus supplement.
See "Certain Federal Income Tax Consequences" for additional
information concerning the application of federal and state tax laws to the
securities.
ERISA CONSIDERATIONS
If you are an employee benefit plan, you should review the
considerations discussed under "ERISA Considerations" in this prospectus
before investing in the securities. In general, subject to those
considerations and to conditions described in that section, and unless
otherwise specified in the prospectus supplement, you may purchase the notes
of any series.
FORM, DENOMINATION AND RECORD DATE
You may purchase securities only in book-entry form. You may purchase
securities in $1,000 increments. The "Record Date" will be the business day
immediately preceding the payment date or, if Definitive Securities are
issued, the 15th day of the preceding calendar month.
RISK FACTORS
A TRUST'S ONLY SOURCES OF FUNDS FOR MAKING PAYMENTS ON ITS
SECURITIES ARE COLLECTIONS ON ITS RECEIVABLES AND ANY
ENHANCEMENT THE SECURITIES MAY HAVE
Receivables and enhancement, if any, will be the only significant
assets of a trust. Collections on the receivables and the enhancement are the
only possible sources of funds to make payments on the securities. You must
rely upon these sources for repayment of your securities.
The securities of any series will represent obligations of or
interests in the related trust only. The securities of any series will not be
insured or guaranteed by DaimlerChrysler AG, [CFC][DCS] or any of their
affiliates, the applicable owner trustee, any indenture trustee or any other
person or entity.
The following applies in the case of a trust that issues more than
one series of securities. The securities of a multi-series trust will be
supported solely by the trust property allocated to its series and will not
have any rights in or claims on, or receive any payments from, the trust
property allocated to any other series of securities issued by that trust.
Consequently, investors must rely solely upon collections on the receivables
allocated to their series and, to the extent available, any enhancement for
such series.
PREPAYMENTS MAY ADVERSELY AFFECT
AVERAGE LIFE AND YIELDS OF THE SECURITIES
Prepayments include all of the following:
o an obligor on a receivable makes payments, in whole or in part,
earlier than scheduled
o the servicer liquidates a defaulted receivable
o the servicer or seller is required to purchase or repurchase,
respectively, a receivable from the trust
As a result of any of the above instances, the principal amount of a
receivable is repaid (or charged off) in advance of its payment schedule.
Most investors use an assumed prepayment rate on the receivables to
price their securities. The actual prepayment rate may be faster or slower
than the prepayment rate used to price the securities. The prepayment rate on
the receivables may be influenced by a variety of economic, social and other
factors.
Any reinvestment risks resulting from a faster or slower incidence of
prepayment of receivables will be borne entirely by the securityholders of the
related series.
Refer to the "Payments on the Securities--Principal
Payments--Optional Redemption" section for information on the servicer's
option to purchase the receivables of a trust.
RATINGS OF THE OFFERED SECURITIES
At the initial issuance of a series, at least two nationally
recognized rating agencies will rate the offered securities in the highest
investment rating category or in the categories otherwise specified in the
prospectus supplement. A rating is not a recommendation to purchase, hold or
sell securities, and it does not comment as to market price or suitability for
a particular investor. The ratings of the offered securities address the
likelihood of the payment of principal and interest on the offered securities
according to their terms. We cannot assure you that a rating will remain for
any given period of time or that a rating agency will not lower or withdraw
its rating if, in its judgment, circumstances in the future so warrant.
LIMITED ABILITY TO RESELL SECURITIES
There may be no secondary market for the securities. Underwriters may
participate in making a secondary market in the securities, but are under no
obligation to do so. We cannot assure you that a secondary market will
develop. If a secondary market does develop, we cannot assure you that it will
continue or that you will be able to resell your securities.
BOOK-ENTRY REGISTRATION MAY LIMIT
YOUR ABILITY TO RESELL YOUR SECURITIES
The securities will be delivered to you in book-entry form through
the facilities of The Depository Trust Company ("DTC") or Clearstream or
Euroclear. Consequently, your securities will not be registered in your name.
As a result, you will not be recognized as a securityholder by the owner
trustee or any applicable indenture trustee. Consequently, you will only be
able to exercise the rights of a securityholder indirectly through DTC and its
participating organizations. Specifically, you may be limited by your ability
to resell the securities to a person or entity that does not participate in
the DTC system or Clearstream or Euroclear.
The above does not apply if Definitive Securities are issued. Refer
to the "Form of Securities and Transfers--Definitive Securities" section for
additional information.
CHANGE IN SERVICER MAY RESULT IN LATE PAYMENTS ON SECURITIES
If [CFC][DCS] were to cease acting as servicer, or if MBCC were to
cease acting as subservicer of the MBCC receivables, there may be delays in
processing
o payments on the receivables and
o information on the receivables.
These processing delays may result in late payments on the securities.
COMMINGLING OF MONIES BY THE SERVICER
MAY RESULT IN A LOSS FOR SECURITYHOLDERS
The servicer will be required to remit all collections on and
proceeds from the receivables to each trust on a monthly or daily basis. For a
monthly basis, the servicer will remit on or before the monthly payment date.
For a daily basis, the servicer will remit within two business days of receipt
of collections and proceeds. Prior to remittance, the funds
o may be invested by the servicer at its own risk and for its own
benefit and
o will not be segregated from funds of the servicer.
If the servicer were unable to remit those funds, the applicable
securityholders might incur a loss.
The prospectus supplement may require the servicer to obtain a letter
of credit or other security for the benefit of the trust to secure timely
remittances of collections on and proceeds from the receivables. Refer to the
"Servicing--Collections" section for additional information.
CERTIFICATEHOLDERS DO NOT HAVE RIGHTS
TO ACT UPON SERVICER DEFAULT
The following generally applies to a series that includes notes and
certificates. If the notes are still outstanding and a Servicer Default occurs
o removal of the servicer may occur without the consent of the
certificateholders or the owner trustee and
o the certificateholders or owner trustee will not have the ability to
remove the servicer.
In addition, the noteholders may have the ability to waive defaults by the
servicer, including defaults that could materially adversely affect the
certificateholders. Refer to the "Servicing--Rights Upon Servicer Default" and
"--Waiver of Past Defaults" sections for additional information.
INSOLVENCY OF THE SELLER MAY RESULT IN DELAYS,
REDUCTIONS OR LOSS OF PAYMENTS TO SECURITYHOLDERS
The seller will warrant to each trust that the sale of the
receivables to the trust is a valid sale. However, if the seller were to
become a debtor in a bankruptcy case, delays in payments of collections of
receivables to the related securityholders could result if it is argued that
the transfer of the receivables to the trust is a pledge of the receivables to
secure a borrowing rather than a sale. If the court rules that the transfer is
a pledge rather than a sale, reductions in the amount of payments to the
securityholders could result.
Also, if the transfer of receivables to a trust is treated as a
pledge, then a tax or government lien on the property of the seller arising
before the transfer may have priority over the trust's interest in the
receivables.
A case decided by the United States Court of Appeals for the Tenth
Circuit contains language to the effect that accounts sold by an entity that
subsequently became bankrupt remained property of the debtor's bankruptcy
estate because the sale of accounts is treated as a "security interest" that
must be perfected under the Uniform Commercial Code ("UCC"). Although the
contracts representing the receivables constitute chattel paper rather than
accounts under the UCC, sale of chattel paper, like sales of accounts, must be
perfected under Article 9 of the UCC. If [CFC][DCS] were to become a debtor
under any insolvency law and a court were to follow the reasoning of the Tenth
Circuit Court of Appeals and apply such reasoning to chattel paper, then the
trust could experience a delay in or reduction of collections on the
receivables, and you could incur a loss on your investment as a result.
TRUSTS MAY NOT HAVE A PERFECTED SECURITY
INTEREST IN CERTAIN FINANCED VEHICLES
In connection with the sale of receivables to a trust, the seller
will assign the security interests in the financed automobiles or light duty
trucks securing those receivables to the trust at the time of sale. Due to
administrative burden and expense, the certificates of title to the financed
automobiles or light duty trucks will not be amended to reflect the assignment
to the trust. In the absence of such an amendment, the trust may not have a
perfected security interest in the financed vehicles securing its receivables
in some states. If a trust does not have a perfected security interest in a
financed automobile or light duty truck, its ability to repossess the financed
automobile or light duty truck securing a defaulted receivable may be
adversely affected.
Generally, the seller will be obligated to repurchase any receivable
that does not have a perfected security interest in the name of the seller (or
MBCC, as applicable) as of the date the receivable is transferred to the
trust. The seller will only be obligated to repurchase the receivable if
o the lack of perfection will materially adversely affect the trust
and
o the lack of perfection will not be cured within a specified period.
To the extent the security interest is perfected, a trust will have a
prior claim over subsequent purchasers of the financed automobile or light
duty truck and holders of subsequently perfected security interests. However,
a trust may not have a prior security interest against liens for repairs of
financed automobiles or light duty trucks or for taxes unpaid by an obligor.
Also, a trust could lose its security interest (or its priority) through fraud
or negligence. If a trust loses its security interest or the priority of its
security interest due to any of these occurrences, neither the seller nor the
servicer will be obligated to repurchase the related receivable if the
occurrence transpired after the trust purchased the receivable.
RELIANCE ON REPRESENTATIONS AND WARRANTIES BY THE SELLER
OR THE SERVICER WHICH PROVES TO BE INADEQUATE
MAY RESULT IN LOSSES TO SECURITYHOLDERS
In connection with the sale of receivables by the seller to a trust,
the seller will make representations and warranties on the characteristics of
the receivables. In some circumstances, the seller may be required to
repurchase receivables that do not conform to the representations and
warranties. In addition, under some circumstances the servicer may be required
to purchase receivables from a trust.
Refer to the "Sale Provisions" and "Servicing--Servicing Procedures"
sections for additional information.
FAILURE TO COMPLY WITH CONSUMER PROTECTION
LAW REQUIREMENTS MAY MAKE A TRUST LIABLE
Federal and state consumer protection laws impose requirements upon
creditors in connection with extensions of credit and collections of retail
installment loans. Some of these laws make an assignee of a loan (such as a
trust) liable to the obligor for any violation by the lender. Generally, the
seller will be obligated to repurchase any receivable which fails to comply
with such laws.
SUBORDINATION OF CERTAIN SECURITIES MAY RESULT
IN REDUCED PAYMENTS TO THOSE SECURITIES
Payments of interest and principal on one or more classes of
securities of a series may be subordinated in priority of payment to payments
of interest and principal due on one or more other classes of securities of
the same series. Subordination of a class of securities has the effect of
increasing the likelihood of payment on the senior classes of securities in
that series and decreasing the likelihood of payment on that subordinated
class of securities.
ISSUANCE OF A SUBSEQUENT SERIES OF SECURITIES MAY
ADVERSELY AFFECT ANY PRIOR SERIES OF SECURITIES
A single trust may issue more than one series of securities. The
provisions of the governing documents for a subsequent series of securities
issued by a trust will not be subject to the consent of or prior review by the
holders of a prior series of securities. If a trust issues a subsequent series
of securities, each rating agency that rated a prior series of securities must
indicate that the subsequent series will not cause them to reduce or withdraw
its rating of a prior series. We cannot assure you that the issuance of a
subsequent series will not have some effect on a prior series of securities.
PRINCIPAL DOCUMENTS
In general, the operations of a trust will be governed by the
following documents:
Document Parties Primary Purposes
Trust Agreement Owner trustee and [CFC][DCS], o creates the trust
as depositor o provides for issuance of certificates and payments to
certificateholders
o establishes rights and duties of owner trustee
o establishes rights of certificateholders
Indenture Trust, as issuer of the o provides for issuance of the notes terms of the notes
and the notes, and indenture trustee o establishes rights and duties of indenture trustee
o establishes rights of noteholders
Sale and Servicing [CFC][DCS], as seller and servicer, o effects sale of receivables to the trust
Agreement and a trust as purchaser o contains representations and warranties concerning the
receivables
o contains servicing obligations of servicer
o provides for compensation to servicer
o directs how cash flow will be applied to expenses of the
trust and payments on its securities
Various provisions of these documents are described throughout this
prospectus and in the related prospectus supplement. The prospectus supplement
for a series will describe any material provisions of these documents that
differ in a material way for that series from the provisions described in this
prospectus.
A form of each of these principal documents has been filed as an
exhibit to the Registration Statement of which this prospectus forms a part.
The summaries of the principal documents in this prospectus do not purport to
be complete and are subject to, and are qualified in their entirety by
reference to, all the provisions of those principal documents.
THE TRUSTS
[CFC] [DCS] may form trusts at various times pursuant to a separate
"Trust Agreement" for each trust. The principal offices of each trust and the
related owner trustee will be specified in the applicable prospectus
supplement.
SECURITIES ISSUANCE
A trust will issue securities and use the net proceeds from the sale
of the securities to purchase receivables and all payments received on such
receivables on and after the applicable cut-off date (as specified in the
prospectus supplement, a "Cut-off Date"). If the purchased receivable is a CFC
Gold Key Plus Receivable, generally, only the right to receive certain
payments will be purchased by a trust. The primary sources for repayment of
the securities issued by a trust are collections on its receivables,
liquidation proceeds on its defaulted receivables and its reserve funds, if
any.
TRUST PROPERTY
If a trust issues more than one series of securities, the securities
of a series will be supported solely by the property allocated to such series
("Series Trust Property") and will not have any rights in or receive any
payments from the Series Trust Property allocated to any other series of
securities issued by that trust. The Series Trust Property of a trust will
include:
o the receivables pool allocated to such series and payments on such
receivables;
o such amounts as from time to time may be held in separate trust
accounts established for the trust and the proceeds of such
accounts, as described in this prospectus and in the accompanying
prospectus supplement;
o security interests in the financed vehicles and any other interest
of the seller in such financed vehicles;
o the rights to proceeds from claims on certain physical damage,
credit life and disability insurance policies covering the financed
vehicles or the obligors;
o the seller's interest in proceeds from recourse to dealers on
defaulted receivables or the underlying financed vehicles of
defaulted receivables;
o any property that secured a receivable and has been acquired by the
trust; and
o any and all proceeds of the above as allocated to such series of
securities.
In accordance with a "Sale and Servicing Agreement", the seller will
sell a pool of receivables to the trust on the day the trust issues a series
of securities. After an initial sale, the seller may sell subsequent
receivables ("Subsequent Receivables") to the trust as frequently as daily
during a specified funding period (a "Funding Period"). The trust will
purchase its Subsequent Receivables from the proceeds of the sale of its
securities that were not used to purchase its initial pool of receivables.
Prior to the purchase of Subsequent Receivables, the trust will maintain those
proceeds in its pre-funding account (the "Pre-Funding Account").
Also, a trust may use its principal collections on receivables to
purchase additional receivables ("Additional Receivables") from the seller
over a specified period (a "Revolving Period"). Any Subsequent Receivables or
Additional Receivables so conveyed will also be assets of the applicable trust
allocated solely to such series of securities.
A trust will purchase Subsequent Receivables or Additional
Receivables only if the prospectus supplement so specifies.
The servicer will continue to service the receivables held by each
trust and will receive fees for such services. To facilitate the servicing of
the receivables, the servicer will retain physical possession of the retail
installment sale contracts owned by each trust and other related documents as
custodian for the trust. To avoid undue administrative burden and expense, the
certificates of title to the financed vehicles will not be amended to reflect
the sale and assignment of the security interest in the financed vehicles to
each trust. In the absence of such an amendment, a trust may not have a
perfected security interest in the financed vehicles in all states.
A trust may have reserve funds or other forms of credit enhancement.
Also, a trust may own securities that were issued by another trust but were
not then sold to investors ("Previously Issued Securities"). In addition, a
trust may own the right to receive the overcollateralization distributions
from another trust.
Refer to the "Receivable Pools" section for additional information on
the receivables. Refer to the "Servicing" section in this prospectus and in
the "Transaction Overview-Servicing" section in the accompanying prospectus
supplement for additional information on servicing the receivables. Refer to
the "Certain Legal Aspects of the Receivables" and "Sale Provisions" sections
for additional information on security interests in the financed vehicles.
USE OF PROCEEDS
Generally, a trust will use the net proceeds from the sale of a
series of securities to (i) purchase receivables and, if applicable, any
Previously Issued Securities from the seller, (ii) make the initial deposit
into the reserve funds, if any, and (iii) deposit the Pre-Funded Amount, if
any, into the Pre-Funding Account. Generally, the seller will use the proceeds
it receives for general corporate purposes.
RECEIVABLE POOLS
Each receivable in a pool is a motor vehicle retail installment sale
contract between a dealer and an obligor. The dealers are retail sellers of
new and used automobiles and light duty trucks. Most of the dealers sell
products manufactured and/or distributed by subsidiaries of DaimlerChrysler
AG. Those products include vehicles manufactured under the Chrysler, Plymouth,
Dodge, Jeep, and Mercedes-Benz trademarks.
Each receivable in a pool was or will be originated by dealers who
regularly sell such contracts to [CFC][DCS] or MBCC and has been or will be
purchased by [CFC][DCS] or MBCC. [CFC][DCS] and MBCC have purchased or will
purchase receivables, directly or indirectly, according to agreements with
dealers throughout the United States in the ordinary course of [CFC's][DCS's]
and MBCC's business.
Any MBCC receivables sold to a trust will first be purchased by
[CFC][DCS] from MBCC and subsequently sold to the trust. Receivable pools will
continue to be serviced by [CFC][DCS], in such capacity as the servicer and
will evidence indirect financing made available by the seller to the obligors.
Receivables generated by MBCC may be subserviced by MBCC.
UNDERWRITING
Chrysler Financial Company L.L.C.
[CFC][DCS] purchases contracts in accordance with its credit
standards which are based upon the vehicle buyer's ability and willingness to
repay the obligation, the value of the vehicle being financed, as well as
other factors.
Mercedes-Benz Credit Corporation
MBCC purchases contracts using consistent underwriting policies and
procedures. MBCC's underwriting standards emphasize, among other factors, the
applicant's willingness and ability to repay according to the terms of the
receivable. The final credit decision is made based upon the degree of credit
risk perceived and the amount of credit requested.
SIMPLE INTEREST RECEIVABLES
"Simple Interest Receivables" are receivables that amortize the
amount financed over a series of fixed level monthly payments. Under the
"simple interest" method, each monthly payment is generally allocated first to
interest and the remainder to principal. The interest allocation is calculated
as follows:
period between current
outstanding principal X stated X and prior payments
balance of the receivable APR (as a fraction of a calendar year)
Accordingly, the portion of the obligor's monthly payment allocated
to principal and interest depends on when an obligor pays the fixed monthly
installment relative to its scheduled due date. The following table
illustrates this relationship:
Portion of Payment
Allocated to If Paid .....
------------ -------------
Before Scheduled After Scheduled
Due Date Due Date
-------- --------
Principal Greater Less
Interest Less Greater
In either case, the obligor generally pays a fixed monthly
installment until the final scheduled payment date. The amount of the final
installment is increased or decreased as necessary to repay the outstanding
principal balance and any finance charges up to the date of final payment. If
a Simple Interest Receivable is prepaid in full, the obligor is required to
pay interest only to the date of prepayment.
If any receivables amortize according to a different method, the
prospectus supplement will describe it. All of [CFC's][DCS's] contracts and
some of MBCC's contracts are Simple Interest Receivables.
PRECOMPUTED RECEIVABLES
Payments received on a "Precomputed Receivable" are allocated
according to the "actuarial" method. The actuarial method provides for
amortization of the loan over a series of fixed level monthly installments.
Each monthly installment is deemed to consist of an amount of interest equal
to a percentage of the stated APR of the loan multiplied by the scheduled
principal balance. The remainder of the scheduled payment is applied to
principal. Generally, no adjustment is made in the event of early or late
payments, although in the latter case the obligor is subject to a late payment
penalty.
Even though scheduled payments received on a Precomputed Receivable
are allocated in accordance with the actuarial method, for a receivable which
is prepaid in full or accelerated under certain circumstances or the financed
vehicle is repossessed and sold or becomes a total loss, the amount owing by
the obligor will be determined by considering that previous payments on the
receivable were allocated according to the "simple interest" or "Rule of 78's"
method.
Refer to the "Simple Interest Receivables" section above for a
description of the simple interest method.
Many of the Precomputed Receivables generally also provide that, in
the event of a prepaid receivable, if the amount owing by the obligor
determined by the "Rule of 78s" would be more favorable to the obligor, the
amount owing may be determined in accordance with such rule. A portion of
MBCC's contracts and none of [CFC's][DCS's] contracts are Precomputed
Receivables.
An "MBCC Balloon Receivable" provides for monthly payments that
amortize the amount financed over its original term to maturity, except that a
final balloon payment, which is materially greater than the scheduled monthly
payments, becomes due on the final maturity date. MBCC Balloon Receivables are
a type of Precomputed Receivable, whose payments are allocated in the same
manner as described above.
[CFC][DCS] GOLD KEY PLUS RECEIVABLES
A "[CFC][DCS] Gold Key Plus Receivable" has the following
characteristics:
o requires a fixed, level monthly payment from the obligor,
o is originated under [CFC's][DCS's] Gold Key Plus program,
o is secured by a new automobile or light duty truck, and
o has a final "Fixed Value Payment" which is materially greater than
the scheduled monthly payments.
A [CFC][DCS] Gold Key Plus Receivable provides for amortization of
the loan over a series of fixed level payment monthly installments, but also
requires a final Fixed Value Payment due after payment of the monthly
installments. The final Fixed Value Payment may be satisfied by:
o payment in full in cash of such amount,
o transfer of the vehicle to [CFC][DCS] provided certain conditions
are satisfied, or
o refinancing the Fixed Value Payment in accordance with certain
conditions.
