As filed with the Securities and Exchange Commission on April 19, 2002
Registration Statement No. 333- 73570
===========================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
DAIMLERCHRYSLER MASTER OWNER TRUST
(Issuer of the Notes)
CARCO AUTO LOAN MASTER TRUST
(Issuer of the Collateral Certificate)
DAIMLERCHRYSLER WHOLESALE RECEIVABLES LLC
(Depositor into the DaimlerChrysler Master Owner Trust and the CARCO Auto
Loan Master Trust) (Exact name of registrant as specified in its charter)
DELAWARE 6146 38-3523542
(State of (Primary Standard Industrial (I.R.S. Employer
Incorporation) Classification Code Number) Identification No.)
27777 Franklin Road
Southfield, Michigan 48034
(248) 948-3031
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
CHRISTOPHER A. TARAVELLA, ESQ.
DaimlerChrysler Services North America LLC
27777 Franklin Road
Southfield, Michigan 48034
(248) 948-3060
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-------------------
Copies to:
RENWICK D. MARTIN, ESQ.
Sidley Austin Brown & Wood LLP
875 Third Avenue
New York, New York 10022
(212) 906-2000
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, check the
following box. / /
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. |X|
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same 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 Amount of
Title of each class of Amount to be Offering Price Per Aggregate Offering Registration
Securities to be registered registered (1) Unit(2) Price Fee (3)
- ----------------------------------------- ----------------- --------------------- ---------------------- ---------------
Auto Loan Asset Backed Notes............ $6,000,000,000 100% $6,000,000,000 $552,000
- ----------------------------------------- ----------------- --------------------- ---------------------- ---------------
Collateral Certificate (4) $6,000,000,000 -- -- --
========================================================================================================================
(1) With respect to notes denominated in a foreign currency, the amount to be
registered shall be the U.S. dollar equivalent thereof based on the
prevailing exchange rate at the time such notes are originally offered.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) Pursuant to Rule 457(p), the Registrant is applying as an offset to the
registration fee for this Registration Statement the amount of $132,000,
which represents the registration fee associated with the $500,000,000 of
unsold securities registered under Registration Statement No. 333-50780,
filed with the Commission on November 28, 2000.
(4) No additional consideration will be paid by the purchasers of the Auto
Loan Asset Backed Notes for the Collateral Certificate, which is pledged
as security for the Auto Loan Asset Backed Notes.
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.
S-2
The information in this prospectus supplement and the accompanying prospectus
is not complete and may be amended. We may not sell these securities until we
deliver a final prospectus supplement and accompanying prospectus. This
prospectus supplement and the accompanying prospectus are not an offer to sell
nor are they seeking an offer to buy these securities in any state where the
offer or sale is not permitted.
Subject to amendment, dated April 19, 2002
DAIMLERCHRYSLER Prospectus Supplement
To Prospectus dated [o]
$[o]
DAIMLERCHRYSLER MASTER OWNER TRUST
Issuer
Floating Rate Auto Loan Asset Backed Notes, Series [o],
due [o]
DAIMLERCHRYSLER WHOLESALE RECEIVABLES LLC, Seller
DAIMLERCHRYSLER SERVICES NORTH AMERICA LLC, Servicer
- --------------------------------------
Before you decide to invest in Principal amount...................... $[[o]
the Series [o] notes, please read Per annum interest rate............... one-month LIBOR
this prospectus supplement plus [o]%
and the prospectus, especially
the risk factors beginning on
page [o] of this prospectus Expected principal payment
supplement and page [o] of the date............................................[o]
prospectus. The Series [o] Legal final.........................................[o]
notes are obligations of the Price to public per Series [o] note..................%
issuer only and do not represent Underwriting discount per Series [o] note............%
interests in or obligations of the Proceeds to seller..................................[o]
CARCO receivables trust,
DaimlerChrysler AG, The total price to public is $[ ], the total
DaimlerChrysler Wholesale underwriting discount is $[ ] and the total
Receivables LLC, amount of proceeds to the issuer is $[ ].
DaimlerChrysler Services North
America LLC or any of their The seller must pay expenses estimated to be [o].
affiliates.
- -------------------------------------- The issuer will pay interest on the Series [o] notes
on the 15th day of each month. The first payment
date will be [o].
We will deliver the Series [o] notes in book-entry form only on or
about [o].
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of the Series [o] notes or
determined that this prospectus supplement or the prospectus is accurate or
complete. Any representation to the contrary is a criminal offense.
______________________________
[underwriter[s]]
______________________________
The date of this prospectus supplement is [ ].
S-2
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Reading the Prospectus and Prospectus Supplement
- ------------------------------------------------------------------------------
We provide information on the offered securities in two documents
that offer varying levels of detail:
o Prospectus -- provides general information, some of which may not
apply to the offered securities.
o Prospectus Supplement -- provides a summary of the specific terms
of the offered securities.
You should rely only on the information contained in this prospectus
supplement and the prospectus. We have not authorized anyone to provide you
with different information.
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.
Limitations on Offers or Solicitations
We do not intend this document to be an offer or solicitation:
o if used in a jurisdiction in which the offer or solicitation is not
authorized;
o if the person making the offer or solicitation is not qualified to
do so; or
o if the offer or solicitation is made to anyone to whom it is
unlawful to make the offer or solicitation.
S-3
- ------------------------------------------------------------------------------
Table of Contents
- ------------------------------------------------------------------------------
READING THE PROSPECTUS AND PROSPECTUS SUPPLEMENT.............................3
SUMMARY OF SERIES TERMS......................................................6
PARTIES..................................................................6
TITLE OF SECURITIES......................................................6
STATED PRINCIPAL AMOUNT; NOMINAL LIQUIDATION AMOUNT......................6
SERIES ISSUANCE DATE.....................................................6
SERIES CUT-OFF DATE......................................................6
COLLATERAL CERTIFICATE...................................................6
TERMS OF THE SERIES [o] NOTES............................................7
LEGAL FINAL..............................................................7
REVOLVING PERIOD.........................................................7
ACCUMULATION PERIOD......................................................8
EARLY REDEMPTION PERIOD..................................................8
CREDIT ENHANCEMENT.......................................................8
EXCESS PRINCIPAL COLLECTIONS.............................................9
OPTIONAL REDEMPTION......................................................9
OTHER SERIES OF NOTES AND CERTIFICATES...................................9
ERISA CONSIDERATIONS.....................................................9
TAX STATUS...............................................................9
NOTE RATINGS.............................................................9
RISK FACTORS............................................................10
NOTES NOT LISTED ON ANY EXCHANGE........................................10
RISK FACTORS................................................................11
ONLY SOME OF THE ASSETS OF THE ISSUER WILL BE AVAILABLE TO MAKE
PAYMENTS ON THE SERIES [o] NOTES..........................11
THE TIMING OF PRINCIPAL PAYMENTS MAY NOT BE AS EXPECTED..........12
CREDIT ENHANCEMENT IS LIMITED AND MAY BE REDUCED.................13
THE CARCO RECEIVABLES TRUST AND THE ISSUER ARE DEPENDENT ON DCS
AND DAIMLERCHRYSLER.......................................13
YOUR ABILITY TO RESELL YOUR NOTES IS LIMITED. ...................13
GLOSSARY....................................................................13
USE OF PROCEEDS.............................................................13
THE DEALER FLOORPLAN FINANCING BUSINESS.....................................14
THE ACCOUNTS................................................................16
DCS'S PERFORMANCE HISTORY...................................................17
LOSS EXPERIENCE.........................................................18
AGING EXPERIENCE........................................................20
S-4
GEOGRAPHIC DISTRIBUTION.................................................20
MATURITY AND PRINCIPAL PAYMENT CONSIDERATIONS...............................21
SERIES PROVISIONS...........................................................22
GENERAL.................................................................22
INTEREST................................................................23
PRINCIPAL...............................................................24
EXCESS FUNDING ACCOUNT..................................................27
OPTIONAL REDEMPTION BY THE ISSUER.......................................27
DEPOSIT AND APPLICATION OF FUNDS............................................28
APPLICATION OF AVAILABLE AMOUNTS ALLOCATED TO SERIES [o]................28
REDUCTION AND REINSTATEMENT OF NOMINAL LIQUIDATION AMOUNTS..............30
REDUCTIONS.........................................................31
REINSTATEMENTS.....................................................32
SERIES [o] OVERCOLLATERALIZATION AMOUNT.................................32
ALLOCATION PERCENTAGES..................................................33
REQUIRED PARTICIPATION PERCENTAGE.......................................34
SALE OF RECEIVABLES.....................................................35
FINAL PAYMENT OF THE SERIES [o] NOTES...................................36
SHARED EXCESS AVAILABLE INTEREST AMOUNTS................................37
EARLY REDEMPTION EVENTS.................................................37
UNDERWRITING................................................................40
LEGAL MATTERS...............................................................41
NOTE RATINGS................................................................41
GLOSSARY OF PRINCIPAL TERMS FOR PROSPECTUS SUPPLEMENT.......................41
OTHER SERIES OF NOTES........................................................1
SERIES OF INVESTOR CERTIFICATES ISSUED BY THE CARCO RECEIVABLES TRUST........1
S-5
Summary of Series Terms
This summary highlights selected information from this prospectus
supplement and may not contain all the information that you need to consider
in making an investment decision. It provides general, simplified descriptions
of matters that are highly complex. You should carefully read this document
and the accompanying prospectus. You will find a detailed description of the
terms of the Series [o] notes following this summary and in the prospectus.
Parties
- ---------------------------------------------------------
Party Description
- ---------------------------------------------------------
Issuer o DaimlerChrysler Master Owner
Trust (the "issuer")
- ---------------------------------------------------------
Seller o DaimlerChrysler Wholesale
Receivables LLC ("DCWR"), an
indirectly owned subsidiary of
DaimlerChrysler Services
North America LLC ("DCS")
o DCWR's executive offices are
located at 27777 Franklin Road,
Southfield, Michigan 48034-8286,
and its telephone number is (248)
948-3031
- ---------------------------------------------------------
Servicer o DCS, a wholly owned subsidiary of
DaimlerChrysler Corporation
("DaimlerChrysler")
- ---------------------------------------------------------
Indenture o The Bank of New York
Trustee
- ---------------------------------------------------------
Owner o Chase Manhattan Bank USA,
Trustee for National Association
Issuer
- ---------------------------------------------------------
CARCO o CARCO Auto Loan Master Trust (the
Receivables "CARCO receivables trust")
Trust o Owns the receivables and has
issued the collateral certificate
to issuer
- ---------------------------------------------------------
Title of Securities
Floating Rate Auto Loan Asset Backed Notes, Series [o] (the "Series
[o] notes").
Stated Principal Amount; Nominal Liquidation Amount
- ---------------------------------------------------------
Stated Principal Amount of Series [o] notes $[o]
Initial nominal liquidation amount of Series $[o] [o]
notes
Initial Series [o] overcollateralization amount $[o]
Initial Series [o] nominal liquidation amount $[o]
- ---------------------------------------------------------
o The Series [o] nominal liquidation amount will equal the portion of the
invested amount of the collateral certificate allocated to Series [o].
The Series [o] notes are secured only by that portion of the collateral
certificate that corresponds to the Series [o] nominal liquidation
amount. The Series [o] nominal liquidation amount will be equal to the
sum of (i) the nominal liquidation amount of the Series [o] notes
(initially, $[o]) and (ii) the Series [o] overcollateralization amount
(initially, $[o]). The Series [o] nominal liquidation amount, the
nominal liquidation amount of the Series [o] notes and the Series [o]
overcollateralization amount will be subject to reduction and
reinstatement as described in this prospectus supplement under the
caption "Deposit and Application of Funds -- Reduction and Reinstatement
of Nominal Liquidation Amounts."
Series Issuance Date
[o].
Series Cut-Off Date
[o].
Collateral Certificate
The collateral certificate is an investor certificate issued by the
CARCO receivables trust and represents an allocable interest in the pool of
receivables. The
S-6
issuer's primary source of funds to make payments on its notes is the
distributions on the collateral certificate. Only the portion of
those distributions that are allocated to Series [o] as described in this
prospectus supplement will be available to make payments on the Series [o]
notes. The Series [o] noteholders will not have any recourse to any other
assets of the issuer or any other person for payments on the Series [o] notes.
Distributions on the collateral certificate that are allocated to other series
of notes will only be available to make payments on the Series [o] notes under
the limited circumstances described in this prospectus supplement and the
prospectus.
The collateral certificate represents a specified undivided interest
in the CARCO receivables trust. The CARCO receivables trust owns receivables
arising from a portfolio of motor vehicle dealer revolving floorplan financing
agreements. See "DaimlerChrysler Wholesale Receivables LLC and the CARCO
Receivables Trust" and "Description of the Investor Certificates Issued by the
CARCO Receivables Trust" in the prospectus.
Terms of the Series [o] Notes
Interest Payment Dates
o Interest will be payable on the 15th of each month, unless the 15th is
not a business day, in which case the payment will be made on the
following business day. The first payment will be on [o].
Per Annum Interest Rate
o [o]% above one-month LIBOR (calculated as described herein). Interest
will be calculated on the basis of the actual number of days in the
applicable interest period divided by 360.
Interest Periods
o Each period from and including a payment date to but excluding the
following payment date, except that the first interest period will be
from and including the Series [o] issuance date to but excluding the
first payment date
Principal Payments
o We expect to pay the principal of the Series [o] notes (but only to the
extent of the nominal liquidation amount of the Series [o] notes) in
full on [o].
o However, under some circumstances we may pay principal earlier or later
or in reduced amounts. See "Maturity and Principal Payment
Considerations" in this prospectus supplement.
Legal Final
We will be obligated to pay the principal amount of the Series [o]
notes (but only to the extent of the nominal liquidation amount of the Series
[o] notes), to the extent not previously paid, by [o].
Revolving Period
During the revolving period, we will not pay principal on the Series
[o] notes or accumulate principal for that purpose. Instead, we will use the
Series [o] share of available principal amounts to make principal payments on
other series and/or pay them to the issuer to maintain the interest in the
CARCO receivables trust evidenced by the collateral certificate. The revolving
period will begin at the close of business on the Series Cut-Off Date and will
end when the accumulation period begins. The revolving period will also end if
an early redemption period begins.
S-7
Accumulation Period
We will accumulate principal for the Series [o] notes during an
accumulation period of no more than [o] months long unless an early redemption
period that is not terminated begins before the start of the accumulation
period. The latest date on which the accumulation period will commence is [o].
During the accumulation period we will accumulate the Series [o] share of
principal collections for payment on [o]. See "Series Provisions -- Principal"
in this prospectus supplement.
Early Redemption Period
If an early redemption event occurs and is not cured, you will begin
to receive payments of principal. We refer to this period after the occurrence
of an early redemption event as the early redemption period. Early redemption
events are events that might adversely affect the issuer's ability to make
payments on the Series [o] notes as originally expected. See "Description of
the Investor Certificates Issued by the CARCO Receivables Trust --
Reinvestment Events and Early Redemption Events" in the prospectus and
"Deposit and Application of Funds -- Early Amortization Events" in this
prospectus supplement for a description of the events that might cause an
early redemption period to start.
Credit Enhancement
Series [o] Overcollateralization Amount
o On the Series [o] cut-off date, the portion of the collateral
certificate allocable to Series [o] will equal $[o] and will exceed the
outstanding dollar principal amount of the Series [o] notes by $[o]. The
amount of that excess is the initial Series [o] overcollateralization
amount. This overcollateralization amount is intended to protect the
Series [o] noteholders from the effect of charge-offs on defaulted
receivables in the CARCO receivables trust that are allocated to Series
[o] and any use of available principal amounts to pay interest on the
Series [o] notes.
o The Series [o] overcollateralization amount will equal the sum of (i)
[o]% of the nominal liquidation amount of the Series [o] notes and (ii)
the incremental overcollateralization amount, which is based on the
amount of ineligible receivables and dealer overconcentration amounts in
the CARCO receivables trust. The amount in clause (ii) may fluctuate
from time to time.
o We will allocate distributions on the collateral certificate to Series
[o] on the basis of the sum of the nominal liquidation amount of the
Series [o] notes and the Series [o] overcollateralization amount. The
Series [o] overcollateralization amount will be reduced by:
o reallocations of available principal amounts otherwise
allocable to the Series [o] over-collateralization amount to pay
interest on the Series [o] notes and
o charge-offs resulting from uncovered defaults on receivables in
the CARCO receivables trust allocated to Series [o].
Reductions in the Series [o] overcollateralization amount will result
in a reduced amount of distributions on the collateral certificate that are
available to
S-8
make payments on the Series [o] notes. If the Series [o] overcollateralization
amount is reduced to zero, then those reallocations and charge-offs will
instead reduce the nominal liquidation amount of the Series [o] notes and you
may incur a loss on your Series [o] notes.
Excess Principal Collections
Principal collections allocable to other series of notes, to the
extent not needed to make payments in respect of the other series, will be
applied to make principal payments in respect of the Series [o] notes and of
other series of notes then entitled to principal payments.
Optional Redemption
The Servicer may cause the issuer to redeem the Series [o] notes on
any day on or after the day on which the nominal liquidation amount of the
Series [o] notes is reduced to $[o] or less.
Other Series of Notes and Certificates
The issuer may issue additional series of notes. The CARCO
receivables trust has previously issued several series of certificates and may
issue additional series of investor certificates. A summary of each series of
investor certificates issued by the CARCO receivables trust currently
outstanding is contained in "Series of Investor Certificates Issued by CARCO
Receivables Trust" at the end of this prospectus supplement.
ERISA Considerations
It is expected that the Series [o] notes will be eligible for
purchase by employee benefit plans. However, plans contemplating the purchase
of Series [o] notes should consult their counsel before making a purchase. See
"ERISA Considerations" in the prospectus.
Tax Status
Sidley Austin Brown & Wood LLP, as special U.S. federal tax counsel
to the issuer, is of the opinion that at the time of initial issuance of the
Series [o] notes for federal income tax purposes:
o the Series [o] notes will be characterized as debt and
o the issuer will not be classified as an association, or a publicly
traded partnership, taxable as a corporation.
By your acceptance of a Series [o] note, you will agree to treat your
Series [o] notes as indebtedness for federal, state and local income and
franchise tax purposes and Michigan single business tax purposes. See "Tax
Matters" in the prospectus for additional information concerning the
application of federal tax laws.
Note Ratings
The issuer will issue the Series [o] notes only if they are rated at
the time of issuance in the highest long-term rating category by at least one
nationally recognized rating agency.
The rating agencies and their ratings only address the likelihood
that you will timely receive your interest payments and you will ultimately
receive all of your required principal payments by the legal final. The rating
agencies and their ratings do not address the likelihood you will receive
interest or principal payments on a scheduled date or whether you will receive
any principal on the Series [o] notes prior to or after the expected payment
date.
S-9
Risk Factors
An investment in Series [o] notes involves material risks. See "Risk
Factors" in this prospectus supplement and the prospectus.
Notes Not Listed on any Exchange
The Series [o] notes will not be listed on an exchange or quoted in
an automated quotation system of a registered securities association. See
"Risk Factors -- Your ability to resell your notes is limited" in this
prospectus supplement or the prospectus.
S-10
- ----------------------------------------------------------------------------
Risk Factors
- ----------------------------------------------------------------------------
In this section and in the prospectus under the heading "Risk
Factors," we discuss the principal risk factors of an investment in the Series
[o] notes.
Only some of the assets of the issuer will be available to make
payments on the Series [o] notes.
The source of funds for payments on o The sole source of payment of principal of or interest on
the notes is limited. the Series [o] notes will be the portion of the available
principal amounts and available interest amounts allocated
to Series [o]. As a result, you must rely only on the
particular allocated assets as security for the Series [o] notes
for payment of the principal of and interest on the Series [o]
notes. You will not have recourse to any other assets of the
issuer or any other person for payment of your notes. See
"Deposit and Application of Funds" in this prospectus
supplement.
Also, following a sale of receivables due to the
insolvency of DCS or Daimler Chrysler, an acceleration of
the notes following an event of default, or on the legal
final, as described in "Deposit and Application of
Funds--Sale of Receivables" in this prospectus supplement
and "Sources of Funds to Pay the Notes--Sale of
Receivables" in the prospectus, only the proceeds of that
sale allocable to the Series [o] notes will be available
to make payments on the Series [o] notes. If the amount of
those proceeds is not enough, you will incur a loss on
your notes.
o Available principal amounts allocable to Series [o] may be
reallocated to pay interest on the Series [o] notes to the extent
that available interest amounts allocable to Series [o] are
insufficient to make such interest payments. Also, losses on
defaulted receivables in the CARCO receivables trust allocated to
Series [o] are generally first applied against the Series [o]
overcollateralization amount and, if the Series [o]
overcollateralization amount has been reduced to zero, then applied
to the nominal liquidation amount of the Series [o] notes. If these
reallocations and losses that are allocated to the nominal
liquidation amount of the Series [o] notes are not reimbursed from
excess available funds, the full stated principal amount of the
Series [o] notes will not be repaid. See "The Notes--
S-11
Stated Principal Amount, Outstanding Dollar Principal Amount and Nominal
Liquidation Amount--Nominal Liquidation Amount" in the prospectus and
"Deposit and Application of Funds--Reduction and Reinstatement of
Nominal Liquidation Amounts" in this prospectus supplement.
The timing of principal payments may not be as expected. Several
factors will have an effect on the amount and timing of principal payments on
the Series [o] notes. Some of those factors are described below.
You may not receive your o The shorter the accumulation period, the greater the chance
principal on the expected that payment in full of the Series [o] notes by their expected
payment date because of the principal payment date will depend on available principal
performance of other series: amounts from other series. A series from which principal
amounts are expected to be available to make payments on
the Series [o] notes may enter an early redemption period
before the Series [o] expected principal payment date.
Available principal amounts allocable to that series will
not be available to pay principal of the Series [o] notes.
As a result, you may receive some of your principal later
than the Series [o] expected principal payment date. On
written request, the seller will give you disclosure
documents relating to the other outstanding series of
notes of the issuer and the outstanding series of
certificates of the CARCO receivables trust. Those
documents describe the events which could result in the
start of an early redemption period for those series.
If an early redemption event o If an early redemption event occurs, you may receive your
occurs, you may receive principal sooner or later than you expected and you may
your principal sooner or not receive all of your principal. In particular, a significant
later than you expected and decline in the amount of : receivables generated could cause
you may not receive all of an early redemption of the Series [o] notes. If the balance of
your principal: the receivables in the CARCO receivables trust is not
maintained at a specified level, DCS must designate
additional accounts, the receivables of which will be sold
to the seller. The seller will be required to transfer
those receivables to the CARCO receivables trust. If
additional accounts are not designated by DCS when
required, an early redemption event will occur.
o If a bankruptcy event relating to DCS or DaimlerChrysler
S-12
were to occur, an early redemption event would occur. In
that case additional receivables would not be transferred to
the CARCO receivables trust and principal payments on the
Series [o] notes would commence.
See "The Dealer Floorplan Financing Business" in the prospectus and
"Maturity and Principal Payment Considerations" and "Deposit and Application
of Funds -- Early Redemption Events" in this prospectus supplement for more
information about the timing of payments on the Series [o] notes.
Credit enhancement is limited and may be reduced. As the credit
enhancement is reduced, you are more likely to incur losses and to receive
your principal earlier or later than you expected. Credit enhancement of the
Series [o] notes will be provided by the Series [o] overcollateralization
amount as described in this prospectus supplement. The amount of such credit
enhancement is limited and may be reduced from time to time. See "Deposit and
Application of Funds -- Series [o] Overcollateralization Amount" for more
information about the credit enhancement for the Series [o] notes.
The CARCO receivables trust and the issuer are dependent on DCS and
DaimlerChrysler. The CARCO receivables trust, and therefore the issuer, are
completely dependent upon DCS for the generation of new receivables. The
ability of DCS to generate receivables is in turn dependent to a large extent
on the sales of automobiles and light duty trucks manufactured or distributed
by DaimlerChrysler. Several factors will have an effect on that dependence. If
DCS does not generate sufficient receivables, an early redemption event may
occur.
Your ability to resell your notes is limited. There may be no
secondary market for your notes. The underwriter[s] may participate in making
a secondary market in the certificates, 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 notes. Also, your notes will not be listed on any
securities exchange or quoted in the automated quotation system of any
registered securities association. As a result, you will not have the
liquidity that might be provided by that kind of listing or quotation.
- ------------------------------------------------------------------------------
Glossary
- ------------------------------------------------------------------------------
You can find a "Glossary of Principal Terms for the Prospectus
Supplement" beginning on page S-[o] in this prospectus supplement.