Generally, a trust will only purchase the principal and interest
payments due prior to the final Fixed Value Payment and DaimlerChrysler Retail
Receivables LLC will purchase the final Fixed Value Payment. DaimlerChrysler
Retail Receivables LLC will have the option to transfer these final Fixed
Value Payments to the related trust in exchange for certificates representing
interests in these final Fixed Value Payments or indebtedness secured by these
final Fixed Value Payments. DaimlerChrysler Retail Receivables LLC may then
sell those certificates or the indebtedness.
SELECTION CRITERIA
Each pool of receivables to be held by a trust and allocated to a
series of securities will be selected from the seller's portfolio and/or
MBCC's portfolio. Each pool of receivables may include only [CFC][DCS]
contracts, or only MBCC contracts or a combination of both [CFC][DCS] and MBCC
contracts.
Generally, only receivables meeting the following criteria will be
selected:
o has been purchased by the seller, directly or indirectly, from
dealers in the ordinary course of business or from MBCC, which will
have purchased them from dealers is secured by a new or used vehicle
o has been originated in the United States
o satisfies the other criteria, if any, in the related prospectus
supplement
If a pool of receivables does not follow any of these selection criteria, the
related prospectus supplement will so specify.
The prospectus supplement will include information on each
receivables pool, including, to the extent appropriate:
o the composition
o the distribution of the receivables pool selected from the
[CFC][DCS] portfolio and from the MBCC portfolio
o the distribution of such receivables pool secured by new vehicles
and by used vehicles
o the distribution by outstanding principal balance
o the distribution by annual percentage rate ("APR")
o the distribution by U.S. state of origination
RECOURSE TO [CFC][DCS] DEALERS
[CFC][DCS] has recourse to its dealers on a portion of its retail
installment sale contracts. Under its recourse obligation, the dealer is
responsible to [CFC][DCS] for payment of the unpaid balance of the contract,
provided that [CFC][DCS] repossesses the vehicle from the retail buyer and
returns it to the dealer within a specified time. [CFC][DCS] applies the same
underwriting standards to the purchase of contracts regardless of whether
there is recourse to dealers.
The net credit loss experience of contracts without recourse against
dealers is higher than that of contracts with recourse against dealers. Based
on its experience, [CFC][DCS] believes that there is no material difference
between the rates of delinquency and repossession on contracts with recourse
against dealers as compared to contracts without recourse against dealers.
In the event of a dealer's bankruptcy, a bankruptcy trustee might
attempt to characterize recourse sales of contracts as loans to the dealer
secured by the contracts. Such an attempt could result in payment delays and,
if successful, losses on the affected receivables. The prospectus supplement
will include information on the percentage of receivables in the pool with
recourse to dealers.
In addition, some dealers may be obligated to repurchase receivables
originated by them if the dealers have made certain misrepresentations about
the receivables.
RECOURSE TO MBCC DEALERS
MBCC's agreements with each of its dealers obligates the dealer to
repurchase any retail installment sale contract for the outstanding principal
balance if the dealer breaches certain representations and warranties. Upon
breach of any representation or warranty made by a dealer with respect to a
contract, pursuant to the dealer agreement, MBCC has a right of recourse
against such dealer to require it to repurchase such contract. Generally, in
determining whether to exercise such right, MBCC considers the prior
performance of the dealer and other business and commercial considerations.
MBCC, as subservicer, will be obligated to enforce such rights with respect to
dealer agreements relating to any MBCC receivables in a pool in accordance
with such customary practices, and the right to any proceeds received upon
such enforcement will be conveyed to the related trust.
NET CREDIT LOSS AND
DELINQUENCY EXPERIENCE
Each prospectus supplement will include specified net credit loss,
repossession and delinquency experience of the seller and, if applicable,
MBCC. We cannot assure you that the delinquency, repossession and net credit
loss experience on any receivables pool will be comparable to historical
experience or to such information.
FLOW OF FUNDS
SOURCES OF FUNDS
A trust may use funds from the following sources to pay its expenses
and make payments on its securities:
o collections on its receivables
o net recoveries from the liquidation of defaulted receivables
o amounts paid by the seller to repurchase a receivable as a result of
the seller's material breach of a representation and warranty--refer
to "Sale Provisions"
o amounts paid by the servicer to purchase a receivable to which it
has made certain modifications--refer to "Servicing -- Servicing
Procedures"
o investment earnings during the related collection period, if any, on
its reserve fund, if any, and on deposits, if any, in its deposit
account
o any reserve fund described in the related prospectus supplement
o any other sources described in the related prospectus supplement.
The funds available to pay expenses and make payments on securities
for any given period are referred to as "Available Funds".
In the case of a trust that issues more than one series of
securities, the distributions on the securities of any one series will be made
solely from funds allocated to that series and not from the funds allocated to
any other series issued by that trust.
APPLICATION OF AVAILABLE FUNDS
On each payment date the available funds of a trust will be applied
to its expenses and payments on its securities in the amounts and the order of
priority set forth in the prospectus supplement.
NET DEPOSITS
As an administrative convenience, the servicer will deposit a trust's
available funds into any account of the trust net of a payments to be made to
the servicer. However, the servicer will account for available funds as if all
deposits and transfers of available funds were made individually rather than
net.
CREDIT ENHANCEMENT
Credit enhancements are intended to enhance the likelihood of full
payment of principal and interest due and to decrease the likelihood that
securityholders will experience losses. Unless otherwise specified in the
related prospectus supplement, the credit enhancement for a class or series of
securities will not provide protection against all risks of loss and will not
guarantee repayment of the entire principal balance and accrued interest. If
losses occur which exceed the amount covered by any credit enhancement or
which are not covered by any credit enhancement, securityholders of any class
or series will bear their allocable share of losses, as described in the
related prospectus supplement. In addition, if a form of credit enhancement
covers more than one series of securities, securityholders of any such series
will be subject to the risk that the credit enhancement will be exhausted by
the claims of securityholders of the other series.
A prospectus supplement for a series will specify whether there is
any credit or cash flow enhancement and how it works. Examples are:
o subordination of one or more classes of securities of a series,
o reserve funds,
o overcollateralization,
o letters of credit,
o credit or liquidity facilities,
o surety bonds,
o guaranteed investment contracts,
o swaps (including without limitation currency swaps),
o other interest rate protection agreements,
o repurchase obligations (including without limitation put options),
o yield supplement agreements,
o other agreements with respect to third party payments,
o any other arrangements as may be described in the related prospectus
supplement or
o any combination of two or more of the above.
RESERVE FUND
A trust may maintain a reserve fund in its Deposit Account.
Generally, a reserve fund will be established by an initial deposit by the
seller on the Closing Date. If a trust has a Funding Period, the reserve fund
will also be increased on each Subsequent Transfer Date to the extent
described in the related prospectus supplement. The amount of the reserve fund
may be increased on each payment date up to a required amount through an
allocation of the trust's Available Funds. The related prospectus supplement
will describe the manner in which the reserve fund will be applied.
PAYMENTS ON THE SECURITIES
The prospectus supplement will describe
o the timing and priority of payments of principal and interest on
each class of the securities,
o their interest rates,
o the method of determining the amount of their principal payments,
o the priority of the application of the trust's available funds to
its expenses, and payments on its securities.
The rights of any class of securities may be senior or subordinate to
other classes of securities. A security may be entitled to
o principal payments with disproportionate, nominal or no interest
payments or
o interest payments with disproportionate, nominal or no principal
payments.
Interest rates may be fixed, variable or adjustable. A class of securities may
be redeemable. The aggregate initial principal amount of the securities of a
series may be greater than, equal to or less than the aggregate initial
principal amount of the receivables in that series.
Payments of principal and interest on any class of securities will be
made on a pro rata basis among all the securityholders of such class. A series
may provide for a liquidity facility or other arrangement (including without
limitation the issuance of additional securities by the trust) that permits
one or more classes of securities to be paid in planned amounts on scheduled
payment dates.
PRINCIPAL PAYMENTS
Weighted Average Life of the Securities
The weighted average life of the securities will generally be
influenced by the rate at which the principal balances of the related
receivables are paid, which payment may be in the form of scheduled
amortization or prepayments. For this purpose, the term "prepayments" includes
prepayments in full, partial prepayments including those related to rebates of
extended warranty contract costs and insurance premiums, liquidations due to
default, as well as receipts of proceeds from physical damage, credit life and
disability insurance policies and certain other receivables repurchased by the
seller or the servicer for administrative reasons. All of the receivables may
be prepaid at any time without penalty to the obligor. The rate of prepayment
of automotive receivables is influenced by a variety of economic, social and
other factors, including the fact that an obligor generally may not sell or
transfer the financed vehicle securing a receivable without the consent of the
seller. The rate of prepayment on the receivables may also be influenced by
the structure of the loan. In addition, under certain circumstances, the
seller will be obligated to repurchase receivables from a trust pursuant to
the related Sale and Servicing Agreement as a result of breaches of its
representations and warranties and the servicer will be obligated to purchase
receivables from a trust pursuant to the Sale and Servicing Agreement as a
result of its breaches of certain covenants. The servicer will also have an
option to purchase all of a trust's receivables when their outstanding amount
declines to a specified level. Such a purchase would result in the early
redemption of the trust's securities.
Refer to the "Sale Provisions" and "Servicing" sections.
A prospectus supplement may provide for a Revolving Period during
which principal collections in respect of the receivables allocated to the
related series will be applied to purchase Additional Receivables for
inclusion in the related series trust property rather than applied to make
distributions on the related securities. Any such application would increase
the weighted average life of those securities. Also, a prospectus supplement
may provide for a liquidity facility or similar arrangement under which
collections of principal may be invested in Eligible Investments and
distributed on the related securities in planned amounts on scheduled payment
dates.
In light of the above considerations, we cannot tell you the amount
of principal that will be paid on any class of securities on any payment date,
since that amount will depend, in part, on the amount of principal collected
on the related receivables pool during the applicable collection period. You
will bear any reinvestment risks resulting from a faster or slower incidence
of prepayment of the receivables that support your securities. The related
prospectus supplement may set forth certain additional information with
respect to the maturity and prepayment considerations applicable to the
particular receivables pool and the related series of securities.
Indexed Securities
A trust may issue a class of "Indexed Securities" in which the
principal amount payable at its final scheduled payment date (the "Indexed
Principal Amount") is determined by reference to a measure (the "Index") which
will relate to the difference in the rate of exchange between United States
dollars and a currency or composite currency (the "Indexed Currency")
specified in the applicable prospectus supplement (such Indexed Securities,
"Currency Indexed Securities");
o the difference in the price of a specified commodity (the "Indexed
Commodity") on specified dates (such Indexed Securities, "Commodity
Indexed Securities");
o the difference in the level of a specified stock index (the "Stock
Index"), which may be based on U.S. or foreign stocks, on specified
dates (such Indexed Securities, "Stock Indexed Securities"); or
o such other objective price or economic measures as are described in
the applicable prospectus supplement.
The applicable prospectus supplement will describe the manner of
determining the Indexed Principal Amount of an Indexed Security and historical
and other information concerning the Indexed Currency, the Indexed Commodity,
the Stock Index or other price or economic measures used in such
determination. The prospectus supplement will also include information
concerning tax consequences to the holders of such Indexed Securities.
Typically, interest on an Indexed Security will be payable based on
the amount designated in the applicable prospectus supplement. The prospectus
supplement will determine the terms of redemption or repayment of Indexed
Securities prior to the final schedule payment date.
Optional Redemption
The prospectus supplement will state whether the servicer has an
option to repurchase the receivables in the related series and when it may
exercise that option. Normally, the option is exercisable when the total
principal balance of the receivables has declined to 10% of their total
principal balance as of the cut-off date. If the servicer exercises this
option, the outstanding securities of that series will be repaid at that time.
INTEREST PAYMENTS
A class of securities may bear interest at a fixed, variable,
adjustable, or zero rate per annum. The applicable prospectus supplement will
provide the detailed interest rate terms of your securities. The following
sections provide a general overview of the mechanics of the various types of
interest rates.
Fixed Rate Securities
Each class of fixed rate securities will bear interest at the
applicable per annum interest rate or pass through rate, as the case may be,
specified in the applicable prospectus supplement. Generally, interest on each
class of fixed rate securities will be computed on the basis of a 360-day year
consisting of twelve 30-day months.
Floating Rate Securities
A trust may issue various types of floating rate securities. Each
class of floating rate securities will bear interest at the applicable per
annum floating interest rate. The following defined terms are used in the
sections below to illustrate how various floating rates are determined. All
floating rate interest calculations resulting in percentages will be rounded,
if necessary, to the nearest 1/100,000 of 1% (0.0000001), with five
one-millionths of a percentage point rounded upward.
"Base Rate"-basis for floating interest rate on securities.
"Spread"-added to or subtracted from the Base Rate and generally a
stated number of basis points (one basis point equals one one-hundredth of a
percentage point).
"Spread Multiplier"-generally a number expressed as a percentage.
"Floating Rate Interest Accrual Period"-the period over which
interest accrues at the floating interest rate.
"Index Maturity"-the period of maturity of the instrument or
obligation from which the Base Rate is calculated (i.e., one month LIBOR).
"H.15(519)"-the publication entitled "Statistical Release H.15(519),
Selected Interest Rates", published by the Board of Governors of the Federal
Reserve System.
"Composite Quotations" the daily statistical release entitled
"Composite 3:30 p.m. Quotations for U.S. Government Securities" published by
the Federal Reserve Bank of New York.
"Interest Reset Date"-the first day of the Floating Rate Interest
Accrual Period.
"Calculation Agent"-representative appointed by the trust to
calculate the interest rate on a class of floating rate securities, typically
the indenture trustee. The Calculation Agent's determinations of interest, in
the absence of obvious error, are conclusive and binding for all purposes.
Floating rate securities may have either or both of the following:
o a maximum limitation, or ceiling, on the rate at which interest may
accrue during any Floating Rate Interest Accrual Period and
o a minimum limitation, or floor, on the rate at which interest may
accrue during any Floating Rate Interest Accrual Period.
In no event will the per annum floating interest rate be higher than
the maximum rate permitted by applicable law.
LIBOR Securities
LIBOR based floating rate securities will bear interest for each
Floating Rate Interest Accrual Period at LIBOR plus or minus the Spread or
multiplied by a Spread Multiplier, if any. The Calculation Agent determines
LIBOR for each Floating Rate Interest Accrual Period on the LIBOR
Determination Date. The "LIBOR Determination Date" is the second LIBOR
Business Day prior to the Interest Reset Date. A "LIBOR Business Day" is a day
that is both a business day and a day on which banking institutions in the
City of London, England are not required or authorized by law to be closed.
"LIBOR" equals the arithmetic mean of the offered rates for deposits
in U.S. dollars for the period of the Index Maturity commencing on the
Interest Reset Date, as displayed on Telerate Page 3750 at approximately 11:00
a.m. London time on the LIBOR Determination Date. "Telerate Page 3750" means
the display page so designated on the Dow Jones Telerate Service.
CD Rate Securities
CD Rate based floating rate securities will bear interest for each
Floating Rate Interest Accrual Period at the CD Rate plus or minus the Spread
or multiplied by a Spread Multiplier, if any. The Calculation Agent determines
the CD Rate for each Floating Rate Interest Accrual Period on the CD Rate
Determination Date. The "CD Rate Determination Date" is the second business
day prior to the Interest Reset Date.
The "CD Rate" equals the rate on the CD Determination Date for
negotiable certificates of deposit for the period of the Index Maturity. This
rate is published in H.15(519) under the heading "CDs (Secondary Market)".
Commercial Paper Rate Securities
Commercial Paper Rate based floating rate securities will bear
interest for each Floating Rate Interest Accrual Period at the Commercial
Paper Rate plus or minus the Spread or multiplied by a Spread Multiplier, if
any. The Calculation Agent determines the Commercial Paper Rate for each
Floating Rate Interest Accrual Period as of the Commercial Paper Rate
Determination Date. The "Commercial Paper Rate Determination Date" is the
second business day prior to the Interest Reset Date.
The "Commercial Paper Rate" for a Floating Rate Interest Accrual
Period equals the Money Market Yield on the Commercial Paper Rate
Determination Date for commercial paper having the period of the Index
Maturity. The rate is published in H.15(519) under the heading "Commercial
Paper". "Money Market Yield" is calculated as follows:
Money Market Yield = D x 360
x100
360 - (D x M)
where:
D = the applicable per annum rate for commercial paper
quoted on a bank discount basis and expressed as a
decimal
M = the actual number of days in the Index Maturity
Federal Funds Rate Securities
Federal Funds Rate based floating rate securities will bear interest
for each Floating Rate Interest Accrual Period at the Federal Funds Rate plus
or minus the Spread or multiplied by a Spread Multiplier, if any. The
Calculation Agent determines the Federal Funds Rate for each Floating Rate
Interest Accrual Period as of the Interest Reset Date.
The "Federal Funds Rate" equals the effective rate on the Interest
Reset Date for Federal Funds having the period of the Index Maturity. This
rate is published in H.15(519) under the heading "Federal Funds (Effective)".
Treasury Rate Securities
Treasury Rate based floating rate securities will bear interest for
each Floating Rate Interest Accrual Period at the Treasury Rate plus or minus
the Spread or multiplied by a Spread Multiplier, if any. The Calculation Agent
determines the Treasury Rate for each Floating Rate Interest Accrual Period as
of its Treasury Rate Determination Date.
The "Treasury Rate Determination Date" is the Monday of the week in
which the Interest Reset Date falls as Treasury bills are normally sold at
auction on Monday of each week. If the applicable Monday is a legal holiday
and the auction is held on Tuesday, then Tuesday would be the Treasury Rate
Determination Date. If the applicable Monday is a legal holiday and the
auction is held on the preceding Friday, then Friday would be the Treasury
Rate Determination Date. If the Interest Reset Date falls on an auction date,
then such Interest Reset Date will instead be the business day immediately
following such auction date.
The "Treasury Rate" equals the rate on the Treasury Determination
Date for the auction of direct obligations of the United States having the
period of the Index Maturity. This rate is published in H.15(519) under the
heading "U.S. Government Securities-Treasury Bills-auction average
(investment)".
FORM OF SECURITIES AND TRANSFERS
Unless otherwise specified in the related prospectus supplement, each
class of securities will initially be represented by one or more securities
registered in the name of the nominee of DTC except as set forth below. Unless
otherwise specified in the related prospectus supplement, the securities will
be available for purchase in denominations of $1,000 in book-entry form only.
The seller has been informed by DTC that DTC's nominee will be Cede & Co.
("Cede"), unless another nominee is specified in the related prospectus
supplement. Accordingly, such nominee is expected to be the holder of record
of the securities of each class. Unless and until Definitive Securities are
issued under the limited circumstances described in this prospectus or in the
related prospectus supplement, no securityholder will be entitled to receive a
physical certificate representing a security. All references in this
prospectus and in the related prospectus supplement to actions by
securityholders refer to actions taken by DTC upon instructions from its
participating organizations (the "Participants") and all references in this
prospectus or and in the related prospectus supplement to distributions,
notices, reports and statements to securityholders refer to distributions,
notices, reports and statements to DTC or its nominee, as the registered
holder of the securities, for distribution to securityholders in accordance
with DTC's procedures with respect thereto.
BOOK-ENTRY REGISTRATION
DTC is a limited purpose trust company organized under the laws of
the State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York UCC and a "clearing agency"
registered pursuant to Section 17A of the Exchange Act. DTC was created to
hold securities for its Participants and to facilitate the clearance and
settlement of securities transactions between Participants through electronic
book-entries, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers, banks,
trust companies and clearing corporations. Indirect access to the DTC system
also is available to others such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly ("Indirect Participants").
Unless otherwise specified in the related prospectus supplement,
securityholders that are not Participants or Indirect Participants but desire
to purchase, sell or otherwise transfer ownership of, or other interests in,
securities may do so only through Participants and Indirect Participants. In
addition, securityholders will receive all distributions of principal and
interest from the related indenture trustee or the related owner trustee, as
applicable, through Participants. Under a book-entry format, securityholders
may experience some delay in their receipt of payments, since such payments
will be forwarded by the applicable trustee to DTC's nominee. DTC will forward
such payments to its Participants, which thereafter will forward them to
Indirect Participants or securityholders. Except to the extent the applicable
DaimlerChrysler Retail Receivables LLC holds certificates with respect to any
series of securities, it is anticipated that the only "securityholder",
"noteholder" and "certificateholder" will be DTC's Nominee. Noteholders will
not be recognized by each indenture trustee as noteholders, as such term is
used in each Indenture, and noteholders will be permitted to exercise the
rights of noteholders only indirectly through DTC and its Participants.
Similarly, certificateholders will not be recognized by each owner trustee as
certificateholders as such term is used in each trust agreement, and
certificateholders will be permitted to exercise the rights of
certificateholders only indirectly through DTC and its Participants.
Under the rules, regulations and procedures creating and affecting
DTC and its operations (the "Rules"), DTC is required to make book-entry
transfers of securities among Participants on whose behalf it acts with
respect to the securities and to receive and transmit distributions of
principal of, and interest on, the securities. Participants and Indirect
Participants with which securityholders have accounts with respect to the
securities similarly are required to make book- entry transfers and receive
and transmit such payments on behalf of their respective securityholders.
Accordingly, although securityholders will not possess securities, the Rules
provide a mechanism by which Participants will receive payments and will be
able to transfer their interests.
Because DTC can only act on behalf of Participants, who in turn act
on behalf of Indirect Participants and certain banks, the ability of a
securityholder to pledge securities to persons or entities that do not
participate in the DTC system, or to otherwise act with respect to such
securities, may be limited due to the lack of a physical certificate for such
securities.
DTC has advised the seller that it will take any action permitted to
be taken by a noteholder under the related Indenture or a certificateholder
under the related Trust Agreement only at the direction of one or more
Participants to whose accounts with DTC the applicable notes or certificates
are credited. DTC may take conflicting actions with respect to other undivided
interests to the extent that such actions are taken on behalf of Participants
whose holdings include such undivided interests.
Except as required by law, neither any administrator, the applicable
owner trustee nor the applicable indenture trustee, will have any liability
for any aspect of the records relating to or payments made on account of
beneficial ownership interests of the securities of any series held by DTC's
nominee, or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
Clearstream, Luxembourg ("Clearstream") is incorporated under the
laws of Luxembourg as a professional depository. Clearstream holds securities
for its participating organizations ("Clearstream Participants") and
facilitates the clearance and settlement of securities transactions between
Clearstream Participants through electronic book-entry changes in accounts of
Clearstream Participants, thereby eliminating the need for physical movement
of certificated securities. Transactions may be settled in Clearstream in any
of 28 currencies, including United States dollars. Clearstream provides to its
Clearstream Participants services for safekeeping, administration, clearance
and settlement of internationally traded securities and securities lending and
borrowing. Clearstream interfaces with domestic markets in several countries.
As a professional depository, Clearstream is subject to regulation by the
Luxembourg Monetary Institute. Clearstream Participants are recognized
financial institutions around the world, including underwriters, securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations and may include the underwriters. Indirect access to
Clearstream is also available to others, such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
Clearstream Participant, either directly or indirectly.
The Euroclear System was created in 1968 to hold securities for
Participants of the Euroclear System ("Euroclear Participants") and to clear
and settle transactions between Euroclear Participants through simultaneous
electronic book-entry delivery against payment, thereby eliminating the need
for physical movement of certificated securities and any risk from lack of
simultaneous transfers of securities and cash. Transactions may now be settled
in Euroclear in any of 32 currencies, including United States dollars. The
Euroclear System includes various other services, including securities lending
and borrowing, and interfaces with domestic markets in several countries
generally similar to the arrangements for cross-market transfers with DTC. The
Euroclear System is operated by Euroclear Bank S.A./N.V. (the "Euroclear
Operator" or "Euroclear"). All operations are conducted by the Euroclear
Operator, and all Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear Operator. The Euroclear Operator
holds a banking license granted to it, and is regulated, by the Belgian
Banking and Finance Commission. Euroclear Participants include banks
(including central banks), securities brokers and dealers and other
professional financial intermediaries and may include the underwriters.
Indirect access to the Euroclear System is also available to other firms that
clear through or maintain a custodial relationship with a Euroclear
Participant, either directly or indirectly.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear
and the related Operating Procedures of the Euroclear System and applicable
Belgian law (collectively, the "Terms and Conditions"). The Terms and
Conditions govern transfers of securities and cash within the Euroclear
System, withdrawal of securities and cash from the Euroclear System, and
receipts of payments with respect to securities in the Euroclear System. All
securities in the Euroclear System are held as a single bulk holding without
attribution of specific certificated securities to specific securities
clearance accounts. The Euroclear Operator acts under the Terms and Conditions
only on behalf of Euroclear Participants and has no record of or relationship
with persons holding through Euroclear Participants.
Distributions with respect to securities held through Clearstream or
Euroclear will be credited to the cash accounts of Clearstream Participants or
Euroclear Participants in accordance with the relevant system's rules and
procedures, to the extent received by its Depositary. Such distributions will
be subject to tax reporting in accordance with relevant United States tax laws
and regulations. See "Certain Federal Income Tax Consequences" in this
prospectus and "Global Clearance, Settlement and Tax Documentation Procedures"
to this prospectus. Clearstream or the Euroclear Operator, as the case may be,
will take any other action permitted to be taken by a securityholder under the
Indenture or Trust Agreement, as applicable, on behalf of a Clearstream
Participant or Euroclear Participant only in accordance with its relevant
rules and procedures and subject to its Depositary's ability to effect such
actions on its behalf through DTC.
Cede, as nominee for DTC, will hold the securities. Clearstream and
Euroclear will hold omnibus positions in the securities on behalf of the
Clearstream Participants and the Euroclear Participants, respectively, through
customers' securities accounts in Clearstream's and Euroclear's names on the
books of their respective depositaries (collectively, the "Depositaries"),
which in turn will hold such positions in customers' securities accounts in
the Depositaries' names on the books of DTC.
Transfers between DTC's Participants will occur in accordance with
DTC rules. Transfers between Clearstream Participants and Euroclear
Participants will occur in the ordinary way in accordance with their
applicable rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Clearstream
Participants or Euroclear Participants, on the other, will be effected in DTC
in accordance with DTC rules on behalf of the relevant European international
clearing system by its Depositary. However, such cross-market transactions
will require delivery of instructions to the relevant European international
clearing system by the counterparty in such system in accordance with its
rules and procedures and within its established deadlines (European time). The
relevant European international clearing system will, if the transaction meets
its settlement requirements, deliver instructions to its Depositary to take
action to effect final settlement on its behalf by delivering or receiving
securities in DTC, and making or receiving payment in accordance with normal
procedures for same-day funds settlement applicable to DTC. Clearstream
Participants and Euroclear Participants may not deliver instructions directly
to the Depositaries.
Because of time-zone differences, credits of securities in
Clearstream or Euroclear as a result of a transaction with a Participant will
be made during the subsequent securities settlement processing, dated the
business day following the DTC settlement date. Those credits or any
transactions in those securities settled during such processing will be
reported to the relevant Clearstream Participant or Euroclear Participant on
that business day. Cash received in Clearstream or Euroclear as a result of
sales of securities by or through a Clearstream Participant or a Euroclear
Participant to a Participant will be received with value on the DTC settlement
date but will be available in the relevant Clearstream or Euroclear cash
account only as of the business day following settlement in DTC.
Although DTC, Clearstream and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of securities among Participants
of DTC, Clearstream and Euroclear, they are under no obligation to perform or
continue to perform such procedures and such procedures may be discontinued at
any time.
In the event that any of DTC, Clearstream or Euroclear should
discontinue its services, the administrator would seek an alternative
depository (if available) or cause the issuance of Definitive Securities to
the owners thereof or their nominees in the manner described in the prospectus
below under "--Definitive Securities".
DEFINITIVE SECURITIES
Unless otherwise specified in the related prospectus supplement, the
securities of a series will be issued in fully registered, certificated form
("Definitive Securities") to securityholders or their respective nominees,
rather than to DTC or its nominee, only if
o o the related administrator or indenture trustee, as applicable,
determines that DTC is no longer willing or able to discharge
properly its responsibilities as depository with respect to such
securities and such administrator or indenture trustee is unable to
locate a qualified successor (and if it is an administrator that has
made such determination, such administrator so notifies the
applicable trustee in writing), or
o o the administrator or indenture trustee, as applicable, at its
option, elects to terminate the book-entry system through DTC or
o o after the occurrence of an Event of Default or a Servicer
Default with respect to such securities, holders representing at
least a majority of the outstanding principal amount of the notes or
the certificates, as the case may be, of such series advise the
applicable trustee through DTC in writing that the continuation of a
book-entry system through DTC (or a successor thereto) with respect
to such notes or certificates is no longer in the best interest of
the holders of such securities.
Upon the occurrence of any event described in the immediately
preceding paragraph, the applicable trustee will be required to notify all
applicable securityholders of a given series through Participants of the
availability of Definitive Securities. When DTC surrenders the definitive
certificates representing the corresponding securities and gives instructions
for re-registration, the applicable trustee will reissue such securities as
Definitive Securities to such securityholders.
Distributions of principal of, and interest on, such Definitive
Securities will thereafter be made by the applicable trustee in accordance
with the procedures set forth in the related Indenture or the related Trust
Agreement, as applicable, directly to holders of Definitive Securities in
whose names the Definitive Securities were registered at the close of business
on the Record Date. Those distributions will be made by check mailed to the
address of such holder as it appears on the register maintained by the
applicable trustee. The final payment on any such Definitive Security,
however, will be made only upon presentation and surrender of such Definitive
Security at the office or agency specified in the notice of final distribution
to the applicable securityholders.
Definitive Securities will be transferable and exchangeable at the
offices of the applicable trustee or of a registrar named in a notice
delivered to holders of Definitive Securities. No service charge will be
imposed for any registration of transfer or exchange, but the applicable
trustee may require payment of a sum sufficient to cover any tax or other
governmental charge imposed in connection therewith.
List of Securityholders
Unless otherwise specified in the related prospectus supplement with
respect to the notes of any series, three or more holders of the notes of such
series or one or more holders of such notes evidencing not less than 25% of
the aggregate outstanding principal balance of such notes may, by written
request to the related indenture trustee, obtain access to the list of all
noteholders maintained by such indenture trustee for the purpose of
communicating with other noteholders with respect to their rights under the
related Indenture or under such notes. The indenture trustee may elect not to
afford the requesting noteholders access to the list of noteholders if it
agrees to mail the desired communication or proxy, on behalf of and at the
expense of the requesting noteholders, to all noteholders of such series.
Unless otherwise specified in the related prospectus supplement with
respect to the certificates of any series, three or more holders of the
certificates of such series or one or more holders of such certificates
evidencing not less than 25% of the certificate balance of such certificates
may, by written request to the related owner trustee, obtain access to the
list of all certificateholders maintained by such owner trustee for the
purpose of communicating with other certificateholders with respect to their
rights under the related trust agreement or under such certificates.
SALE PROVISIONS
On the closing date specified in a prospectus supplement (the
"Closing Date"), the seller will transfer and assign to the applicable trust,
without recourse, pursuant to a Sale and Servicing Agreement, its entire
interest in a pool of receivables, including its security interests in the
related financed vehicles. Each such receivable will be identified in a
schedule to the Sale and Servicing Agreement. The applicable owner trustee
will execute and deliver the trust's notes and/or certificates, as applicable.
Unless otherwise provided in the related prospectus supplement, the net
proceeds received from the sale of the offered securities of a series will be
applied to the purchase of the related receivables from the seller and, to the
extent specified in the related prospectus supplement, to the deposit of the
Pre-Funded Amount for such series into the related Pre-Funding Account. The
prospectus supplement will specify whether Subsequent Receivables for such
series will be sold by the seller to the trust from time to time during any
Funding Period for the trust on each date specified as a transfer date in the
prospectus supplement (each, a "Subsequent Transfer Date").
In each Sale and Servicing Agreement the seller will represent and
warrant to the applicable trust, among other things, that:
o the information provided in the schedule of receivables attached to
the Sale and Servicing Agreement is correct in all material
respects;
o the obligor on each receivable is required to maintain physical
damage insurance covering the financed vehicle in accordance with
the seller's or MBCC's, as applicable, normal requirements;
o as of the applicable Closing Date or the applicable Subsequent
Transfer Date, if any, to the best of its knowledge, the related
receivables are free and clear of all security interests, liens,
charges and encumbrances and no offsets, defenses or counterclaims
have been asserted or threatened;
o as of the Closing Date or the applicable Subsequent Transfer Date,
if any, each related receivable is or will be secured by a first
perfected security interest in favor of the seller or MBCC, as
applicable, in the financed vehicle;
o each receivable, at the time it was originated, complied and, as of
the Closing Date or the applicable Subsequent Transfer Date, if any,
complies in all material respects with applicable federal and state
laws, including, without limitation, consumer credit, truth in
lending, equal credit opportunity and disclosure laws; and
o any other representations and warranties that may be set forth in
the related prospectus supplement.
Unless otherwise provided in the related prospectus supplement, as of
the last day of the second month following the discovery by or notice to the
seller of a breach of any representation or warranty of the seller that
materially and adversely affects the interests of the related trust in any
receivable, the seller will repurchase that receivable if the breach has not
been cured. The purchase price payable to the trust will be the unpaid
principal balance owed by the obligor on the receivable plus interest thereon
at its APR to the last day of the month of repurchase (the "Repurchase
Amount"). The repurchase obligation constitutes the sole remedy available to
the securityholders, the owner trustee and the indenture trustee for any such
uncured breach.
Pursuant to each Sale and Servicing Agreement, to assure uniform
quality in servicing the receivables and to reduce administrative costs, each
trust will designate the servicer as custodian to maintain possession, as such
trust's agent, of the related motor vehicle retail installment sale contracts
and any other documents relating to the receivables. The seller's accounting
records and computer systems will reflect the sale and assignment of the
related receivables to the applicable trust, and UCC financing statements
reflecting such sale and assignment will be filed. However, if another person
acquired possession of the motor vehicle retail installment contracts, under
some circumstances collections on those receivables would not be available to
make payments on the securities.
SERVICING
THE SERVICER
Unless otherwise specified in the prospectus supplement, [CFC][DCS]
will service the receivables. [CFC][DCS] is a wholly-owned subsidiary of
DaimlerChrysler Corporation ("DaimlerChrysler") and engages in providing
consumer and dealer automotive financing for the products of DaimlerChrysler,
including retail and lease financing for vehicles, dealer inventory and other
financing needs. DaimlerChrysler is a wholly-owned subsidiary of
DaimlerChrysler AG. DaimlerChrysler AG provides a wide range of transportation
products and financial and other services. It is one of the largest automobile
manufacturers in the world in terms of revenues. DaimlerChrysler AG operates
in several business segments including passenger cars, commercial vehicles,
services, and aerospace. The following chart illustrates the organization
effective as of April 9, 2001:
DaimlerChrysler AG
DaimlerChrysler North
American Holding Corporation
DaimlerChrysler
Corporation
CFC
MBCC
[CFC's][DCS's] business is substantially dependent upon the
operations of DaimlerChrysler. In particular, lower levels of production and
sale of DaimlerChrysler's automotive products could result in a reduction in
the level of finance and insurance operations of [CFC][DCS]. [CFC's][DCS's]
executive offices are located at 27777 Franklin Road, Southfield, Michigan
48034-9296, and its telephone number is (248) 948-3124.
DaimlerChrysler Services North America LLC, a Michigan limited
liability company ("DCS") is a wholly-owned subsidiary of CFC. During 2001,
CFC is expected to merge into DCS with DCS being the surviving legal entity.
If such merger occurs, DCS will be the seller and servicer under each Sale and
Servicing Agreement and the administrator under each Administration Agreement.
If such merger occurs, DCS is expected to have substantially the same assets
and liabilities that CFC had prior to the merger. We cannot assure you that
such merger will occur.
THE SUBSERVICER
[CFC][DCS] may purchase automobile and light duty truck receivables
from MBCC and subsequently sell them to a trust. The related prospectus
supplement may indicate the number and principal amount of such receivables
included in a pool. [CFC][DCS] may contract with MBCC to subservice the MBCC
receivables.
As illustrated in the above organizational chart, both [CFC][DCS] and
MBCC are indirectly wholly-owned subsidiaries of DaimlerChrysler AG. MBCC
provides a variety of comprehensive financial services to dealers and
customers of products manufactured or distributed by DaimlerChrysler AG and
its affiliates in North America. MBCC and certain of its subsidiaries
primarily provide retail and wholesale financing, leasing, and other financial
services to authorized Mercedes-Benz automobile dealers and their customers.
Additionally, a wholly-owned subsidiary of MBCC provides financing for both
DaimlerChrysler and other manufacturers' products.
ACCOUNTS
With respect to each trust, the servicer will establish and maintain
with the related indenture trustee one or more accounts, in the name of the
indenture trustee on behalf of the securityholders of that series (the
"Deposit Account"). The servicer will deposit the collections on a trust's
receivables into the trust's Deposit Account as described under
"--Collections" below. The applicable trustee will apply available funds in a
Deposit Account to pay the trust's expenses and to make payments on its
securities. If a trust has reserve funds, they will be held in its Deposit
Account. As described under "Sale Provisions" a trust that has a Funding
Period will have a Pre-Funding Account. The prospectus supplement will
describe any other accounts that a trust may have.
Funds in any account of a trust will be invested in Eligible
Investments. "Eligible Investments" are generally limited to investments
acceptable to the rating agencies rating the trust's offered securities as
being consistent with the ratings of those securities. Eligible Investments
may include motor vehicle retail sale contracts. Except as described below or
in the related prospectus supplement, Eligible Investments are generally
limited to obligations or securities that mature on or before the next payment
date for such series. However, to the extent permitted by the rating agencies
for a series, funds in any reserve funds for such series may be invested in
securities that will not mature prior to the next payment date and will not be
sold to meet any shortfalls. Thus, the amount of available cash in any reserve
funds at any time may be less than the balance of the reserve funds. If the
amount required to be withdrawn from any reserve funds to cover shortfalls in
collections on the receivables for the related series (as provided in the
related prospectus supplement) exceeds the amount of cash available in the
reserve funds, a temporary shortfall in the amounts distributed to the
securityholders of that series could result. Those shortfalls could, in turn,
increase the average life of those securities. Except as otherwise specified
in the related prospectus supplement, investment earnings on funds in the
Deposit Account during the related Collection Period, if any, net of losses
and investment expenses shall be deposited in the Deposit Account on each
payment date and shall be treated as collections of interest on the related
receivables.
Any account for a trust will be maintained as an Eligible Deposit
Account. An "Eligible Deposit Account" is any segregated account with an
Eligible Institution or an institution otherwise acceptable to the rating
agencies. An "Eligible Institution" means (a) a depository institution
organized under the laws of the United States of America or any one of the
states thereof or the District of Columbia (or any domestic branch of a
foreign bank) (i) which has either (A) a long-term unsecured debt rating
acceptable to the rating agencies or (B) a short-term unsecured debt rating or
certificate of deposit rating acceptable to the rating agencies and (ii) whose
deposits are insured by the FDIC or (b) the corporate trust department of the
related indenture trustee or owner trustee.
SERVICING PROCEDURES
The servicer will make reasonable efforts to collect all payments due
with respect to the receivables held by any trust and will, consistent with
the related Sale and Servicing Agreement, follow such collection procedures as
it follows with respect to comparable motor vehicle retail installment sale
contracts it services for itself or others. Consistent with its normal
procedures, the servicer may, in its discretion, arrange with the obligor on a
receivable to extend or modify the payment schedule. Some of such arrangements
may result in the servicer purchasing the receivable for the Repurchase
Amount. The servicer may sell the financed vehicle securing the respective
receivable at public or private sale, or take any other action permitted by
applicable law. See "Certain Legal Aspects of the Receivables".
COLLECTIONS
The servicer will deposit collections on the receivables received by
it during the Collection Period on the payment date following that Collection
Period. A "Collection Period" is a calendar month unless otherwise specified
in the prospectus supplement. If at any time any of the following conditions
are true, the servicer must deposit collections on the receivables for that
series into its Deposit Account within two business days of receipt. The
conditions are: (i) [CFC][DCS] is no longer the servicer, or (ii) a Servicer
Default exists, or (iii) any other condition to making deposits monthly as may
be specified by the rating agencies or set forth in the related prospectus
supplement. Pending deposit into the Deposit Account, collections may be
invested by the servicer at its own risk and for its own benefit and will not
be segregated from its own funds. If the servicer were unable to remit such
funds, securityholders might incur a loss. To the extent set forth in the
related prospectus supplement, the servicer may, in order to satisfy the
requirements described above, obtain a letter of credit or other security for
the benefit of the related trust to secure timely remittances of collections
on the related receivables and payment of the aggregate Repurchase Amount with
respect to receivables purchased by the servicer.
Unless otherwise provided in the related prospectus supplement, the
servicer will not make advances of delinquent payments on the receivables.
[CFC][DCS] SERVICING AND COLLECTIONS
[CFC's][DCS's] collectors are assigned to specific delinquent
obligors and attempt to contact the delinquent obligor by telephone or by
letter based on the terms of delinquency and the history of the account.
Repossession procedures typically begin when a contract becomes between 60 to
90 days delinquent. Repossession is carried out according to specific
procedures adopted by [CFC][DCS].
Any deficiencies remaining, after repossession and sale of the
vehicle after the full charge-off of the contract, are pursued by [CFC][DCS]
to the extent practicable and legally permitted. Obligors are contacted, and
when warranted by individual circumstances, repayment schedules are
established and monitored until the deficiencies are either paid in full or
become impractical to pursue.
MBCC SERVICING AND COLLECTIONS
MBCC measures delinquency by the number of days elapsed from the date
a payment is due under a contract. MBCC considers an account to be past due or
delinquent when the obligor has an overdue balance in excess of a
predetermined minimum amount. MBCC generally begins collection activities on
delinquent contracts on the 11th day after the due date of the scheduled
payment. MBCC also uses an automated system of monitoring delinquency, which
categorizes delinquent accounts into different priorities of collection
activity, based on the level of delinquency of each account.
MBCC's collectors are assigned to specific obligors and attempt to
contact the delinquent obligor by telephone or by letter based on the terms of
delinquency and the history of the account. Repossession procedures typically
begin when a contract becomes between 60 to 90 days delinquent. Repossession
is carried out according to specific procedures adopted by MBCC.
Any deficiencies remaining, after repossession and sale of the
vehicle after the full charge-off of the contract, are pursued by MBCC to the
extent practicable and legally permitted. Obligors are contacted, and when
warranted by individual circumstances, repayment schedules are established and
monitored until the deficiencies are either paid in full or become impractical
to pursue.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Unless otherwise specified in the prospectus supplement for any
series, the servicer will be entitled to receive the Servicing Fee for each
Collection Period in an amount equal to a specified percentage per month of
the total receivables principal balance for such series as of the first day of
that Collection Period (the "Servicing Fee"). The priority of payment of the
Servicing Fee will be set forth in the prospectus supplement.