- ------------------------------------------------------------------------------
Use of Proceeds
- ------------------------------------------------------------------------------
From the net proceeds of the Series [o] notes, we will pay $[o] to
DCWR. DCWR will use the proceeds to purchase receivables from DCS or to repay
amounts previously borrowed to
S-13
purchase receivables. DCS will use the portion of the proceeds paid to it for
general corporate purposes.
- ------------------------------------------------------------------------------
The Dealer Floorplan Financing Business
- ------------------------------------------------------------------------------
You can read about the dealer floorplan financing business under "The
Dealer Floorplan Financing Business" in the prospectus. The receivables sold
to the trust were or will be selected from extensions of credit and advances
made by DaimlerChrysler and DCS to approximately 3,225 domestic motor vehicle
dealers.
o DCS financed 57.8% of the total number of all DaimlerChrysler-
franchised dealers as of December 31, 2001.
o DCS has extended credit lines to 1,201 DaimlerChrysler-franchised
dealers that also operate non-DaimlerChrysler franchises
(representing approximately 38% of the aggregate credit lines of
dealers in the U.S. Wholesale Portfolio as of December 31, 2001)
and 529 non-DaimlerChrysler dealers (representing approximately
17% of those aggregate credit lines).
o As of December 31, 2001, the balance of principal receivables in
the U.S. Wholesale Portfolio was approximately $10.2 billion.
o DCS currently services the U.S. Wholesale Portfolio through its
home office and through a network of 23 zone offices located
throughout the United States.
o As of December 31, 2001, the average credit lines per dealer in
the U.S. Wholesale Portfolio for new and used vehicles (which
includes Auction Vehicles) were $3.99 million and $0.57 million,
respectively, and the average balance of principal receivables
per dealer was $3.16 million.
o As of December 31, 2001, the aggregate total receivables balance
as a percentage of the aggregate total credit lines was
approximately 69.4%.
The following table sets forth the percentages of dealer account
balances by year of credit line origination for the U.S. Wholesale Portfolio.
- ----------------------------------------------------------------------------------------------------------------------
Portfolio Percentages by Year
of Credit Line Origination
As of December 31, 2001
- ----------------------------------------------------------------------------------------------------------------------
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
2001 2000 1999 1998 1997 1996 1995 1994 Prior to
1994
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
16.24% 7.13% 7.82% 5.25% 4.53% 2.46% 4.67% 2.35% 49.56%
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
S-14
As of December 31, 2001, the weighted average spread over the prime
rate charged to dealers in the U.S. Wholesale Portfolio was approximately
1.10%.
Used vehicles (which excludes Auction Vehicles) represented
approximately 3.39% of the aggregate principal amount of receivables in the
U.S. Wholesale Portfolio as of December 31, 2001. As of December 31, 2001,
used vehicles represented approximately 3.19% of the aggregate principal
amount of receivables in the trust (including Excluded Receivables).
S-15
Finance Hold Experience
The following table provides the percentage of dealers in the U.S.
Wholesale Portfolio that were subject to finance hold as of the dates
indicated.
- ------------------------------------------------------------------------------------------------------------------------
Finance Hold Experience
As of December 31,
--------- ---------- --------- --------- ---------- --------- --------- --------- ---------- ---------
2001 2000 1999 1998 1997 1996 1995 1994 1993 1992
--------- ---------- --------- --------- ---------- --------- --------- --------- ---------- ---------
Percentage of
Dealers 1.9% 0.8% 0.4% 0.9% 2.1% 1.1% 1.8% 1.6% 3.2% 6.8%
- ------------------------------------------------------------------------------------------------------------------------
The percentage of dealerships on finance hold is trending downward
from a high of 6.8% in 1992. Finance hold experience has been reflective of
overall macro-economic conditions. DCS management's past experience has
indicated that finance hold trends tend to follow the tentative nature of the
present business economy.
Dealer Trouble Experience
The following table provides the number and percentage of dealers in
Dealer Trouble Status in the U.S. Wholesale Portfolio as of the dates
indicated.
- ------------------------------------------------------------------------------------------------------------------------
Dealer Trouble Experience
As of December 31,
--------- ---------- --------- ---------- ---------- --------- ---------- --------- ---------- ---------
2001 2000 1999 1998 1997 1996 1995 1994 1993 1992
--------- ---------- --------- ---------- ---------- --------- ---------- --------- ---------- ---------
Number of
Dealers 24 27 27 21 24 20 6 12 21 56
- -------------------------------------------------------------------------------------------------------------------------
Percentage of
Dealers 0.7% 0.8% 0.9% 0.7% 0.7% 0.6% 0.2% 0.3% 0.6% 1.8%
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
Trends of Dealer Trouble Status over the past five years have held at
an average of approximately 25 dealers in Dealer Trouble Status from time to
time. Dealer Trouble Status indicates those dealers that have probable
principal loss potential. The percentage of dealers in Dealer Trouble Status
has closely mirrored the trend of dealerships on finance hold over the past
two years but is not inherently connected to finance hold status. DCS
management's past experience has indicated that Dealer Trouble Status
experience tends to increase with the threat or occurrence of economic
pressures in the U.S.
- ------------------------------------------------------------------------------
The Accounts
- ------------------------------------------------------------------------------
As of December 31, 2001, with respect to the Accounts in the trust:
S-16
o there were approximately 3,060 Accounts and the principal
receivables balance was approximately $9.0 billion;
o the average credit lines per dealer for new and used vehicles
(which include Auction Vehicles) were approximately $3.61
million and $0.53 million, respectively, and the average balance
of principal receivables per dealer was approximately $2.93
million; and
o the aggregate total receivables balance as a percentage of the
aggregate total credit line was approximately 70.8%.
Unless otherwise indicated, the statistics included in this
paragraph, in the table below and under "DCS's Performance History --
Geographic Distribution" with respect to the Accounts and the receivables in
the CARCO receivables trust give effect to approximately $22.1 million of
principal receivables balances with respect to dealers (the "Excluded
Receivables" and the "Excluded Dealers", respectively) that are in voluntary
or involuntary bankruptcy proceedings or voluntary or involuntary liquidation
or that, subject to limitations, are being voluntarily removed by the seller
from the CARCO receivables trust. A portion of those principal receivables was
created after those dealers entered into that status or were designated by the
seller for removal from the CARCO receivables trust and, as a result, are
owned by DCS. Principal receivables balances created prior to those dealers
entering into that status or being designated for removal from the CARCO
receivables trust are included in the principal receivables balance. See
"Description of the Certificates -- Removal of Accounts" in the prospectus for
a description of the manner in which an Account can be removed from the trust.
The following table sets forth the percentages of dealer account
balances by year of credit line origination for the accounts in the trust.
- ----------------------------------------------------------------------------------------------------------------------
Portfolio Percentages by Year
of Credit Line Origination
As of December 31,
- ----------------------------------------------------------------------------------------------------------------------
Prior
2001 2000 1999 1998 1997 1996 1995 1994 1994
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
7.12% 7.67% 8.82% 5.86% 5.01% 2.74% 4.16% 2.66% 55.96%
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
- ----------------------------------------------------------------------------------------------------------------------
As of December 31, 2001, the weighted average spread over the Prime
Rate charged to Dealers was approximately 1.16%.
- ----------------------------------------------------------------------------
DCS's Performance History
- -----------------------------------------------------------------------------
S-17
Loss Experience
The following tables set forth the average principal receivables
balance and loss experience for each of the periods shown on the U.S.
Wholesale Portfolio. Because the Eligible Accounts will be only a portion of
the entire U.S. Wholesale Portfolio, actual loss experience with respect to
the Eligible Accounts may be different. We cannot assure you that the loss
experience for the receivables in the future will be similar to the historical
experience set forth below with respect to the U.S. Wholesale Portfolio. Also,
the historical experience set forth below reflects financial assistance
provided by DaimlerChrysler to DaimlerChrysler-franchised dealers as described
under "The Dealer Floorplan Financing Business -- Relationship with
DaimlerChrysler" in the prospectus. If DaimlerChrysler is not able to or
elects not to provide that assistance, the loss experience in respect of the
U.S. Wholesale Portfolio may be adversely affected. See "Risk Factors --
Issuer's relationship to DaimlerChrysler and DCS" in the prospectus and "Risk
Factors -- The CARCO receivables trust and the issuer dependent on
DaimlerChrysler and DCS" in this prospectus supplement.
S-18
Loss Experience for the U.S. Wholesale Portfolio
($ Millions)
Year Ended December 31,
------------------------------------------------------------------------------------
2001 2000 1999 1998 1997 1996 1995 1994
------------------------------------------------------------------------------------
Average Principal
Receivables Balance(1) $9,689 $11,336 $9,947 $9,236 $8,877 $ 8,825 $ 8,256 $ 6,754
-----------------------------------------------------------------------------------------------------------------
Net Losses/ (Net
Recoveries)(2) $ 2 $ 1 $ (0) $ 11 $ 4 $ (0) $ (1) $ (1)
-----------------------------------------------------------------------------------------------------------------
Net Losses/ (Net
Recoveries) as a
Percent of Liquidations 0.004% 0.001% (0.001)% 0.020% 0.008% 0.000% (0.002)% (0.003)%
-----------------------------------------------------------------------------------------------------------------
Net Losses/ (Net
Recoveries) as a
Percent of Average
Principal Receivables
Balance 0.02% 0.01% (0.00)% 0.12% 0.04% (0.00)% (0.01)% (0.01)%
-----------------------------------------------------------------------------------------------------------------
----------- ----------- ------------ ------------ ------------ -----------
1993 1992 1991 1990 1989 1988
----------- ----------- ------------ ------------ ------------ -----------
Average Principal
Receivables Balance(1) $6,271 $ 5,344 $ 4,826 $ 4,726 $ 4,933 $ 4,129
-------------------------- ----------- ----------- ------------ ------------ ------------ -----------
Net Losses/ (Net
Recoveries)(2) $ 12 $ 26 $ 36 $ 23 $ 13 $ 3
-------------------------- ----------- ----------- ------------ ------------ ------------ -----------
Net Losses/ (Net
Recoveries) as a
Percent of
Liquidations 0.035% 0.098% 0.163% 0.117% 0.060% 0.015%
-------------------------- ----------- ----------- ------------ ------------ ------------ -----------
Net Losses/ (Net
Recoveries) as a
Percent of Average
Principal Receivables
Balance 0.19% 0.49% 0.75% 0.49% 0.26% 0.07%
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
(1) Average Principal Receivables Balance is the average of the month-end
principal balances for the thirteen months ending on the last day of
the period.
(2) Net Losses in any period are gross losses less recoveries for such
period.
- -------------------------------------------------------------------------------
Net losses have showed favorable trends over the last four years
because of the availability of large amounts of deficiency dollars collected.
Losses net of recoveries is expected to increase in the coming three-year
period due to the lack of collectible deficiencies. DCS management expects
that the loss to liquidation percentage will continue an upward trend with the
loss of wholesale accounts. The trend could reverse itself with increased
acquisitions.
S-19
Aging Experience
The following table provides the age distribution of vehicle
inventory for all dealers in the U.S. Wholesale Portfolio, as a percentage of
total principal outstanding at the date indicated. Because the Eligible
Accounts will only be a portion of the entire U.S. Wholesale Portfolio, actual
age distribution with respect to the Eligible Accounts may be different.
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Age Distribution for the U.S. Wholesale Portfolio
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Year Ended December 31,
--------------------------------------------------------------------------------------------
Aging (Days) 2001 2000 1999 1998 1997 1996 1995
--------------------------------------------------------------------------------------------
<31............... 33.5% 23.0% 36.7% 32.2% 32.5% 31.1% 30.6%
31-60............. 23.0 19.8 21.9 21.5 21.9 20.6 22.2
61-90............. 14.3 18.3 16.6 15.3 14.7 16.7 17.5
91-120............ 10.6 16.6 11.6 12.6 11.0 12.0 11.8
121-150........... 7.7 10.0 4.4 8.0 7.4 6.7 6.9
151-180........... 3.5 2.9 2.5 2.9 3.3 3.2 2.4
181-210........... 1.9 2.8 1.5 1.9 1.9 2.4 1.6
211-240........... 1.4 1.6 1.3 1.3 1.3 1.5 1.1
241-270........... 0.9 1.2 0.9 0.9 1.0 1.1 1.1
271-300........... 0.8 1.1 0.7 0.7 0.9 0.9 1.0
301-330........... 0.5 0.8 0.4 0.6 0.8 0.7 0.7
331-360........... 0.3 0.6 0.3 0.4 0.6 0.5 0.6
>360.............. 1.8 1.4 1.3 1.6 2.5 2.5 2.4
--------------------------------------------------------------------------------------------
100% 100% 100% 100% 100% 100% 100%
-------------------------------------------------------------------------
Geographic Distribution
The following table provides the geographic distribution of the
vehicle inventory for all dealers in the CARCO receivables trust on the basis
of receivables outstanding and the number of dealers generating the portfolio.
The percentages may not add to 100.00% because of rounding.
- ---------------------------------------------------------------------------------------------------------------------
Geographic Distribution of Accounts in the CARCO Receivables Trust
As of December 31, 2001
Percentage of Total Number Percentage of
Receivables Receivables of Number of
Outstanding Outstanding Dealers Dealers
----------------- ---------------- --------------- ------------------
Texas.......................... $914,283,854.84 10.18% 212 6.92%
California..................... 607,981,091.01 6.77% 173 5.65%
Florida........................ 587,986,049.39 6.54% 139 4.54%
Illinois ...................... 512,740,885.05 5.71% 183 5.98%
New York....................... 472,808,796.45 5.26% 152 4.96%
New Jersey..................... 468,373,988.49 5.21% 145 4.74%
Other(1)....................... 5,420,398,433.15 60.33% 2,058 67.21%
----------------- ---------------- --------------- ------------------
Total ......................... $8,984,573,098.38 100.00% 3,062 100.00%
================== ================ =============== ==================
(1) No other state includes more than 5% of the outstanding receivables.
- ---------------------------------------------------------------------------------------------------------------------
S-20
- ------------------------------------------------------------------------------
Maturity and Principal Payment Considerations
- ------------------------------------------------------------------------------
You will begin receiving principal on your notes if an Early
Redemption Period that is not terminated has commenced. Full payment of the
Series [o] notes by the [o] payment date (the "Series [o] Expected Principal
Payment Date") depends on, among other things, repayment by dealers of the
receivables and may not occur if dealer payments are insufficient. Because the
receivables are paid upon retail sale of the underlying vehicle, the timing of
the payments is uncertain. There is no assurance that DCS will generate
additional receivables under the Accounts or that any particular pattern of
dealer payments will occur. Also, the shorter the Accumulation Period Length
the greater the likelihood that payment of the Series [o] notes in full by the
Series [o] Expected Principal Payment Date will be dependent on the
reallocation of Available Principal Amounts which are initially allocated to
other outstanding series of notes. If one or more other series of notes from
which Available Principal Amounts are expected to be available to be
reallocated to the payment of the Series [o] notes enters into an early
redemption period before the Series [o] Expected Principal Payment Date,
Available Principal Amounts allocated to those series of notes will not be
available to be reallocated to make payments of principal of the Series [o]
notes and you may receive your final payment of principal later than the
Series [o] Expected Principal Payment Date.
Because an Early Redemption Event with respect to the Series [o]
notes may occur and would initiate an Early Redemption Period, you may receive
the final payment of principal on your Series [o] notes prior to the scheduled
termination of the Revolving Period or prior to the Series [o] Expected
Principal Payment Date.
The amount of new receivables generated in any month and monthly
payment rates on the receivables may vary because of seasonal variations in
vehicle sales and inventory levels, retail incentive programs provided by
vehicle manufacturers and various economic factors affecting vehicle sales
generally. The following table sets forth the highest and lowest monthly
payment rates for the U.S. Wholesale Portfolio during any month in the periods
shown and the average of the monthly payment rates for all months during the
periods shown. The monthly payment rate is the percentage equivalent of a
fraction, the numerator of which is the aggregate of all collections of
principal during the period and the denominator of which is the average
aggregate principal balance for the period. These monthly payment rates
include principal credit adjustments. We cannot assure you that the rate of
principal collections will be similar to the historical experience set forth
below. As the Eligible Accounts will be only a portion of the entire U.S.
Wholesale Portfolio, historical monthly payment rates with respect to the
Eligible Accounts may be different than those shown below.
S-21
- -----------------------------------------------------------------------------------------------------
Monthly Payment Rates for the U.S. Wholesale Portfolio
Year Ended December 31,
------------------------------------------------------------------------------------------
2001 2000 1999 1998 1997 1996 1995 1994 1993 1992
------------------------------------------------------------------------------------------
Highest Month 62.8% 52.8% 60.5% 60.8% 57.7% 58.3% 59.1% 59.7% 54.7% 50.6%
- -----------------------------------------------------------------------------------------------------------------
Lowest Month 41.5 36.2 44.7 42.5 41.1 43.2 36.5 34.2 35.9 34.4
- -----------------------------------------------------------------------------------------------------------------
Average of the
Months in the Period 49.9 45.6 52.0 50.0 48.2 49.0 45.6 50.3 46.6 41.3
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Series Provisions
- ------------------------------------------------------------------------------
General
The CARCO receivables trust has issued the collateral certificate to
the issuer under the Pooling and Servicing Agreement and a Series Supplement
relating to the collateral certificate. The indenture trustee will make
available for inspection a copy of the Pooling and Servicing Agreement and the
Series Supplement, each without exhibits or schedules, on request. You should
refer to the prospectus for additional information concerning the collateral
certificate, the Pooling and Servicing Agreement and the Series Supplement.
The issuer will issue the Series [o] notes pursuant to the indenture
and an indenture supplement. The discussion under this heading "Series
Provisions" and the heading "Deposit and Application of Funds" in this
prospectus supplement and the discussion under the headings "The Notes",
"Sources of Funds to Pay the Notes" and "The Indenture" in the prospectus
summarize the material terms of the Series [o] notes, the indenture and the
indenture supplement. These summaries do not purport to be complete and are
qualified in their entirety by reference to the provisions of the notes, the
indenture and the indenture supplement. Neither the indenture nor the
indenture supplement limits the aggregate principal amount of notes that may
be issued.
The issuer will pay principal of and interest on the Series [o] notes
solely from the portion of Available Interest Amounts and Available Principal
Amounts that are allocated to Series [o] under the indenture and the indenture
supplement after giving effect to all allocations and reallocations. If those
sources are not sufficient to pay the Series [o] notes, Series [o] noteholders
will have no recourse to any other assets of the issuer or any other person or
entity for the payment of principal of or interest on the Series [o] notes.
In general, the CARCO receivables trust will allocate collections on
the receivables among each series of its investor certificates, including the
collateral certificate. We describe how these allocations are made under
"Description of the Investor Certificates Issued by the CARCO Receivables
Trust" in the prospectus. The indenture trustee will receive distributions of
the collateral certificate's share of those collections. The indenture trustee
will then allocate those distributions among each series of notes as described
in this prospectus supplement. The Series [o] share of distributions on the
collateral certificate is the only source of funds for
S-22
payments on the Series [o] notes. We will apply Available Interest Amounts
allocable to Series [o] to pay interest on the Series [o] notes and to cover
charge-offs from defaults on the receivables that are allocable to Series [o].
The Available Amounts allocable to Series [o] will include those funds
allocable to the nominal liquidation amount of the Series [o] notes and the
Series [o] overcollateralization amount. We will first use the portion of the
funds allocable to the Series [o] overcollateralization amount and any excess
available interest collections not required by other series of notes to cover
any interest shortfalls and the Series [o] share of charge-offs on defaulted
receivables. When it is time to distribute principal to Series [o] noteholders
or accumulate principal collections for that purpose, we will use the Series
[o] share of Available Principal Amounts. Under some circumstances, we may use
Available Principal Amounts allocated to another series of notes that are not
then needed by those series.
The preceding paragraph is a very simplified description of the
primary allocations and uses of distributions on the collateral certificate.
The following descriptions in this prospectus supplement contain a more
precise description of the calculations of those allocations and the manner,
timing and priorities of the application of those distributions. Many of the
calculations are complex and are described in the definitions of the terms
used. The complex defined terms are needed in order to tell you more precisely
the amount that will be available to make a specified payment. The "Glossary
of Principal Terms for Prospectus Supplement" at the end of this prospectus
supplement contains many of these definitions. However, for convenience we
often include the definition where its subject is being discussed.
Interest
Interest on the outstanding dollar principal amount of the Series [o]
notes will accrue at the Series [o] rate and will be payable to the Series [o]
noteholders on each payment date, commencing [o]. Interest payable on any
payment date will accrue from and including the preceding payment date to but
excluding that payment date, or, in the case of the first payment date, from
and including the Series [o] issuance date to but excluding the first payment
date. Each of those periods is an "Interest Period." Interest will be
calculated on the basis of the actual number of days in each Interest Period
divided by 360. Interest due for any payment date but not paid on that payment
date will be due on the next payment date, together with interest on the
amount at the Series [o] rate calculated on the basis of the Series [o] note,
to the extent permitted by applicable law. We will make interest payments on
the Series [o] notes solely out of applicable distributions on the collateral
certificate that are allocated to Series [o].
The Calculation Agent will determine the Series [o] rate for each
Interest Period on the LIBOR Determination Date preceding that Interest
Period. The "Series [o] rate" will be the per annum rate equal to the
applicable LIBOR plus [o]%.
"Monthly Interest" for any payment date means the amount of interest
accrued in respect of the Series [o] notes during the Interest Period for that
payment date.
"LIBOR" with respect to any Interest Period will equal the offered
rate for United States dollar deposits for one month that appears on Telerate
Page 3750 as of 11:00 A.M., London time, on the second LIBOR Business Day
prior to that Interest Period (a "LIBOR Determination Date"). "Telerate Page
3750" means the display page so designated on the Dow Jones Telerate
S-23
Service, or any other page as may replace that page on that service, or any
other service as may be nominated as the information vendor, for the purpose of
displaying London interbank offered rates of major banks. If that rate appears
on Telerate Page 3750, LIBOR will be that rate. "LIBOR Business Day" as used
in this prospectus supplement means 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. If on any LIBOR Determination Date
the offered rate does not appear on Telerate Page 3750, the Calculation Agent
will request each of the reference banks, which shall be major banks that are
engaged in transactions in the London interbank market selected by the
Calculation Agent, to provide the Calculation Agent with its offered quotation
for United States dollar deposits for one month to prime banks in the London
interbank market as of 11:00 A.M., London time, on that date. If at least two
reference banks provide the Calculation Agent with the offered quotations,
LIBOR on that date will be the arithmetic mean, rounded upwards, if necessary,
to the nearest 1 / 100,000 of 1% (.0000001), with five one-millionths of a
percentage point rounded upward, of all the quotations. If on that date fewer
than two of the reference banks provide the Calculation Agent with the offered
quotations, LIBOR on that date will be the arithmetic mean, rounded upwards,
if necessary, to the nearest 1 / 100,000 of 1 % (.0000001), with five
one-millionths of a percentage point rounded upward, of the offered per annum
rates that one or more leading banks in The City of New York selected by the
Calculation Agent are quoting as of 11:00 A.M., New York City time, on that
date to leading European banks for United States dollar deposits for one
month. If, however, those banks are not quoting as described above, LIBOR for
that date will be LIBOR applicable to the Interest Period immediately
preceding that Interest Period. The "Calculation Agent" will initially be the
indenture trustee.
Principal
We are not scheduled to make principal payments to the Series [o]
noteholders until the Series [o] Expected Principal Payment Date. However, if
an Early Redemption Period that is not terminated has commenced before the
Expected Principal Payment Date, we will begin making principal payments on
the first payment date in the month following the month in which the Early
Redemption Period begins.
Generally, on each payment date with respect to the Revolving Period,
the Series [o] share of Available Principal Amounts will not be used to make
principal payments on the Series [o] notes. Instead we will either
o use them to cover principal payments due to the noteholders
of any other series of notes that is in an amortization,
early redemption or accumulation periods or
o if no other series is then amortizing or accumulating
principal, pay them to the issuer to maintain the interest
in the CARCO receivables trust evidenced by the collateral
certificate.
See "Deposit and Application of Funds -- Application of Available Amounts to
Series [o]" and "-- Allocation Percentages" for additional details.
S-24
The "Revolving Period" for the Series [o] notes will be the period
beginning at the close of business on the Series [o] Cut-Off Date and
terminating on the earlier of
o the close of business on the day immediately preceding the
Accumulation Period Commencement Date and
o the close of business on the day an Early Redemption Period
commences.
The Revolving Period, however, may recommence upon the termination of an Early
Redemption Period. See "Deposit and Application of Funds -- Early Redemption
Events".