Unless otherwise provided in the related prospectus supplement, the
servicer will also collect and retain any late fees, prepayment charges and
other administrative fees or similar charges allowed by applicable law with
respect to the related receivables. The servicer will be entitled to
reimbursement from such trust for certain liabilities. Payments by or on
behalf of obligors will be allocated to scheduled payments and late fees and
other charges in accordance with the servicer's normal practices and
procedures.
The Servicing Fee will compensate the servicer for performing the
functions of a third party servicer of motor vehicle receivables as an agent
for their beneficial owner, including collecting and posting all payments,
responding to inquiries of obligors on the receivables, investigating
delinquencies, sending payment coupons to obligors, reporting tax information
to obligors, paying costs of collections and disposition of defaults and
policing the collateral. The Servicing Fee also will compensate the servicer
for administering the particular receivables pool, including accounting for
collections and furnishing monthly and annual statements to the related owner
trustee and indenture trustee with respect to distributions and generating
federal income tax information for such trust and for the related
securityholders. The Servicing Fee also will reimburse the servicer for
certain taxes, the fees of the related owner trustee and indenture trustee, if
any, accounting fees, outside auditor fees, data processing costs and other
costs incurred in connection with administering a receivables pool.
REPORTS TO SECURITYHOLDERS
On or prior to each payment date, the servicer will prepare and
provide to the indenture trustee and owner trustee for each series a statement
to be made available to the securityholders of that series on such payment
date. The statement for a series will contain the following information for
the current payment date or the period since the prior payment date:
(i) the amount of principal paid on each class of securities;
(ii) the amount of the interest paid on each class of securities;
(iii) the total principal balance of the receivables as of the
close of business at the beginning and at the end of the
related Collection Period;
(iv) the outstanding principal balance of each class of
securities, both before and after giving effect to all
principal payments on that payment date;
(v) the amount of the servicing fee paid to the servicer with
respect to the related Collection Period;
(vi) the interest rate or pass through rate for the current
Interest Reset Period for any class of notes or certificates
of such series with variable or adjustable rates;
(vii) the amount of the aggregate realized losses, if any, for the
related Collection Period;
(viii) any shortfalls in the payments due on that payment date;
(ix) the total Repurchase Amounts, if any, for receivables that
were repurchased by the seller or the servicer during such
Collection Period;
(x) the balance of the reserve funds, if any, on that payment
date and the required amount, if any, of those reserve funds;
(xi) during the related Funding Period, if any, the remaining
Pre-Funded Amount; and
(xii) for the first such date that is on or immediately following
the end of the Funding Period, if any, the amount of any
related remaining Pre-Funded Amount that has not been used to
fund the purchase of Subsequent Receivables and is being
passed through as payments of principal on the securities of
such series.
Each amount set forth pursuant to subclauses (i), (ii), (v) and
(viii) with respect to each security of any series will be expressed both in
total and as a dollar amount per $1,000 of the initial principal balance of
that security.
Within the prescribed period of time for tax reporting purposes after
the end of each calendar year during the term of each trust, the applicable
trustee will mail to each person who at any time during such calendar year has
been a securityholder with respect to that trust and received any payment
thereon a statement containing certain information needed in the preparation
of federal income tax returns of that securityholder. Refer to "Certain
Federal Income Tax Consequences".
STATEMENTS TO TRUSTEES AND TRUST
Prior to each payment date or payment date with respect to each
series of securities, the servicer will provide to the applicable trustees a
statement setting forth substantially the same information as is required to
be provided in the periodic reports provided to securityholders of such series
described under "--Reports to Securityholders".
EVIDENCE AS TO COMPLIANCE
Each Sale and Servicing Agreement will provide that a firm of
independent public accountants will furnish annually to the indenture trustee
and owner trustee a statement as to compliance by the servicer during the
preceding twelve months (or, in the case of the first such certificate, from
the applicable Closing Date) with certain standards relating to the servicing
of the applicable receivables, the servicer's accounting records and computer
files with respect thereto and certain other matters.
Under each Sale and Servicing Agreement the servicer will be
obligated to deliver annually to the indenture trustee and owner trustee a
certificate signed by an officer of the servicer stating that the servicer has
fulfilled its obligations under the Sale and Servicing Agreement throughout
the preceding twelve months (or, in the case of the first such certificate,
from the Closing Date). However, if there has been a default in the
fulfillment of any such obligation, the certificate describing each such
default. The servicer has agreed to give each indenture trustee and each owner
trustee notice of certain servicer Defaults under the related Sale and
Servicing Agreement.
Copies of such statements and certificates may be obtained by
securityholders by a request in writing addressed to the applicable trustee.
CERTAIN MATTERS REGARDING THE SERVICER
Each Sale and Servicing Agreement will provide that [CFC][DCS] may
not resign from its obligations and duties as servicer thereunder, except upon
determination that [CFC's][DCS's] performance of such duties is no longer
permissible under applicable law. No such resignation will become effective
until the related indenture trustee or owner trustee, as applicable, or a
successor servicer has assumed [CFC's][DCS's] servicing obligations under the
Sale and Servicing Agreement.
Each Sale and Servicing Agreement will further provide that neither
the servicer nor any of its directors, officers, employees and agents will be
under any liability to the related trust or the related noteholders or
certificateholders for taking any action or for refraining from taking any
action pursuant to such Sale and Servicing Agreement or for errors in
judgment. However, neither the servicer nor any such person will be protected
against any liability that would otherwise be imposed by reason of willful
misfeasance, bad faith or negligence in the performance of the servicer's
duties thereunder or by reason of reckless disregard of its obligations and
duties thereunder. In addition, each Sale and Servicing Agreement will provide
that the servicer is under no obligation to appear in, prosecute or defend any
legal action that is not incidental to the servicer's servicing
responsibilities under such Sale and Servicing Agreement and that, in its
opinion, may cause it to incur any expense or liability.
The following entities will automatically become the successor
servicer under a Sale and Servicing Agreement:
o any entity into which the servicer may be merged or consolidated, or
o any entity resulting from any merger or consolidation to which the
servicer is a party, or
o any entity succeeding to the business of the servicer or,
o any entity 50% or more of the ownership interest which is owned,
directly or indirectly, by DaimlerChrysler and which assumes the
servicer's obligations.
Such successor must assume the obligations of the servicer under the Sale and
Servicing Agreement.
SERVICER DEFAULT
Except as otherwise provided in the related prospectus supplement,
"Servicer Default" under each Sale and Servicing Agreement will consist of
o o any failure by the servicer to deliver to the applicable trustee
for deposit in any of the related trust accounts any required
payment or to direct the applicable trustee to make any required
distributions therefrom, which failure continues unremedied for five
business days after written notice from the applicable trustee is
received by the servicer or after discovery of such failure by the
servicer;
o o any failure by the servicer or the seller, as the case may be,
duly to observe or perform in any material respect any other
covenant or agreement in such Sale and Servicing Agreement, which
failure materially and adversely affects the rights of the
noteholders or the certificateholders of the related series and
which continues unremedied for 60 days after the giving of written
notice of such failure (A) to the servicer or the seller, as the
case may be, by the applicable trustee or (B) to the servicer or the
seller, as the case may be, and to the applicable trustee by holders
of notes or certificates of such series, as applicable, evidencing
not less than 25% in principal amount of such outstanding notes or
certificates; and
o o the occurrence of an Insolvency Event with respect to the
servicer, the seller or DaimlerChrysler Retail Receivables LLC.
"Insolvency Event" means, with respect to any person, any of the
following events or actions: certain events of insolvency,
readjustment of debt, marshalling of assets and liabilities or
similar proceedings with respect to such person and certain actions
by such person indicating its insolvency, reorganization pursuant to
bankruptcy proceedings or inability to pay its obligations.
RIGHTS UPON SERVICER DEFAULT
In the case of any trust that has issued notes, unless otherwise
provided in the related prospectus supplement, as long as a Servicer Default
under a Sale and Servicing Agreement remains unremedied, the related indenture
trustee or holders of the notes evidencing not less than 51% of principal
amount of such notes then outstanding may terminate all the rights and
obligations of the servicer under such Sale and Servicing Agreement. Such
indenture trustee or a successor servicer appointed by such indenture trustee
will succeed to all the responsibilities, duties and liabilities of the
servicer under such Sale and Servicing Agreement and will be entitled to
similar compensation arrangements. If, however, a bankruptcy trustee or
similar official has been appointed for the servicer, and no Servicer Default
other than such appointment has occurred, such trustee or official may have
the power to prevent the indenture trustee, the noteholders, the owner trustee
or the certificateholders from effecting a transfer of servicing. If the
indenture trustee is unwilling or unable to so act, it may appoint, or
petition a court of competent jurisdiction for the appointment of, a successor
with a net worth of at least $100,000,000 and whose regular business includes
the servicing of motor vehicle receivables. The indenture trustee or owner
trustee may make arrangements for compensation to be paid to the successor
that is not greater than the servicing compensation to the servicer under such
Sale and Servicing Agreement.
WAIVER OF PAST DEFAULTS
Unless otherwise provided in the related prospectus supplement, the
holders of notes of a series evidencing at least a majority in principal
amount of the then outstanding notes of the series may, on behalf of all
noteholders and certificateholders of that series, waive any default by the
servicer in the performance of its obligations under the related Sale and
Servicing Agreement and its consequences. However, they cannot waive a
Servicer Default in making any required deposits to or payments from any of
the trust accounts in accordance with such Sale and Servicing Agreement.
Holders of a majority of the principal balance of the certificates of a series
have similar rights with respect to a default by the Servicer that does not
adversely affect the noteholders of the series.
THE INDENTURE
INDENTURE; MASTER INDENTURE
A trust will issue its notes pursuant to an indenture with the
applicable indenture trustee. If a trust issues more than one series of notes,
each such series may be issued pursuant to a separate indenture or pursuant to
a base indenture and a supplement for the series. In that case, the notes of a
series will be secured solely by the series trust property allocated to the
series and will not have any rights in, or receive any payments from, that
series trust property allocated to any other series of securities issued by
the same trust. Such an indenture or master indenture is referred to as an
"Indenture".
Modification of Indenture
With respect to each trust that has issued notes pursuant to an
Indenture, the trust and the indenture trustee may, with the consent of the
holders of a majority of the outstanding notes of the related series, execute
a supplemental indenture to add provisions to, change in any manner or
eliminate any provisions of, the related Indenture, or modify (except as
provided below) in any manner the rights of the related noteholders.
Unless otherwise specified in the related prospectus supplement with
respect to a series of notes, without the consent of the holder of each such
outstanding note affected thereby, no supplemental indenture will:
o change the due date of any installment of principal of or interest
on any such note or reduce the principal amount thereof, the
interest rate specified thereon or the redemption price with respect
thereto or change any place of payment where or the coin or currency
in which any such note or any interest thereon is payable;
o impair the right to institute suit for the enforcement of certain
provisions of the related Indenture regarding payment;
o reduce the percentage of the aggregate amount of the outstanding
notes of such series, the consent of the holders of which is
required for any such supplemental indenture or the consent of the
holders of which is required for any waiver of compliance with
certain provisions of the related Indenture or of certain defaults
thereunder and their consequences as provided for in such Indenture;
o modify or alter the provisions of the related Indenture regarding
the voting of notes held by the applicable trust, any other obligor
on such notes, the seller or an affiliate of any of them;
o reduce the percentage of the aggregate outstanding amount of such
notes, the consent of the holders of which is required to direct the
related indenture trustee to sell or liquidate the receivables
allocated to such series if the proceeds of such sale would be
insufficient to pay the principal amount and accrued but unpaid
interest on the outstanding notes of such series;
o decrease the percentage of the aggregate principal amount of such
notes required to amend the sections of the related Indenture which
specify the applicable percentage of aggregate principal amount of
the notes of such series necessary to amend such Indenture or
certain other related agreements; or
o permit the creation of any lien ranking prior to or on a parity with
the lien of the related Indenture with respect to any of the series
trust property securing such notes or, except as otherwise permitted
or contemplated in such Indenture, terminate the lien of such
Indenture on any such collateral or deprive the holder of any such
note of the security afforded by the lien of such Indenture.
Unless otherwise provided in the applicable prospectus supplement,
the trust and the applicable indenture trustee may also enter into
supplemental indentures, without obtaining the consent of the noteholders of
the related series, for the purpose of, among other things, adding any
provisions to or changing in any manner or eliminating any of the provisions
of the related Indenture or of modifying in any manner the rights of such
noteholders; provided that such action will not materially and adversely
affect the interest of any such noteholder.
Events of Default; Rights upon Event of Default.
With respect to the notes of a series, unless otherwise specified in
the related prospectus supplement, "Events of Default" under the related
Indenture will consist of:
o a default for five days (or for such other longer period specified
in the related prospectus supplement) or more in the payment of any
interest on any such note;
o a default in the payment of the principal of or any installment of
the principal of any such note when the same becomes due and
payable;
o a default in the observance or performance of any covenant or
agreement of the applicable trust made in the related Indenture and
the continuation of any such default for a period of 30 days after
notice thereof is given to such trust by the applicable indenture
trustee or to such trust and such indenture trustee by the holders
of at least 25% in principal amount of such notes then outstanding;
o any representation or warranty made by such trust in the related
Indenture or in any certificate delivered pursuant thereto or in
connection therewith having been incorrect in any material respect
as of the time made, and such breach not having been cured within 30
days after notice thereof is given to such trust by the applicable
indenture trustee or to such trust and such indenture trustee by the
holders of at least 25% in principal amount of such notes then
outstanding; or
o certain events of bankruptcy, insolvency, receivership or
liquidation of the applicable trust.
The amount of principal required to be paid to noteholders of a series under
the related Indenture will generally be limited to amounts available in the
applicable Deposit Account and allocated for distribution to such noteholders.
Therefore, unless otherwise specified in the related prospectus supplement,
the failure to pay principal on a class of notes generally will not result in
the occurrence of an Event of Default until the final scheduled payment date
for such class of notes.
In the case of a trust that issues more than one series of notes, an
Event of Default with respect to one such series of notes will not of itself
constitute an Event of Default with respect to any such other series of notes.
If an Event of Default with respect to the notes of any series should
occur and continue, the related indenture trustee or holders of a majority in
principal amount of such notes then outstanding may declare the principal of
such notes to be immediately due and payable. Unless otherwise specified in
the related prospectus supplement, such declaration may, under certain
circumstances, be rescinded by the holders of a majority in principal amount
of such notes then outstanding.
If the notes of any series are due and payable following an Event of
Default with respect thereto, the related indenture trustee may institute
proceedings to collect amounts due or foreclose on series trust property
allocated to such series, exercise remedies as a secured party, sell the
receivables included in such series trust property or elect to have the
applicable trust maintain possession of such receivables and continue to apply
collections on such receivables as if there had been no declaration of
acceleration. Unless otherwise specified in the related prospectus supplement,
however, such indenture trustee is prohibited from selling the related
receivables following an Event of Default, other than a default in the payment
of any principal of or a default for five days (or such longer period
specified in the related Indenture) or more in the payment of any interest on
any note of such series, unless
o the holders of all the outstanding notes of such series consent to
such sale,
o the proceeds of such sale are sufficient to pay in full the
principal of and the accrued interest on such outstanding notes at
the date of such sale or
o such indenture trustee determines that the proceeds of such
receivables would not be sufficient on an ongoing basis to make all
payments on such notes as such payments would have become due if
such obligations had not been declared due and payable, and such
indenture trustee obtains the consent of the holders of 66 2/3% of
the aggregate outstanding amount of such notes.
If a trust issues more than one series of notes, each such series of
notes will be secured solely by the series trust property allocated to such
series and will not have any rights in or claims on, or receive any payments
from, the series trust property allocated to any other series of securities
issued by such trust.
Subject to the provisions of the applicable Indenture relating to the
duties of the related indenture trustee, if an Event of Default occurs and is
continuing with respect to a series of notes, such indenture trustee will be
under no obligation to exercise any of the rights or powers under such
Indenture at the request or direction of any of the holders of such notes, if
such indenture trustee reasonably believes it will not be adequately
indemnified against the costs, expenses and liabilities which it might incur
in complying with such request. Subject to the provisions for indemnification
and certain limitations contained in the related Indenture, the holders of a
majority in principal amount of the outstanding notes of a series will have
the right to direct the time, method and place of conducting any proceeding or
any remedy available to the applicable indenture trustee in respect of such
series, and the holders of a majority in principal amount of such notes then
outstanding may, in certain cases, waive any default with respect to such
notes, except a default in the payment of principal or interest or a default
in respect of a covenant or provision of such Indenture that cannot be
modified without the waiver or consent of all the holders of such outstanding
notes.
Unless otherwise specified in the related prospectus supplement, no
holder of a note of any series will have the right to institute any proceeding
with respect to the related Indenture, unless
o such holder has given to the applicable indenture trustee prior
written notice of a continuing Event of Default,
o the holders of not less than 25% in principal amount of the
outstanding notes of such series have made written request to such
indenture trustee to institute such proceeding in its own name as
indenture trustee,
o such holder or holders have offered such indenture trustee
reasonable indemnity,
o such indenture trustee has for 60 days failed to institute such
proceeding, and no direction inconsistent with such written request
has been given to such indenture trustee during such 60-day period
by the holders of a majority in principal amount of such outstanding
notes.
In addition, each indenture trustee and the holders of a series of
notes, by accepting such notes, will covenant, to the extent legally
enforceable, that they will not at any time institute against the applicable
trust any bankruptcy, reorganization or other proceeding under any federal or
state bankruptcy or similar law and that they do not have and will not assert
any claims against any series trust property allocated to any other series of
notes issued by such trust.
For any series, neither the related indenture trustee nor the related
owner trustee in its individual capacity, nor any holder of a certificate
representing an ownership interest in the trust nor any of their respective
owners, beneficiaries, agents, officers, directors, employees, affiliates,
successors or assigns will, in the absence of an express agreement to the
contrary, be personally liable for the payment of the principal of or interest
on such notes or for the agreements of such trust contained in the applicable
Indenture.
Certain Covenants
Each Indenture will provide that the related trust may not
consolidate with or merge into any other entity, unless
o the entity formed by or surviving such consolidation or merger is
organized under the laws of the United States, any state or the
District of Columbia,
o such entity expressly assumes such trust's obligation to make due
and punctual payments upon the notes of the related series and the
performance or observance of every agreement and covenant of such
trust under the Indenture,
o no Event of Default shall have occurred and be continuing
immediately after such merger or consolidation,
o such trust has been advised that the rating of the notes or the
certificates of such series then in effect would not be reduced or
withdrawn by the rating agencies as a result of such merger or
consolidation and
o such trust has received an opinion of counsel to the effect that
such consolidation or merger would have no material adverse federal
income tax consequence to the trust or to any related noteholder or
certificateholder.
No trust will, among other things,
o except as expressly permitted by its documents, sell, transfer,
exchange or otherwise dispose of any of its property,
o claim any credit on or make any deduction from the principal and
interest payable in respect of its notes (other than amounts
withheld under the Code or applicable state law) or assert any claim
against any present or former holder of such notes because of the
payment of taxes levied or assessed upon the trust,
o dissolve or liquidate in whole or in part,
o permit the validity or effectiveness of the related Indenture to be
impaired or permit any person to be released from any covenants or
obligations with respect to such notes under such Indenture except
as may be expressly permitted thereby or
o permit any lien, charge, excise, claim, security interest, mortgage
or other encumbrance to be created on or extend to or otherwise
arise upon or burden such series trust property or any part thereof,
or any interest therein or the proceeds thereof.
No trust may engage in any activity other than as specified under the
section of the related prospectus supplement entitled "Transaction
Overview--The Trust". No trust will incur, assume or guarantee any
indebtedness other than indebtedness incurred pursuant to one or more series
of notes issued by it and the related Indentures, pursuant to any advances
made to it by the servicer or otherwise in accordance with its documents.
ANNUAL COMPLIANCE STATEMENT
Each trust will be required to file annually with the related
indenture trustee a written statement as to the fulfillment of its obligations
under the Indenture.
INDENTURE TRUSTEE'S ANNUAL REPORT
The indenture trustee for each series of notes will be required to
mail each year to all related noteholders a brief report relating to its
eligibility and qualification to continue as indenture trustee under the
related Indenture, any amounts advanced by it under the Indenture, the amount,
interest rate and maturity date of certain indebtedness owing by the related
trust to the applicable indenture trustee in its individual capacity, the
property and funds physically held by such indenture trustee as such and any
action taken by it that materially affects the related notes and that has not
been previously reported.
SATISFACTION AND DISCHARGE OF INDENTURE
An Indenture will be discharged with respect to the series trust
property securing a series of notes upon the delivery to the related indenture
trustee for cancellation of all such notes or, with certain limitations, upon
deposit with such indenture trustee of funds sufficient for the payment in
full of all such notes.
THE INDENTURE TRUSTEE
The indenture trustee for a series of notes will be specified in the
related prospectus supplement. The indenture trustee for any series may resign
at any time, in which event the trust will be obligated to appoint a successor
trustee for such series. A trust may also remove any such indenture trustee if
such indenture trustee ceases to be eligible to continue as such under the
related Indenture or if such indenture trustee becomes insolvent. In such
circumstances, the trust will be obligated to appoint a successor indenture
trustee for the applicable series of notes. Any resignation or removal of the
indenture trustee for any series of notes does not become effective until
acceptance of the appointment by the successor trustee for such series.