Unless an Early Redemption Period that is not terminated as described
in this prospectus supplement has commenced, the Series [o] notes will have an
Accumulation Period during which the Series [o] share of Available Principal
Amounts will be accumulated in specified amounts in the principal funding
account for the purpose of paying the outstanding dollar principal amount of
the Series [o] notes in full on the Expected Principal Payment Date.
Initially, the Accumulation Period is scheduled to be five months long.
However, depending on the performance of the receivables in the CARCO
receivables trust, the length of the Accumulation Period may be shortened to
four, three or two months or a single month as described in the following
paragraph.
The "Accumulation Period Commencement Date" will be [o] or, if the
issuer, acting directly or through the administrator, elects at its option to
delay the start of the Accumulation Period, a later date selected by the
issuer. Delaying the start of the Accumulation Period will extend the
Revolving Period and shorten the Accumulation Period. The issuer may elect to
delay the start of the Accumulation Period because it believes that (i) the
issuer will be able to reallocate Available Principal Amounts allocable to
other series of notes to make larger monthly deposits into the principal
funding account over a shorter period of time or (ii) the payment rate on the
receivables will permit larger monthly deposits to that account over a shorter
period of time. In order to delay the start of the Accumulation Period, the
following things must occur:
o the issuer must deliver to the indenture trustee a certificate
to the effect that the issuer believes that delaying the start
of the Accumulation Period will not delay any payment of
principal to Series [o] noteholders;
o Standard & Poor's and Moody's must advise the issuer that they
will not lower or withdraw their ratings on the notes of any
series because of the delay in the start of the Accumulation
Period;
o the amount of principal that the indenture trustee will deposit
into the principal funding account each month during the
Accumulation Period must be increased, so that the sum of all
deposits made during the shortened Accumulation Period will
equal the principal amount due to Series [o] noteholders on the
Series [o] Expected Principal Payment Date;
o the Accumulation Period must start no later than [o]; and
S-25
o the issuer must make this election no later than the first day
of the last month of the Revolving Period, including extensions
of the Revolving Period.
If the issuer delays the start of the Accumulation Period and an
Early Redemption Event occurs, you may receive some of your principal later
than you would have received it without a delay in the start of the
Accumulation Period.
Unless and until an Early Redemption Period that is not terminated as
described in this prospectus supplement has occurred and until the outstanding
dollar principal amount of the Series [o] notes is paid in full, generally, on
each payment date with respect to the Accumulation Period, Available Principal
Amounts allocable to the Series [o] will no longer be paid for the benefit of
another series of notes or to the issuer. Instead, those amounts up to the
Controlled Deposit Amount for each of those payment dates will be deposited in
the principal funding account. We will use the funds deposited in the
principal funding account to pay the outstanding dollar principal amount of
the Series [o] notes on the Series [o] Expected Principal Payment Date. If on
that date the total amount in the principal funding account and the excess
funding account is less than the outstanding dollar principal amount of the
Series [o] notes, the Early Redemption Period will commence. On each
subsequent payment date with respect to the Early Redemption Period, the
Series [o] noteholders will receive payments of Monthly Principal and Monthly
Interest until the outstanding dollar principal amount of the Series [o] notes
has been paid in full or the legal final has occurred. Even if the total
amount in the principal funding account on the Series [o] Expected Principal
Payment Date is insufficient to pay the outstanding dollar principal amount of
the Series [o] notes in full, we will distribute that amount to the Series [o]
noteholders at that time.
Monthly Principal is the amount of principal that we will pay to or
accumulate for the Series [o] noteholders on a monthly basis. The "Monthly
Principal" with respect to any payment date relating to the Accumulation
Period or any Early Redemption Period will equal the Available Principal
Amount for Series [o] less any portion thereof that is applied to pay interest
on the Series [o] notes on that payment date. However, for each payment date,
with respect to the Accumulation Period, Monthly Principal will not exceed the
Controlled Deposit Amount for that payment date plus any Controlled Deposit
Amount for a prior payment date that has not been previously deposited into
the principal funding account. Also, Monthly Principal will not exceed the
nominal liquidation amount of the Series [o] notes less the amount (other than
investment earnings) on deposit in the principal funding account.
Consequently, if the nominal liquidation amount of the Series [o] notes is
reduced by reallocations of Available Principal Amounts to pay interest on the
Series [o] notes or by charge-offs due to defaulted receivables and is not
reinstated, you will incur a loss on your Series [o] notes.
During the Accumulation Period, we intend to accumulate each month a
fixed amount equal to the "Controlled Accumulation Amount", which is equal to
the outstanding dollar principal amount as of the Accumulation Period
Commencement Date, divided by the Accumulation Period Length. The
"Accumulation Period Length" will be the number of full Collection Periods
between the Accumulation Period Commencement Date and the Series [o] Expected
Principal Payment Date. Because there may be funds in the excess funding
account allocable to Series [o] and the Available Principal Amounts allocable
to Series [o] for any payment date may fluctuate, we intend to accumulate the
Controlled Deposit Amount on each
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payment date with respect to the Accumulation Period. The "Controlled Deposit
Amount" for a payment date will be the excess of (i) the Controlled
Accumulation Amount over (ii) any funds in the excess funding account that are
allocable to Series [o] and have not been deposited into the principal funding
account as of that payment date.
Excess Funding Account
Unless and until an Early Redemption Event shall have occurred or the
Accumulation Period shall have commenced, the CARCO receivables trust trustee
will keep the excess funded amount for the collateral certificate in the
excess funding account for the collateral certificate. The CARCO receivables
trust trustee will generally invest funds on deposit in the excess funding
account at the direction of the servicer in Eligible Investments. Those
investments must mature on or prior to the next payment date.
We will pay funds on deposit in the excess funding account to the
seller or allocate them to one or more series of notes which are in
amortization, early redemption or accumulation periods, but only to the extent
of any increases in the Invested Amount of the collateral certificate as a
result of the addition of receivables to the CARCO receivables trust, a
reduction in the Seller's Interest, or a reduction in the invested amount of
any other series of certificates. We will deposit additional amounts in the
excess funding account on a payment date to the extent described under
"Description of the Investor Certificates Issued by the CARCO Receivables
Trust -- Excess Funding Account."
On each payment date, we will treat the Series [o] share of all net
investment income received on amounts in the excess funding account since the
prior payment date as Available Interest Amounts for Series [o].
On the [o] payment date we will transfer the Series [o] share of any
funds (other than investment income) on deposit in the excess funding account
to the principal funding account. No funds will be deposited in the excess
funding account during any Early Redemption Period. [Also, we will not deposit
any amounts into the excess funding account with respect to any Transfer Date
following the [o] Transfer Date.]
Optional Redemption by the Issuer
Under the indenture, the servicer has the right, but not the
obligation, to cause the issuer to redeem the Series [o] notes in whole but
not in part on any day on or after the day on which the nominal liquidation
amount of the Series [o] notes is reduced to less than [$ ]. This redemption
option is referred to as a clean-up call.
If the servicer elects to cause the issuer to redeem the Series [o]
notes, it will cause the issuer to notify the registered holders at least
thirty days prior to the redemption date. The redemption price of the Series
[o] notes will equal 100% of the outstanding dollar principal amount, plus
accrued but unpaid interest on the Series [o] notes to but excluding the date
of redemption.
If the issuer is unable to pay the redemption price in full on the
redemption date, monthly payments on the Series [o] notes will thereafter be
made until either the principal of and accrued
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interest on those notes are paid in full or the legal final occurs, whichever
is earlier. Any funds in the principal funding account and interest funding
account for the Series [o] notes will be applied to make the principal and
interest payments on the Series [o] notes on the redemption date.
- ------------------------------------------------------------------------------
Deposit and Application of Funds
- -------------------------------------------------------------------------------
The indenture specifies how we will allocate Available Interest
Amounts and Available Principal Amounts among the multiple series of notes
issued from time to time by the issuer. "Available Interest Amounts" will
consist of interest collections on the receivables owned by the CARCO
receivables trust that are allocated to the investor portion of the collateral
certificate. "Available Principal Amounts" will consist of principal
collections on the receivables and certain related amounts that are allocated
to the investor portion of the collateral certificate. The Available Interest
Amounts and the Available Principal Amounts are collectively referred to as
"Available Amounts". We describe how interest collections and principal
collections at the CARCO receivables trust are allocated among the various
series of investor certificates (including the collateral certificate) under
"Description of the Investor Certificates Issued by the CARCO Receivables
Trust--Allocation Percentages" in the prospectus.
We describe how interest collections and principal collections
allocated to the collateral certificate are then further allocated between the
seller's portion and the investor portion under "Source of Funds to Pay the
Notes--General" in the prospectus. Only the investor portions of those
collections are available to make payments on the notes.
Each Series [o] account referred to in this prospectus supplement may
be a subaccount of one master account for Series [o].
Application of Available Amounts Allocated to Series [o]
Available Interest Amounts for Series [o]. Under "-- Allocation
Percentages" below, we describe how we will allocate Available Interest
Amounts among each series of notes. On each Transfer Date, the indenture
trustee will also include the following amounts along with the Available
Interest Amounts allocated to Series [o]:
o any net investment earnings on funds in the principal
funding account will be withdrawn from the principal funding
account and added to the Available Interest Amounts
allocated to the Series [o] notes;
o if the amount of interest at the Series [o] rate on funds in
the principal funding account exceeds the net investment
earnings described in the preceding bullet point, the amount
of this excess, referred to as the negative carry amount,
will be deducted from available funds otherwise allocable to
the seller and added to the Available Interest Amounts
allocated to the Series [o] notes; and
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o any shared excess Available Interest Amounts allocated from
other series to Series [o], as described in "--Shared Excess
Available Interest Amounts," will be added to the Available
Interest Amounts allocated to the Series [o] notes.
After taking into account the additions described in the above three
bullet points, the Available Interest Amounts allocated to the Series [o]
notes is referred to as "Series [o] Available Interest Amounts." On each
Transfer Date, the indenture trustee, at the direction of the servicer, will
apply Series [o] Available Interest Amounts as follows:
o first, if DCS or any of its affiliates is not the servicer,
the indenture trustee will apply funds to pay the servicing
fee;
o second, the indenture trustee will deposit to the interest
funding account (i) accrued and unpaid interest on the
Series [o] notes due on the next payment date and (ii) to
the extent lawful, interest at the Series [o] rate on any
unpaid delinquent interest on the Series [o] notes;
o third, if DCS or any of its affiliates is the servicer, the
indenture trustee will apply funds to pay the servicing
fee;
o fourth, if the Available Interest Amounts for Series [o] for
that Transfer Date exceeds the interest payable in clauses
first, second and third, then we will treat that excess
amount as Available Principal Amounts for Series [o] to the
extent of:
- the amount of charge-offs on defaulted receivables that
are allocable to Series [o] for the related Collection
Period; and
- the Series [o] nominal liquidation amount deficit, if
any; and
o fifth, any Series [o] Available Interest Amounts that remain
after giving effect to clauses first, second, third and
fourth will be treated as "Shared Excess Available Interest
Amounts" and will be applied to shortfalls or deficits of
other series of notes or, to the extent not needed to cover
shortfalls or deficits of other series, paid to the issuer.
Available Principal Amounts for Series [o]. Under "-- Allocation
Percentages," we describe how we will allocate Available Principal Amounts
among each series of notes. On each Transfer Date, the indenture trustee will
increase the Available Principal Amounts allocated to the Series [o] notes by
the amount of any Available Interest Amounts used to fund the Series [o] share
of any charge-offs on defaulted receivables and any Series [o] nominal
liquidation amount deficit, as described in clause fourth of the preceding
paragraph. The resulting sum, referred to as "Series [o] Available Principal
Amounts," will be applied by the indenture trustee on each Transfer Date, at
the direction of the servicer, as follows:
o first, if the Available Interest Amounts for Series [o] are
not enough to cover the interest on the Series [o] notes
specified in clause second above, the indenture trustee will
deposit to the interest funding account the amount of that
shortfall in
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an amount not to exceed the Series [o] nominal liquidation
amount (after taking into account any reductions
due to charge-offs due to defaulted receivables);
o second, if Series [o] is in its Accumulation Period, the
indenture trustee will deposit the Controlled Deposit Amount
to the principal funding account and we will treat any
remaining Series [o] Available Principal Amounts as "Shared
Excess Available Principal Amounts" available to be used to
satisfy the principal funding requirements of other series
of notes or to be reinvested in the collateral certificate
to maintain the invested amount of the collateral
certificate;
o third, if Series [o] is in an Early Redemption Period, the
indenture trustee will deposit any remaining Series [o]
Available Principal Amounts in the principal funding
account;
o fourth, if Series [o] is not in its Accumulation Period or
an Early Redemption Period, we will treat any remaining
Series [o] Available Principal Amounts as Shared Excess
Available Principal Amounts available to be used to satisfy
the principal funding requirements of other series of notes
or to be reinvested in the collateral certificate to
maintain the invested amount of the collateral certificate;
and
o fifth, if Series [o] is in its Accumulation Period or an
Early Redemption Period and the nominal liquidation amount
of the Series [o] notes has been deposited to the principal
funding account, any remaining Available Principal Amounts
for Series [o] will be paid to the seller. The amount in
this clause fifth will represent the Series [o]
overcollateralization amount.
The use of Series [o] Available Principal Amounts under clause first
above to pay interest on the Series [o] notes will result in a reduction in
the Series [o] nominal liquidation amount as described under "--Reduction and
Reinstatement of the Series [o] Nominal Liquidation Amount".
If the Series [o] noteholders direct the CARCO receivables trust to
sell receivables as described under "--Sale of Receivables," we will pay the
proceeds of such sale to the Series [o] noteholders to the extent of the
interest due on the Series [o] notes and the nominal liquidation amount of the
Series [o] notes, and the Series [o] noteholders will not receive any further
Available Amounts or other assets of the issuer.
Reduction and Reinstatement of Nominal Liquidation Amounts
The calculation of a series nominal liquidation amount is described
under "The Notes -- Stated Principal Amount, Outstanding Dollar Principal
Amount and Nominal Liquidation Amount of Notes" in the prospectus. That
section contains a description of reduction and reinstatements of the series
nominal liquidation amount other than on account of principal payments or
deposits to the principal funding account.
S-30
The Series [o] nominal liquidation amount at the Series [o] Cut-Off
Date is the sum of (i) the $[o] initial nominal liquidation amount of the
Series [o] notes (which equals the initial outstanding dollar principal amount
of the Series [o] notes) and (ii) the $[o] Series [o] overcollateralization
amount at the initial issuance of the Series [o] notes. The Invested Amount of
the collateral certificate will be the sum of the series nominal liquidation
amounts for each outstanding series of notes.
The Series [o] nominal liquidation amount will be calculated on each
Transfer Date. Generally, the Series [o] nominal liquidation amount for each
Transfer Date will be an amount equal to the Series [o] nominal liquidation
amount as calculated on the prior determination date, decreased by certain
reductions since that date and increased by certain reinstatements since that
date. We describe these reductions and reinstatements below.
Reductions. The Series [o] nominal liquidation amount will be reduced
on any Transfer Date by the following amounts allocated on that Transfer Date:
(A) the amount, if any, of the Series [o] Available Principal
Amounts used to pay interest on the Series [o] notes as
described above under "--Application of Available Amounts
Allocated to Series [o] -- Available Principal Amounts for
Series [o]" and
(B) the amount of charge-offs on defaulted receivables in the
related Collection Period that are allocated to Series [o]
to the extent that they are not covered by Series [o]
Available Interest Amounts that are treated as Series [o]
Available Principal Amounts to cover such losses as
described under "--Application of Available Amounts
Allocated to Series [o] -- Available Interest Amounts for
Series [o]."
In addition, the portion of the Series [o] nominal liquidation amount
constituting the nominal liquidation amount of the Series [o] notes will be
reduced by the amount of any funds deposited into the principal funding
account since the prior date on which the Series [o] nominal liquidation
amount was calculated. Deposits into the principal funding account will not
reduce the portion of the Series [o] nominal liquidation amount constituting
the Series [o] overcollateralization amount.
On each Transfer Date, we will allocate the amount of any reduction
in the Series [o] nominal liquidation amount due to clause (A) or (B) above as
follows:
o first, we will reduce the Series [o] overcollateralization
amount by the amount of such reduction until the Series [o]
overcollateralization amount reaches zero; and
o second, we will reduce the nominal liquidation amount of the
Series [o] notes by any remaining amount of such reduction
until the nominal liquidation amount of the Series [o] notes
reaches zero.
When we reduce the Series [o] overcollateralization amount as
described in clause first above, we will apply such reduction to the portion
of the Series [o] overcollateralization amount equal to the Series [o]
overcollateralization percentage of the nominal liquidation amount of the
S-31
Series [o] notes (the "Primary Series [o] Overcollateralization Amount"). If
the Primary Series [o] Overcollateralization Amount is reduced below its
original amount on any Transfer Date after giving effect to all allocations
and distributions on that date, then an Early Redemption Event will occur.
While we will reduce the nominal liquidation amount of the Series [o]
notes as described above, the outstanding dollar principal amount of the
Series [o] notes will not be similarly reduced. However, the aggregate
principal paid on the Series [o] notes will not exceed the nominal liquidation
amount of the Series [o] notes. Consequently, you will incur a loss on your
notes if the Series [o] overcollateralization amount is reduced to zero and
the nominal liquidation amount of the Series [o] notes is thereafter reduced
and not reinstated as described below.
Reinstatements. The Series [o] nominal liquidation amount will be
reinstated on any Transfer Date by the amount of the Series [o] Available
Interest Amounts that we apply to cover the Series [o] nominal liquidation
amount deficit pursuant to clause fourth under "--Application of Available
Amounts Allocated to Series [o] - Available Interest Amounts for Series [o]."
We will allocate the amount of that reinstatement on that Transfer Date as
follows:
o first, if the nominal liquidation amount of the Series [o]
notes has been reduced and not fully reinstated, we will
allocate the reinstatement amount to the nominal liquidation
amount of the Series [o] notes until it equals the
outstanding dollar principal amount of the Series [o] less
any amounts (other than investment earnings) in the
principal funding account and any principal payments to the
Series [o] noteholders; and
o second, we will allocate any remaining reinstatement amount
to the Series [o] overcollateralization amount until the
Series [o] overcollateralization amount has been fully
reinstated.
The nominal liquidation amounts of other series of notes will be
subject to similar reductions and reinstatements.
Series [o] Overcollateralization Amount
The Series [o] overcollateralization amount will be equal to the sum of
(i) [o]% (the "Series [o] overcollateralization
percentage") of the then-current nominal liquidation
amount of the Series [o] notes; and
(ii) the incremental overcollateralization amount.
The "incremental overcollateralization amount" on any Determination
Date will equal the result obtained by multiplying
(i) a fraction, the numerator of which is the Series [o]
nominal liquidation amount (calculated without
including the incremental overcollateralization
amount), and the denominator of which is the Pool
Balance on the last day of the preceding Collection
Period
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by (ii) the excess, if any, of
(a) the sum of the Overconcentration Amount and the
aggregate amount of Ineligible Receivables on that
Determination Date
over (b) the aggregate amount of Ineligible Receivables
and receivables in accounts containing Dealer
Overconcentrations, in each case that became
Defaulted Receivables during the preceding
Collection Period and are not subject to
reassignment from the CARCO receivables trust,
unless insolvency events relating to the seller or
DCS have occurred, as further described in the
Pooling and Servicing Agreement.
The terms used in this definition are defined in the Glossary in the
prospectus.
As of the Series [o] Cut-Off Date, the Series [o]
overcollateralization amount was $[o].
The Series [o] overcollateralization amount will vary from time to
time as the amounts in clauses (i) and (ii) above vary from time to time.
Also, we will reduce or reinstate the Series [o] overcollateralization amount
as described under "--Reduction and Reinstatement of Nominal Liquidation
Amounts."
Notwithstanding the foregoing, if the long-term unsecured debt of
[Daimler Chrysler AG] is reduced below BBB- by Standard & Poor's, then the
Series [o] overcollateralization percentage will be [o]% rather than [o]%
until that rating is increased to at least BBB-.
Allocation Percentages
We will allocate Available Amounts to Series [o] on the basis of
various percentages. Which percentage we use depends on whether we are
allocating Available Interest Amounts or Available Principal Amounts and
whether the Available Amounts are received in the Revolving Period or in the
Accumulation Period or an Early Redemption Period.
The servicer for the CARCO receivables trust will allocate
collections on the receivables among the various series of investor
certificates (including the collateral certificate) as described under
"Description of the Investor Certificates Issued by the CARCO Receivables
Trust -- Allocation Percentages -- Allocations among Series" in the
prospectus. In general, we will allocate interest collections, principal
collections, charge-offs and Miscellaneous Payments among series of
certificates (including the collateral certificate) pro rata on the basis of
their adjusted invested amounts. The adjusted invested amount of the
collateral certificate will be the sum of the series nominal liquidation
amounts for all outstanding series of notes.
We will allocate the Available Amounts distributed on the collateral
certificate among the series of notes (including Series [o]) as follows:
o Available Interest Amounts and the charge-offs on defaulted
receivables will be allocated to each series of notes based
on its series floating allocation percentage;
S-33
o if a series of notes is not in an amortization, early
redemption or accumulation period (a "nonprincipal period"),
then Available Principal Amounts will be allocated to that
series based on its series floating allocation percentage;
o if a series of notes is in an amortization, early redemption
or accumulation period (i.e., the Accumulation Period or any
Early Redemption Period in the case of the Series [o]
notes), then Available Principal Amounts will be allocated
to that series based on its series principal allocation
percentage; and
o Miscellaneous Payments allocated to the collateral
certificate will be treated as part of Available Principal
Amounts.
The series floating allocation percentage effects, in general, a pro
rata allocation based on the series nominal liquidation amount of each series.
The series floating allocation percentage for Series [o], referred to as the
"Series [o] floating allocation percentage," for any Transfer Date will be the
percentage equivalent, which shall never exceed 100%, of a fraction, the
numerator of which is the Series [o] nominal liquidation amount as of the day
preceding that Transfer Date and the denominator of which is the sum of the
series nominal liquidation amounts for all series of notes (including Series
[o] ) on that day.
The series principal allocation percentage is, in general, based on
the series nominal liquidation amount of each series at the end of its
revolving period. Consequently, even though we are distributing or
accumulating Available Principal Amounts for the noteholders of any series,
the numerator used for the calculation will not decline. The series principal
allocation percentage for Series [o], referred to as the "Series [o] principal
allocation percentage," for any Transfer Date will be the percentage
equivalent, which shall never exceed 100%, of a fraction:
o the numerator of which is the Series [o] nominal liquidation
amount as of the last day of the Collection Period prior to
the commencement of its Accumulation Period or an Early
Redemption Period, as applicable, and
o the denominator of which is the sum of the series nominal
liquidation amounts for all series of notes; provided,
however, that for any series that is amortizing or
accumulating principal, the series nominal liquidation
amount of that series will be the series nominal liquidation
amount as of the last day of the Collection Period prior to
the commencement of such amortization or accumulation.
This fraction will be adjusted to account for any additional issuances of
series of notes since the prior Transfer Date.
Required Participation Percentage
As described under "Description of the Investor Certificates Issued
by the CARCO Receivables Trust -- Addition of Accounts" in the prospectus, the
seller will be required to add to the CARCO receivables trust the receivables
of Additional Accounts if the Pool Balance at the end of a Collection Period
is less than the Required Participation Amount for the following payment date.
The calculation of the Required Participation Amount is a function of the
S-34
Required Participation Percentage. The "Required Participation Percentage" for
the collateral certificate is [103]%. However, if either (a) the aggregate
amount of principal receivables due from, either AutoNation, Inc. [and its
affiliates] or United Auto Group, Inc. [and its affiliates] on the close of
business on the last day of any Collection Period is greater than 4% of the
Pool Balance on that day or (b) if the aggregate amount of principal
receivables due from any other dealer at such time is greater than 1.5% of the
Pool Balance on that day, then the Required Participation Percentage, as of
that last day and with respect to that Collection Period and the immediately
following Collection Period only, will be [104]%. Furthermore, the seller may,
upon ten days' prior notice to the CARCO receivables trust trustee and the
Rating Agencies, reduce the Required Participation Percentage to not less than
100%, so long as the Rating Agencies shall not have notified the seller or the
servicer that any reduction will result in a reduction or withdrawal of the
rating of the Series [o] notes or any other outstanding series or class of
notes.
Sale of Receivables
Receivables may be sold upon the insolvency of DCS or
DaimlerChrysler, an acceleration of the Series [o] notes after an event of
default and on the legal final of the Series [o] notes. If an event of default
occurs and the Series [o] notes are accelerated, the CARCO receivables trust
may sell receivables if the conditions described in "Indenture -- Events of
Defaults" in the prospectus are satisfied. This sale will take place at the
option of the indenture trustee or at the direction of the holders of a
majority of aggregate outstanding dollar principal amount of the Series [o]
notes. However, a sale will only be permitted if at least one of the following
conditions is met:
o the holders of at least 90% of the outstanding dollar principal
amount of the Series [o] notes consent;
o the net proceeds of such sale plus amounts on deposit in the
applicable accounts would be sufficient to pay all amounts due
on the Series [o] notes; or
o holders of at least 662/3% of the outstanding dollar principal
amount of the Series [o] notes consent to the sale and the
indenture trustee determines that the funds to be allocated to
the Series [o] notes, including Available Interest Amounts and
Available Principal Amounts allocable to Series [o] and amounts
on deposit in the applicable accounts, are not likely to be
sufficient to make payments on the Series [o] notes when due.
If principal of or interest on the Series [o] notes has not been paid
in full on the legal final (after giving effect to any adjustments, deposits
and payments to be made on that date), the sale will automatically take place
on that date. We will apply proceeds from the sale to the payment of the
amounts due on the Series [o] notes. We will pay any excess to the seller.
The amount of receivables sold will be up to the Series [o] nominal
liquidation amount. The nominal liquidation amount of the Series [o] notes
will be automatically reduced to zero upon the sale. After the sale, we will
not allocate any further Available Principal Amounts or Available Interest
Amounts to the Series [o] notes.
S-35
The amount of proceeds from the sale of receivables for the Series
[o] notes may be less than the outstanding dollar principal amount of the
Series [o] notes. This deficiency can arise if the Series [o] nominal
liquidation amount was reduced below the outstanding dollar principal amount
of the Series [o] notes before the sale of receivables or if the sale price
for the receivables was less than the outstanding dollar principal amount of
the Series [o] notes. These types of deficiencies will not be reimbursed.
Any amount remaining on deposit in the interest funding account when
the Series [o] notes has received final payment as described in "-- Final
Payment of the Series [o] Notes" after a sale of receivables will be treated
as Available Interest Amounts and be allocated as described in "-- Allocation
of Available Amounts."
Final Payment of the Series [o] Notes
Series [o] noteholders will be entitled to payment of principal in an
amount equal to the outstanding dollar principal amount of the Series [o]
notes. However, Series [o] Available Principal Amounts will be available to
pay principal on the Series [o] notes only up to the Series [o] nominal
liquidation amount, which may be reduced for charge-offs due to uncovered
defaults on principal receivables in the CARCO receivables trust and
reallocations of Series [o] Available Principal Amounts to pay interest on the
Series [o] notes. In addition, if a sale of receivables to pay outstanding
amounts on the Series [o] notes occurs (as described in "-- Sale of
Receivables"), the amount of receivables sold will be limited to the Series
[o] nominal liquidation amount. If the Series [o] nominal liquidation amount
has been reduced below the outstanding dollar principal amount of the Series
[o] notes and not reinstated to that amount as described in this prospectus
supplement, Series [o] noteholders will not receive full payment of principal
of their notes.
On the date of a sale of receivables following acceleration of the
Series [o] notes or on the legal final of the Series [o] notes, the proceeds
of such sale, but only up to the Series [o] nominal liquidation amount, will
be available to pay the outstanding dollar principal amount of the Series [o]
notes.
The Series [o] notes will be considered to be paid in full, the
holders of the Series [o] notes will have no further right or claim, and the
issuer will have no further obligation or liability for principal or interest,
on the earliest to occur of:
o the date of the payment in full of the stated principal amount of
and all accrued interest on the Series [o] notes;
o the date on which the outstanding dollar principal amount of the
Series [o] notes is reduced to zero, and all accrued interest on
the Series [o] notes is paid in full;
o the legal final of the Series [o] notes, after giving effect to
all deposits, allocations, reallocations, sales of receivables
and payments to be made on that date; or
o the date on which a sale of receivables has taken place, as
described in "-- Sale of Receivables."
S-36
Shared Excess Available Interest Amounts
Any Series [o] Available Interest Amounts that are not needed to make
payments or deposits for Series [o] on any Transfer Date will be available for
allocation to other series of notes. Such excess will be treated as Shared
Excess Available Interest Amounts and will be allocated to cover shortfalls in
Available Interest Amounts for other series, if any, which have not been
covered out of the Available Interest Amounts allocable to those series. If
these shortfalls exceed the Shared Excess Available Interest Amounts for any
Transfer Date, Shared Excess Available Interest Amounts will be allocated pro
rata among the applicable series based on their respective shortfalls in
Available Interest Amounts. To the extent that Shared Excess Available
Interest Amounts exceed those shortfalls, the balance will be paid to the
issuer.
Shared Excess Available Principal Amounts
Any Series [o] Available Principal Amounts that are not needed to
make payments or deposits for Series [o] on any Transfer Date will be
available for allocation to other series of notes. Such excess will be treated
as Shared Excess Available Principal Amounts and will be allocated to cover
shortfalls in Available Principal Amounts for other series, if any, which have
not been covered out of the Available Principal Amounts allocable to those
series. Any reallocation of Series [o] Available Principal Amounts for this
purpose will not reduce the nominal liquidation amount of the Series [o]
notes. If principal shortfalls exceed the Shared Excess Available Principal
Amounts for any Transfer Date, Shared Excess Available Principal Amounts will
be allocated pro rata among the applicable series based on their respective
shortfalls in Available Principal Amounts. To the extent that Shared Excess
Principal Amounts exceed principal shortfalls, the balance will be paid to the
issuer.
Early Redemption Events
The Early Redemption Events with respect to the Series [o] notes will
include each of the Early Amortization Events in the prospectus, plus each of
the following:
1. failure on the part of DCWR, the servicer or DCS (if DCS is no
longer the servicer), as applicable,
o to make any payment or deposit required by the Pooling and
Servicing Agreement or the Receivables Purchase Agreement,
including but not limited to any Transfer Deposit Amount or
Adjustment Payment, on or before the date occurring two
business days after the date that payment or deposit is
required to be made; or
o to deliver a Distribution Date Statement on the date
required under the Pooling and Servicing Agreement, or
within the applicable grace period which will not exceed
five business days; or
o to comply with its covenant not to create any lien on a
Receivable; or
o to observe or perform in any material respect any other
covenants or agreements set forth in the Pooling and
Servicing Agreement or the Receivables Purchase
S-37
Agreement, which failure continues unremedied for a period of
45 days after written notice of that failure;
2. any representation or warranty made by DCS, as seller, in the
Receivables Purchase Agreement or by DCWR in the Pooling and
Servicing Agreement or any information required to be given by
DCWR to the CARCO receivables trust trustee to identify the
Accounts proves to have been incorrect in any material respect
when made and continues to be incorrect in any material respect
for a period of 60 days after written notice and as a result the
interests of the certificateholders are materially and adversely
affected. An Early Redemption Event, however, shall not be
deemed to occur if DCWR has repurchased the related receivables
or all of the receivables, if applicable, during that period in
accordance with the provisions of the Pooling and Servicing
Agreement;
3. the occurrence of certain events of bankruptcy, insolvency or
receivership relating to DCS or DaimlerChrysler;
4. a failure by DCWR to convey receivables in Additional Accounts to
the trust within five business days after the day on which it is
required to convey those receivables under the Pooling and
Servicing Agreement;
5. on any Transfer Date, the Primary Series [o]
Overcollateralization Amount for the next payment date will be
reduced to an amount less than the required amount on that
Transfer Date after giving effect to the distributions to be
made on the next payment date; provided that, for the purpose of
determining whether an Early Redemption Event has occurred
pursuant to this clause 5, any reduction of the Primary Series
[o] Overcollateralization Amount resulting from reallocations of
the Series [o] Available Principal Amounts to pay interest on the
Series [o] notes in the event LIBOR is equal to or greater than
the prime rate upon which interest on the receivables is
calculated on the applicable LIBOR Determination Date will be
considered an Early Redemption Event only if LIBOR remains equal
to or greater than such prime rate for the next 30 consecutive
days following such LIBOR Determination Date;
6. any Service Default occurs;
7. on any Determination Date, as of the last day of the preceding
Collection Period, the aggregate amount of principal receivables
relating to Used Vehicles exceeds 20% of the Pool Balance on that
last day;
8. on any Determination Date, the average of the Monthly Payment
Rates for the three preceding Collection Periods, is less
than 20%;
9. the outstanding dollar principal amount of the Series [o] notes
is not repaid by the Series [o] Expected Principal Payment Date;
10. the issuer becomes an investment company within the meaning of
the Investment Company Act of 1940; and
S-38
11. the occurrence of an event of default under the indenture.
In the case of any event described in clauses 1, 2 or 6 above, an
Early Redemption Event with respect to Series [o] will be deemed to have
occurred only if, after the applicable grace period described in those
clauses, if any, either the indenture trustee or Series [o] noteholders
holding Series [o] notes evidencing more than 50% of the outstanding dollar
principal amount of the Series [o] notes by written notice to the seller, the
servicer, the CARCO receivables trust trustee and the indenture trustee, if
given by Series [o] noteholders, declare that an Early Redemption Event has
occurred as of the date of that notice. In the case of any Early Redemption
Event described in the prospectus or any event described in 3, 4, 5, 7, 8, 9,
10 or 11 above, an Early Redemption Event with respect to Series [o] will be
deemed to have occurred without any notice or other action on the part of the
indenture trustee or the Series [o] noteholders immediately upon the
occurrence of that event.
Under limited circumstances, an Early Redemption Period which
commences prior to the scheduled end of the Revolving Period may terminate and
the Revolving Period recommence. If an Early Redemption Period results from
the failure by DCWR to convey receivables in Additional Accounts to the CARCO
receivables trust, as described in clause 4 above, during the Revolving Period
and no other Early Redemption Event that has not been cured or waived as
described in this prospectus supplement has occurred, the Early Redemption
Period resulting from that failure will terminate and the Revolving Period
will recommence as of the end of the first Collection Period during which the
seller would no longer be required to convey receivables to the trust.
However, it will not recommence if the scheduled termination date of the
Revolving Period has occurred. The seller may no longer be required to convey
receivables as described above as a result of a reduction in the Invested
Amount occurring due to principal payments made in respect of the collateral
certificate and the certificates of other outstanding series during the Early
Redemption Period or as a result of the subsequent addition of receivables to
the CARCO receivables trust. However, if any Early Redemption Event, other
than an Early Redemption Event described in the clause 3 above or in the
prospectus, occurs, the Revolving Period will recommence following receipt of
o written confirmation by each Rating Agency, other than
Moody's, that its rating of the Series [o] notes will not be
withdrawn or lowered as a result of the recommencement and
o the consent of Series [o] noteholders holding Series [o]
notes evidencing more than 50% of the outstanding dollar
principal amount of the Series [o] notes to the
recommencement, provided that no other Early Redemption
Event that has not been cured or waived as described in this
prospectus supplement has occurred and the scheduled
termination of the Revolving Period has not occurred.
S-39
- -----------------------------------------------------------------------------
Underwriting
- -----------------------------------------------------------------------------
Subject to the terms and conditions set forth in the underwriting
agreement, the seller has agreed to sell to each of the underwriters named
below, and each underwriter has severally agreed to purchase, Series [o] notes
in the principal amounts indicated opposite its name:
Principal
amount of
Underwriters Series [o] notes
------------ ----------------
Total........................................
In the underwriting agreement, the underwriters have agreed, subject
to the terms and conditions set forth in that agreement, to purchase all of
the Series [o] notes offered hereby if any of these notes are purchased.
The underwriter[s] propose initially to offer the Series [o] notes to
the public at the public offering price shown on the cover page of this
prospectus supplement, and to securities dealers at that price less
concessions not greater than [ ]% of the principal amount of the Series [o]
notes. The underwriter[s] may allow, and the securities dealers may reallow to
other securities dealers, concessions not greater than [ ]% of the principal
amount of the Series [o] notes. After the initial public offering, the public
offering price and other selling terms may be changed by the underwriter[s].
In the ordinary course of its business, the underwriter[s] and [its]
[their] affiliates have engaged and may engage in investment banking
transactions with the seller and its affiliates.
The underwriter[s] intend to make a secondary market in the Series
[o] notes, but have no obligation to do so. We cannot assure you that a
secondary market for the Series [o] notes will develop or, if it does develop,
that it will continue or that it will provide holders of the Series [o] notes
with a sufficient level of liquidity of the Series [o] notes.
- ------------------------------------------------------------------------------
Legal Matters
- ------------------------------------------------------------------------------
Certain legal matters relating to the Series [o] notes will be passed
upon for DCWR by Sidley Austin Brown & Wood LLP, New York, New York, and for
the underwriter[s] by Sidley
S-40
Austin Brown & Wood LLP. Federal income tax and ERISA matters will be passed
upon for DCWR and the issuer by Sidley Austin Brown & Wood LLP. In addition to
representing the underwriter[s], Sidley Austin Brown & Wood LLP from time to
time represents DaimlerChrysler Services North America LLC and its affiliates
on other matters. See "Legal Matters" in the prospectus.
- ------------------------------------------------------------------------------
Note Ratings
- ------------------------------------------------------------------------------
The issuer will issue the Series [o] notes only if they are rated at
the time of issuance in the highest long-term rating category by at least one
nationally recognized rating agency.
The rating agencies and their ratings only address the likelihood
that you will timely receive interest payments due and you will ultimately
receive all of your required principal payments by the legal final. The rating
agencies and their ratings do not address the likelihood you will receive
principal payments on a scheduled date or whether you will receive any
principal on your Series [o] notes prior to or after the expected payment
date.
The ratings assigned to the Series [o] notes should be evaluated
independently from similar ratings on other types of securities. A rating is
not a recommendation to buy, sell or hold securities and may be subject to
revision or withdrawal at any time by the rating agency.
- ------------------------------------------------------------------------------
Glossary of Principal Terms for Prospectus Supplement
- ------------------------------------------------------------------------------
"Accumulation Period Commencement Date" means [o] or, if the issuer,
acting directly or through the administrator, elects to delay the start of the
Accumulation Period, a later date selected by the issuer. In selecting an
Accumulation Period Commencement Date, the issuer must satisfy the conditions
described under "Series Provisions--Principal."
"Accumulation Period Length" means the number of full Collection
Periods between the Accumulation Period Commencement Date and the Series [o]
Expected Principal Payment Date.
"Administrator" means DCS acting as an administrative agent for the
issuer pursuant to an administration agreement with the issuer.
"Calculation Agent" means, initially, the indenture trustee.
"CARCO receivables trust" means the CARCO Auto Loan Master Trust.
"CFC LLC" means Chrysler Financial Company L.L.C. and its successors.
S-41
"Collection Period" means, for any payment date, the calendar month
preceding the month in which that payment date occurs.
"Controlled Accumulation Amount" means an amount equal to the
outstanding dollar principal amount as of the [o] payment date divided by the
Accumulation Period Length.
"Controlled Deposit Amount" means, for a payment date, the excess (i)
of the Controlled Accumulation Amount over (ii) any funds in the Excess
Funding Account that are allocable to Series [o] and have not been deposited
into the principal funding account as of that payment date.
"DaimlerChrysler" means DaimlerChrysler Corporation and its
successors.
"DCS" means DaimlerChrysler Services North America LLC and its
successors.
"DCWR" means DaimlerChrysler Wholesale Receivables LLC and its
successors.
"Excluded Dealers" means the dealers that are in voluntary or
involuntary bankruptcy proceedings or voluntary or involuntary liquidation or
that, subject to limitations, are being voluntarily removed by the seller from
the trust.
"Excluded Receivables" means principal receivables with respect to
Excluded Dealers.
"final payment date" means the payment date on which, after giving
effect to all payments to be made on that payment date, the outstanding dollar
principal amount of the Series [o] notes will be paid in full.
"interest funding account" means a Qualified Account maintained by
the administrator in the name of the indenture trustee for the benefit of the
Series [o] noteholders and in which interest is deposited for payment to the
Series [o] noteholders.
"Interest Period" means, with respect to any payment date, the period
from and including the preceding payment date to but excluding that payment
date, or, in the case of the first payment date, from and including the Series
[o] issuance date to but excluding the first payment date.
"legal final" means the payment date in [o], which is the payment
date on which the Series [o] notes are required to be paid.
"LIBOR" means, with respect to any Interest Period, the rate
established by the Calculation Agent, which will equal the offered rate for
United States dollar deposits for one month that appears on Telerate Page 3750
as of 11:00 A.M., London time, on the LIBOR Determination Date. However, if on
any LIBOR Determination Date the offered rate does not appear on Telerate Page
3750, the Calculation Agent will request each of the reference banks, which
shall be major banks that are engaged in transactions in the London interbank
market selected by the Calculation Agent, to provide the Calculation Agent
with its offered quotation for United States dollar deposits for one month to
prime banks in the London interbank market as of 11:00 A.M., London time, on
that date. If at least two reference banks provide the Calculation
S-42
Agent with the offered quotations, LIBOR on that date will be the arithmetic
mean, rounded upwards, if necessary, to the nearest 1/100,000 of 1% (.0000001),
with five one-millionths of a percentage point rounded upward, of all the
quotations. If on that date fewer than two of the reference banks provide the
Calculation Agent with the offered quotations, LIBOR on that date will be the
arithmetic mean, rounded upwards, if necessary, to the nearest 1 / 100,000 of
1% (.0000001), with five one-millionths of a percentage point rounded upward,
of the offered per annum rates that one or more leading banks in The City of
New York selected by the Calculation Agent are quoting as of 11:00 A.M., New
York City time, on that date to leading European banks for United States
dollar deposits for one month. If, however, those banks are not quoting as
described above, LIBOR for that date will be LIBOR applicable to the Interest
Period immediately preceding that Interest Period.
"LIBOR Business Day" means 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 Determination Date" means, with respect to any Interest
Period, the second LIBOR Business Day prior to that Interest Period.
"Monthly Interest" means, for any payment date, the amount of
interest accrued in respect of the Series [o] notes in the Interest Period for
that payment date.
"Monthly Principal" means, with respect to any payment date relating
to the Accumulation Period or any Early Redemption Period, the Series [o]
Available Principal Amounts for that payment date. For each payment date,
however, with respect to the Accumulation Period, Monthly Principal may not
exceed the Controlled Deposit Amount. Also, Monthly Principal will not exceed
the Series [o] nominal liquidation amount less the amount (other than
investment earnings) in the principal funding account.
"nominal liquidation amount of the Series [o] notes" means the
outstanding dollar principal amount of the Series [o] notes (which upon
issuance will be $[o]), minus the reductions in the nominal liquidation amount
of the Series [o] notes described under "Deposit and Application of
Funds--Reduction and Reinstatement of Nominal Liquidation Amounts" plus the
reinstatements to the nominal liquidation amount of the Series [o] notes
described under that heading minus the amount on deposit in the principal
funding account.
"Nonprincipal Period" means any period that is not the Accumulation
Period or an Early Redemption Period.
"payment date" means the 15th day of each month (or if that 15th day
is not a business day, the next following business day), commencing in [o].
"pool factor" means, for a payment date, an eleven-digit decimal
expressing the Invested Amount as of the Determination Date, determined after
taking into account any reduction in the Invested Amount which will occur on
the payment date, as a proportion of the Initial Invested Amount.
S-43
"principal funding account" means a Qualified Account maintained by
the administrator in the name of the indenture trustee for the benefit of the
Series [o] noteholders and in which principal is accumulated for payment to
the Series [o] noteholders.
"Record Date" means, for any payment date, the day immediately
preceding that date.
"Required Participation Percentage" means, for collateral
certificate, [103]%. However, if either (a) the aggregate amount of principal
receivables due from, either AutoNation, Inc. [and its affiliates] or United
Auto Group, Inc. [and its affiliates] on the close of business on the last day
of any Collection Period is greater than 4% of the Pool Balance on that day or
(b) if the aggregate amount of principal receivables due from any other dealer
at such time is greater than 1.5% of the Pool Balance on that day, the
Required Participation Percentage shall mean, as of that last day and with
respect to that Collection Period and the immediately following Collection
Period only, [104]%. Furthermore, the seller may, upon ten days' prior notice
to the trustee, the Rating Agencies and any Enhancement provider, reduce the
Required Participation Percentage to not less than 100%, so long as the Rating
Agencies shall not have notified the seller or the servicer that any reduction
will result in a reduction or withdrawal of the rating of the Series [o] notes
or any other outstanding series or class of notes.
"Revolving Period" means the period beginning at the close of
business on the Series [o] Cut-Off Date and terminating on the earlier of
o the close of business on the day immediately preceding the
day on which the Accumulation Period commences and
o the close of business on the day an Early Redemption Period
commences.
The Revolving Period, however, may recommence upon the termination of an Early
Redemption Period.
"seller" means DCWR.
"Seller's Participation Amount" means, for any date, an amount equal
to the Pool Balance on that date minus the aggregate invested amounts for all
outstanding series of investor certificates (including the collateral
certificate) issued by the CARCO receivables trust.
"Series [o] Available Interest Accounts" is described under "Deposit
and Application of Funds -- Application of Available Amounts to Series [o] --
Available Interest Amounts for Series [o].
"Series [o] Available Principal Amounts" is described under "Deposit
and Application of funds -- Application of Available Amounts to Series [o] --
Available Principal Amounts for Series [o].
"Series [o] Cut-Off Date" means [o].
"Series [o] Expected Principal Payment Date" means the [o] payment
date.
S-44
"Series Floating Allocation Percentage" means, for any Transfer Date,
the percentage equivalent, which shall never exceed 100%, of a fraction, the
numerator of which is the Series [o] nominal liquidation amount as of the day
preceding that Transfer Date and the denominator of which is the sum of the
series nominal liquidation amounts for all series of notes (including Series
[o]).
"Series [o] issuance date" means the date on which the Series [o]
notes are initially issued.
"Series [o] nominal liquidation amount" means the sum of (i) the
nominal liquidation amount of the Series [o] notes and (ii) the Series [o]
overcollateralization amount.
"Series [o] notes" means the issuer's Floating Rate Auto Loan Asset
Backed Notes, Series [o].
"Series [o] overcollateralization amount" is described under "Deposit
and Application of Funds--Series [o] Overcollateralization Amount."
"Series [o] overcollateralization percentage" means [___]%.
"Series Principal Allocation Percentage" means, for any Transfer
Date, the percentage equivalent, which shall never exceed 100%, of a fraction,
o the numerator of which is the Series [o] nominal liquidation
amount as of the last day of the Collection Period prior to
the commencement of its Accumulation Period or Early
Redemption Period, as applicable, if that last day has
occurred or, if that last day has not occurred, as of the
last day of the immediately preceding Collection Period and
o the denominator of which is the sum of the series nominal
liquidation amounts for all series of notes; provided that
for any series that is amortizing or accumulating principal,
the series nominal liquidation amount of that series will be
the series nominal liquidation amount as of the last day of
the Collection Period prior to the commencement of such
amortization or accumulation.
"Series [o] rate" means the per annum rate equal to the applicable
LIBOR plus [o]%.
"Shared Excess Available Interest Amounts" means, with respect to any
Transfer Date, the sum of, for each series of notes, the Available Interest
Amounts for that series that are not required to be applied in respect of that
series.
"Shared Excess Available Principal Amounts" means, with respect to
any Transfer Date, the sum of, for each series of notes, the Available
Principal Amounts for that series that are not required to be applied in
respect of that series.
"Telerate Page 3750" means the display page so designated on the Dow
Jones Telerate Service, or any other page as may replace that page on that
service, or any other service as may
S-45
be nominated as the information vendor, for the purpose of displaying London
interbank offered rates of major banks.
"Transfer Date" means the business day prior to a payment date.
"underwriter" means [o].
"Underwriting Agreement" means the underwriting agreement among the
underwriter[s], DaimlerChrysler Wholesale Receivables LLC and DaimlerChrysler
Services North America LLC dated as of [o]
S-46
Annex I
- ------------------------------------------------------------------------------
Other Series of Notes
- ------------------------------------------------------------------------------
[This Annex I sets forth the principal characteristics of the
following outstanding series of notes issued by the issuer:]
[At the date of this prospectus supplement, there are no outstanding
series of notes.]