MISCELLANEOUS PROVISIONS
OF PRINCIPAL DOCUMENTS
AMENDMENT
Unless otherwise provided in the related prospectus supplement, each
of a trust's principal documents may be amended by the parties thereto,
without the consent of the related noteholders or certificateholders, for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of any of those agreement or of modifying in any manner
the rights of such noteholders or certificateholders so long as such action
will not, in the opinion of counsel satisfactory to the related owner trustee
or indenture trustee, as applicable, materially and adversely affect the
interest of any such noteholder or certificateholder. Unless otherwise
specified in the related prospectus supplement, those agreements may also be
amended by the seller, the servicer, the related owner trustee and any related
indenture trustee with the consent of the holders of notes evidencing at least
a majority in principal amount of then outstanding notes, if any, of the
related series and the holders of the certificates of such series evidencing
at least a majority of the principal amount of such certificates then
outstanding, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of those agreements or of
modifying in any manner the rights of such noteholders or certificateholders.
However, no such amendment may (i) increase or reduce in any manner the amount
of, or accelerate or delay the timing of, collections of payments on the
related receivables or distributions that are required to be made for the
benefit of such noteholders or certificateholders or (ii) reduce the aforesaid
percentage of the notes or certificates of such series that are required to
consent to any such amendment, without the consent of the holders of all the
outstanding notes or certificates, as the case may be, of such series.
THE OWNER TRUSTEE
The owner trustee for each trust will be specified in the related
prospectus supplement. The owner trustee's liability in connection with the
issuance and sale of the related securities is limited solely to the express
obligations of such owner trustee set forth in the related Trust Agreement and
the Sale and Servicing Agreement, as applicable. An owner trustee may resign
at any time, in which event the servicer will be obligated to appoint a
successor owner trustee. The administrator of a trust may also remove the
owner trustee if the owner trustee ceases to be eligible to continue as owner
trustee under the related trust agreement or if the owner trustee becomes
insolvent. In such circumstances, the administrator will be obligated to
appoint a successor owner trustee. Any resignation or removal of an owner
trustee will not become effective until acceptance of the appointment by the
successor owner trustee.
INSOLVENCY EVENT
Each Trust Agreement will provide that the applicable owner trustee
does not have the power to commence a voluntary proceeding in bankruptcy with
respect to the related trust without the unanimous prior approval of all
certificateholders (including DaimlerChrysler Retail Receivables LLC) of such
trust and the delivery to the owner trustee by each such certificateholder
(including DaimlerChrysler Retail Receivables LLC) of a certificate certifying
that such certificateholder reasonably believes that such trust is insolvent.
PAYMENT OF NOTES
Upon the payment in full of all outstanding notes of a series and the
satisfaction and discharge of the related Indenture, the related owner trustee
will succeed to all the rights of the indenture trustee, and the
certificateholders of such series will succeed to all the rights of the
noteholders of such series, under the related Sale and Servicing Agreement,
except as otherwise provided therein.
TERMINATION
With respect to each series, the obligations of the servicer, the
seller, the related owner trustee and the related indenture trustee, if any,
pursuant to the principal agreements of the trust will terminate upon the
earliest of
o the maturity or other liquidation of the last related receivable
included in the series trust property allocated to such series and
the disposition of any amounts received upon liquidation of any such
remaining receivables,
o the payment to noteholders, if any, and certificateholders of such
series of all amounts required to be paid to them pursuant to the
Sale and Servicing Agreement and the Indenture, and
o the occurrence of either event described below.
Unless otherwise provided in the related prospectus supplement, in
order to avoid excessive administrative expense, the servicer will be
permitted at its option to purchase from each trust, as of the end of any
applicable Collection Period, if the total outstanding principal amount of the
receivables in a series is 10% or less of the total principal amount of the
receivables as of the cut-off date for the series. The purchase price will
equal the aggregate of the Repurchase Amounts for the receivables as of the
end of such Collection Period.
If and to the extent provided in the related prospectus supplement
with respect to a trust, the applicable trustee will, within ten days
following a payment date as of which the total principal amount of the
receivables in a series is equal to or less than the percentage of the total
principal amount of the receivables as of the cut-off date for the series
specified in the related prospectus supplement, solicit bids for the purchase
of such receivables, in the manner and subject to the terms and conditions set
forth in such prospectus supplement. If the applicable trustee receives
satisfactory bids as described in such prospectus supplement, then such
remaining receivables will be sold to the highest bidder.
As more fully described in the related prospectus supplement, any
outstanding notes of the related series will be redeemed concurrently with
either of the events specified above. The subsequent distribution to the
related certificateholders of all amounts required to be distributed to them
pursuant to the applicable Trust Agreement will effect early retirement of
those certificates.
ADMINISTRATION AGREEMENT
[CFC][DCS], in its capacity as administrator, will enter into an
agreement (as amended and supplemented from time to time, an "Administration
Agreement") with each trust that issues notes and the related indenture
trustee. The administrator will agree, to the extent provided in such
Administration Agreement, to provide the notices and to perform other
administrative obligations required by the related Indenture. Unless otherwise
specified in the related prospectus supplement, as compensation for the
performance of the administrator's obligations under the applicable
Administration Agreement and as reimbursement for its expenses related
thereto, the administrator will be entitled to a monthly administration fee in
an amount equal to $200 per month with respect to each series of notes (the
"Administration Fee"), which fee will be paid by the servicer.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
SECURITY INTEREST IN VEHICLES
The retail installment sales contracts evidencing the receivables
also grant security interests in the financed vehicles under the applicable
UCC. Perfection of security interests in the automobiles and light duty trucks
financed by the seller is generally governed by the motor vehicle registration
laws of the state in which the vehicle is located. In all states in which the
receivables have been originated, a security interest in automobiles and light
duty trucks is perfected by obtaining the certificate of title to the financed
vehicle or a notation of the secured party's lien on the vehicles' certificate
of title. (In Louisiana, a copy of the installment sale contract must also be
filed with the appropriate governmental recording office).
All contracts originated or acquired by the seller name the seller as
obligee or assignee and as the secured party. The seller also takes all
actions necessary under the laws of the state in which the financed vehicle is
located to perfect the seller's security interest in the financed vehicle,
including, where applicable, having a notation of its lien recorded on such
vehicle's certificate of title. Because the seller continues to service the
contracts, the obligors on the contracts will not be notified of the sale to a
trust. No action will be taken to record the transfer of the security interest
from the seller to a trust by amendment of the certificates of title for the
financed vehicles or otherwise.
The seller will assign its security interests in the financed
vehicles securing the related receivables to each trust pursuant to the
related Sale and Servicing Agreement. However, because of the administrative
burden and expense, neither the seller nor the related owner trustee will
amend any certificate of title to identify a trust as the new secured party on
the certificate of title relating to a financed vehicle. Also, the seller will
continue to hold any certificates of title relating to the vehicles in its
possession as custodian for the trust pursuant to the related Sale and
Servicing Agreement. Refer to "Sale Provisions".
In most states, an assignment such as that under each Sale and
Servicing Agreement is an effective conveyance of a security interest without
amendment of any lien noted on a vehicle's certificate of title, and the
assignee succeeds thereby to the assignor's rights as secured party. However,
by not identifying a trust as the secured party on the certificate of title,
the security interest of a trust in the vehicle could be defeated through
fraud or negligence. In such states, in the absence of fraud or forgery by the
vehicle owner or the seller or administrative error by state or local
agencies, the notation of the seller's lien on the certificates of title will
be sufficient to protect a trust against the rights of subsequent purchasers
of a financed vehicle or subsequent lenders who take a security interest in a
financed vehicle. If there are any financed vehicles as to which the seller
failed to obtain or assign to a trust a perfected security interest, the
security interest of that trust would be subordinate to, among others, the
interests of subsequent purchasers of the financed vehicles and holders of
perfected security interests therein. Such a failure, however, would
constitute a breach of the warranties of the seller under the related Sale and
Servicing Agreement and would create an obligation of the seller to repurchase
the related receivable unless the breach were cured. Refer to "Sale
Provisions" and "Risk Factors--Trusts May Not have a Perfected Security
Interest in Certain Financed Vehicles".
Under the laws of most states, the perfected security interest in a
vehicle would continue for four months after the vehicle is moved to a state
other than the state in which it is initially registered and thereafter until
the owner thereof reregisters the vehicle in the new state. A majority of
states generally require surrender of a certificate of title to reregister a
vehicle. Accordingly, a secured party must surrender possession if it holds
the certificate of title to the vehicle. If a vehicle is registered in a state
providing for the notation of a lien on the certificate of title but not
possession by the secured party, the secured party would receive notice of
surrender if the security interest is noted on the certificate of title. Thus,
the secured party would have the opportunity to re-perfect its security
interest in the vehicle in the state of relocation. In states that do not
require a certificate of title for registration of a motor vehicle,
re-registration could defeat perfection. In the ordinary course of servicing
motor vehicle receivables, the servicer takes steps to effect re-perfection
upon receipt of notice of re-registration or information from the obligor as
to relocation. Similarly, when an obligor sells a vehicle, the servicer must
surrender possession of the certificate of title or will receive notice as a
result of its lien noted thereon and accordingly will have an opportunity to
require satisfaction of the related receivable before release of the lien.
Under each Sale and Servicing Agreement the servicer is obligated to take
appropriate steps to maintain perfection of security interests in the financed
vehicles and is obligated to purchase the related receivable if it fails to do
so.
Under the laws of most states, liens for repairs performed on a motor
vehicle and liens for unpaid taxes take priority over even a perfected
security interest in a financed vehicle. The Code also grants priority to
certain federal tax liens over the lien of a secured party. The laws of
certain states and federal law permit the confiscation of vehicles by
governmental authorities under certain circumstances if used in unlawful
activities, which may result in the loss of a secured party's perfected
security interest in the confiscated vehicle. Under each Sale and Servicing
Agreement the seller will represent to the related trust that, as of the date
the related receivable is sold to the trust, each security interest in a
financed vehicle is or will be prior to all other present liens (other than
tax liens and other liens that arise by operation of law) upon and security
interests in such financed vehicle. However, liens for repairs or taxes could
arise, or the confiscation of a financed vehicle could occur, at any time
during the term of a receivable. No notice will be given to the owner trustee,
any indenture trustee or any securityholders in respect of a trust if such a
lien arises or confiscation occurs.
REPOSSESSION
In the event of default by a vehicle purchaser, the holder of the
motor vehicle retail installment sale contract has all the remedies of a
secured party under the UCC, except where specifically limited by other state
laws. Among the UCC remedies, the secured party has the right to perform
self-help repossession unless such act would constitute a breach of the peace.
Self-help is the method employed by the servicer in most cases and is
accomplished simply by retaking possession of the financed vehicle. In the
event of default by the obligor, some jurisdictions require that the obligor
be notified of the default and be given a time period within which he may cure
the default prior to repossession. Generally, the right of reinstatement may
be exercised on a limited number of occasions in any one-year period. In cases
where the obligor objects or raises a defense to repossession, or if otherwise
required by applicable state law, a court order must be obtained from the
appropriate state court. The vehicle must then be repossessed in accordance
with that order.
NOTICE OF SALE; REDEMPTION RIGHTS
The UCC and other state laws require the secured party to provide the
obligor with reasonable notice of the date, time and place of any public sale
and/or the date after which any private sale of the collateral may be held.
The obligor has the right to redeem the collateral prior to actual sale by
paying the secured party the unpaid principal balance of the obligation plus
reasonable expenses for repossessing, holding and preparing the collateral for
disposition and arranging for its sale, plus, in some jurisdictions,
reasonable attorneys' fees. In some states, payment of delinquent installments
is sufficient.
DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS
The proceeds of resale of the vehicles generally will be applied
first to the expenses of resale and repossession and then to the satisfaction
of the indebtedness. Some states impose prohibitions or limitations on
deficiency judgments if the net proceeds from resale do not cover the full
amount of the indebtedness; others do not. However, the deficiency judgment
would be a personal judgment against the obligor for the shortfall, and a
defaulting obligor can be expected to have very little capital or sources of
income available following repossession. Therefore, in many cases, it may not
be useful to seek a deficiency judgment or, if one is obtained, it may be
settled at a significant discount.
Occasionally, after resale of a vehicle and payment of all expenses
and all indebtedness, there is a surplus of funds. In that case, the UCC
requires the creditor to remit the surplus to any holder of a lien with
respect to the vehicle. If no such lienholder exists and there are remaining
funds, the UCC requires the creditor to remit the surplus to the former owner
of the vehicle.
CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws and related
regulations impose substantial requirements upon lenders and servicers
involved in consumer finance. These laws include the Truth-in-Lending Act, the
Equal Credit Opportunity Act, the Federal Trade Commission Act, the Fair
Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection
Procedures Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's
Regulations B and Z, the Soldiers' and Sailors' Civil Relief Act of 1940, the
Texas Consumer Credit Code, state adoptions of the National Consumer Act and
of the Uniform Consumer Credit Code and state motor vehicle retail installment
sales acts, retail installment sales acts and other similar laws. Also, state
laws impose finance charge ceilings and other restrictions on consumer
transactions and require contract disclosures in addition to those required
under federal law. These requirements impose specific statutory liabilities
upon creditors who fail to comply with their provisions. In some cases, this
liability could affect an assignee's ability to enforce consumer finance
contracts such as the receivables.
The so-called "Holder-in-Due-Course" Rule of the Federal Trade
Commission (the "FTC Rule"), the provisions of which are generally duplicated
by the Uniform Consumer Credit Code, other statutes or the common law, has the
effect of subjecting a seller in a consumer credit transaction (and certain
related creditors and their assignees) to all claims and defenses which the
obligor in the transaction could assert against the seller of the goods.
Liability under the FTC Rule is limited to the amounts paid by the obligor
under the contract and the holder of the contract may also be unable to
collect any balance remaining due thereunder from the obligor.
Most of the receivables will be subject to the requirements of the
FTC Rule. Accordingly, each trust, as holder of its receivables, will be
subject to any claims or defenses that the purchaser of the applicable
financed vehicle may assert against the seller of the financed vehicle. Such
claims are limited to a maximum liability equal to the amounts paid by the
obligor on the receivable.
Courts have applied general equitable principles to secured parties
pursuing repossession and litigation involving deficiency balances. These
equitable principles may have the effect of relieving an obligor from some or
all of the legal consequences of a default.
In several cases, consumers have asserted that the self-help remedies
of secured parties under the UCC and related laws violate the due process
protections provided under the 14th Amendment to the Constitution of the
United States. Courts have generally upheld the notice provisions of the UCC
and related laws as reasonable or have found that the repossession and resale
by the creditor do not involve sufficient state action to afford
constitutional protection to borrowers.
Under each Sale and Servicing Agreement the seller will warrant to
the related trust that each receivable complies with all requirements of law
in all material respects. Accordingly, if an obligor has a claim against the
trust for violation of any law and such claim materially and adversely affects
the trust's interest in a receivable, such violation would constitute a breach
of the warranties of the seller under such Sale and Servicing Agreement and
would create an obligation of the seller to repurchase the receivable unless
the breach is cured. Refer to "Sale Provisions".
OTHER LIMITATIONS
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a secured
party to realize upon collateral or to enforce a deficiency judgment. For
example, in a Chapter 13 proceeding under the federal bankruptcy law, a court
may prevent a creditor from repossessing a vehicle, and, as part of the
rehabilitation plan, reduce the amount of the secured indebtedness to the
market value of the vehicle at the time of bankruptcy (as determined by the
court), leaving the creditor as a general unsecured creditor for the remainder
of the indebtedness. A bankruptcy court may also reduce the monthly payments
due under a contract or change the rate of interest and time of repayment of
the indebtedness.
CERTAIN FEDERAL INCOME
TAX CONSEQUENCES
The following is a general summary of certain federal income tax
consequences of the purchase, ownership and disposition of the notes and the
certificates. The summary does not purport to deal with federal income tax
consequences applicable to all categories of holders, some of which may be
subject to special rules. For example, it does not discuss the tax treatment
of noteholders or certificateholders that are insurance companies, regulated
investment companies or dealers in securities. Moreover, there are no cases or
Internal Revenue Service ("IRS") rulings on similar transactions involving
both debt and equity interests issued by a trust with terms similar to those
of the notes and the certificates. As a result, the IRS may disagree with all
or a part of the discussion below. Prospective investors are urged to consult
their own tax advisors in determining the federal, state, local, foreign and
any other tax consequences to them of the purchase, ownership and disposition
of the notes and the certificates.
The following summary is based upon current provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), the Treasury
regulations promulgated thereunder and judicial or ruling authority, all of
which are subject to change, which change may be retroactive. Each trust will
be provided with an opinion of special Federal tax counsel to each trust
specified in the related prospectus supplement ("Federal Tax Counsel"),
regarding certain federal income tax matters discussed below. An opinion of
Federal Tax Counsel, however, is not binding on the IRS or the courts. No
ruling on any of the issues discussed below will be sought from the IRS. For
purposes of the following summary, references to the trust, the notes, the
certificates and related terms, parties and documents shall be deemed to
refer, unless otherwise specified herein, to each trust and the notes,
certificates and related terms, parties and documents applicable to such
trust.
The federal income tax consequences to certificateholders will vary
depending on whether (i) an election is made to treat the trust as a
partnership under the Code or (ii) all the certificates are retained by the
seller or an affiliate thereof. The prospectus supplement for each series of
certificates will specify whether a partnership election will be made.
TRUSTS FOR WHICH A PARTNERSHIP ELECTION IS MADE
Tax Characterization of the Trust as a Partnership
Federal Tax Counsel will deliver its opinion that a trust for which a
partnership election is made will not be an association (or publicly traded
partnership) taxable as a corporation for federal income tax purposes. This
opinion will be based on the assumption that the terms of the trust agreement
and related documents will be complied with, and on counsel's conclusions that
the nature of the income of the trust will exempt it from the rule that
certain publicly traded partnerships are taxable as corporations.
Tax Consequences to Holders of the Notes
Treatment of the Notes as Indebtedness
The seller will agree, and the noteholders will agree by their
purchase of notes, to treat the notes as debt for federal income tax purposes.
Federal Tax Counsel will, except as otherwise provided in the related
prospectus supplement, advise the trust that the notes will be characterized as
debt for federal income tax purposes. The discussion below assumes this
characterization of the notes is correct.
OID, Indexed Securities, Etc.
The discussion below assumes that all payments on the notes are
denominated in U.S. dollars, and that the notes are not Indexed securities or
Strip notes. Moreover, the discussion assumes that the interest formula for
the notes meets the requirements for "qualified stated interest" under
Treasury regulations (the "OID regulations") relating to original issue
discount ("OID"), and that any OID on the notes (i.e., any excess of the
principal amount of the notes over their issue price) does not exceed a de
minimis amount (i.e., 1/4% of their principal amount multiplied by the number
of full years included in their term), all within the meaning of the OID
regulations. If these conditions are not satisfied with respect to any given
series of notes, additional tax considerations with respect to such notes will
be disclosed in the applicable prospectus supplement.
Interest Income on the Notes
Based on the above assumptions, except as discussed in the following
paragraph, the notes will not be considered issued with OID. The stated
interest thereon will be taxable to a noteholder as ordinary interest income
when received or accrued in accordance with such noteholder's method of tax
accounting. Under the OID regulations, a holder of a note issued with a de
minimis amount of OID must include such OID in income, on a pro rata basis, as
principal payments are made on the note. It is believed that any prepayment
premium paid as a result of a mandatory redemption will be taxable as
contingent interest when it becomes fixed and unconditionally payable. A
purchaser who buys a note for more or less than its principal amount will
generally be subject, respectively, to the premium amortization or market
discount rules of the Code.
A holder of a note that has a fixed maturity date of not more than
one year from the issue date of such note (a "Short-Term note") may be subject
to special rules. An accrual basis holder of a Short-Term note (and certain
cash method holders, including regulated investment companies, as set forth in
Section 1281 of the Code) generally would be required to report interest
income as interest accrues on a straight-line basis over the term of each
interest period. Other cash basis holders of a Short-Term note would, in
general, be required to report interest income as interest is paid (or, if
earlier, upon the taxable disposition of the Short-Term note). However, a cash
basis holder of a Short-Term note reporting interest income as it is paid may
be required to defer a portion of any interest expense otherwise deductible on
indebtedness incurred to purchase or carry the Short-Term note until the
taxable disposition of the Short-Term note. A cash basis taxpayer may elect
under Section 1281 of the Code to accrue interest income on all non-government
debt obligations with a term of one year or less, in which case the taxpayer
would include interest on the Short-Term note in income as it accrues, but
would not be subject to the interest expense deferral rule referred to in the
preceding sentence. Certain special rules apply if a Short-Term note is
purchased for more or less than its principal amount.
Sale or Other Disposition
If a noteholder sells a note, the holder will recognize gain or loss
in an amount equal to the difference between the amount realized on the sale
and the holder's adjusted tax basis in the note. The adjusted tax basis of a
note to a particular noteholder will equal the holder's cost for the note,
increased by any market discount, acquisition discount, OID (including de
minimis OID) and gain previously included by such noteholder in income with
respect to the note and decreased by the amount of bond premium (if any)
previously amortized and by the amount of principal payments previously
received by such noteholder with respect to such note. Any such gain or loss
will be capital gain or loss if the note was held as a capital asset, except
for gain representing accrued interest and accrued market discount not
previously included in income. Any capital gain recognized upon a sale,
exchange or other disposition of a note will be long-term capital gain if the
seller's holding period is more than one year and will be short-term capital
gain if the seller's holding period is one year or less. The deductibility of
capital losses is subject to certain limitations. Prospective investors should
consult with their own tax advisors concerning the U.S. federal tax
consequences of the sale, exchange or other disposition of a note.
Foreign Holders
Interest payments made or accrued on the notes will generally be
considered "portfolio interest," and a non-U.S. person that is an individual
or corporation (or an entity treated as a corporation for U.S. federal income
tax purposes) holding the notes on its own behalf will not be subject to U.S.
federal income tax on interest paid or accrued on a note unless such non-U.S.
person is an actual or constructive "10 percent shareholder" of the trust or
the seller (including a holder of 10% of the outstanding certificates), a
"controlled foreign corporation" related to the trust or the seller, or a bank
receiving interest described in section 881(c)(3)(A) of the Code.
To qualify for the exemption from taxation, the withholding agent
must have received a statement from the individual or corporation that:
o is signed under penalties of perjury by the beneficial owner of the
note,
o certifies that such owner is not a U.S. person, and
o provides the beneficial owner's name and address.
The "withholding agent" is the last U.S. payor (or non-U.S. payor
that is a qualified intermediary, U.S. branch of a foreign person or
withholding foreign partnership) in the chain of payment prior to payment to a
non-U.S. person (which itself is not a withholding agent). Generally, this
statement is made on an IRS Form W-8BEN, which will be effective for the
remainder of the year of signature plus three full calendar years, unless a
change in circumstances makes any information on the form incorrect.
Notwithstanding the preceding sentence, an IRS Form W-8BEN with a U.S.
taxpayer identification number will remain effective until a change in
circumstances makes any information on the form incorrect, provided that the
withholding agent reports at least annually to the beneficial owner on IRS
Form 1042-S. The beneficial owner must inform the withholding agent within 30
days of such change and furnish a new IRS Form W-8BEN.
A non-U.S. person other than an individual or corporation (or an
entity treated as a corporation for federal income tax purposes) holding the
notes on its own behalf may have substantially increased reporting
requirements. In particular, in the case of notes held by a foreign
partnership or foreign trust, the partners or beneficiaries, as the case may
be, rather than the partnership or trust will be required to provide the
certification discussed above, and the partnership (or trust) will be required
to provide certain additional information.
Certain securities clearing organizations, and other entities who are not
beneficial owners, may provide a signed statement to the withholding agent in
lieu of the beneficial owner's signed statement. However, in such case, the
signed statement may require a copy of the beneficial owner's IRS Form W-8BEN
(or the substitute form) to be attached.
A non-U.S. person holding the notes on its own behalf, whose income
with respect to its investment in a note is effectively connected with the
conduct of a U.S. trade or business, will generally be taxed as if the holder
were a U.S. person if the holder provides the withholding agent with an IRS
Form W-8ECI.
If the interest paid or accrued on the notes is not portfolio
interest, then it will be subject to U.S. federal income tax at graduated
rates (if received by a non-U.S. person with effectively connected income that
has provided a Form W-8ECI) or withholding tax at a rate of 30 percent, unless
reduced or eliminated pursuant to an applicable tax treaty.
Generally, a non-U.S. person will not be subject to U.S. federal
income tax on any amount which constitutes capital gain upon the sale,
redemption, retirement or other taxable disposition of a note, unless such
gain is derived from sources within the United States and such non-U.S. person
is an individual who is present in the United States for 183 days or more in
the taxable year of the disposition or otherwise establishes a "tax home" in
the United States. Certain other exceptions may be applicable, and a non-U.S.
person holding a note should consult its tax advisor in this regard.
The Notes will not be includible in the estate of a non-U.S. person
that holds a note unless the individual is an actual or constructive "10
percent shareholder" of the seller or the trust (including a holder of 10% of
the outstanding certificates) or, at the time of such individual's death,
payments in respect of the note would have been effectively connected with the
conduct by such individual of a trade or business in the United States.
Backup Withholding
Backup withholding of U.S. federal income tax at a rate of 31 percent
may apply to payments made in respect of a note to a registered owner that is
not an exempt recipient and that fails to provide certain identifying
information (such as the registered owner's taxpayer identification number) in
the required manner. Generally, individuals are not exempt recipients, whereas
corporations and certain other entities, such as tax exempt organizations,
qualified pension and profit-sharing trusts, or individual retirement accounts
generally are exempt recipients. Payments made in respect of the notes to a
U.S. person must be reported to the IRS, unless the U.S. person is an exempt
recipient or establishes an exemption. Compliance with the identification
procedures described in the preceding section would establish an exemption
from backup withholding for those non-U.S. persons holding notes who are not
exempt recipients.
In addition, upon the sale of a note to (or through) a broker, the
broker must report the sale and withhold 31% of the entire purchase price,
unless either (i) the broker determines that the seller is a corporation or
other exempt recipient or (ii) the seller certifies that it is a non-U.S.
person (and certain other conditions are met). Certification of the registered
owner's status as a non-U.S. person normally would be made on an IRS Form
W-8BEN under penalties of perjury, although in certain cases it may be
possible to submit other documentary evidence.
Any amounts withheld under the backup withholding rules from a
payment to a beneficial owner would be allowed as a refund or a credit against
such beneficial owner's U.S. federal income tax provided the required
information is furnished to the IRS.
Prospective investors are strongly urged to consult their own tax
advisors with respect to the application of backup withholding to their
individual circumstances.
Possible Alternative Treatments of the Notes
If, contrary to the opinion of Federal Tax Counsel, the IRS
successfully asserted that one or more of the notes did not represent debt for
federal income tax purposes, the notes might be treated as equity interests in
the trust. If so treated, the trust might be treated as a publicly traded
partnership taxable as a corporation with potentially adverse tax consequences
(and the publicly traded partnership taxable as a corporation would not be
able to reduce its taxable income by deductions for interest expense on notes
recharacterized as equity). Alternatively, and most likely in the view of
Federal Tax Counsel, the trust would be treated as a publicly traded
partnership that would not be taxable as a corporation because it would meet
certain qualifying income tests. Nonetheless, treatment of the notes as equity
interests in such a partnership could have adverse tax consequences to certain
holders. For example, income to certain tax-exempt entities (including pension
funds) would be "unrelated business taxable income", income to foreign holders
generally would be subject to U.S. tax and U.S. tax return filing and
withholding requirements, and individual holders might be subject to certain
limitations on their ability to deduct their share of trust expenses.
Tax Consequences to Holders of the Certificates
Treatment of the Trust as a Partnership
The seller and the servicer will agree, and the certificateholders
will agree by their purchase of certificates, to treat the trust and each
separate series trust property as a partnership for purposes of federal and
state income tax, franchise tax and any other tax measured in whole or in part
by income, with the assets of the partnership being the assets held by the
trust, the partners of the partnership being the certificateholders (including
DaimlerChrysler Retail Receivables LLC in its capacity as recipient of
distributions from the reserve funds), and the notes being debt of the related
partnership. However, the proper characterization of the arrangement involving
the trust, the certificates, the notes, the seller, DaimlerChrysler Retail
Receivables LLC and the servicer is not clear because there is no authority on
transactions closely comparable to that contemplated herein.
A variety of alternative characterizations are possible. For example,
because the certificates have certain features characteristic of debt, the
certificates might be considered debt of DaimlerChrysler Retail Receivables
LLC or the trust. Any such characterization would not result in materially
adverse tax consequences to certificateholders as compared to the consequences
from treatment of the certificates as equity in a partnership, described
below. The following discussion assumes that the certificates represent equity
interests in a partnership.
Indexed Securities, Etc.
The following discussion assumes that all payments on the
certificates are denominated in U.S. dollars, none of the certificates are
Indexed securities or Strip certificates, and that a series of securities
includes a single class of certificates. If these conditions are not satisfied
with respect to any given series of certificates, additional tax
considerations with respect to such certificates will be disclosed in the
applicable prospectus supplement.
Partnership Taxation
As a partnership, the trust will not be subject to federal income
tax. Rather, each certificateholder will be required to separately take into
account such holder's allocated share of income, gains, losses, deductions and
credits of the trust. The trust's income will consist primarily of interest
and finance charges earned on the receivables (including appropriate
adjustments for market discount, OID and bond premium) and any gain upon
collection or disposition of receivables. The trust's deductions will consist
primarily of interest accruing with respect to the notes, servicing and other
fees, and losses or deductions upon collection or disposition of receivables.
The tax items of a partnership are allocable to the partners in
accordance with the Code, Treasury regulations and the partnership agreement
(here, the trust agreement and related documents). The trust agreement will
provide, in general, that the certificateholders will be allocated taxable
income of the trust for each month equal to the sum of (i) the interest that
accrues on the certificates in accordance with their terms for such month,
including interest accruing at the pass through rate for such month and
interest on amounts previously due on the certificates but not yet
distributed; (ii) any trust income attributable to discount on the receivables
that corresponds to any excess of the principal amount of the certificates
over their initial issue price; (iii) prepayment premium payable to the
certificateholders for such month; and (iv) any other amounts of income
payable to the certificateholders for such month. Such allocation will be
reduced by any amortization by the trust of premium on receivables that
corresponds to any excess of the issue price of certificates over their
principal amount. All remaining taxable income of the trust will be allocated
to DaimlerChrysler Retail Receivables LLC. Based on the economic arrangement
of the parties, this approach for allocating trust income should be
permissible under applicable Treasury regulations, although no assurance can
be given that the IRS would not require a greater amount of income to be
allocated to certificateholders. Moreover, even under the foregoing method of
allocation, certificateholders may be allocated income equal to the entire
pass through rate plus the other items described above even though the trust
might not have sufficient cash to make current cash distributions of such
amount. Thus, cash basis holders will in effect be required to report income
from the certificates on the accrual basis and certificateholders may become
liable for taxes on trust income even if they have not received cash from the
trust to pay such taxes. In addition, because tax allocations and tax
reporting will be done on a uniform basis for all certificateholders but
certificateholders may be purchasing certificates at different times and at
different prices, certificateholders may be required to report on their tax
returns taxable income that is greater or less than the amount reported to
them by the trust.
All of the taxable income allocated to a certificateholder that is a
pension, profit sharing or employee benefit plan or other tax-exempt entity
(including an individual retirement account) will constitute "unrelated
business taxable income" generally taxable to such a holder under the Code.
An individual taxpayer's share of expenses of the trust (including
fees to the servicer but not interest expense) would be miscellaneous itemized
deductions. Such deductions might be disallowed to the individual in whole or
in part and might result in such holder being taxed on an amount of income
that exceeds the amount of cash actually distributed to such holder over the
life of the trust.
The trust intends to make all tax calculations relating to income and
allocations to certificateholders on an aggregate basis. If the IRS were to
require that such calculations be made separately for each receivable, the
trust might be required to incur additional expense but it is believed that
there would not be a material adverse effect on certificateholders.
Discount and Premium
It is believed that the receivables were not issued with OID, and,
therefore, the trust should not have OID income. However, the purchase price
paid by the trust for the receivables may be greater or less than the
remaining principal balance of the receivables at the time of purchase. If so,
the receivables will have been acquired at a premium or discount, as the case
may be. (As indicated above, the trust will make this calculation on an
aggregate basis, but might be required to recompute it on a
receivable-by-receivable basis.)
If the trust acquires the receivables at a market discount or
premium, the trust will elect to include any such discount in income currently
as it accrues over the life of the receivables or to offset any such premium
against interest income on the receivables. As indicated above, a portion of
such market discount income or premium deduction may be allocated to
certificateholders.
Section 708 Termination
Under Section 708 of the Code, the trust will be deemed to terminate
for federal income tax purposes if 50% or more of the capital and profits
interests in the trust are sold or exchanged within a 12-month period.
Pursuant to final Treasury regulations issued on May 9, 1997, if such a
termination occurs, the trust will be considered to have contributed the
assets of the trust (the "old partnership") to a new partnership (the "new
partnership") in exchange for interests in the partnership. Such interests
would be deemed distributed to the partners of the old partnership in
liquidation thereof, which would not constitute a sale or exchange.
Disposition of Certificates
Generally, capital gain or loss will be recognized on a sale of
certificates in an amount equal to the difference between the amount realized
and the seller's tax basis in the certificates sold. A certificateholder's tax
basis in a certificate will generally equal the holder's cost increased by the
holder's share of trust income (includible in income) and decreased by any
distributions received with respect to such certificate. In addition, both the
tax basis in the certificates and the amount realized on a sale of a
certificate would include the holder's share of the notes and other
liabilities of the trust. A holder acquiring certificates at different prices
may be required to maintain a single aggregate adjusted tax basis in such
certificates, and, upon sale or other disposition of some of the certificates,
allocate a portion of such aggregate tax basis to the certificates sold
(rather than maintaining a separate tax basis in each certificate for purposes
of computing gain or loss on a sale of that certificate).
Any gain on the sale of a certificate attributable to the holder's
share of unrecognized accrued market discount on the receivables would
generally be treated as ordinary income to the holder and would give rise to
special tax reporting requirements. The trust does not expect to have any
other assets that would give rise to such special reporting requirements.
Thus, to avoid those special reporting requirements, the trust will elect to
include market discount in income as it accrues.
If a certificateholder is required to recognize an aggregate amount
of income (not including income attributable to disallowed itemized deductions
described above) over the life of the certificates that exceeds the aggregate
cash distributions with respect thereto, such excess will generally give rise
to a capital loss upon the retirement of the certificates.
Allocations Between Transferors and Transferees
In general, the trust's taxable income and losses will be determined
monthly and the tax items for a particular calendar month will be apportioned
among the certificateholders in proportion to the principal amount of
certificates owned by them as of the close of the last day of such month. As a
result, a holder purchasing certificates may be allocated tax items (which
will affect its tax liability and tax basis) attributable to periods before
the actual transaction.
The use of such a monthly convention may not be permitted by existing
regulations. If a monthly convention is not allowed (or only applies to
transfers of less than all of the partner's interest), taxable income or
losses of the trust might be reallocated among the certificateholders.
DaimlerChrysler Retail Receivables LLC is authorized to revise the trust's
method of allocation between transferors and transferees to conform to a
method permitted by future regulations.
Section 754 Election
In the event that a certificateholder sells its certificates at a
profit (or loss), the purchasing certificateholder will have a higher (or
lower) basis in the certificates than the selling certificateholder had. The
tax basis of the trust's assets will not be adjusted to reflect that higher
(or lower) basis unless the trust were to file an election under Section 754
of the Code. In order to avoid the administrative complexities that would be
involved in keeping accurate accounting records, as well as potentially
onerous information reporting requirements, the trust will not make such an
election. As a result, certificateholders might be allocated a greater or
lesser amount of trust income than would be appropriate based on their own
purchase price for the certificates.
Administrative Matters
Taxation of U.S. Tax-Exempt Shareholders. In general, U.S.
Shareholders that generally are exempt from taxation in the United States
("U.S. Tax-Exempt Shareholders") are subject to tax in respect of any
unrelated business taxable income ("UBTI") they recognize. UBTI is defined
generally as income from a trade or business regularly carried on by a
tax-exempt entity that is unrelated to its exempt purpose. UBTI generally does
not include dividends, interest and, with certain exceptions, gains or losses
from the sale, exchange or other disposition of property.
Section 514 of the Code provides that a tax-exempt entity's
"debt-financed income" will be included in computing UBTI, regardless of
whether such income would otherwise be excluded as dividends, interest or
other similar income. Consequently, if a U.S. Tax-Exempt Shareholder's
acquisition of a certificate is debt-financed, all or a portion of such
investor's income attributable to the trust will be included in UBTI. In
addition, the trust may borrow funds or otherwise incur debt (for example, by
issuing notes) that may result in income of the Trust being treated as
debt-financed income under the UBTI rules.
There is some uncertainty with respect to this matter, certain
proposed regulations with respect to this subject have not been finalized and
may be modified or amended prior to their finalization, and additional
regulations could be promulgated, possibly with retroactive effect. U.S.
Tax-Exempt Shareholders should therefore consult their tax advisors regarding
all possible aspects of UBTI.
The owner trustee is required to keep or have kept complete and
accurate books of the trust. Such books will be maintained for financial
reporting and tax purposes on an accrual basis and the fiscal year of the
trust will be the calendar year. The owner trustee will file a partnership
information return (IRS Form 1065) with the IRS for each taxable year of the
trust and will report each certificateholder's allocable share of items of
trust income and expense to holders and the IRS on Schedule K1. The trust will
provide the Schedule K1 information to nominees that fail to provide the trust
with the information statement described below and such nominees will be
required to forward such information to the beneficial owners of the
certificates. Generally, holders must file tax returns that are consistent
with the information return filed by the trust or be subject to penalties
unless the holder notifies the IRS of all such inconsistencies.
Under Section 6031 of the Code, any person that holds certificates as
a nominee at any time during a calendar year is required to furnish the trust
with a statement containing certain information on the nominee, the beneficial
owners and the certificates so held. Such information includes (i) the name,
address and taxpayer identification number of the nominee and (ii) as to each
beneficial owner (x) the name, address and identification number of such
person, (y) whether such person is a United States person, a tax-exempt entity
or a foreign government, an international organization, or any wholly owned
agency or instrumentality of either of the foregoing, and (z) certain
information on certificates that were held, bought or sold on behalf of such
person throughout the year. In addition, brokers and financial institutions
that hold certificates through a nominee are required to furnish directly to
the trust information as to themselves and their ownership of certificates. A
clearing agency registered under Section 17A of the Exchange Act is not
required to furnish any such information statement to the trust. The
information referred to above for any calendar year must be furnished to the
trust on or before the following January 31. Nominees, brokers and financial
institutions that fail to provide the trust with the information described
above may be subject to penalties.
DaimlerChrysler Retail Receivables LLC will be designated as the tax
matters partner in the related trust agreement and, as such, will be
responsible for representing the certificateholders in any dispute with the
IRS. The Code provides for administrative examination of a partnership as if
the partnership were a separate and distinct taxpayer. Generally, the statute
of limitations for partnership items does not expire before three years after
the date on which the partnership information return is filed. Any adverse
determination following an audit of the return of the trust by the appropriate
taxing authorities could result in an adjustment of the returns of the
certificateholders, and, under certain circumstances, a certificateholder may
be precluded from separately litigating a proposed adjustment to the items of
the trust. An adjustment could also result in an audit of a
certificateholder's returns and adjustments of items not related to the income
and losses of the trust.
Tax Consequences to Foreign Certificateholders
It is not clear whether the trust would be considered to be engaged
in a trade or business in the United States for purposes of federal
withholding taxes with respect to non-U.S. persons because there is no clear
authority dealing with that issue under facts substantially similar to those
described herein. Although it is not expected that the trust would be engaged
in a trade or business in the United States for such purposes, the trust will
withhold as if it were so engaged in order to protect the trust from possible
adverse consequences of a failure to withhold. The trust expects to withhold
on the portion of its taxable income that is allocable to foreign
certificateholders pursuant to Section 1446 of the Code, as if such income
were effectively connected to a U.S. trade or business, at a rate of 35% for
foreign holders that are taxable as corporations and 39.6% for all other
foreign holders. Subsequent adoption of Treasury regulations or the issuance
of other administrative pronouncements may require the trust to change its
withholding procedures. In determining a holder's withholding status, the
trust may rely on IRS Form W-8BEN, IRS Form W9 or the holder's certification of
non-foreign status signed under penalties of perjury.
Each foreign holder might be required to file a U.S. individual or
corporate income tax return (including, in the case of a corporation, the
branch profits tax) on its share of the trust's income. Each foreign holder
must obtain a taxpayer identification number from the IRS and submit that
number to the trust on Form W-8BEN or other applicable form (or substantially
identical form) in order to assure appropriate crediting of the taxes
withheld. A foreign holder generally would be entitled to file with the IRS a
claim for refund with respect to taxes withheld by the trust, taking the
position that no taxes were due because the trust was not engaged in a U.S.
trade or business. However, interest payments made (or accrued) to a
certificateholder who is a foreign person generally will be considered
guaranteed payments to the extent such payments are determined without regard
to the income of the trust. If these interest payments are properly
characterized as guaranteed payments, then the interest will not be considered
"portfolio interest". As a result, certificateholders that are non-U.S.
persons will be subject to United States federal income tax and withholding
tax at a rate of 30%, unless reduced or eliminated pursuant to an applicable
treaty. In such case, a foreign holder would only be entitled to claim a
refund for that portion of the taxes in excess of the taxes that should be
withheld with respect to the guaranteed payments.
Backup Withholdings
Distributions made on the certificates and proceeds from the sale of
the certificates will be subject to a "backup" withholding tax of 31% if, in
general, the certificateholder fails to comply with certain identification
procedures, unless the holder is an exempt recipient under applicable
provisions of the Code.
Tax Exempt Investors
Investors that are exempt from federal income taxation under Section
501 of the Code are nevertheless subject to federal income taxation on their
"unrelated business taxable income," including "unrelated debt-financed
income," as defined in Sections 512 and 514 of the Code. Income in respect of
certificates of a trust that has also issued notes would be "unrelated
debt-financed income" for these purposes.
TRUSTS IN WHICH ALL CERTIFICATES ARE RETAINED
BY THE SELLER OR AN AFFILIATE OF THE SELLER
Tax Characterization of the Trust
Federal Tax Counsel will deliver its opinion that a trust which
issues one or more classes of notes to investors and all the certificates of
which are retained by seller or an affiliate thereof will not be an
association (or publicly traded partnership) taxable as a corporation for
federal income tax purposes. This opinion will be based on the assumption that
the terms of the trust agreement and related documents will be complied with,
and on counsel's conclusions that the trust will constitute a mere security
arrangement for the issuance of debt by the single certificateholder.
Treatment of the Notes as Indebtedness
The seller will agree, and the noteholders will agree by their
purchase of notes, to treat the notes as debt for federal income tax purposes.