A-I-1
Annex II
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Series of Investor Certificates Issued by the CARCO Receivables Trust
- ------------------------------------------------------------------------------
This Annex II sets forth the principal characteristics of
o the Floating Rate Auto Loan Asset Backed Certificates,
Series 1996-1,
o the Floating Rate Auto Loan Asset Backed Certificates,
Series 1998-1,
o the Floating Rate Auto Loan Asset Backed Certificates,
Series 1999-2,
o the Floating Rate Auto Loan Asset Backed Certificates,
Series 1999-3,
o the 6.43% Auto Loan Asset Backed Certificates, Series 1999-4,
o the Floating Rate Auto Loan Asset Backed Certificates,
Series 2000-A,
o the Floating Rate Auto Loan Asset Backed Certificates,
Series 2000-B,
o the Floating Rate Auto Loan Asset Backed Certificates,
Series 2001-A, and
o the Floating Rate Auto Loan Asset Backed Certificates,
Series 2000-C ("Series 1996-1", "Series 1998-1", "Series
1999-2", "Series 1999-3", "Series 1999-4", "Series 2000-A",
"Series 2000-B", "Series 2000-C" and Series 2001-A"
respectively).
For more specific information with respect to any series of investor
certificates, any prospective investor should contact DCWR at (248)
[512-3990]. DCWR will provide, without charge, to any prospective purchaser, a
copy of the disclosure document with respect to that series.
1. Series 1996-1
Initial Principal Amount.................... $500,000,000
Scheduled Interest
Payment Date................................ Monthly, on or about the fifteenth day of each month
Current Principal Amount $500,000,000
Required Participation
Percentage.................................. 103%
Initial Subordinated Amount................. Approximately 11.1% of the Invested Amount
Revolving Period............................ October 31, 1996 to the earlier of the commencement of an
Accumulation Period or an Early Amortization Period
Expected Principal Payment Date............. November 2003 Payment date
Termination Date............................ October 2005 Payment date
2. Series 1998-1
Initial Principal Amount
A-II-1
Class A-1 Certificates................. $500,000,000
Class A-2 Certificates................. $500,000,000
Scheduled Interest
Payment Date................................ Monthly, on or about the fifteenth day of each month
Current Principal Amount
Class A-1 Certificates................. $[0]
Class A-2 Certificates................. $500,000,000
Required Participation
Percentage.................................. 103%
Initial Subordinated Amount Approximately 11.1% of the Invested Amount
Revolving Period............................
Class A-1 Certificates................. July 1, 1998 to the earlier of the commencement of an
Accumulation Period or an Early Amortization Period
Class A-2 Certificates................. July 1, 1998 to the earlier of the commencement of an
Accumulation Period or an Early Amortization Period
Expected Principal Payment Date
Class A-1 Certificates................. June 2001 Payment date
Class A-2 Certificates................. June 2003 Payment date
Termination Date
Class A-1 Certificates................. June 2003 Payment date
Class A-2 Certificates................. June 2005 Payment date
3. Series 1999-2
Initial Principal Amount
Class A-1 Certificates................. $750,000,000
Class A-2 Certificates................. $600,000,000
Scheduled Interest
Payment Date................................ Monthly, on or about the fifteenth day of each month
Current Principal Amount
Class A-1 Certificates................. $750,000,000
Class A-2 Certificates................. $600,000,000
Required Participation
Percentage.................................. 103%
Initial Subordinated Amount Approximately 11.1% of the Invested Amount
Revolving Period
Class A-1 Certificates................. May 1, 1999 to the earlier of the commencement of an
Accumulation Period or an Early Amortization Period
Class A-2 Certificates................. May 1, 1999 to the earlier of the commencement of an
Accumulation Period or an Early Amortization Period
Expected Principal Payment Date
Class A-1 Certificates................. May 2002 Payment date
Class A-2 Certificates................. May 2004 Payment date
Termination Date
A-II-2
Class A-1 Certificates................. May 2004 Payment date
Class A-2 Certificates................. May 2006 Payment date
4. Series 1999-3
Initial Principal Amount.................... $1,000,000,000
Scheduled Interest
Payment Date................................ Monthly, on or about the fifteenth day of each month
Current Principal Amount.................... $1,000,000,000
Required Participation
Percentage.................................. 103%
Initial Subordinated Amount................. Approximately 11.1% of the Invested Amount
Revolving Period............................ June 30, 1999 to the earlier of the commencement of an
Accumulation Period or an Early Amortization Period
Expected Principal Payment Date............. July 2002 Payment date
Termination Date............................ July 2004 Payment date
5. Series 1999-4
Initial Principal Amount.................... $500,000,000
Scheduled Interest
Payment Date................................ Monthly, on or about the fifteenth day of each month
Current Principal Amount.................... $500,000,000
Required Participation
Percentage.................................. 103%
Initial Subordinated Amount................. Approximately 12% of the Invested Amount
Revolving Period............................ October 31, 1999 to the earlier of the commencement of an
Accumulation Period or an Early Amortization Period
Expected Principal Payment Date............. November 2002 Payment date
Termination Date............................ November 2004 Payment date
6. 2000-A
Initial Principal Amount.................... $750,000,000
Scheduled Interest
Payment Date................................ Monthly, on or about the fifteenth day of each month
Current Principal Amount.................... $750,000,000
Required Participation
Percentage.................................. 103%
Initial Subordinated Amount................. Approximately 11.1% of the Invested Amount
Revolving Period............................ March 31, 2000 to earlier of the commencement of an
Accumulation Period or an Early Amortization Period
Expected Principal Payment Date............. March 2003 Payment date
Termination Date............................ March 2005 Payment date
7. 2000-B
A-II-3
Initial Principal Amount.................... $501,000,000
Scheduled Interest
Payment Date................................ Monthly, on or about the fifteenth day of each month
Current Principal Amount.................... $501,000,000
Required Participation
Percentage.................................. 103%
Initial Subordinated Amount................. Approximately 11.1% of the Invested Amount
Revolving Period ........................... October 24, 2000 to earlier of the commencement of an
Accumulation Period or an Early Amortization Period
Expected Principal Payment Date............. October 2003 Payment date
Termination Date............................ October 2005 Payment date
8. 2000-C
Initial Principal Amount.................... $500,000,000
Scheduled Interest
Payment Date................................ Monthly, on or about the fifteenth day of each month
Current Principal Amount.................... $500,000,000
Required Participation
Percentage.................................. 103%
Initial Subordinated Amount................. Approximately 11.1% of the Invested Amount
Revolving Period ........................... December 8, 2000 to earlier of the commencement of an
Accumulation Period or an Early Amortization Period
Expected Principal Payment Date............. November 2003 Payment date
Termination Date............................ November 2005 Payment date
9. 2001-A
Initial Principal Amount.................... $1,000,000,000
Scheduled Interest
Payment Date................................ Monthly, on or about the fifteenth day of each month
Current Principal Amount.................... $1,000,000,000
Required Participation
Percentage.................................. 103%
Initial Subordinated Amount................. Approximately 11.1% of the Invested Amount
Revolving Period............................ December 3, 2001 to earlier of the commencement of an
Accumulation Period or an Early Amortization Period
Expected Principal Payment Date............. November 15, 2004
Termination Date............................ November 15, 2006
A-II-4
Subject to completion dated April 19, 2002
DAIMLERCHRYSLER PROSPECTUS
DAIMLERCHRYSLER MASTER OWNER TRUST
Issuer
Auto Loan Asset Backed Notes
DAIMLERCHRYSLER WHOLESALE RECEIVABLES LLC,
Seller
DAIMLERCHRYSLER SERVICES NORTH AMERICA LLC,
Servicer
The issuer --
o may periodically issue asset backed notes in one or more series with
one or more classes; and
o will own
-- a certificate issued by a master receivables trust that owns
receivables arising from a portfolio of automobile dealer
revolving floorplan financing agreements; and
-- distributions on that certificate, which consist of payments
due on those receivables.
The notes --
o will be obligations of the issuer only;
o will be paid only from the assets of the issuer;
o will represent the right to payments in the amounts and at the times
described in the prospectus supplement for those notes;
o will be rated in an investment grade rating category at the time of
issuance by at least one nationally recognized rating agency; and
o may have the benefit of one or more forms of credit enhancement.
Before you decide to invest in any of the notes, please read this
prospectus and the related prospectus supplement. There are material risks in
investing in the notes. Please read the risk factors beginning on page [o] of
this prospectus. The notes will be obligations of the issuer only and neither
the notes nor the assets of the issuer will represent interests in or
obligations of DaimlerChrysler Wholesale Receivables LLC, DaimlerChrysler AG,
DaimlerChrysler Corporation, DaimlerChrysler Services North America LLC, any
of their affiliates or any other person. The notes are not obligations of or
interests in the master receivables trust.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the notes 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 [o], 2002.
Reading this Prospectus and the
Accompanying Prospectus Supplement
We provide information on your notes 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 notes, including your notes and
o the accompanying prospectus supplement provides a summary of the
specific terms of your notes.
If the terms of the notes 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.
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.
Where You Can Find More Information
The seller has filed a Registration Statement (together with all
amendments and exhibits, the "Registration Statement") under the Securities
Act of 1933, as amended (the "Securities Act"), with the Securities and
Exchange Commission (the "SEC") with respect to the notes offered by this
prospectus. This prospectus, which forms part of the Registration Statement,
does not contain all of the information contained in the Registration
Statement and the exhibits to the Registration Statement.
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 the SEC's public reference facilities at 233 Broadway, New York, New
York 10279 and
o the SEC's regional office at Citicorp Center, 500 West Madison
Street, Chicago, Illinois 60661.
Also, the SEC maintains a web site at http://www.sec.gov containing reports,
proxy and information statements and other information regarding registrants
that file electronically with the SEC.
Incorporation of Documents by Reference
The SEC allows information filed with it to be incorporated by reference
into this prospectus. The following documents filed with the SEC by the
servicer, on behalf of the issuer, are incorporated in this prospectus by
reference: the CARCO receivables trust's Annual Report on
ii
Form 10-K for the year ended December 31, 2001. All reports and other documents
filed by the servicer, on behalf of the CARCO receivables trust and also on
behalf of the issuer, in accordance with Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act subsequent to the date of this prospectus and prior to the
termination of the offering of the notes shall be deemed to be incorporated by
reference in this prospectus.
For purposes of this prospectus, any statement in this prospectus or in a
document incorporated or deemed to be incorporated by reference may be
modified or superseded. Those 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 the statement will no longer be a part
of this prospectus. Only the modified form of the 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 requested the copies from Assistant Secretary, 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 the documents, if the exhibits are
specifically incorporated by reference in the documents. You may also read and
copy these materials at the public reference facilities of the SEC in
Washington D.C., referred to previously.
iii
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Page o General........................................16
---- o Creation of Receivables........................17
- -------------------------------------------------------- o Credit Underwriting Process....................17
Summary.............................................1 o Billing, Collection Procedures and
- -------------------------------------------------------- Payment Terms..................................18
Risk Factors........................................5 o Revenue Experience.............................19
- -------------------------------------------------------- o Relationship with DaimlerChrysler..............19
o Your ability to resell notes is limited.........5 o Dealer Monitoring..............................20
o Risk factors relating to the collateral o "Dealer Trouble" Status and DCS's
certificate and the CARCO receivables Write-Off Policy...............................20
trust...........................................5 o Additional Information.........................21
o Credit enhancement for a series of notes -------------------------------------------------------
is limited. If the credit enhancement is The Accounts.......................................21
exhausted, you may incur a loss.................8 -------------------------------------------------------
o Credit ratings of the notes reflect the DaimlerChrysler Services North America LLC.........22
rating agency's assessment of the likelihood -------------------------------------------------------
that you will receive your payments of The Notes..........................................23
interest and principal..........................8 -------------------------------------------------------
o Book-entry registration may limit your o Interest.......................................24
ability to resell or pledge your notes..........8 o Principal......................................25
o Only some of the assets of the issuer are o Stated Principal Amount, Outstanding
available for payments on any series or Dollar Principal Amount and Nominal
class of notes..................................9 Liquidation Amount of Notes....................25
o Allocations of charged-off receivables in o Subordination of Principal.....................28
the CARCO receivables trust could reduce o Redemption and Early Redemption of Notes.......29
payments to you.................................9 o Issuances of New Series, Classes and
o You may receive principal payments earlier Subclasses of Notes............................30
or later than the expected payment date.........9 o Payments on Notes; Paying Agent................31
o Class B notes and Class C notes bear losses o Book-Entry Notes...............................32
before Class A notes bear any losses...........10 -------------------------------------------------------
o Payment of Class B notes and Class C notes Sources of Funds to Pay the Notes..................38
may be delayed due to the subordination -------------------------------------------------------
provisions.....................................10 o General........................................38
o You may not be able to reinvest any early o Deposit and Application of Funds...............40
redemption proceeds in a comparable security...11 o Issuer Accounts................................41
o Issuance of additional notes may affect the o Derivative Agreements..........................41
timing and amount of payments to you...........11 o Sale of Receivables............................41
o You may have limited control of actions under o Limited Recourse to the Issuer; Security
the indenture and the pooling and servicing for the Notes..................................42
agreement......................................11 -------------------------------------------------------
o Your remedies upon default may be limited......11 The Indenture......................................42
- -------------------------------------------------------- -------------------------------------------------------
DaimlerChrysler Wholesale Receivables LLC and the o Indenture Trustee..............................43
CARCO Receivables Trust..........................13 o Issuer Covenants...............................43
- -------------------------------------------------------- o Events of Default..............................44
o DaimlerChrysler Wholesale Receivables o Events of Default Remedies.....................44
LLC............................................13 o Early Redemption Events........................46
o The CARCO Receivables Trust....................14 o Meetings.......................................47
- -------------------------------------------------------- o Voting.........................................47
The Issuer.........................................15 o Amendments to the Indenture and
- -------------------------------------------------------- Indenture Supplements..........................47
Use of Proceeds....................................16 o Tax Opinions for Amendments....................50
- -------------------------------------------------------- o Addresses for Notices..........................50
The Dealer Floorplan Financing Business............16 o Issuer's Annual Compliance Statement...........50
- --------------------------------------------------------
iv
o Indenture Trustee's Annual Report..............50 o Collection and Other Servicing Procedures......83
o List of Noteholders............................51 o Servicer Covenants.............................84
o Reports........................................51 o Servicing Compensation and Payment of
- ------------------------------------------------------- Expenses.......................................84
Description of the Investor Certificates o Matters Regarding the Servicer.................85
Issued by the CARCO Receivables Trust.............51 o Service Default................................86
- ------------------------------------------------------- o Reports........................................87
o General........................................51 o Evidence as to Compliance......................87
o Interest.......................................52 o Amendments.....................................88
o Principal......................................52 o List of Certificateholders.....................89
o The Seller's Certificate.......................55 o The CARCO Receivables Trustee..................89
o New Issuances..................................56 -------------------------------------------------------
o Conveyance of Receivables and Description of the Receivables Purchase
Collateral Security............................58 Agreement.........................................90
o Representations and Warranties.................59 -------------------------------------------------------
o Eligible Accounts and Eligible o Sale or Transfer of Receivables................90
Receivables61 o Representations and Warranties.................90
o Ineligible Receivables, the Installment o Covenants......................................91
Balance Amount and the Overconcentration o Termination....................................92
Amount.........................................63 -------------------------------------------------------
o Addition of Accounts...........................64 Legal Aspects of the Receivables...................92
o Removal of Accounts............................66 -------------------------------------------------------
o Excluded Series................................69 o Transfer of Receivables........................92
o Collection Account.............................70 o Matters Relating to Bankruptcy.................93
o Excess Funding Account.........................71 -------------------------------------------------------
o Allocation Percentages.........................72 Tax Matters........................................95
o Allocation of Collections; Deposits in -------------------------------------------------------
Collection Account.............................74 o Federal Income Tax Consequences................95
o Limited Subordination of Seller's o State and Local Tax Consequences..............102
Interest; Enhancements.........................76 -------------------------------------------------------
o Distributions..................................78 ERISA Considerations..............................102
o Defaulted Receivables and Recoveries...........78 -------------------------------------------------------
o Optional Repurchase............................79 o General.......................................102
o Reinvestment Events and Early Experts...........................................104
Amortization Events............................79 Plan of Distribution..............................104
o Termination; Fully Reinvested Date.............81 Legal Matters.....................................106
o Indemnification................................82 -------------------------------------------------------
Glossary of Principal Terms for Prospectus........108
-------------------------------------------------------
Annex A: Global Clearance, Settlement and
Tax Documentation Procedures.....................A-1
-------------------------------------------------------
v
Summary
The following summary is a short, concise description of the main
structural features that a series or class of notes 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 note. You will find a detailed
description of the possible terms of a note following this summary. Refer to
the "Glossary of Principal Terms for Prospectus" for the definitions of each
capitalized term used in this summary and elsewhere in this prospectus.
Parties
The issuer will be governed by a trust agreement
Party Description between DCWR and the owner trustee. The primary asset
of the issuer will be a certificate (the "collateral
Issuer o DaimlerChrysler Master Owner Trust certificate") issued by CARCO Auto Loan Master Trust
(the "CARCO receivables trust"). The CARCO receivables
Seller o DaimlerChrysler Wholesale trust has or will have outstanding eleven series of
Receivables LLC ("DCWR"), a certificates, including the collateral certificate,
special-purpose indirectly owned that evidence interests in the CARCO receivables trust
subsidiary of DaimlerChrysler and receive a share of the collections on the
Services North America LLC ("DCS") receivables owned by that trust. The assets of the
CARCO receivables trust include:
Servicer o DCS, a wholly owned subsidiary of
DaimlerChrysler Corporation o receivables existing under the accounts at the
("DaimlerChrysler"), the successor close of business on May 31, 1991, receivables
to Chrysler Corporation generated under the accounts from time to time after
that date during the term of the CARCO receivables
Indenture o The Bank of New York trust as well as receivables generated under any
Trustee accounts added to the CARCO receivables trust from time
to time;
Owner Trustee o Chase Manhattan Bank USA, National
Association o all funds collected or to be collected in respect
of the receivables;
CARCO o CARCO Auto Loan Master Trust (the
Receivables "CARCO receivables trust") o all funds on deposit in the accounts of the CARCO
Trust receivables trust;
o Owns the receivables and has issued o any other enhancement issued with respect to any
the collateral certificate to the particular series or class; and
issuer
o a security interest in motor vehicles and parts
Trustee of o The Bank of New York inventory, equipment, fixtures, service accounts
CARCO and, in some cases,
Receivables
Trust
Title of Securities
Auto Loan Asset Backed Notes (the "notes").
The Issuer
1
realty and/or a personal guarantee securing the notes will have its own interest rate, which may be
receivables. fixed, variable, contingent, adjustable or have any
combination of these characteristics and will be
The Accounts specified in the prospectus supplement. The issuer's
sources of funds for the payment of interest on a
The accounts under which the receivables have been series of notes will include:
or will be generated are revolving credit agreements
entered into with DCS, directly or as successor to an
affiliate, by dealers to finance the purchase of their o interest and principal distributions on the
automobile and light duty truck and other vehicle collateral certificate allocable to that
inventory. Accounts may be added to, or removed from, series; and
the CARCO receivables trust. See "The Accounts",
"Description of the Investor Certificates Issued by the o any available credit enhancement for that
CARCO Receivables Trust -- Eligible Accounts and series.
Eligible Receivables", "-- Addition of Accounts" and "
- -- Removal of Accounts." Only the amounts allocated to a series are available to
make payments on that series.
The Receivables Owned by
CARCO Receivables Trust Principal
The receivables consist of advances made by DCS to The issuer will make principal payments on a
domestic motor vehicle dealers to purchase the series of notes on one or more dates specified in the
vehicles. The vehicles consist primarily of new prospectus supplement. We will specify in the
automobiles, light duty trucks and other vehicles. The prospectus supplement the sources of funds that the
principal amount of an advance in respect of a vehicle issuer will use to pay principal. Typically, these
typically is equal to the wholesale purchase price of sources will include:
the vehicle plus destination charges and, subject to
exceptions, is due upon the retail sale of the vehicle. o all or a portion of the principal
See "The Dealer Floorplan Financing Business -- distributions on the collateral certificate
Creation of Receivables" and "-- Payment Terms." The allocable to that series;
receivables bear interest at a floating rate. See "The
Dealer Floorplan Financing Business -- Revenue o all or a portion of the interest
Experience." distributions on the collateral certificate
allocable to that series remaining after the
Form and Denomination issuer has made interest payments on that
of Notes; Record Date series; and
You may purchase notes in book-entry form only and o any available credit enhancement for that
in $1,000 increments. The record date for payments on series.
the notes will be the day preceding the related payment
date. Only the amounts allocated to a series are available to
make payments on that series.
Interest
We will set forth in the prospectus supplement for
The issuer will pay interest on the notes in a a series the manner in which the issuer will accumulate
series with the frequency specified in the prospectus or apply available funds toward principal payments on
supplement. Each series or class of that series of notes.
2
Each series of notes will have a revolving period amount for a series will be subordinated to the rights
during which we will make no principal payments on that of the noteholders of that series to the extent
series of notes. We may structure principal payments described in the related prospectus supplement. Also,
for a class of notes in the following ways, among we may provide other enhancements. See "Sources of
others: Funds to Pay the Notes."
o a single expected principal payment date, on Tax Matters
which we will repay all principal at once; or
In the opinion of Sidley Austin Brown & Wood LLP,
o an amortization period, during which we will special federal income tax counsel for the seller and
repay principal on each specified payment the issuer,
date until we have repaid all principal.
o the notes of each series will be
If a series has more than one class of notes, we characterized as debt for federal income tax
may repay principal differently for the various purposes; and
classes.
o the issuer will not be classified as an
However, it is possible that principal payments on association, or a publicly traded
a class or series of notes will begin earlier than the partnership, taxable as a corporation under
date we specify in the prospectus supplement. If an federal income tax law.
early redemption event or event of default for a series
of notes occurs, the issuer will apply all principal By your acceptance of a note, you will agree to treat
distributions allocated to that series to the repayment your notes as indebtedness of the seller for federal,
of the outstanding principal of notes in that series, state and local income and single business tax
unless we provide in the prospectus supplement that purposes. We might issue the notes with original issue
those funds will be set aside for payment on a later discount. See "Tax Matters" for additional information
date. An early redemption event or an event of default concerning the application of federal and Michigan tax
will likely cause us to repay principal on the notes laws.
earlier than the expected date we specified in the
prospectus supplement for that series. Also, an early ERISA Considerations
redemption event or an event of default may result in
delays or reductions in the payments on your notes. If you are an employee benefit plan, you should
review the considerations discussed under "ERISA
The servicer or other designated person may have Considerations" in this prospectus and consult counsel
the option to purchase the outstanding notes of a before investing in the notes. In general, subject to
series when its stated principal amount is reduced to a those considerations and to the conditions described in
specified level. that section and unless otherwise specified in the
prospectus supplement, you may purchase notes of any
Overcollateralization Amount; series.
Enhancements
Note Ratings
Unless we otherwise specify in the related
prospectus supplement, the overcollateralization We will issue the notes of a series only if they
are rated in an investment grade rating category by at
least one nationally recognized rating agency.
3
The rating agencies and their ratings do not Risk Factors
address whether you will receive any principal on your
notes prior to or after the expected principal payment An investment in any series of notes involves
date. material risks. See "Risk Factors" in this prospectus
and in the accompanying prospectus supplement.
4
Risk Factors
In this section and in the related prospectus supplement under the
heading "Risk Factors," we discuss the principal risk factors for an
investment in the notes.
Your ability to resell notes is limited.
There may be no secondary market for your notes. Underwriters may
participate in making a secondary market in the notes, 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 notes. Also, your notes will
not be listed on any securities exchange or quoted in the automated quotation
system of any registered securities association. As a result, you will not
have the liquidity that might be provided by that kind of listing or
quotation.
Risk factors relating to the collateral certificate and the
CARCO receivables trust.
The primary assets of the issuer are the collateral certificate and the
distributions made on the collateral certificate. Consequently, the factors
that affect the ability of the CARCO receivables trust to make distributions
on the collateral certificate also affect the issuer's ability to make
payments on your notes.
o Various legal aspects may cause delays in your receiving payments or may
result in reduced payments or losses on your notes.
This risk factor discusses various ways in which a third party may become
entitled to receive collections on the receivables instead of the CARCO
receivables trust. If that happens, you will experience delays in payments on
your notes and may experience reductions in payments on your notes.
Ultimately, you may incur a loss on your notes.
There are limited circumstances under the Uniform Commercial Code and
applicable federal law in which prior or subsequent transferees of receivables
could have an interest in the receivables with priority over the CARCO
receivables trust's interest. See "Legal Aspects of the Receivables --
Transfer of Receivables."
DCS and the seller have and will treat the transfer of receivables to the
CARCO receivables trust described in this prospectus as a sale of the
receivables to the seller and then to the CARCO receivables trust. However,
DCS and/or the seller may become a debtor in a bankruptcy case and a creditor
or trustee-in-bankruptcy of the debtor or the debtor itself may take the
position that the sale of receivables to the seller or to the CARCO
receivables trust should be recharacterized as a pledge of the receivables to
secure a borrowing of the debtor. In that case, the CARCO receivables trust
could experience delays in payments of collections of receivables to it or,
should the court rule in favor of any trustee, debtor or creditor, reductions
in the amount of the payments could result. Also, if the transfer of
receivables to the seller is recharacterized as a pledge, a tax or government
lien on the property of DCS arising before any receivables come into existence
may have priority over the seller's interest in the receivables. See "Legal
Aspects of the Receivables -- Matters Relating to Bankruptcy."