Federal Tax Counsel will, except as otherwise provided in the related
prospectus supplement, advise the trust that the notes will be classified as
debt for federal income tax purposes. Assuming such characterization of the
notes is correct, the federal income tax consequences to noteholders described
above under the heading "Trusts for Which a Partnership Election is Made--Tax
Consequences to Holders of the notes" would apply to the noteholders.
If, contrary to the opinion of Federal Tax Counsel, the IRS
successfully asserted that one or more classes of notes did not represent debt
for federal income tax purposes, such class or classes of notes might be
treated as equity interests in the trust. If so treated, the trust might be
treated as a publicly traded partnership taxable as a corporation with
potentially adverse tax consequences (and the publicly traded partnership
taxable as a corporation would not be able to reduce its taxable income by
deductions for interest expense on notes recharacterized as equity).
Alternatively, and more likely in the view of Federal Tax Counsel, the trust
would most likely be treated as a publicly traded partnership that would not
be taxable as a corporation because it would meet certain qualifying income
tests. Nonetheless, treatment of notes as equity interests in such a
partnership could have adverse tax consequences to certain holders of such
notes. For example, income to certain tax-exempt entities (including pension
funds) would be "unrelated business taxable income", income to foreign holders
may be subject to U.S. withholding tax and U.S. tax return filing
requirements, and individual holders might be subject to certain limitations
on their ability to deduct their share of trust expenses. In the event one or
more classes of notes were treated as interests in a partnership, the
consequences governing the certificates as equity interests in a partnership
described above under "Trusts for which a Partnership Election is Made--Tax
Consequences to Holders of the certificates" would apply to the holders of
such notes.
FASITS
FASIT Provisions
The Small Business and Job Protection Act of 1996 added sections 860H
through 860L to the Code (the "FASIT provisions"), which provide for a new
type of entity for United States federal income tax purposes known as a
"financial asset securitization investment trust" (a "FASIT"). Federal Tax
Counsel will deliver its opinion that a trust for which a FASIT election is
made will be treated as a FASIT for federal income tax purposes assuming
compliance with the terms of the trust agreement (including the making of a
timely FASIT election) and related documents. The FASIT provisions of the Code
became effective on September 1, 1997. On February 4, 2000, the IRS and
Treasury issued proposed Treasury regulations on FASITs. The regulations
generally would not be effective until final regulations are filed with the
federal register. However, it appears that certain anti-abuse rules would
apply as of February 4, 2000. Accordingly, definitive guidance cannot be
provided with respect to many aspects of the tax treatment of the trust or the
holders of FASIT regular interests (such holders, "FASIT regular
noteholders"). Moreover, the qualification as a FASIT of any trust for which a
FASIT election is made (a "FASIT trust") depends on the trust's ability to
satisfy the requirements of the FASIT provisions on an ongoing basis,
including, without limitation, the requirements of any final Treasury
regulations that may be promulgated in the future under the FASIT provisions
or as a result of any change in applicable law. Thus, no assurances can be
made regarding the continuing qualification as a FASIT of any trust for which
a FASIT election is made at any particular time after the issuance of
securities by the FASIT trust. In general, the FASIT legislation will enable a
trust to be treated as a pass-through entity not subject to United States
federal entity-level income tax (except with respect to certain prohibited
transactions) and to issue securities that would be treated as debt for United
States federal income tax purposes. The prospectus supplement for a trust that
elects FASIT treatment will provide additional information on the FASIT
provisions. Also, FASIT election may be made with respect to a trust in
connection with the issuance of future series of its securities, upon
satisfaction of certain conditions, delivery by the trust of appropriate legal
opinions and a determination by the trust that such election will have no
adverse impact on holders of any then-existing classes of securities of the
trust.
CERTAIN STATE TAX CONSEQUENCES
The activities of servicing and collecting the receivables will be
undertaken by the servicer, a Michigan limited liability company. Because of
the variation in each state's tax laws based in whole or in part upon income,
it is impossible to predict tax consequences to holders of notes and
certificates in all of the state taxing jurisdictions in which they are
already subject to tax. Noteholders and certificateholders are urged to
consult their own tax advisors with respect to state tax consequences arising
out of the purchase, ownership and disposition of notes and certificates.
* * *
The federal and state tax discussions set forth above are included
for general information only and may not be applicable depending upon a
noteholder's or certificateholder's particular tax situation. Prospective
purchasers should consult their tax advisors with respect to the tax
consequences to them of the purchase, ownership and disposition of notes and
certificates, including the tax consequences under state, local, foreign and
other tax laws and the possible effects of changes in federal or other tax
laws.
ERISA CONSIDERATIONS
Section 406 of ERISA and Section 4975 of the Code prohibit a pension,
profit sharing or other employee benefit or other plan (such as an individual
retirement account and certain types of Keogh Plans) that is subject to Title
I of ERISA or to Section 4975 of the Code 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. Certain governmental plans, although not subject to ERISA or the
Code, are subject to federal, state or local laws ("Similar Law") that impose
similar requirements. Such plans subject to ERISA, Section 4975, or Similar
Law are referred to herein as "Plans". A violation of these "prohibited
transaction" rules may generate excise tax and other liabilities under ERISA
and the Code or under Similar Law for such persons.
Depending on the relevant facts and circumstances, certain prohibited
transaction exemptions may apply to the purchase or holding of the
securities--for example:
o Prohibited Transaction Class Exemption ("PTE") 96-23, which exempts
certain transactions effected on behalf of a Plan by an "in-house
asset manager";
o PTE 95-60, which exempts certain transactions between insurance
company general accounts and parties in interest;
o PTE 91-38, which exempts certain transactions between bank
collective investment funds and parties in interest;
o PTE 90-1, which exempts certain transactions between insurance
company pooled separate accounts and parties in interest;
o PTE 84-14, which exempts certain transactions effected on behalf of
a Plan by a "qualified professional asset manager".
There can be no assurance that any of these exemptions will apply
with respect to any Plan's investment in the securities, or that such an
exemption, if it did apply, would apply to all prohibited transactions that
may occur in connection with such investment. Furthermore, these exemptions
would not apply to transactions involved in operation of the trust if, as
described below, the assets of the trust were considered to include Plan
assets.
ERISA also imposes certain duties on persons who are fiduciaries of
Plans subject to ERISA, including the requirements of investment prudence and
diversification, and the requirement that such a Plan's investments be made in
accordance with the documents governing the Plan. Under ERISA, any person who
exercises any authority or control respecting the management or disposition of
the assets of a Plan is considered to be a fiduciary of such Plan. Plan
fiduciaries must determine whether the acquisition and holding of securities
and the operations of the trust would result in prohibited transactions if
Plans that purchase the securities were deemed to own an interest in the
underlying assets of the trust under the rules discussed below. There may also
be an improper delegation of the responsibility to manage Plan assets if Plans
that purchase the securities are deemed to own an interest in the underlying
assets of the trust.
Pursuant to Department of Labor Regulation ss.2510.3-101 (the "Plan
Assets Regulation"), in general when a Plan acquires an equity interest in an
entity such as a trust and such interest does not represent a "publicly
offered security" or a security issued by an investment company registered
under the Investment Company Act of 1940, as amended, the Plan's assets
include both the equity interest and an undivided interest in each of the
underlying assets of the entity, unless it is established either that the
entity is an "operating company" or that equity participation in the entity by
"benefit plan investors" is not "significant". In general, an "equity
interest" is defined under the Plan Assets Regulation as any interest in an
entity other than an instrument which is treated as indebtedness under
applicable local law and which has no substantial equity features. It is
anticipated that the certificates will be considered equity interests in the
trust for purposes of the Plan Assets Regulation. In that case, the assets of
the trust would constitute plan assets if certificates are acquired by Plans.
In such event, the fiduciary and prohibited transaction restrictions of ERISA
and Section 4975 of the Code would apply to transactions involving the assets
of the trust. As a result, except in the case of Certificates with respect to
which the Exemption is available (as described below), certificates generally
shall not be transferred unless the owner trustee receives
o a representation substantially to the effect that the proposed
transferee is not a Plan and is not acquiring the certificates on
behalf of or with the assets of a Plan (including assets that may be
held in an insurance company's separate or general accounts where
assets in such accounts may be deemed "plan assets" for purposes of
ERISA), or
o an opinion of counsel in form and substance satisfactory to the
owner trustee and the seller that the purchase or holding of the
certificates by or on behalf of a Plan will not constitute a
prohibited transaction and will not result in the assets of the
trust being deemed to be "plan assets" and subject to the fiduciary
responsibility provisions of ERISA or the prohibited transaction
provisions of ERISA and the Code or any Similar Law or subject the
owner trustee, the indenture trustee, the certificate administrator
or the seller to any obligation in addition to those undertaken in
the trust agreement.
Unless otherwise specified in the related prospectus supplement, the
offered notes may be purchased by a Plan. A fiduciary of a Plan must determine
that the purchase of a note is consistent with its fiduciary duties under
ERISA and does not result in a nonexempt prohibited transaction as defined in
Section 406 of ERISA or Section 4975 of the Code. However, the notes may not
be purchased with the assets of a Plan if the seller, an underwriter, the
indenture trustee, the owner trustee or any of their affiliates
o has investment or administrative discretion with respect to such
Plan assets;
o has authority or responsibility to give, or regularly gives,
investment advice with respect to such Plan assets for a fee and
pursuant to an agreement or understanding that such advice
- will serve as a primary basis for investment decisions with respect
to such Plan assets and
- will be based on the particular investment needs for such Plan; or
o is an employer maintaining or contributing to such Plan.
Employee benefit plans that are governmental plans (as defined in
Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33)
of ERISA) are not subject to ERISA requirements. However, any such
governmental or church plan which is qualified under Section 401(a) of the
Code and exempt from taxation under Section 501(a) of the Code is subject to
the prohibited transaction rules in Section 503 of the Code.
A fiduciary of a Plan considering the purchase of securities of a
given series should consult its tax and/or legal advisors regarding whether
the considered plan assets, the possibility of exemptive relief from the
prohibited transaction rules and other issues and their potential
consequences.
The U.S. Department of Labor (the "DOL") has granted to the lead
underwriter named in the prospectus supplement an exemption (the "Exemption")
from certain of the prohibited transaction rules of ERISA with respect to the
initial purchase, the holding and the subsequent resale by Plans of
certificates representing interests in asset-backed pass-through trusts that
consist of certain receivables, loans and other obligations that meet the
conditions and requirements of the Exemption. The receivables covered by the
Exemption include motor vehicle installment sales contracts such as a trust's
receivables. The Exemption will apply to the acquisition, holding and resale
of the Certificates by a Plan, provided that certain conditions (certain of
which are described below) are met.
Among the conditions which must be satisfied for the Exemption to
apply to the Certificates are the following:
1. The acquisition of the Certificates by a Plan is on terms
(including the price for the Certificates) that are at least as favorable to
the Plan as they would be in an arm's length transaction with an unrelated
party;
2. The rights and interests evidenced by the Certificates acquired by
the Plan are not subordinated to the rights and interests evidenced by other
certificates of the trust unless the issuer holds only certain types of assets
such as fully-secured motor vehicle installment sales ("Designated
Transactions");
3. The Certificates acquired by the Plan have received a rating at
the time of such acquisition that is in one of the three highest generic
rating categories (four, in a Designated Transaction) from either Standard &
Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc.,
Moody's Investors Service, Inc. or Fitch, Inc.;
4. The owner trustee is not an affiliate of any other member of the
Restricted Group (as defined below);
5. The sum of all payments made to the underwriters in connection
with the distribution of the Certificates represents not more than reasonable
compensation for underwriting the Certificates; the sum of all payments made
to and retained by the seller pursuant to the sale of the receivables to the
trust represents not more than the fair market value of such receivables; and
the sum of all payments made to and retained by the servicer represents not
more than reasonable compensation for the servicer's services under the Sale
and Servicing Agreement and reimbursement of the servicer's reasonable
expenses in connection therewith; and
6. The Plan investing in the Certificates is an "accredited investor"
as defined in Rule 501(a)(1) of Regulation D of the SEC under the Securities
Act of 1933.
On July 21, 1997, the DOL published in the Federal Register an
amendment to the Exemption, which extends exemptive relief to certain
mortgage-backed and asset-backed securities transactions using pre-funding
accounts for trusts issuing pass-through certificates. The amendment generally
allows mortgage loans or other secured receivables (the "Obligations")
supporting payments to certificateholders, and having a value equal to no more
than twenty-five percent (25%) of the total principal amount of the
certificates being offered by the trust, to be transferred to the trust within
a 90-day or three-month period following the closing date (the "Pre-Funding
Period"), instead of requiring that all such Obligations be either identified
or transferred on or before the Closing Date. The relief is available when the
following conditions are met:
1. The ratio of the amount allocated to the pre-funding account to
the total principal amount of the certificates being offered (the "Pre-Funding
Limit") must not exceed twenty-five percent (25%).
2. All Obligations transferred after the Closing Date (the
"Additional Obligations") must meet the same terms and conditions for
eligibility as the original Obligations used to create the trust, which terms
and conditions have been approved by a rating agency.
3. The transfer of such Additional Obligations to the trust during
the Pre-Funding Period must not result in the certificates to be covered by
the Exemption receiving a lower credit rating from a rating agency upon
termination of the Pre-Funding Period than the rating that was obtained at the
time of the initial issuance of the certificates by the trust.
4. Solely as a result of the use of pre-funding, the weighted average
annual percentage interest rate for all of the Obligations in the trust at the
end of the Pre-Funding Period must not be more than 100 basis points lower
than the average interest rate for the Obligations transferred to the trust on
the Closing Date.
5. In order to insure that the characteristics of the Additional
Obligations are substantially similar to the original Obligations which were
transferred to the trust Fund:
(i) the characteristics of the Additional Obligations must be
monitored by an insurer or other credit support provider that is independent
of the depositor; or
(ii) an independent accountant retained by the depositor must provide
the depositor with a letter (with copies provided to each rating agency rating
the certificates, the related underwriter and the related trustee) stating
whether or not the characteristics of the Additional Obligations conform to
the characteristics described in the related prospectus or prospectus
supplement. In preparing such letter, the independent accountant must use the
same type of procedures as were applicable to the Obligations transferred to
the trust as of the Closing Date.
6. The Pre-Funding Period must end no later than three months or 90
days after the Closing Date or earlier in certain circumstances if an Event of
Default occurs.
7. Amounts transferred to any pre-funding account and/or capitalized
interest account used in connection with the pre-funding may be invested only
in certain permitted investments ("Permitted Investments").
8. The related prospectus or prospectus supplement must describe:
(i) any pre-funding account and/or capitalized interest account used
in connection with a pre-funding account;
(ii) the duration of the Pre-Funding Period;
(iii) the percentage and/or dollar amount of the Pre-Funding Limit
for the trust; and
(iv) that the amounts remaining in the pre-funding account at the end
of the Pre-Funding Period will be remitted to certificateholders as repayments
of principal.
9. The related sale and servicing agreement must describe the
Permitted Investments for the pre-funding account and/or capitalized interest
account and, if not disclosed in the related prospectus or prospectus
supplement, the terms and conditions for eligibility of Additional
Obligations.
The Exemption would also provide relief from certain
self-dealing/conflict of interest or prohibited transactions that may occur
when the Plan fiduciary causes a Plan to acquire certificates in a trust when
the fiduciary (or its affiliate) is an obligor on obligations held in the
trust only if, among other requirements,
(i) in the case of the acquisition of Certificates in connection with
the initial issuance, at least fifty (50) percent of the Certificates and of
the aggregate interest in the trust are acquired by persons independent of the
Restricted Group (as defined below),
(ii) such fiduciary (or its affiliate) is an obligor with respect to
five percent (5%) or less of the fair market value of the obligations
contained in the trust,
(iii) Plan's investment in Certificates does not exceed twenty-five
(25) percent of all of the Certificates outstanding at the time of the
acquisition, and
(iv) immediately after the acquisition, no more than twenty-five (25)
percent of the assets of any Plan with respect to which the fiduciary has
discretionary authority or renders investment advice are invested in
certificates representing an interest in one or more trusts containing assets
sold or serviced by the same entity.
The Exemption does not apply to Plans sponsored by the seller, any
underwriter, the owner trustee, the indenture trustee, the servicer, any
obligor with respect to receivables included in the trust constituting more
than five percent of the aggregate unamortized principal balance of the assets
in the trust, or any affiliate of such parties (the "Restricted Group").
The prospectus supplement for each series of securities will indicate
the classes of securities, if any, offered thereby to which it is expected
that the Exemption will apply.
Any Plan fiduciary which proposes to cause a Plan to purchase
securities should consult with counsel concerning the impact of ERISA and the
Code, the applicability of the Exemption (as amended) and the potential
consequences in their specific circumstances, prior to making such investment.
Also, each Plan fiduciary should determine whether, under the general
fiduciary standards of investment prudence and diversification, an investment
in the securities is appropriate for the Plan, taking into account the overall
investment policy of the Plan and the composition of the Plan's investment
portfolio.
PLAN OF DISTRIBUTION
On the terms and conditions set forth in one or more underwriting
agreements for a series (collectively, the "Underwriting Agreement"), the
seller will agree to cause the related trust to sell to the underwriters named
in the related prospectus supplement, and each of such underwriters will
severally agree to purchase, the offered securities set forth in that
prospectus supplement.
In an Underwriting Agreement for a series, the several underwriters
will agree, subject to the terms and conditions set forth therein, to purchase
all the offered securities if any of the offered securities are purchased.
Each prospectus supplement will either (i) set forth the price at
which each class of offered securities will be offered to the public and any
concessions that may be offered to certain dealers participating in the
offering of such notes and certificates or (ii) specify that the offered
securities are to be resold by the underwriters in negotiated transactions at
varying prices to be determined at the time of such sale. After the initial
public offering of any offered securities, the public offering prices and
concessions may be changed.
Each Underwriting Agreement will provide that the seller will
indemnify the underwriters against certain civil liabilities, including
liabilities under the Securities Act, or contribute to payments the several
underwriters may be required to make in respect thereof.
Each trust may, from time to time, invest the funds in its accounts
in Eligible Investments acquired from the underwriters or the seller.
Pursuant to the Underwriting Agreement for a series of securities,
the closing of the sale of any class of offered securities will be conditioned
on the closing of the sale of all other offered securities of that series.
The place and time of delivery for a series of securities will be set
forth in the related prospectus supplement.
Until the distribution of the offered securities of a series is
completed, rules of the Commission may limit the ability of the underwriters
and certain selling group members to bid for and purchase those securities. As
an exception to these rules, the underwriters are permitted to engage in
certain transactions that stabilize the price of those securities. Such
transactions consist of bids or purchases for the purpose of pegging, fixing
or maintaining the price of the securities.
The underwriters may create a short position in the securities being
offered by selling more offered securities than are set forth on the cover
page of the related prospectus supplement. The underwriters may reduce that
short position by purchasing those offered securities in the open market.
In general, purchases of a security for the purpose of stabilization
or to reduce a short position could cause the price of the security to be
higher than it might be in the absence of such purchases.
Neither the seller nor any of the underwriters makes any
representation or prediction as to the direction or magnitude of any effect
that the transactions described above may have on the prices of the securities
of any trust. In addition, neither the seller nor any of the underwriters
makes any representation that the underwriters will engage in such
transactions or that such transactions, once commenced, will not be
discontinued without notice.
If any securities of a series are offered in the United Kingdom, each
underwriter will represent and agree that
o it has not offered or sold, and will not offer or sell, any of those
securities to persons in the United Kingdom except to persons whose
ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of
their businesses or otherwise in circumstances that do not
constitute an offer to the public in the United Kingdom for the
purposes of the Public Offers of Securities Regulations 1995,
o it has complied and will comply with all applicable provisions of
the Financial Services Act of 1986 of Great Britain with respect to
anything done by it in relation to those securities in, from or
otherwise involving the United Kingdom and
o it has only issued or passed on and will only issue or pass on in
the United Kingdom any document in connection with the issue of
those securities to a person who is of a kind described in Article
11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1995 or is a person to whom the document may
otherwise lawfully be issued or passed on.
If you initially receive an electronic copy of the prospectus and
prospectus supplement from an underwriter, you will receive a paper copy of
the prospectus and prospectus supplement upon request to the underwriter.
Upon receipt of a qualifying request, the underwriter will promptly
deliver a paper copy of the prospectus and prospectus supplement to you free
of charge.
LEGAL OPINIONS
Certain legal matters relating to the securities of any series will be
passed upon for the related trust and the seller by Sidley Austin Brown & Wood
LLP as to matters of New York law and Richards, Layton & Finger as to matters
of Delaware law.