5
At the time a vehicle is sold, DCS's security interest in the vehicle
will terminate. Therefore, if a dealer fails to remit to DCS amounts owed with
respect to vehicles that have been sold, the related receivables will no
longer be secured by vehicles.
o The timing of payments on the receivables will determine whether we will
pay principal on the notes when intended.
Dealers pay receivables upon the retail sale of the underlying vehicle.
The timing of those sales is uncertain. Also, we cannot assure you that there
will be additional receivables created under the Accounts or that any
particular pattern of dealer repayments will occur. The payment of principal
on the notes depends on dealer repayments. As a result, you may not receive
your principal when you expected because:
o the notes of your series or class may not be fully amortized by its
expected payment date, if any, or
o the payment of principal to noteholders or the deposit of principal
in a principal funding account during an accumulation period, if
any, with respect to your series or class of notes may not equal the
controlled amortization amount or controlled deposit amount, if any,
with respect to the series or class.
o Social, economic and other factors will affect the level of the
collections on the receivables and may affect the amount of the
distributions of the collateral certificate and therefore payments on the
notes.
Payments of the receivables are largely dependent upon the retail sale of
the related vehicles. The level of retail sales of cars and light duty trucks
may change as the result of a variety of social and economic factors. Economic
factors include
o interest rates,
o unemployment levels,
o the rate of inflation and
o consumer perception of economic conditions generally.
The use of incentive programs, e.g., manufacturers' rebate programs, may
affect retail sales. However, we cannot predict whether or to what extent
economic or social factors will affect the level of vehicle sales.
o The ability of the CARCO receivables trust to make payments on the
collateral certificate depends in part on the ability of DaimlerChrysler
and DCS to generate receivables and the ability of DCS to perform its
obligations under the pooling and servicing agreement.
Neither DCS nor DaimlerChrysler is obligated to make any payments in
respect of the receivables, the collateral certificate or any notes. However,
the CARCO receivables trust and the issuer depend completely upon DCS to
generate new receivables. The ability of DCS to generate receivables depends
in turn to a large extent on the sales of automobiles and light duty trucks
and other vehicles manufactured or distributed by DaimlerChrysler. We cannot
assure you that DCS
6
will continue to generate receivables at the same rate as receivables were
generated in prior years. Also, if DCS were to cease acting as servicer,
delays in processing payments on the receivables and information in respect
of the receivables could occur and result in delays in payments to you.
DCS makes representations and warranties with respect to the
characteristics of the receivables. In some cases, DCS would be required to
purchase receivables with respect to which the representations and warranties
have been breached. If DCS fails to make a required repurchase, the issuer may
have less funds. In addition, subject to limitations, DCS has the ability to
change the terms of the Accounts, including the rate and the credit line, as
well as change its underwriting procedures. These changes could reduce the
amount of collections received on the receivables and therefore reduce the
amount of funds received by the issuer.
Under agreements between DaimlerChrysler and DaimlerChrysler-franchised
dealers, DaimlerChrysler is committed to purchase unmiled vehicles from the
dealers upon dealership termination. If DaimlerChrysler is not able to
repurchase the new vehicles under the repurchase provision of new vehicles in
the dealer agreements, losses with respect to the receivables may be adversely
affected. See "The Dealer Floorplan Financing Business -- Relationship with
DaimlerChrysler." Also, because a substantial number of the vehicles to be
sold by the Dealers are manufactured or distributed by DaimlerChrysler, if
DaimlerChrysler were temporarily or permanently no longer manufacturing or
distributing vehicles, the rate of sales of DaimlerChrysler-manufactured
vehicles owned by the Dealers would decrease. In that case, payment rates and
the loss experience with respect to the receivables will be adversely
affected. See "The Dealer Floorplan Financing Business."
o Other certificateholders may control the actions of the CARCO receivables
trust. Their actions may be adverse to your interest.
In some cases, the consent or approval of the holders of a specified
percentage of the aggregate unpaid principal amount of all outstanding
investor certificates of all outstanding series issued by the CARCO
receivables trust will be required to direct some actions. These actions
include amending the pooling and servicing agreement in some cases and
directing a reassignment of the entire portfolio of receivables. Also,
following the occurrence of an insolvency event with respect to the seller,
the holders of certificates evidencing more than 50% of the aggregate unpaid
principal amount of each series of certificates or each class of each series
of certificates, and any holder of a supplemental certificate, will be
required to direct the trustee for the receivables not to sell or otherwise
liquidate the receivables. The holders of notes may have no control over such
actions by holders of certificates.
o The issuance of additional series of certificates may adversely affect
your interest.
The CARCO receivables trust, as a CARCO receivables trust, has previously
issued several series of investor certificates and is expected to issue
additional series of investor certificates which may be represented by
different classes within a series. A series supplement delivered under the
pooling and servicing agreement in connection with the issuance of any other
series of investor certificates will specify principal terms applicable to the
series. No series supplement may change the terms of the investor certificates
of another series or the terms of the pooling and servicing agreement as
applied to the investor certificates of another series. See "Description of
the Investor
7
Certificates Issued by the CARCO Receivables Trust -- New Issuances." However,
we cannot assure you that the terms of any one series of investor certificates
might not have an impact on the timing or amount of payments received by a
certificateholder of any other series and, consequently, on the timing or
amount of payments received by a noteholder.
Credit enhancement for a series of notes is limited.
If the credit enhancement is exhausted, you may incur a loss.
We will provide credit enhancement of each series of notes by creating an
overcollaterization amount to the extent described in the related prospectus
supplement. The amount of the credit enhancement is limited and will be
reduced from time to time as described in the related prospectus supplement.
If the credit enhancement is exhausted, you are much more likely to incur a
loss. See "Limited Subordination of Seller's Interest; Enhancements."
Credit ratings of the notes reflect the rating agency's assessment of the
likelihood that you will receive your payments of interest and principal.
Unless we specify otherwise in the related prospectus supplement, it will
be a condition to the issuance of the notes of each series offered by this
prospectus that they be rated in an investment grade rating category by at
least one nationally recognized rating agency. Any rating assigned to the
notes of a series or a class by a rating agency
o will reflect the rating agency's assessment of the likelihood that
noteholders of the series or class will receive the payments of
interest and principal required to be made under the indenture and
o will be based primarily on the value of the receivables in the CARCO
receivables trust, the level of subordination of the seller's
interest in the issuer and the availability of any enhancement with
respect to the series or class.
The rating will not be a recommendation to buy, hold or sell notes of the
series or class, and the rating will not comment as to the market price or
suitability for a particular investor. We cannot assure you that a rating will
remain for any given period of time or that a rating agency will not reduce or
withdraw a rating in the future if in its judgment circumstances in the future
so warrant. A reduction in the rating of your notes may reduce the market
value of your notes.
Book-entry registration may limit
your ability to resell or pledge your notes.
Unless we otherwise specify in the prospectus supplement relating to a
series of notes, the notes of each series will initially be book-entry notes
and will not be registered in your name or your nominee's name. Accordingly,
you will not be recognized by the indenture trustee as the "noteholder." You
will only be able to exercise the rights of a noteholder indirectly through
DTC and its participating organizations, and, if applicable, through Euroclear
or Clearstream and their respective participating organizations. See "The
Notes" and "-- Book-Entry Notes."
8
Only some of the assets of the issuer
are available for payments on any series or class of notes.
The sole source of payment of principal of or interest on a series or
class of notes is provided by:
o the portion of the principal collections and interest
collections received by the issuer under the collateral
certificate and available to that series or class of notes
after giving effect to all allocations and reallocations;
o the applicable trust accounts for that series or class of
notes; and
o payments received under any applicable derivative agreement for
that series or class of notes.
As a result, you must rely only on the particular assets allocated to your
series or class as security for your series or class for repayment of the
principal of and interest on your notes. You will not have recourse to any
other assets of the issuer or any other person for payment of your notes. See
"Sources of Funds to Pay the Notes."
A further restriction applies if the holders of a series or class of
notes directs the CARCO receivables trust to sell receivables following an
event of default and acceleration, or on the applicable legal maturity date,
as described in "Sources of Funds to Pay the Notes -- Sale of Receivables." In
that case, that series or class of notes has recourse only to the proceeds of
that sale and investment earnings on those proceeds.
Allocations of charged-off receivables
in the CARCO receivables trust could reduce payments to you.
The servicer will charge off the receivables arising in the accounts in
the CARCO receivables trust portfolio if the receivables become uncollectible.
The collateral certificate will be allocated a portion of these charged-off
receivables. If the amount of charged-off receivables allocated to the
collateral certificate exceeds the amount of funds available for reimbursement
of those charge-offs, the available funds under the collateral certificate may
not be sufficient to pay the full stated principal amount of your notes.
You will not receive full payment of your notes if the nominal
liquidation amount of your notes has been reduced by charge-offs of
receivables in the CARCO receivables trust or as the result of reallocations
of principal collections to pay interest on senior classes of notes, and those
amounts have not been reimbursed from excess interest collections. See
"Sources of Funds to Pay the Notes -- Final Payment of the Notes." For a
discussion of nominal liquidation amount, see "The Notes -- Stated Principal
Amount, Outstanding Dollar Principal Amount and Nominal Liquidation Amount of
Notes."
You may receive principal payments
earlier or later than the expected principal payment date.
We cannot assure that you will receive the principal amount of your notes
on its expected principal payment date. An early redemption event is an event
that indicates that we may not be
9
able to make payments on your notes as we had intended. See "Description of
the Investor Certificates Issued by the CARCO Receivables Trust -- Reinvestment
Events and Early Amortization Events." If an early redemption event or an
event of default for a series occurs, the issuer will apply all distributions
of principal allocated to that series to the repayment of the principal of the
notes of that series, unless we otherwise specify in the related prospectus
supplement. The occurrence of an early redemption event or an event of default
will likely cause us to begin payment of principal earlier than the related
expected principal payment date. However, such events may result in delays or
reductions in the payment of principal and could result in a loss on your notes.
Class B notes and Class C notes bear losses
before Class A notes bear any losses.
A series may include Class B notes and Class C notes. Class B notes of a
series will be subordinated in right of payment of principal to Class A notes
of that series, and Class C notes of a series are subordinated in right of
payment of principal to Class A notes and Class B notes of that series. In
general, unless we specify otherwise in the related prospectus supplement,
interest payments on a class of notes of a series will not be subordinated in
right of payment to interest payments on any other class of notes of that
series.
In all series with subordinated classes of notes, principal collections
that are allocable to the subordinated classes of notes may be reallocated to
pay interest on senior classes of notes of that series. Also, unless we
specify otherwise in the related prospectus supplement, losses on charged-off
receivables in the CARCO receivables trust are allocated first to the
subordinated classes of a series. See "The Notes -- Stated Principal Amount,
Outstanding Dollar Principal Amount and Nominal Liquidation Amount of Notes --
Nominal Liquidation Amount" and "-- Subordination of Principal." If these
reallocations and losses are not reimbursed from excess interest collections,
the full stated principal amount of the subordinated classes of notes may not
be repaid.
If there is a sale of the receivables owned by the CARCO receivables
trust because of a sale or repurchase of the interest represented by the
collateral certificate after a default by the servicer of the CARCO
receivables trust, the net proceeds of the sale allocable to principal
payments with respect to the collateral certificate that are allocable to a
series will generally be used first to pay amounts due to Class A noteholders
of that series, next to pay amounts due to Class B noteholders, if any, of
that series, and lastly, for amounts due to Class C noteholders, if any, of
that series. This could cause a loss to Class C noteholders or the Class B
noteholders.
Payment of Class B notes and Class C notes
may be delayed due to the subordination provisions.
In general, no payment of principal of Class B notes, if any, of a series
will be made until all principal of Class A notes of that series has been
paid, and no payment of principal of Class C notes, if any, of that series
will be made until all principal of Class A notes and Class B notes of that
series has been paid, even if the subordinated notes have reached their
expected principal payment date, or have had an early redemption event, event
of default or other optional or mandatory redemption. See "The Notes --
Subordination of Principal."
10
You may not be able to reinvest
any early redemption proceeds in a comparable security.
If your notes are redeemed at a time when prevailing interest rates are
relatively low, you may not be able to reinvest the redemption proceeds in a
comparable security with an effective interest rate as high as that of your
notes.
Issuance of additional notes may affect
the timing and amount of payments to you.
The issuer expects to issue notes from time to time. New notes may be
issued without notice to existing noteholders and without their consent, and
may have different terms from outstanding notes. For a description of the
conditions that must be met before the issuer can issue new notes, see "The
Notes -- Issuance of New Series, Classes and Subclasses of Notes."
The issuance of a new series of notes could adversely affect the timing
and amount of payments on outstanding notes. For example, if notes issued
after your notes have a higher interest rate than your notes, the result could
be that there is a smaller amount of shared excess interest collections
available to pay interest on your notes. Also, when new notes are issued, the
voting rights of your notes may be diluted. See "Risk Factors -- You may have
limited control of actions under the indenture and the pooling and servicing
agreement."
You may have limited control of actions
under the indenture and the pooling and servicing agreement.
Under the indenture, some actions require the vote of noteholders holding
a specified percentage of the aggregate outstanding dollar principal amount of
notes of a series, class or subclass or all the notes. These actions include
accelerating the payment of principal of the notes or consenting to amendments
relating to the collateral certificate. In the case of votes by series or
votes by holders of all of the notes of a series that has subordinated notes,
the Class A outstanding dollar principal amount will generally be
substantially greater than the Class B or Class C outstanding dollar principal
amounts. Consequently, the Class A noteholders will generally have the ability
to determine whether and what actions should be taken and may be expected to
act solely in their interest. The Class B and Class C noteholders will
generally need the concurrence of the Class A noteholders to cause actions to
be taken.
Your remedies upon default may be limited.
Your remedies may be limited if an event of default under your class of
notes occurs. After an event of default affecting your class of notes, any
funds in the principal funding account and the interest funding account with
respect to that series or class of notes will be applied to pay principal of
and interest on those notes or reallocated or retained for the benefit of any
senior classes of notes. Then, in each following month, principal collections
and interest collections allocated to those notes will either be deposited
into the applicable principal or interest funding account and applied to make
monthly principal and interest payments on those notes or reallocated or
retained for the benefit of any senior classes of notes until the earlier of
the date those notes are no longer necessary to provide subordination
protection for senior classes of notes or until the legal maturity date of
those notes.
11
Any funds in the applicable principal funding account that are not
reallocated to other classes of that series and any funds in the applicable
interest funding account will be available to pay principal of and interest on
that class of notes. However, if your notes are Class B notes or Class C
notes, you generally will receive full payment of principal of those notes
only to the extent provided in the related prospectus supplement.
Following an event of default and acceleration, and on the applicable
legal final maturity date, holders of notes will have the ability to direct a
sale of receivables -- or a sale of interests in receivables -- held by the
CARCO receivables trust only under the limited circumstances as described in
"The Indenture -- Events of Default" and "Sources of Funds to Pay the Notes --
Sale of Receivables." Even if a sale of receivables is permitted, we cannot
assure you that the proceeds of the sale will be enough to pay unpaid
principal of and interest on your notes.
You can find a "Glossary of Principal Terms for Prospectus" beginning on
page [o] in this prospectus.
12
DaimlerChrysler Wholesale Receivables LLC and the CARCO Receivables Trust
DaimlerChrysler Wholesale Receivables LLC
DCWR is a limited liability company formed under the laws of the State of
Delaware on February 4, 2000 as a wholly owned subsidiary of the predecessor
of DCS, for the limited purpose of purchasing wholesale, retail and other
receivables from DCS and transferring the receivables to third parties or
issuing indebtedness secured by receivables to third parties. DCWR acquired
the Seller's Interest from U.S. Auto Receivables Company ("USA") on May 31,
2000. At that time DCWR assumed the obligations of the seller under the
Pooling and Servicing Agreement and the obligations of the purchaser under the
Receivables Purchase Agreement. On August 8, 1991, USA had acquired the
Seller's Interest from Chrysler Auto Receivables Company ("CARCO") and assumed
those obligations. As of May 31, 2000, USA was merged into a member of DCWR
and no longer exists. CARCO is a wholly-owned subsidiary of DCS.
DCWR is deemed to have made all representations and warranties of the
seller in the Pooling and Servicing Agreement and any Series Supplement with
respect to any series of certificates outstanding as of May 31, 2000. In
addition, DCWR has assumed the obligations of USA under the certificates with
respect to any outstanding series, the Pooling and Servicing Agreement and the
Receivables Purchase Agreement and has agreed to hold USA harmless from any
liability related to those obligations. Obligations transferred to and assumed
by DCWR include USA's obligation with respect to the subordinated notes held
by DCS, the proceeds of which note were used to fund a portion of the purchase
price of receivables from Chrysler Credit Corporation ("CCC") on the Initial
Closing Date and a portion of the purchase prices of the receivables arising
in the Additional Accounts added to the trust on Addition Dates subsequent to
the Initial Closing Date. DCS may make additional subordinated loans to DCWR
in the future.
The seller has taken steps in structuring the transactions contemplated
by this prospectus that are intended to insure that the voluntary or
involuntary application for relief by DCS under the United States Bankruptcy
Code or similar applicable state laws ("Insolvency Laws") will not result in
the consolidation of the assets and liabilities of the seller with those of
DCS. These steps include the creation of the seller as a separate,
limited-purpose subsidiary under a limited liability company agreement
containing limitations on the nature of the seller's business, as described
above, and on the seller's ability to commence a voluntary case or proceeding
under any Insolvency Law without the unanimous affirmative vote of all its
officers. However, we cannot assure you that the activities of the seller
would not result in a court concluding that the assets and liabilities of the
seller should be consolidated with those of DCS in a proceeding under any
Insolvency Law. See "Risk Factors -- Risk factors relating to the collateral
certificate and the CARCO receivables trust -- Various legal aspects may cause
delays in your receiving payments or may result in reduced payments or losses
on your notes" and "Legal Aspects of the Receivables -- Matters Relating to
Bankruptcy."
Also, tax and other statutory liabilities, including liabilities to the
Pension Benefit Guaranty Corporation relating to the underfunding of pension
plans, of DaimlerChrysler or DCS can be asserted against the seller. To the
extent that any of those liabilities arise after the transfer of receivables
to the CARCO receivables trust, the CARCO receivables trust's interest in the
receivables would be prior to the interest of the claimant with respect to the
liabilities. However,
13
the existence of a claim against the seller could permit the claimant to
subject the seller to an involuntary proceeding under the Bankruptcy Code or
other Insolvency Law. See "Risk Factors -- Risk factors relating to the
collateral certificate and the CARCO receivables trust -- Various legal
aspects may cause delays in your receiving payments or may result in reduced
payments or losses on your notes" and "-- Risk factors relating to the
collateral certificate and the CARCO Receivables Trust -- The ability of the
CARCO receivables trust to make payments on the collateral certificate depends
in part on the ability of DaimlerChrysler and DCS to generate receivables and
the ability of DCS to perform its obligations under the pooling and servicing
agreement" and "Legal Aspects of the Receivables -- Matters Relating to
Bankruptcy."
DCWR's executive offices are located at 27777 Franklin Road, Southfield,
Michigan 48034-8286, and its telephone number is (248) 948-3031.
The CARCO Receivables Trust
The CARCO receivables trust was formed in accordance with the laws of
the State of New York under the Pooling and Servicing Agreement. The property
of the trust consists of:
o the receivables existing in the Accounts on May 31, 1991 (the
"Initial Cut-Off Date");
o all receivables generated in the Accounts from time to time
after the Initial Cut-Off Date during the term of the trust as
well as receivables generated in any Accounts added to the
CARCO receivables trust from time to time, but excluding
receivables in any Accounts that are removed from the CARCO
receivables trust from time to time after the Initial Cut-Off
Date;
o an assignment of all the seller's rights and remedies under the
Receivables Purchase Agreement;
o all funds collected or to be collected in respect of the
receivables;
o all funds on deposit in accounts of the CARCO receivables
trust;
o any Enhancement issued with respect to any particular series or
class of investor certificates; and
o a security interest in the vehicles and any other collateral
security.
See "Description of the Investor Certificates Issued by the CARCO Receivables
Trust -- Addition of Accounts." See "Description of the Receivables Purchase
Agreement" for a summary of terms of the Receivables Purchase Agreement.
DCS will not convey to the CARCO receivables trust receivables ("Fleet
Receivables") originated in connection with multiple new vehicle orders of at
least five vehicles by specified Dealers. The terms "receivables" and
"principal receivables" as used in this prospectus will not refer to Fleet
Receivables.
The property of the CARCO receivables trust may also include Enhancements
for the benefit of certificateholders of a particular series or class. The
collateral certificate will not have the benefit of any such Enhancement. The
certificateholders of a particular series or class will not have
14
any interest in any Enhancements provided for the benefit of the
certificateholders of another series or class, unless we so provide in the
related Series Supplement or Series Supplements. Under the Pooling and
Servicing Agreement, the seller will be allowed, subject to limitations and
conditions, and in some circumstances will be obligated,
o to designate from time to time Additional Accounts to be
included as Accounts and to convey to the CARCO receivables
trust the receivables of the Additional Accounts, and
o to designate from time to time Accounts to be removed and to
require the CARCO receivables trustee to convey receivables in
the Removed Accounts to the seller.
The CARCO receivables trust was formed to issue certificates under the
Pooling and Servicing Agreement and prior to formation had no assets or
obligations. The CARCO receivables trust will not engage in any business
activity other than
o acquiring and holding the receivables and the other assets of
the trust and proceeds from the receivables and those assets,
o issuing the investor certificates and the seller's certificate,
and any Supplemental certificates, and making payments on those
certificates and
o related activities.
As a consequence, we do not expect the CARCO receivables trust to have any
need for, or source of, capital resources other than the assets of the CARCO
receivables trust.
The Issuer
DaimlerChrysler Master Owner Trust is the issuer of the notes. It is a
Delaware statutory business trust formed by DCWR on , 2002.
The issuer exists for the exclusive purposes of:
o acquiring and holding the collateral certificate and other
assets, including the proceeds of these assets;
o issuing series of notes;
o making payments on the notes; and
o engaging in other activities that are necessary or incidental
to accomplish these limited purposes.
The issuer is operated pursuant to a trust agreement between DCWR and
Chase Manhattan Bank USA, National Association, as owner trustee. The issuer
does not have any officers or directors. Its administrator is DCS. As
administrator of the issuer, DCS will generally direct the actions to be taken
by the issuer.
15
The assets of the issuer consist primarily of:
o the collateral certificate;
o derivative agreements that, subject to the terms of the
related indenture supplement, the issuer has entered into
or may enter into to manage interest rate or currency risk
relating to some classes of notes; and
o the issuer accounts.
The issuer does not expect to have any other significant assets.
Use of Proceeds
Unless we otherwise provide in the related prospectus supplement:
o we will pay the net proceeds from the sale of a series of notes
to DCWR;
o DCWR will use the portion of the proceeds paid to it, together
with the subordinated loan from DCS described under
"DaimlerChrysler Wholesale Receivables LLC and the CARCO
Receivables Trust -- DaimlerChrysler Wholesale Receivables
LLC", to purchase receivables from DCS or to repay amounts
previously borrowed to purchase receivables; and
o DCS will use the portion of the proceeds paid to it for general
corporate purposes.
The Dealer Floorplan Financing Business
General
The receivables transferred to the CARCO receivables trust under to the
Pooling and Servicing Agreement were or will be selected from extensions of
credit and advances, known as "wholesale" or "floorplan" financing, made by
DaimlerChrysler, directly or as successor to Chrysler Corporation, and DCS,
directly or as a successor to affiliates, to domestic motor vehicle dealers.
These funds are used by dealers to purchase new and used vehicles manufactured
or distributed by DaimlerChrysler and other manufacturers pending sale to
retail buyers. As described in this prospectus, receivables transferred to the
CARCO receivables trust are secured by the vehicles and, in many cases, parts
inventory, equipment, fixtures and service accounts of the vehicle dealers. In
some cases, the receivables are also secured by realty owned by, and/or a
personal guarantee of, a vehicle dealer.
DCS, as successor to Chrysler Financial Company L.L.C. ("CFC LLC"),
Chrysler Financial Corporation ("CFC Corp.") and Chrysler Credit Corporation
("CCC"), is the primary wholesale financing source for
DaimlerChrysler-franchised dealers in the United States. DaimlerChrysler
vehicles for which DCS provides wholesale financing include vehicles
manufactured under the CHRYSLER, DODGE and JEEP trademarks.