INDEX OF PRINCIPAL TERMS
A
Additional Obligations......................................................67
Additional Receivables......................................................20
Administration Agreement....................................................51
Administration Fee..........................................................52
APR.........................................................................24
Available Funds.............................................................25
B
Base Rate...................................................................29
C
Calculation Agent...........................................................29
CD Rate.....................................................................30
CD Rate Determination Date..................................................30
Cede........................................................................31
[CFC][DCS]...................................................................9
[CFC][DCS] Gold Key Plus Receivable.........................................23
Clearstream.................................................................32
Clearstream Participants....................................................32
Closing Date................................................................36
Code........................................................................55
Collection Period...........................................................38
Commercial Paper Rate.......................................................30
Commercial Paper Rate Determination Date....................................30
Commodity Indexed Securities................................................28
Composite Quotations........................................................29
Cooperative.................................................................32
Currency Indexed Securities.................................................28
Cut-off Date................................................................20
D
DaimlerChrysler.............................................................37
DaimlerChrysler AG..........................................................37
Definitive Securities.......................................................34
Deposit Account.............................................................38
Depositaries................................................................33
DOL.........................................................................66
DTC.........................................................................15
E
Eligible Deposit Account....................................................38
Eligible Institution........................................................38
Eligible Investments........................................................38
Euroclear...................................................................32
Euroclear Operator..........................................................32
Events of Default...........................................................46
excess interest collections.................................................12
Exemption...................................................................66
F
FASIT.......................................................................64
FASIT provisions............................................................64
Federal Funds Rate..........................................................31
Federal Tax Counsel.........................................................55
Fixed Value Payment.........................................................23
Floating Rate Interest Accrual Period.......................................29
foreign person..............................................................57
FTC Rule....................................................................54
Funding Period..............................................................20
H
H.15(519)...................................................................29
I
Indenture...................................................................45
Index.......................................................................28
Index Maturity..............................................................29
Indexed Commodity...........................................................28
Indexed Currency............................................................28
Indexed Principal Amount....................................................28
Indexed Securities..........................................................28
Indirect Participants.......................................................31
Insolvency Event............................................................44
Interest Reset Date.........................................................29
IRS.........................................................................55
L
LIBOR.......................................................................30
LIBOR Business Day..........................................................30
LIBOR Determination Date....................................................30
M
MBCC.........................................................................9
MBCC Balloon Receivable.....................................................23
Money Market Yield..........................................................30
N
new partnership.............................................................59
New Regulations.............................................................57
O
Obligations.................................................................67
OID.........................................................................56
OID regulations.............................................................56
old partnership.............................................................59
P
Participants................................................................31
Permitted Investments.......................................................68
Plan Assets Regulation......................................................65
Plans.......................................................................65
Precomputed Receivable......................................................23
Pre-Funding Account.........................................................20
Pre-Funding Limit...........................................................67
Pre-Funding Period..........................................................67
Previously Issued Securities................................................21
PTE.........................................................................65
R
Record Date.................................................................13
Registration Statement.......................................................2
Repurchase Amount...........................................................36
Restricted Group............................................................69
Revolving Period............................................................20
Rules.......................................................................32
S
Sale and Servicing Agreement................................................20
SEC..........................................................................2
Senior Certificates.........................................................66
Series Trust Property.......................................................20
Servicer Default............................................................44
Servicing Fee...............................................................40
Short-Term note.............................................................56
Similar Law.................................................................65
Simple Interest Receivables.................................................22
Spread......................................................................29
Spread Multiplier...........................................................29
Stock Index.................................................................28
Stock Indexed Securities....................................................28
Subsequent Receivables......................................................20
Subsequent Transfer Date....................................................36
T
Telerate Page 3750..........................................................30
Terms and Conditions........................................................33
Treasury Rate...............................................................31
Treasury Rate Determination Date............................................31
Trust Agreement.............................................................19
U
U.S. person.................................................................77
UCC.........................................................................16
Underwriting Agreement......................................................69
Annex I
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
OVERVIEW
Except in certain limited circumstances, the globally offered
securities will be available only in book-entry form. Investors may hold the
globally offered securities through any of DTC, Clearstream or Euroclear. In
both the European and U.S. domestic markets, the globally offered securities
will trade as home market instruments. Initial settlement and all secondary
trades will settle in same-day funds.
Secondary market trading between investors holding globally offered
securities through Clearstream and Euroclear will be conducted in the ordinary
way in accordance with their normal rules and operating procedures and in
accordance with conventional eurobond practice (i.e., seven calendar day
settlement).
Secondary market trading between investors holding globally offered
securities through DTC will be conducted according to the rules and procedures
applicable to U.S. corporate debt obligations.
Secondary cross-market trading between Clearstream or Euroclear and
DTC Participants holding offered securities will be effected on a
delivery-against-payment basis through the respective depositaries of
Clearstream and Euroclear (in such capacity) and DTC Participants.
Non-U.S. holders (as described below) of globally offered securities
will be subject to U.S. withholding taxes unless such holders meet certain
requirements and deliver appropriate U.S. tax documents to the securities
clearing organizations or their Participants.
INITIAL SETTLEMENT
All globally offered securities will be held in book-entry form by
DTC in the name of Cede & Co. as nominee of DTC. Investors' interests in the
globally offered securities will be represented through financial institutions
acting on their behalf as direct and Indirect Participants in DTC. As a
result, Clearstream and Euroclear will hold positions on behalf of their
Participants through their respective depositaries, which in turn will hold
such positions in accounts as DTC Participants.
Investors electing to hold their globally offered securities through
DTC will follow the settlement practices applicable to prior debt issues.
Investors' securities custody accounts will be credited with their holdings
against payment in same-day funds on the settlement date.
Investors electing to hold their globally offered securities through
Clearstream or Euroclear accounts will follow the settlement procedures
applicable to conventional eurobonds, except that there will be no temporary
global security and no "lock-up" or restricted period. Globally offered
securities will be credited to the securities custody accounts on the
settlement date against payments in same-day funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important
to establish at the time of the trade the location of both the purchaser's and
seller's accounts to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants
Secondary market trading between DTC Participants will be settled
using the procedures applicable to book-entry securities in same-day funds.
Trading between Clearstream and/or Euroclear Participants
Secondary market trading between Clearstream Participants or
Euroclear Participants will be settled using the procedures applicable to
conventional eurobonds in same-day funds.
Trading between DTC seller and Clearstream or Euroclear purchaser
When globally offered securities are to be transferred from the
account of a DTC Participant to the account of a Clearstream Participant or a
Euroclear Participant, the purchaser will send instructions to Clearstream or
Euroclear through a Clearstream Participant or Euroclear Participant at least
one business day prior to settlement. Clearstream or Euroclear, as applicable,
will instruct its depositary to receive the globally offered securities
against payment. Payment will include interest accrued on the globally offered
securities from and including the last coupon payment date to and excluding
the settlement date. Payment will then be made by such depositary to the DTC
Participant's account against delivery of the globally offered securities.
After settlement has been completed, the globally offered securities will be
credited to the applicable clearing system and by the clearing system, in
accordance with its usual procedures, to the Clearstream Participant's or
Euroclear Participant's account. The globally offered securities' credit will
appear the next day (European time) and the cash debit will be back-valued to,
and the interest on the globally offered securities will accrue from, the
value date (which would be the preceding day when settlement occurred in New
York). If settlement is not completed on the intended value date (i.e., the
trade fails), the Clearstream or Euroclear cash debit will be valued instead
as of the actual settlement date.
Clearstream Participants and Euroclear Participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to
pre-position funds for settlement, either from cash on hand or existing lines
of credit, as they would for any settlement occurring within Clearstream or
Euroclear. Under this approach, they may take on credit exposure to
Clearstream or Euroclear until the globally offered securities are credited to
their accounts one day later.
As an alternative, if Clearstream or Euroclear has extended a line of
credit to them, Clearstream Participants or Euroclear Participants can elect
not to pre-position funds and allow that credit line to be drawn upon to
finance settlement. Under this procedure, Clearstream Participants or
Euroclear Participants purchasing globally offered securities would incur
overdraft charges for one day, assuming they cleared the overdraft when the
globally offered securities were credited to their accounts. However, interest
on the globally offered securities would accrue from the value date.
Therefore, in many cases the investment income on the globally offered
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 Clearstream Participant's or Euroclear Participant's particular cost
of funds.
Since the settlement is taking place during New York business hours,
DTC Participants can employ their usual procedures for sending globally
offered securities to the respective depositary for the benefit of Clearstream
Participants or Euroclear Participants. The sale proceeds will be available to
the DTC seller on the settlement date. Thus, to the DTC Participant a
cross-market transaction will settle no differently than a trade between two
DTC Participants.
Trading between Clearstream or Euroclear seller and DTC purchaser
Due to time zone differences in their favor, Clearstream Participants
and Euroclear Participants may employ their customary procedures for
transactions in which globally offered securities are to be transferred by the
respective clearing systems, through their respective depositaries, to a DTC
Participant. The seller will send instructions to Clearstream or Euroclear
through a Clearstream Participant or Euroclear Participant at least one
business day prior to settlement.
In these cases, Clearstream or Euroclear will instruct their
respective depositaries, as appropriate, to deliver the securities to the DTC
Participant's account against payment. Payment will include interest accrued
on the globally offered securities from and including the last coupon payment
date to and excluding the settlement date. The payment will then be reflected
in the account of the Clearstream Participant or Euroclear Participant the
following day, and receipt of the cash proceeds in the Clearstream
Participant's or Euroclear Participant's account would be back-valued to the
value date (which would be the preceding day, when settlement occurred in New
York).
Should the Clearstream Participant or Euroclear Participant have a
line of credit with its clearing system and elect to be in debt in
anticipation of receipt of the sale proceeds in its account, the
back-valuation will extinguish any overdraft charges incurred over that
one-day period. If settlement is not completed on the intended value date
(i.e., the trade fails), receipt of the cash proceeds in the Clearstream
Participant's or Euroclear Participant's account would instead be valued as of
the actual settlement date.
Finally, day traders that use Clearstream or Euroclear and that
purchase globally offered securities from DTC Participants for delivery to
Clearstream Participants or Euroclear Participants should note that these
trades would automatically fail on the sale side unless affirmative action
were taken. At least three techniques should be readily available to eliminate
this potential problem:
o borrowing through Clearstream or Euroclear for one day (until the
purchase side of the day trade is reflected in their Clearstream or
Euroclear accounts) in accordance with the clearing system's
customary procedures;
o borrowing the globally offered securities in the U.S. from a DTC
Participant no later than one day prior to settlement, which would
give the globally offered securities sufficient time to be reflected
in their Clearstream or Euroclear account in order to settle the
sale side of the trade; or
o staggering the value dates for the buy and sell sides of the trade
so that the value date for the purchase from the DTC Participant is
at least one day prior to the value date for the sale to the
Clearstream Participant or Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of globally offered securities holding securities
through Clearstream or Euroclear (or through DTC if the holder has an address
outside the U.S.) will generally 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, generally unless each
clearing system, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business in the chain of
intermediaries between such beneficial owner and the U.S. entity required to
withhold tax complies with applicable certification requirements and such
beneficial owner takes one of the following steps to obtain an exemption or
reduced tax rate:
Exemption of non-U.S. persons (Form W-8BEN)
Beneficial owners of offered securities that are non-U.S. persons
generally can obtain a complete exemption from the withholding tax by filing a
signed Form W-8BEN (Certificate of Foreign Status). If the information shown
on Form W-8BEN changes, a new Form W-8BEN must be filed within 30 days of such
change.
Exemption for non-U.S. person with effectively connected income (Form W-8ECI)
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 W-8ECI (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 W-8BEN)
Non-U.S. persons that are beneficial owners of offered securities and
are 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 W-8BEN (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-8BEN. Form W-8BEN may be
filed by the beneficial owner of offered securities or such owner's agent.
Exemption for U.S. persons (Form W-9)
U.S. persons can obtain a complete exemption from the withholding tax
by filing Form W-9 (Payer's Request for Taxpayer Identification Number and
Certification).
U.S. Federal Income Tax Reporting Procedure
The beneficial owner of a Global Security or, in the case of a Form
W-8BEN or a Form W-8ECI filer, such owner's agent, files by submitting the
appropriate form to the person through whom it holds the security (the
clearing agency, in the case of persons holding directly on the books of the
clearing agency). Form W-8BEN is effective for three calendar years and Form
W-8ECI is effective for one calendar year.
The term "U.S. person" means
o a citizen or resident of the United States or
o a corporation or partnership (including an entity treated as a
corporation or partnership for United States federal income tax
purposes) created or organized in or under the laws of the United
States, any state thereof or the District of Columbia, (unless, in
the case of partnership, Treasury regulations are adopted that
provide otherwise),
o an estate the income of which is includible in gross income for
United States tax purposes, regardless of its source or
o a trust if a court within the United States is able to exercise
primary supervision of the administration of the trust and one or
more United States persons have the authority to control all
substantial decisions of the trust or
o to the extent provided in Treasury regulations, certain trusts in
existence on August 20, 1996 and treated as United States persons
before such date that elect to be so treated.
The term "non-U.S. person" means a beneficial owner of a Note that is
not a U.S. person. The discussion under the heading of "Certain Federal Income
Tax Consequences" applies to U.S. persons, except as provided otherwise. The
terms U.S. person and non-U.S. person have the same meaning as defined herein.
This summary does not deal with all aspects of U.S. federal income
tax withholding that may be relevant to foreign holders of the globally
offered securities. Investors are advised to consult their own tax advisors
for specific tax advice concerning their holding and disposing of the globally
offered securities.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*
The following is an itemized list of the estimated expenses to be
incurred in connection with the offering of the securities being offered
hereunder other than underwriting discounts and commissions.
Registration Fee....................................................$2,500,000
Printing Expenses...................................................$ 280,000
Trustee Fees and Expenses...........................................$ 215,000
Legal Fees and Expenses.............................................$ 187,500
Accountants' Fees and Expenses......................................$ 187,500
Rating Agencies' Fees...............................................$1,875,000
Miscellaneous.......................................................$ 115,000
----------
Total......................................................$5,360,000
- ---------------
*All amounts except the SEC Registration Fee are estimates of
expenses in connection with the issuance and distribution of ten Series of
Securities in an aggregate principal amount assumed for these purposes to be
equal to $10,000,000,000.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 3.5 of the Operating Agreement of the Registrant provides
that to the fullest extent permitted by the Michigan Limited Liability Company
Act, the Registrant to the extent of its assets legally available for such
purpose, will indemnify and hold harmless each person who is or was a manager,
officer, committee member, employee, member, or who serves or may have served
at the Registrant's request as a member, director, manager, officer, or
employee of any company or corporation that the Registrant owns directly or
indirectly, and any member's respective shareholders, directors, officers,
agents, affiliates and professional or other advisors (collectively, the
"Indemnified Persons") from and against any and all loss, cost, damage,
expense (including, without limitation, fees and expenses of attorneys and
other advisors and any court costs incurred by any Indemnified Person) or
liability by reason of anything any Indemnified Person does or refrains from
doing for, or in connection with the business or affairs of, the Registrant
and its subsidiaries and affiliates, except to the extent that it is finally
judicially determined by a court of competent jurisdiction that the loss,
cost, damage, expense or liability resulted primarily from the Indemnified
Person's negligence, misconduct in the performance of her or her duty, or
willful breach of a material provision of the Operating Agreement which in any
event causes actual material damage to the Registrant. The Registrant may pay
in advance or reimburse reasonable expenses (including advancing the
reasonable cost of defense) incurred by an Indemnified Person who is, or is
threatened to be, named or made a defendant or a respondent in a proceeding
concerning the business affairs of the Registrant. Reference is made to
Exhibit 3.2 to this Registration Statement for the complete texts of Section
3.5 of the Operating Agreement.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 by the Registrant may be permitted to directors,
officers and controlling persons of the Registrant under the foregoing
provisions, or otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against
public policy as expressed in said Act and therefore may be unenforceable. If
a claim for indemnification against such liabilities (except insofar as it
provides for the payment by the Registrant of expenses incurred or paid by a
director or officer in the successful defense of any action, suit or
proceeding) is asserted against the Registrant by a director, officer or
controlling person in connection with the securities offered hereby and the
Securities and Exchange Commission is still of the same opinion, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether or not such indemnification by it is against
public policy as expressed in the Act, and will be governed by the final
adjudication of such issue.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS
(a) All financial statements, schedules and historical financial information have been omitted as they are
not applicable.
1.1 Form of Underwriting Agreement for the Notes.*
1.2 Form of Underwriting Agreement for the Certificates.*
3.1 Copy of Articles of Organization of Chrysler Financial Company L.L.C.*
3.2 Copy of Amended and Restated Operating Agreement of Chrysler Financial Company L.L.C.*
3.3 Form of Certificate of Trust for DaimlerChrysler Auto Trusts (included in Exhibit 4.4).*
4.1 Form of Indenture between the Trust and the Indenture Trustee (including Forms of Notes).
4.2 Form of Master Indenture (for issuance of more than one series of Notes) between the Trust and
the Indenture Trustee.*
4.3 Form of Series Indenture Supplement between the Trust and the Indenture Trustee (including
forms of Notes).*
4.4 Form of Amended and Restated Trust Agreement among the Registrant, the Company and the Trustee
(including forms of Certificates).*
4.5 Form of Amended and Restated Trust Agreement (for issuance of more than one Series of
Certificates) among the Registrant, the Company and the Trustee (including forms of
Certificates).*
5.1 Opinion of Sidley Austin Brown & Wood LLP with respect to legality.
5.2 Opinion of Richards, Layton & Finger with respect to legality.
8.1 Opinion of Sidley Austin Brown & Wood LLP with respect to federal tax matters.
23.1 Consent of Sidley Austin Brown & Wood LLP (included in its opinions filed as Exhibits 5.1 and 8.1).
23.2 Consent of Richards, Layton & Finger (included in its opinion filed as Exhibit 5.2).
24.1 Powers of Attorney.
25.1 Form of T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of Bank One,
National Association.
25.2 Form of T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of New York.
99.1 Form of Sale and Servicing Agreement between the Registrant and the Trust.*
99.2 Form of Administration Agreement among the Trust, the Administrator and the Indenture Trustee.*
99.3 Form of Purchase Agreement between the Company and the Registrant.*
________________________________________________________________________________________________________________
* Incorporated by reference to the Registration Statement on Form S-3 (Reg. No. 333-92583).
ITEM 17. UNDERTAKINGS
(a) As to Rule 415:
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made of the securities registered hereby, a post-effective
amendment to this Registration Statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, as amended;
(ii) to reflect in the prospectus any facts or
events arising after the effective date of this Registration
Statement (or the most recent post-effective amendment
hereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in this
Registration Statement; and
(iii) to include any material information with
respect to the plan of distribution not previously disclosed
in this Registration Statement or any material change to
such information in this Registration Statement;
provided, however, that the undertakings set forth in clauses (i) and
(ii) above do not apply if the information required to be included in
a post-effective amendment by those clauses is contained in periodic
reports filed by the registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934, as amended, that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, as amended, each such post-effective
amendment shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) The registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
that Act.
(c) As to documents subsequently filed that are incorporated by
reference:
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing of the registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934, as amended, that is incorporated
by reference in this registration statement shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(d) As to indemnification:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to directors, officers
and controlling persons of the registrant pursuant to the provisions described
under Item 15 above, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933, as amended,
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in such
Securities Act of 1933, as amended, and will be governed by the final
adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Southfield and State of Michigan, on
the 8th day of May, 2001.
CHRYSLER FINANCIAL COMPANY L.L.C.,
By: /s/ J.H. Walker
-------------------------
J.H. Walker
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Principal Executive Officer of Chrysler Financial Company L.L.C.
/s/ J.H. Walker President May 8, 2001
- --------------------------
J.H. Walker
Principal Financial Officer of Chrysler Financial Company L.L.C.:
/s/ D.H. Olsen Vice President and May 8, 2001
- -------------------------- Chief Financial Officer
D.H. Olsen
Principal Accounting Officer of Chrysler Financial Company L.L.C.:
/s/ N. Meder Vice President and May 8, 2001
- -------------------------- Controller
N.Meder
Board of Managers of Chrysler Financial Company L.L.C.:
/s/ K. Mangold* Manager May 8, 2001
- --------------------------
K. Mangold
/s/ D.H. Olsen* Manager May 8, 2001
- --------------------------
D.H. Olsen
/s/ C. Taravella* Manager May 8, 2001
- --------------------------
C. Taravella
/s/ J.H. Walker* Manager May 8, 2001
- --------------------------
J.H. Walker
*By: /s/Byron C. Babbish
---------------------
Byron C. Babbish
Attorney-in-Fact
[date]
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- ------- ----------------------
1.1 Form of Underwriting Agreement for the Notes.*
1.2 Form of Underwriting Agreement for the Certificates.*
3.1 Copy of Articles of Organization of Chrysler Financial Company L.L.C.*
3.2 Copy of Amended and Restated Operating Agreement of Chrysler Financial Company L.L.C.*
3.3 Form of Certificate of Trust for DaimlerChrysler Auto Trusts (included in Exhibit 4.4).*
4.1 Form of Indenture between the Trust and the Indenture Trustee (including Forms of Notes).
4.2 Form of Master Indenture (for issuance of more than one series of Notes) between the Trust and
the Indenture Trustee.*
4.3 Form of Series Indenture Supplement between the Trust and the Indenture Trustee (including
forms of Notes).*
4.4 Form of Amended and Restated Trust Agreement among the Registrant, the Company and the Trustee
(including forms of Certificates).*
4.5 Form of Amended and Restated Trust Agreement (for issuance of more than one Series of Certificates) among the
Registrant, the Company and the Trustee (including forms of Certificates).*
5.1 Opinion of Sidley Austin Brown & Wood LLP with respect to legality.
5.2 Opinion of Richards, Layton & Finger with respect to legality.
8.1 Opinion of Sidley Austin Brown & Wood LLP with respect to federal tax matters.
23.1 Consent of Sidley Austin Brown & Wood LLP (included in its opinions filed as Exhibits 5.1 and 8.1).
23.2 Consent of Richards, Layton & Finger (included in its opinion filed as Exhibit 5.2).
24.1 Powers of Attorney.
25.1 Form of T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of Bank One,
National Association.
25.2 Form of T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of New
York.
99.1 Form of Sale and Servicing Agreement between the Registrant and the Trust.*
99.2 Form of Administration Agreement among the Trust, the Administrator and the Indenture Trustee.*
99.3 Form of Purchase Agreement between the Company and the Registrant.*
____________________________________________________________________________________________________________________
* Incorporated by reference to the Registration Statement on Form S-3 (Reg. No. 333-92583) and the same exhibit therein.