DCS, directly or as successor to CFC LLC, CFC Corp. or CCC, has extended
credit lines to DaimlerChrysler-franchised dealers that also operate
non-DaimlerChrysler franchises and non-
16
DaimlerChrysler dealers. DCS services the accounts of domestic dealers
financed by it (the "U.S. Wholesale Portfolio") through its Southfield Support
office located in Southfield, Michigan and through a network of zone offices
located throughout the United States.
Vehicles financed by any dealer under the floorplan program are
categorized by DCS, under its policies and procedures, as New Vehicles or Used
Vehicles based on whether the vehicles qualify for the new or used wholesale
and retail interest rate chargeable to the dealer in connection with the
vehicles financed. Currently, "New Vehicles" consist of
o current and prior model year unmiled vehicles,
o current model year miled vehicles purchased at a closed auction
conducted by DaimlerChrysler, and
o prior model year and two year old miled vehicles.
Currently, "Used Vehicles" consist of previously owned vehicles, other than
current model year miled vehicles purchased at a closed auction conducted by
DaimlerChrysler and prior model year and two year old miled vehicles. Vehicles
purchased by a dealer at a closed auction conducted by DaimlerChrysler are
referred to, collectively, as "Auction Vehicles." New Vehicles and Used
Vehicles may be categorized differently in the future based on DCS's practices
and policies.
Creation of Receivables
DCS finances 100% of the wholesale invoice price of new vehicles,
including destination charges. DaimlerChrysler originates receivables in
respect of DaimlerChrysler-manufactured or distributed vehicles concurrently
with the shipment of the vehicles to the financed dealer.
Once a dealer has commenced the floorplanning of a manufacturer's
vehicles through DCS, DCS will finance all purchases of vehicles by the dealer
from the manufacturer. DCS will cancel this arrangement, however, if a
dealer's inventory is considered by DCS to be seriously overstocked, if a
dealer is experiencing financial difficulties or if a dealer requests
controlled vehicle releases. In those circumstances, known as "Finance Hold",
the applicable local zone office of DCS assumes control of vehicle releases to
the dealer. DCS makes special arrangements to finance inter-dealer sales of
vehicles.
Credit Underwriting Process
DCS extends credit to dealers from time to time based upon established
credit lines. Dealers may establish lines of credit to finance purchases of
new, used and auction vehicles. All DaimlerChrysler-franchised dealers that
have a new vehicle line of credit are also eligible for a used vehicle and an
auction vehicle credit line. A new vehicle credit line relates to New
Vehicles, other than current model year miled vehicles purchased at a closed
auction conducted by DaimlerChrysler, and a used vehicle credit line relates
to Used Vehicles. An auction vehicle credit line relates to Auction Vehicles.
A newly franchised dealer requesting the establishment of a new vehicle
credit line must submit an application to a DCS zone office. After receipt of
the application, the local zone office investigates the prospective dealer.
The office reviews the prospective dealer's credit reports and
17
bank references and evaluates the dealer's marketing capabilities and start-up
financial resources and credit requirements. When an existing dealer requests
the establishment of a wholesale new vehicle credit line, the office reviews the
dealer's credit reports, including the experience of the dealer's current
financing source, and bank references. Further, the office investigates the
dealer's current state of operations and management, including evaluating a
factory reference, and marketing capabilities. For credit lines within an
office's approval limits, the office either approves or disapproves the
dealer's request. For credit lines in excess of an office's approval limits,
the office transmits the requisite documentation to the Southfield Support
Dealer Credit Department for approval or disapproval. DCS applies the same
underwriting standards for dealers franchised by other manufacturers.
Upon approval, dealers execute a series of financing agreements with DCS
and, in the case of DaimlerChrysler-franchised dealers, DaimlerChrysler. These
agreements provide DCS a first priority security interest in the vehicles and
other collateral and a demand master promissory note in favor of DCS. Under
these agreements, DCS requires all dealers to maintain insurance coverage for
each vehicle for which it provided floorplan financing, with DCS designated as
loss payee.
The size of a credit line initially offered to a dealer is based upon the
dealer's sales record, or, in the case of a prospective dealer, expected
annual sales, and the dealer's effective net worth. The amount of a dealer's
credit line for new vehicles is adjusted quarterly by DCS. The adjustment is
based upon the dealer's average new vehicle sales during the prior 180 days
and is, typically, in an amount sufficient to finance a 75-day supply of
vehicles. The amount of a dealer's credit line for used vehicles is also
adjusted periodically. This adjustment is based upon the dealer's average used
vehicle sales for the prior 180 days and is, typically, in an amount
sufficient to finance 50% of a 30 to 45-day supply of vehicles. DCS determines
the size of a dealer's auction vehicle credit line on a case by case basis and
makes adjustments periodically based on DCS's practices and procedures.
The aggregate amount advanced for each Used Vehicle is equal to the
National Automotive Dealers Association's Official Wholesale Used Car Trade-in
Guide wholesale book value for the vehicle. However, the aggregate amount of
the credit line for the used vehicles may not exceed 50% of the value of the
dealer's total inventory of used vehicles. The amount advanced for New
Vehicles and all Auction Vehicles is equal to the amount invoiced with respect
to the vehicles and the auction purchase price, including auction fees, of the
Auction Vehicles, respectively.
Billing, Collection Procedures and Payment Terms
DCS prepares and distributes each month to each dealer a statement
setting forth billing and related account information. DCS generates and mails
each dealer's bills on the sixth and seventh calendar day of the month.
Interest and other nonprincipal charges must be paid by the end of the month
in which they are billed. DCS bills interest and handling fees in arrears, but
bills insurance costs in advance. Upon the sale of a vehicle for which it has
provided floorplan financing, DCS is entitled to receive payment in full of
the related advance. Dealers remit payments by check directly to DCS's local
zone offices or electronically via an electronic funds transfer system
maintained by the Southfield Support office.
18
Revenue Experience
DCS charges dealers interest at a floating rate based on the rate (the
"Prime Rate") designated as the "prime rate" from time to time by financial
institutions selected by DCS, plus a designated spread ranging from 0.50% to
1.75% on New Vehicles. The Prime Rate is reset by DCS on the first and
sixteenth days of every month and is applied to all balances outstanding
during the applicable period. The actual spread for each dealer is determined
according to the total amount of the dealer's credit lines. DCS typically
increases the spreads charged on Used Vehicle balances by an additional 0.75%.
Previously owned vehicles, however, purchased at a DaimlerChrysler closed
auction are financed at the applicable New Vehicle rate. In the case of a few
larger dealers, DCS charges the dealers interest at a floating rate based on
LIBOR plus 2.75% up to the Prime Rate plus 0.25%.
Relationship with DaimlerChrysler
DaimlerChrysler provides to some DaimlerChrysler-franchised dealers
financial assistance in the form of working capital loans and other loans. In
addition, DaimlerChrysler provides floorplan assistance to all
DaimlerChrysler-franchised dealers through a number of formal and informal
programs. On all new vehicle financings, DaimlerChrysler reimburses dealers
directly for the finance costs for a specified period from the date of
shipment. DaimlerChrysler also has a supplemental floorplan assistance
program. In this program, DaimlerChrysler reimburses dealers at the time of
retail sale, for a specified amount depending upon the vehicle model.
Under an agreement between DaimlerChrysler and each
DaimlerChrysler-franchised dealer, DaimlerChrysler commits to repurchase
unsold new vehicles in inventory upon dealership termination, at the vehicles'
wholesale prices less a specified margin. DaimlerChrysler only repurchases
current model year vehicles that are new, undamaged and unused.
DaimlerChrysler also agrees to repurchase from dealers, at the time of
franchise termination, parts inventory at specified percentages of the invoice
price. If DCS takes possession of a dealer's parts inventory, DaimlerChrysler
is only obligated to pay DCS 55% of the invoice price of the inventory. All of
the assistance, however, is provided by DaimlerChrysler for the benefit of its
dealers, and does not relieve the dealers of any of their obligations to DCS.
Much of the assistance is provided at the option of DaimlerChrysler,
which may terminate any of the optional programs in whole or in part at any
time. If DaimlerChrysler is unable to or elects not to provide the assistance,
the loss experience of DCS in respect of the U.S. Wholesale Portfolio may be
adversely affected. In addition, because a substantial number of the vehicles
sold by the dealers are manufactured or distributed by DaimlerChrysler, if
DaimlerChrysler were temporarily or permanently no longer in that business,
the rate of sales of DaimlerChrysler-manufactured vehicles would decrease.
This would adversely affect payment rates and the loss experience of the U.S.
Wholesale Portfolio. See "Risk Factors -- Risk factors relating to the
collateral certificate and the CARCO receivables trust -- The ability of the
CARCO receivables trust to make payments on the collateral certificate depends
in part on the ability of DaimlerChrysler and DCS to generate receivables and
the ability of DCS to perform its obligations under the pooling and servicing
agreement."
19
Dealer Monitoring
DCS's local zone offices monitor the level of each dealer's wholesale
credit line on a periodic basis. Dealers are permitted to exceed those lines
on a temporary basis. For example, a dealer may, immediately prior to a
seasonal sales peak, purchase more vehicles than it is otherwise permitted to
finance under its existing credit lines. As another example, because of slow
inventory turnover, a dealer's credit lines may be reduced prior to its
liquidating a sufficient portion of its vehicle inventory. If at any time DCS
learns that a dealer's balance exceeds its approved credit lines, DCS will
evaluate the dealer's financial position and may temporarily increase the
dealer's credit lines or place the dealer in a disciplinary category known as
"finance hold." See "Creation of Receivables."
Zone office personnel conduct audits of dealer vehicle inventories on a
regular basis. The timing of each visit is varied and no advance notice is
given to the audited dealer. Auditors review dealers' financial records and
conduct a physical inventory of the vehicles on the dealers' premises. Through
the audit process, DCS reconciles each dealer's physical inventory with its
records of financed vehicles. Audits are intended to identify instances where
a dealer sold vehicles but did not immediately repay the related advances. The
audit process also aids DCS in determining in those instances whether a dealer
received sale proceeds but diverted the proceeds to uses other than the
repayment of the obligations to DCS.
"Dealer Trouble" Status and DCS's Write-Off Policy
Under some circumstances, DCS will classify a dealer under "Dealer
Trouble" status. The circumstances include
o failure to remit any principal or interest payment when due,
o any notifications of liens, levies or attachments and
o a general deterioration of its financial condition.
Once a dealer is assigned to Dealer Trouble status, DCS determines any more
extension of credit on a case-by-case basis.
DCS attempts to work with dealers to resolve instances of Dealer Trouble
status. If, however, a dealer remains on that status, it can result in one of
the following:
o an orderly liquidation in which the dealer voluntarily
liquidates its inventory through normal sales to retail
customers,
o a forced liquidation in which DCS repossesses the dealer's
inventory and, in the case of DaimlerChrysler-franchised
dealers, closes the franchise,
o a voluntary surrender of the dealer's inventory and, in the
case of DaimlerChrysler-franchised dealers, franchise closure,
or
o a forced sale of the dealership.
DCS typically works with franchised dealers to find third parties to purchase
a troubled dealership.
20
The proceeds of the sales are used to repay amounts due to DCS. Once
liquidation has begun, DCS performs an analysis of its position, writes off
any amounts identified at that time as uncollectible and attempts to liquidate
all possible collateral remaining. During the course of a liquidation, DCS may
recognize additional losses or recoveries.
Additional Information
We will set forth in the prospectus supplement for each series additional
information with respect to the Dealer Floorplan Financing Business.
The Accounts
The receivables arise in the revolving financing arrangements (the
"Accounts") with domestic motor vehicle dealers ("dealers") franchised by
DaimlerChrysler and/or other automobile manufacturers. DCS selected the
Accounts from all the wholesale accounts in the U.S. Wholesale Portfolio that
are Eligible Accounts (the "Eligible Portfolio"). Each Account in the Eligible
Portfolio must be an account established by DCS, directly or as successor to
CFC LLC, CFC Corp. or CCC, in the ordinary course of business and meet other
criteria provided in the Pooling and Servicing Agreement. See "Description of
the Investor Certificates Issued by the CARCO Receivables Trust --
Representations and Warranties." DCS and the seller have represented that each
believes that the Accounts will be representative of the accounts in the
Eligible Portfolio and that the inclusion of the Accounts, as a whole, will
not represent an adverse selection from the Eligible Portfolio.
From time to time, dealers deposit funds with DCS in cash management
accounts, limited in amount to the amount of the wholesale accounts. DCS
applies funds deposited by a dealer in its cash management account to reduce
the dealer's outstanding Principal Receivables balance. Under some
circumstances, a dealer may reborrow the funds.
Under the Pooling and Servicing Agreement, the seller, and under the
Receivables Purchase Agreement, DCS has the right, subject to limitations and
conditions, and in some circumstances is obligated, to choose from time to
time additional qualifying wholesale accounts to be included as Accounts and
to convey to the trust some of the receivables of the Additional Accounts,
including receivables created after the conveyance. These accounts must meet
the eligibility criteria set forth above as of the date the accounts are
designated as Additional Accounts. DCS will convey the receivables then
existing, with exceptions, or later created under the Additional Accounts to
the seller. The seller will then convey them to the trust. See "Description of
the Investor Certificates Issued by the CARCO Receivables Trust -- Addition of
Accounts." In addition, as of any Additional Cut-Off Date in respect of
Additional Accounts and the date any new receivables are generated, DCS will
represent and warrant to the seller, and the seller will represent and warrant
to the CARCO receivables trust, that the receivables meet the eligibility
requirements set forth in the Pooling and Servicing Agreement. See
"Description of the Investor Certificates Issued by the CARCO Receivables
Trust -- Conveyance of Receivables and Collateral Security." Under some
circumstances specified in the Pooling and Servicing Agreement, the seller has
the right to remove Accounts, and the receivables arising from the Accounts,
from the CARCO receivables trust. See "Description of the Certificates --
Removal of Accounts." During the term of the CARCO receivables trust, the
Accounts from which the receivables arise will be the same Accounts
21
designated by the seller on the Initial Cut-Off Date plus any Additional
Accounts, minus any Accounts removed from the CARCO receivables trust.
We will provide additional information about the Accounts in each
prospectus supplement.
DaimlerChrysler Services North America LLC
DCS, a Michigan limited liability company and a wholly-owned subsidiary
of DaimlerChrysler, is a financial services organization. It is the continuing
company resulting from a merger on November 30, 2001, of CFC LLC into DCS. DCS
has substantially the same assets and liabilities that CFC LLC had. CFC LLC, a
Michigan limited liability company, was the continuing corporation resulting
from a merger on October 28, 1998, of CFC Corp. into CFC LLC. CFC Corp., a
Michigan corporation, was the continuing limited liability company resulting
from a merger on June 1, 1967, of a financial services subsidiary of Chrysler
Corporation, as predecessor of DaimlerChrysler, into a newly acquired,
previously nonaffiliated finance company incorporated in 1926. DCS is engaged
in the following:
o automotive retail, wholesale and fleet financing,
o servicing commercial leases and loans,
o property, casualty and other insurance and
o automotive dealership facility development and management.
DCS's business depends substantially upon DaimlerChrysler's operations.
In particular, lower levels of production and sale of DaimlerChrysler's
automotive products could reduce the level of DCS's finance and insurance
operations. See "Risk Factors -- Risk Factors relating to the collateral
certificate and the CARCO receivables trust -- The ability of the CARCO
receivables trust to make payments on the collateral certificate depends in
part on the ability of DaimlerChrysler and DCS to generate receivables and the
ability of DCS to perform its obligations under the pooling and servicing
agreement." DCS's executive offices are located at 27777 Franklin Road,
Southfield, Michigan 48034-8286 and its telephone number is (248) 512-3990.
CCC, a wholly owned subsidiary of CFC Corp., provided retail, wholesale
and lease financing services to automobile dealers and their customers
throughout the United States. On December 31, 1995, CCC merged into CFC Corp.
CFC Corp., in accordance with the terms of the Pooling and Servicing Agreement
and the Receivables Purchase Agreement, assumed all the rights and obligations
of CCC under (a) the Pooling and Servicing Agreement, including rights and
obligations of the servicer, and (b) the Receivables Purchase Agreement,
including rights and obligations of the seller. After that merger, CFC Corp.
provided retail, wholesale and lease financing services to automobile dealers
and their customers throughout the United States. On October 25, 1998, CFC
Corp. merged into CFC LLC. CFC LLC, under the terms of the Pooling and
Servicing Agreement, assumed all the rights and obligations of CFC Corp. under
(a) the Pooling and Servicing Agreement, including rights and obligations of
the servicer, and (b) the Receivables Purchase Agreement, including rights and
obligations of the seller. After that merger, CFC LLC provided retail,
wholesale and lease financing services to automobile dealers and their
customers throughout the United States.
22
On November 30, 2001, CFC LLC merged into DCS. DCS, under the terms of
the Pooling and Servicing Agreement, assumed all the rights and obligations of
CFC LLC under (a) the Pooling and Servicing Agreement, including rights and
obligations of the servicer, and (b) the Receivables Purchase Agreement,
including rights and obligations of the seller.
We will provide additional information about DCS in the prospectus
supplement for each series.
The Notes
The notes will be issued pursuant to the indenture. The indenture does
not limit the aggregate stated principal amount of notes that may be issued.
The notes will be issued in series. Each series of notes will consist of
Class A notes (or a single class of notes) and may also consist of Class B
notes and Class C notes. Each class of notes may have subclasses. Whenever a
"class" of notes is referred to in this prospectus or any supplement to this
prospectus, it also includes all subclasses of that note, unless the context
otherwise requires.
The issuer may offer notes denominated in any foreign currency. We will
describe the specific terms of any note denominated in a foreign currency in
the applicable supplement to this prospectus.
If we so specify in a supplement to this prospectus, the noteholders of
one or more classes will have the benefit of a derivative agreement, including
an interest rate or currency swap, cap, collar, guaranteed investment contract
or other agreement for the exclusive benefit of that class or those classes.
We will describe any derivative agreement for the benefit of a class and the
financial institution that provides it in the applicable supplement to this
prospectus.
The issuer will pay principal of and interest on a class of notes solely
from the portion of interest collections and principal collections distributed
on the collateral certificate that are available to that class of notes after
giving effect to all allocations and reallocations, amounts in any issuer
account relating to that class of notes, and amounts received under any
derivative agreement relating to that class of notes. If those sources are not
sufficient to pay the notes of that class, those noteholders will have no
recourse to any other assets of the issuer or the assets of any other entity
for the payment of principal of or interest on those notes.
We will include the following terms of the notes in a supplement to this
prospectus:
o the series designation;
o the rate per annum at which the notes will bear interest, if
any, or the formula or index on which that rate will be
determined and the date from which interest will accrue;
o the payment dates, if any, for the notes;
23
o the stated principal amount of each Class of notes and, if
there is more than one class of notes, whether they are Class A
notes, Class B notes or Class C notes or a subclass of any of
those classes;
o the overcollateralization amount, if any, for that class of
notes;
o the currency of payment of principal of and interest on the
notes, if other than U.S. dollars;
o the expected principal payment date of the notes;
o the legal final maturity date of the notes, which will be no
later than the termination date of the collateral certificate;
o the times at which the notes may, pursuant to any optional or
mandatory redemption provisions, be redeemed, and the other
terms and provisions of those redemptions;
o any additional events of default or early redemption events for
the notes of that series;
o if the notes have the benefit of a derivative agreement, the
terms of that agreement and a description of the counterparty
to that agreement; and
o other terms of the notes.
Holders of notes of any outstanding series or class will not have the
right to review or consent to any subsequent issuance of notes. A series or
class of notes may be issued privately, which series or class would therefore
not be offered pursuant to this prospectus and a prospectus supplement.
The issuer may, without the consent of any noteholders, issue additional
notes of an existing class of notes. Any such issuance of additional notes
must satisfy the applicable conditions under "-- Issuances of New Series,
Classes and Subclasses of Notes" below.
Interest
Each note, except zero-coupon discount notes, will bear interest at
either a fixed rate or a floating rate, which will be specified in the related
prospectus supplement. We will specify the interest accrual period in the
related prospectus supplement. Until the expected principal payment date for a
discount note, accreted principal will be capitalized as part of the principal
of the note and reinvested in the collateral certificate. The applicable
supplement to this prospectus will specify the interest rate to be borne by a
discount note after an event of default or after its expected principal
payment date.
If interest collections allocable to the collateral certificate are less
than expected, principal collections allocable to the overcollateralization
amount for the applicable series or the subordinated classes of notes of that
series may be used to pay interest on the notes or the senior classes of notes
of that series. However, this reallocation of principal would reduce the
Invested Amount of the collateral certificate, as well as the
overcollateralization amount or the nominal liquidation amount of the
subordinated classes of notes of that series. Reductions of these amounts
would have the effect of reducing principal collections and interest
collections on the collateral
24
certificate that are allocable to that series, unless these reductions are
reimbursed from excess interest collections. See "Sources of Funds to Pay the
Notes -- Deposit and Application of Funds."
If interest on a note is not paid within five business days after it is
due, an event of default will occur with respect to that note. See "The
Indenture -- Events of Default."
Principal
We will specify the timing and the amount of payments of principal of a
note in the related supplement to this prospectus.
For some notes, the issuer expects to pay the stated principal amount of
each note in one payment on that note's expected principal payment date, and
the issuer is obligated to do so if funds are available for that purpose. It
is not an event of default if the principal of a note is not paid on its
expected principal payment date because no funds are available for that
purpose.
Principal of a note may be paid earlier than its expected principal
payment date if an early redemption event or an event of default occurs. See
"The Indenture -- Early Redemption Events" and "-- Events of Default."
Principal of a note may be paid later than its expected principal payment
date if sufficient funds are not allocable from the CARCO receivables trust to
the collateral certificate, or are not allocable under the indenture to the
series or class of notes to be paid. If the stated principal amount of a note
is not paid in full on its legal final maturity date, an event of default will
occur with respect to that note. See "The Indenture -- Events of Default."
A series of notes may provide for the variable funding and amortization
of those notes from time to time.
See "Risk Factors -- You may receive principal payments earlier or later
than the expected principal payment date" for a discussion of factors that may
affect the timing of principal payments on the notes.
Stated Principal Amount, Outstanding Dollar Principal Amount and
Nominal Liquidation Amount of Notes
Each note will have:
o a stated principal amount;
o an outstanding dollar principal amount; and
o a nominal liquidation amount.
Stated Principal Amount. The stated principal amount of a note is the
amount that is stated on the face of the note to be payable to its holders. It
can be denominated in U.S. dollars or in a foreign currency.
25
Outstanding Dollar Principal Amount. For U.S. dollar notes (other than
discount notes), the outstanding dollar principal amount is the same as the
stated principal amount, less principal payments to the noteholders. For
foreign currency notes, the outstanding dollar principal amount is the U.S.
dollar equivalent of the stated principal amount of the notes, less dollar
payments to derivative counterparties with respect to principal. For discount
notes, the outstanding dollar principal amount is an amount stated in, or
determined by a formula described in, the applicable supplement to this
prospectus.
Nominal Liquidation Amount. The nominal liquidation amount of a note is a
U.S. dollar amount based on the outstanding dollar principal amount of that
note, but with some reductions -- including reductions from reallocations of
principal collections and allocations of charge-offs of principal receivables
in the CARCO receivables trust -- and increases described under this heading.
The nominal liquidation amount of a note corresponds to the portion of the
Invested Amount of the collateral certificate that would be allocated to that
note if the CARCO receivables trust were liquidated.
In most circumstances, the nominal liquidation amount of a note, together
with any funds on deposit in the applicable principal funding account, will be
equal to the outstanding dollar principal amount of that note. However, if
there are reductions in the nominal liquidation amount of a note as a result
of reallocations of principal collections from that note to pay interest on
other notes of the same series, or as a result of charge-offs of principal
receivables in the CARCO receivables trust, there will be a deficit in the
nominal liquidation amount of that note. Unless that deficiency is reimbursed
through the reinvestment of excess interest collections on the collateral
certificate, the stated principal amount of some notes will not be paid in
full.
A subordinated note's nominal liquidation amount is used to calculate the
maximum amount of funds that may be reallocated from that subordinated note to
pay interest on senior notes of the same series. The nominal liquidation
amount is also used to calculate the amount of principal collections that can
be allocated for payment of principal to a note, or paid to the counterparty
to a derivative agreement, if applicable. This means that if the nominal
liquidation amount of a note has been reduced by charge-offs of principal
receivables in the CARCO receivables trust or by reallocations of principal
collections to pay interest on other notes, the holders of notes with the
reduced nominal liquidation amount may receive less than the full stated
principal amount of their notes, either because the amount of U.S. dollars
allocated to pay them is less than the outstanding dollar principal amount of
the notes, or because the amount of U.S. dollars allocated to pay the
counterparty to a derivative agreement is less than the amount necessary to
obtain enough of the applicable foreign currency for payment of their notes in
full.
The nominal liquidation amount of a note may be reduced as follows:
o If there are charge-offs of principal receivables in the CARCO
receivables trust, the portion of charge-offs allocated to a
series of notes will reduce that series' nominal liquidation
amount to the extent these charge-offs are greater than that
series' available excess interest collections. For a series
that has an overcollateralization amount, we will allocate
these reductions first to the overcollateralization amount. Any
remaining reductions will be allocated to the notes of that
series. If the series has subordinated classes of notes, the
reductions allocated to the notes of that series will be
initially
26
allocated pro rata to each class of notes based on the nominal
liquidation amount of that class. Then we will reallocate these
reductions to the subordinated classes of notes of that series
in succession, beginning with the most subordinated class. The
prospectus supplement for any series of notes may provide for a
different allocation of these reductions.
o If principal collections are reallocated from an
overcollateralization amount of a series to the notes of that
series, the overcollateralization amount will be reduced by the
amount of that reallocation. If principal collections are
reallocated from a subordinated class of notes of a series to
pay interest on the senior classes of notes of that series, the
nominal liquidation amount of that subordinated class will be
reduced by the amount of the reallocations. For example, the
amount of the reallocation of principal collections to pay
interest on Class A notes will be applied first, to reduce the
nominal liquidation amount of Class C notes of the same series
to the extent of the required subordinated amount of Class C
notes for that class of Class A notes, and second, to reduce
the nominal liquidation amount of Class B notes of the same
series to the extent of the required subordinated amount of
Class B notes for that class of Class A notes. The amount of
the reallocation of principal collections to pay interest on
Class B notes will be applied to reduce the nominal liquidation
amount of Class C notes of the same series to the extent of the
required subordination amount of Class C notes for that class
of Class B notes. No principal of Class A notes may be
reallocated to pay interest on any class of notes if the
prospectus supplement so provides. The prospectus supplement
for any series of notes may provide for a different allocation
of these reductions.
o The nominal liquidation amount of a note will be reduced by the
amount on deposit in its principal funding account after giving
effect to all allocations, reallocations and payments. This
includes principal collections that are deposited directly into
that class's principal funding account, or reallocated from the
principal funding account for a subordinated class.
o The nominal liquidation amount of a note will be reduced by the
amount of all payments of principal of that note.
o If a note directs a sale of receivables after an event of
default and acceleration or on its legal final maturity date,
its nominal liquidation amount is automatically reduced to
zero. See "Sources of Funds to Pay the Notes -- Sale of
Receivables."
The nominal liquidation amount of a note can be increased as follows:
o For discount notes, the nominal liquidation amount will
increase over time as principal accretes, to the extent that
interest collections are allocated to that class for that
purpose.
o If excess interest collections are available, we will apply
them to reimburse earlier reductions in the nominal liquidation
amount from charge-offs of principal receivables in the CARCO
receivables trust or from reallocations of principal
collections from the overcollateralization amount of a series
to pay interest on the notes of that series or from
subordinated classes of a series to pay interest on senior
classes of that series or from the senior class of a series to
pay interest on that senior class. These reimbursements will be
allocated to each series pro rata based on the sum of all
unreimbursed reductions
27
of each class in that series. Within each series, the increases
will be allocated in order of seniority of the notes of that
series.
o If principal collections have been reallocated from the
principal funding account for a subordinated class to the
principal funding account for a senior class of notes of the
same series, the nominal liquidation amount of the subordinated
class will be increased by the amount of the reallocation, and
the nominal liquidation amount of the senior class will be
reduced by the same amount.
If the nominal liquidation amount of your notes has been reduced and the
reduction has not been reimbursed from excess interest collections, you will
not receive repayment of all of your principal. See "Sources of Funds to Pay
the Notes -- Final Payment of the Notes."
The nominal liquidation amount of a note may not be reduced below zero
and may not be increased above the outstanding dollar principal amount of that
note, less any amounts on deposit in the applicable principal funding account.
If a note held by DCWR, the issuer or any of their affiliates is
canceled, the nominal liquidation amount of that note is automatically reduced
to zero, with a corresponding automatic reduction in the Invested Amount of
the collateral certificate.
The cumulative net amount of reductions of the nominal liquidation amount
of any note due to reallocation of principal collections to pay interest on
other notes and charge-offs of principal receivables in the CARCO receivables
trust cannot exceed the initial outstanding dollar principal amount of that
note.
Allocations of charge-offs of principal receivables in the CARCO
receivables trust and reallocations of principal collections to other notes
reduce the nominal liquidation amount of outstanding notes only, and do not
affect notes that are issued after that time.
Subordination of Principal
If a series of notes has only one class, the credit enhancement for that
class will be the overcollateralization amount. If a series of notes has more
than one class, then the subordinate notes of that series will serve as credit
enhancement for the senior notes of that series. Such a series of notes may
also have an overcollateralization amount. The following paragraphs under this
subheading illustrate how this subordination works in the case of a series
that has Class A notes, Class B notes and Class C notes. The prospectus
supplement for a series may provide for different subordination arrangements
among the senior and subordinate classes of a series.
Principal payments on Class B notes and Class C notes of a series are
subordinated to payments on Class A notes of that series. Subordination of
Class B notes and Class C notes of a series provides credit enhancement for
Class A notes of that series.
Principal payments on Class C notes of a series are subordinated to
payments on Class A notes and Class B notes of that series. Subordination of
Class C notes of a series provides credit enhancement for the Class A notes
and Class B notes of that series.
28
In all series, principal collections that are allocable to subordinated
classes of notes may be reallocated to pay interest on senior classes of notes
of that series and, if so specified, on designated subordinated classes of
notes of that series. In addition, charge-offs of principal receivables in the
CARCO receivables trust are allocated first to the subordinated classes of a
series. See "The Notes -- Stated Principal Amount, Outstanding Dollar
Principal Amount and Nominal Liquidation Amount of Notes -- Nominal
Liquidation Amount" and "Sources of Funds to Pay the Notes -- Deposit and
Application of Funds."
No principal payments will be made on a subordinated class of notes until
all principal of the senior classes of notes of that series has been paid in
full. However, there are several exceptions to this rule. Principal may be
paid to the holders of subordinated classes while notes of senior classes of
that series are still outstanding under the following circumstances:
o If the nominal liquidation amount of a subordinated class has
been reduced as a result of an allocation of charge-offs of
principal receivables to that class or reallocation of
principal collections from that class to pay interest on senior
classes, and that reduction is later reimbursed from excess
interest collections, the amount of that reimbursement is no
longer subordinated to the senior classes of that series and may
be paid to the holders of the subordinated class while the notes
of senior classes are still outstanding.
o If principal collections have been reallocated from the
principal funding account for a subordinated class to the
principal funding account for a senior class of notes of the
same series, then the subordinated classes of notes of that
series may be paid.
Redemption and Early Redemption of Notes
Each class of notes will be subject to mandatory redemption on its
expected principal payment date.
If we so specify in the related prospectus supplement, the issuer may, at
its option, redeem any note before its expected principal payment date. The
prospectus supplement will indicate at what times the issuer may exercise that
right of redemption and if the redemption may be made in whole or in part as
well as any other terms of the redemption. The issuer will give notice to
holders of the affected notes before any optional redemption date.
If we so specify in the related prospectus supplement, a noteholder may,
at its option, require the issuer to redeem the holder's notes before the
expected principal payment date. The prospectus supplement will indicate at
what times a noteholder may exercise that right of redemption and if the
redemption may be made in whole or in part as well as any other terms of the
redemption.
In addition, if an early redemption event occurs, the issuer will be
required to redeem each affected note to the extent funds are available for
that purpose. The issuer will give notice to holders of the affected notes
before an early redemption date. See "The Indenture -- Early Redemption
Events" for a description of the early redemption events and their
consequences to holders of notes.
Whenever the issuer is required to redeem a note before its legal final
maturity date, it will do so only if and to the extent funds are allocated to
the collateral certificate and to that note. A
29
noteholder will have no claim against the issuer if the issuer fails to make a
required redemption of notes because no funds are available for that purpose.
The failure to redeem before the legal final maturity date under these
circumstances will not be an event of default.
Issuances of New Series, Classes and Subclasses of Notes
The issuer may issue new notes of a series, class or subclass, so long as
the conditions of issuance are met. These conditions include:
o on or before the third business day before a new issuance of
notes, the issuer gives the indenture trustee and the rating
agencies notice of the issuance;
o the issuer delivers to the indenture trustee a certificate
stating that
-- the issuer reasonably believes that the new issuance will
not at the time of its occurrence or at a future date (1)
cause an early redemption event or event of default, (2)
adversely affect the amount or timing of payments to
holders of notes of any series or (3) adversely affect
the security interest of the indenture trustee in the
collateral securing the outstanding notes;
-- all instruments furnished to the indenture trustee
conform to the requirements of the indenture and
constitute sufficient authority under the indenture for
the indenture trustee to authenticate and deliver the
notes;
-- the form and terms of the notes have been established in
conformity with the provisions of the indenture;
-- all laws and requirements with respect to the execution
and delivery by the issuer of the notes have been
complied with in all material respects;
-- the issuer has the power and authority to issue the
notes; and
-- the notes have been duly authorized, are binding
obligations of the issuer, and are entitled to the
benefits of the indenture;
o the issuer delivers to the indenture trustee and the rating
agencies an opinion of counsel that for federal income tax and
Michigan income and single business tax purposes (1) the new
issuance will not adversely affect in any material respect the
characterization as debt of any outstanding investor
certificates issued by the CARCO receivables trust, other than
the collateral certificate, (2) the new issuance will not cause
a taxable event to holders of CARCO receivables trust investor
certificates and (3) following the new issuance, the CARCO
receivables trust will not be an association, or a publicly
traded partnership, taxable as a corporation, except that, if
certain conditions are satisfied, the issuer at its option will
not be required to deliver these tax opinions;
o the issuer delivers to the indenture trustee and the rating
agencies an opinion of counsel that for federal income tax and
Delaware income and franchise tax purposes (1) the new issuance
will not adversely affect in any material respect the
characterization of the notes of any outstanding series, class
or subclass as debt, (2) the new issuance will not
30
cause a taxable event to holders of any outstanding notes, (3)
following the new issuance, the issuer will not be an
association, or a publicly traded partnership, taxable as a
corporation and (4) following the new issuance, the newly
issued notes will be properly characterized as debt, except
that, if certain conditions are satisfied, the issuer at its
option will not be required to deliver these tax opinions;
o at the time of the new issuance, either the rating condition
described in "Prospectus Summary -- Note Ratings" are satisfied
or the issuer obtains confirmation from the rating agencies
that the new issuance of notes will not cause a reduction or
withdrawal of the rating of any outstanding notes rated by that
rating agency;
o no early amortization event with respect to the collateral
certificate has occurred and is continuing as of the date of
the new issuance; and
o any other conditions specified in the related prospectus
supplement are satisfied.
Payments on Notes; Paying Agent
The notes will be issued in book-entry form and payments of principal of
and interest on the notes will be made in U.S. dollars as described under "--
Book-Entry Notes" unless the stated principal amount of the notes is
denominated in a foreign currency.
The issuer and the indenture trustee, and any agent of the issuer or the
indenture trustee, will treat the registered holder of any note as the
absolute owner of that note, whether or not the note is overdue and
notwithstanding any notice to the contrary, for the purpose of making payment
and for all other purposes.
The issuer will make payments on a note to the registered holder of the
note at the close of business on the record date established for the related
payment date.
The issuer expects to designate the corporate trust office of The Bank of
New York, in New York City, as its paying agent for the notes of each series.
The issuer will identify any other entities appointed to serve as paying
agents on notes of a series or class in a prospectus supplement. The issuer
may at any time designate additional paying agents or rescind the designation
of any paying agent or approve a change in the office through which any paying
agent acts. However, the issuer will be required to maintain a paying agent in
each place of payment for a series or class of notes.
After notice by publication, all funds paid to a paying agent for the
payment of the principal of or interest on any note of any series which
remains unclaimed at the end of two years after the principal or interest
becomes due and payable will be repaid to the issuer. After funds are repaid
to the issuer, the holder of that note may look only to the issuer for payment
of that principal or interest.
Denominations
The notes offered by this prospectus will be issued in denominations of
$1,000 and multiples of $1,000 in excess of that amount.
31
Record Date
The record date for payment of the notes will be the last day of the
month before the related payment date.
Governing Law
The laws of the State of New York will govern the notes and the
indenture.
Form, Exchange, and Registration and Transfer of Notes
The notes offered by this prospectus will be issued in registered form.
The notes will be represented by one or more global notes registered in the
name of The Depository Trust Company, as depository, or its nominee. We refer
to each beneficial interest in a global note as a "book-entry note." For a
description of the special provisions that apply to book-entry notes, see " --
Book-Entry Notes."
A holder of notes may exchange those notes for other notes of the same
class of any authorized denominations and of the same aggregate stated
principal amount and tenor.
Any holder of a note may present that note for registration of transfer,
with the form of transfer properly executed, at the office of the note
registrar or at the office of any transfer agent that the issuer designates.
Holders of notes will not be charged any service charge for the exchange or
transfer of their notes. Holders of notes that are to be transferred or
exchanged will be liable for the payment of any taxes and other governmental
charges described in the indenture before the transfer or exchange will be
completed. The note registrar or transfer agent, as the case may be, will
effect a transfer or exchange when it is satisfied with the documents of title
and identity of the person making the request.
The issuer expects to appoint The Bank of New York as the note registrar
for the notes. The issuer also may at any time designate additional transfer
agents for any series or class of notes. The issuer may at any time rescind
the designation of any transfer agent or approve a change in the location
through which any transfer agent acts. However, the issuer will be required to
maintain a transfer agent in each place of payment for the notes.
Book-Entry Notes
The notes offered by this prospectus will be in book-entry form. This
means that, except under the limited circumstances described in this
subheading under "-- Definitive Notes", purchasers of notes will not be
entitled to have the notes registered in their names and will not be entitled
to receive physical delivery of the notes in definitive paper form. Instead,
upon issuance, all the notes of a class will be represented by one or more
fully registered permanent global notes, without interest coupons.
Each global note will be deposited with a securities depository named The
Depository Trust Company and will be registered in the name of its nominee,
Cede & Co. No global note representing book-entry notes may be transferred
except as a whole by DTC to a nominee of DTC, or by a nominee of DTC to
another nominee of DTC. Thus, DTC or its nominee will be the only
32
registered holder of the notes and will be considered the sole representative
of the beneficial owners of notes for purposes of the indenture.
The registration of the global notes in the name of Cede & Co. will not
affect beneficial ownership and is performed merely to facilitate subsequent
transfers. The book-entry system is used because it eliminates the need for
physical movement of securities.
Purchasers of notes in the United States can hold interests in the global
notes only through DTC, either directly, if they are participants in that
system -- such as a bank, brokerage house or other institution that maintains
securities accounts for customers with DTC or its nominee -- or otherwise
indirectly through a participant in DTC. Purchasers of notes in Europe can
hold interests in the global notes only through Clearstream or through
Euroclear Bank, S.A./N.V., as operator of the Euroclear System.
Because DTC will be the only registered owner of the global notes,
Clearstream and Euroclear will hold positions through their respective U.S.
depositories, which in turn will hold positions on the books of DTC.
As long as the notes are in book-entry form, they will be evidenced
solely by entries on the books of DTC, its participants and any indirect
participants. Thus, each beneficial owner of a book-entry note will hold its
note indirectly through a hierarchy of intermediaries, with DTC at the "top"
and the beneficial owner's own securities intermediary at the "bottom."
The issuer, the indenture trustee and their agents will not be liable for
the accuracy of, and are not responsible for maintaining, supervising or
reviewing DTC's records or any participant's or indirect participant's records
relating to book-entry notes. The issuer, the indenture trustee and their
agents also will not be responsible or liable for payments made on account of
the book-entry notes.
Until definitive notes are issued to the beneficial owners as described
in this subheading under "-- Definitive Notes", all references to "holders" of
notes means DTC. The issuer, the indenture trustee and any paying agent,
transfer agent or securities registrar may treat DTC as the absolute owner of
the notes for all purposes.
Beneficial owners of book-entry notes should realize that the issuer will
make all distributions of principal and interest on their notes to DTC and
will send all required reports and notices solely to DTC as long as DTC is the
registered holder of the notes. DTC and the participants are generally
required to receive and transmit all distributions, notices and directions
from the indenture trustee to the beneficial owners through the chain of
intermediaries.
Similarly, the indenture trustee will accept notices and directions
solely from DTC. Therefore, in order to exercise any rights of a holder of
notes under the indenture, each person owning a beneficial interest in the
notes must rely on the procedures of DTC and, in some cases, Clearstream or
Euroclear. If the beneficial owner is not a participant in that system, then
it must rely on the procedures of the participant and, if applicable, indirect
participant through which that person owns its interest. DTC has advised the
issuer that it will take actions under the indenture only at the direction of
its participants, which in turn will act only at the direction of the
beneficial owners.
33
Some of these actions, however, may conflict with actions it takes at the
direction of other participants and beneficial owners.
Notices and other communications by DTC to participants, by participants
to indirect participants, and by participants and indirect participants to
beneficial owners will be governed by arrangements among them.
Beneficial owners of book-entry notes should also realize that book-entry
notes may be more difficult to pledge because of the lack of a physical note.
Beneficial owners may also experience delays in receiving payments on their
notes since distributions will initially be made to DTC and must be
transferred through the chain of intermediaries to the beneficial owner's
account.
The Depository Trust Company
DTC is a limited-purpose trust company organized under the New York
Banking Law and is a "banking institution" within the meaning of the New York
Banking Law. DTC is also a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered under Section 17A of the Securities Exchange Act
of 1934. DTC was created to hold securities deposited by its participants and
to facilitate the clearance and settlement of securities transactions among
its participants through electronic book-entry changes in accounts of the
participants, thus eliminating the need for physical movement of securities.
The rules applicable to DTC are on file with the Securities and Exchange
Commission.
Clearstream Banking, societe anonyme
Clearstream is registered as a bank in Luxembourg and is regulated by the
Banque Centrale du Luxembourg, the Luxembourg Central Bank, which supervises
Luxembourg banks. Clearstream holds securities for its customers and
facilitates the clearance and settlement of securities transactions by
electronic book-entry transfers between their accounts. Clearstream provides
various services, including safekeeping, administration, clearance and
settlement of internationally traded securities and securities lending and
borrowing. Clearstream also deals with domestic securities markets in over 30
countries through established depository and custodial relationships.
Clearstream has established an electronic bridge with Euroclear in Brussels to
facilitate settlement of trades between Clearstream and Euroclear.
Clearstream's customers are worldwide financial institutions including
underwriters, securities brokers and dealers, banks, trust companies and
clearing corporations. Clearstream's U.S. customers are limited to securities
brokers and dealers, and banks. Indirect access to Clearstream is available to
other institutions that clear through or maintain a custodial relationship
with an account holder of Clearstream.
Euroclear System
Euroclear was created in 1968 to hold securities for participants of
Euroclear and to clear and settle transactions between Euroclear participants
through simultaneous electronic book-entry delivery against payment. This
system eliminates the need for physical movement of securities and any risk
from lack of simultaneous transfers of securities and cash. Euroclear includes
various
34
other services, including securities lending and borrowing and interfaces with
domestic markets in several countries. The Euroclear Operator is the Euroclear
Bank, S.A./N.V. The Euroclear Operator conducts all operations. All Euroclear
securities clearance accounts and Euroclear cash accounts are accounts with
the Euroclear Operator. Euroclear participants include banks, including
central banks, securities brokers and dealers and other professional financial
intermediaries and may include the underwriters. Indirect access to Euroclear
is also available to other firms that clear through or maintain a custodial
relationship with a Euroclear participant, either directly or indirectly.
The Euroclear Operator holds a banking license granted to it, and is
regulated by, the Belgian Banking and Finance Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear
and the related Operating Procedures of the Euroclear System, and applicable
Belgian law. These Terms and Conditions govern transfers of securities and
cash within Euroclear, withdrawals of securities and cash from Euroclear, and
receipts of payments with respect to securities in Euroclear. All securities
in Euroclear are held on a fungible basis without attribution of specific
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.
This information about DTC, Clearstream and Euroclear has been provided
by each of them for informational purposes only and is not intended to serve
as a representation, warranty or contract modification of any kind.
Distributions on Book-Entry Notes
The issuer will make distributions of principal of and interest on
book-entry notes to DTC. These payments will be made in immediately available
funds by the issuer's paying agent, The Bank of New York, at the office of the
paying agent in New York City that the issuer designates for that purpose.
In the case of principal payments, the global notes must be presented to
the paying agent in time for the paying agent to make those payments in
immediately available funds in accordance with its normal payment procedures.
Upon receipt of any payment of principal of or interest on a global note,
DTC will immediately credit the accounts of its participants on its book-entry
registration and transfer system. DTC will credit those accounts with payments
in amounts proportionate to the participants' respective beneficial interests
in the stated principal amount of the global note as shown on the records of
DTC. Payments by participants to beneficial owners of book-entry notes will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of those
participants.
35
Distributions on book-entry notes held beneficially through Clearstream
will be credited to cash accounts of Clearstream participants in accordance
with its rules and procedures, to the extent received by its U.S. depository.
Distributions on book-entry notes held beneficially through Euroclear
will be credited to the cash accounts of Euroclear participants in accordance
with the Terms and Conditions, to the extent received by its U.S. depository.
In the event definitive notes are issued, distributions of principal and
interest on definitive notes will be made directly to the holders of the
definitive notes in whose names the definitive notes were registered at the
close of business on the related record date.
Global Clearance and Settlement Procedures
Initial settlement for the notes will be made in immediately available
funds. Secondary market trading between DTC participants will occur in the
ordinary way in accordance with DTC's rules and will be settled in immediately
available funds using DTC's Same-Day Funds Settlement System. Secondary market
trading between Clearstream participants and/or Euroclear participants will
occur in the ordinary way in accordance with the applicable rules and
operating procedures of Clearstream and Euroclear and will be settled using
the procedures applicable to conventional eurobonds in immediately available
funds.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Clearstream
or Euroclear participants, on the other, will be effected in DTC in accordance
with DTC's rules on behalf of the relevant European international clearing
system by the U.S. depositories. However, cross-market transactions of this
type will require delivery of instructions to the relevant European
international clearing system by the counterparty in that 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
U.S. depository to take action to effect final settlement on its behalf by
delivering or receiving notes 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 DTC.
Because of time-zone differences, credits to notes received in
Clearstream or Euroclear as a result of a transaction with a DTC participant
will be made during subsequent securities settlement processing and will be
credited the business day following a DTC settlement date. The credits to or
any transactions in the notes settled during processing will be reported to
the relevant Euroclear or Clearstream participants on that business day. Cash
received in Clearstream or Euroclear as a result of sales of notes by or
through a Clearstream participant or a Euroclear participant to a DTC
participant will be received with value on the DTC settlement date, but will
be available in the relevant Clearstream or Euroclear cash account only as of
the business day following settlement in DTC.
Although DTC, Clearstream and Euroclear have agreed to these procedures
in order to facilitate transfers of notes among participants of DTC,
Clearstream and Euroclear, they are under
36
no obligation to perform or continue to perform these procedures and these
procedures may be discontinued at any time.
Definitive Notes
Beneficial owners of book-entry notes may exchange those notes for
definitive notes registered in their name only if:
o DTC is unwilling or unable to continue as depository for the
global notes or ceases to be a registered "clearing agency" and
the issuer is unable to find a qualified replacement for DTC;
o the issuer, in its sole discretion, elects to terminate the
book-entry system through DTC; or
o any event of default has occurred with respect to those
book-entry notes, and beneficial owners evidencing not less
than 50% of the unpaid outstanding dollar principal amount of
the notes of that class advise the indenture trustee and DTC
that the continuation of a book entry system is no longer in
the best interests of those beneficial owners.
If any of these three events occurs, DTC is required to notify the
beneficial owners through the chain of intermediaries that the definitive
notes are available. The appropriate global note will then be exchangeable in
whole for definitive notes in registered form of like tenor and of an equal
aggregate stated principal amount, in specified denominations. Definitive
notes will be registered in the name or names of the person or persons
specified by DTC in a written instruction to the registrar of the notes. DTC
may base its written instruction upon directions it receives from its
participants. Thereafter, the holders of the definitive notes will be
recognized as the "holders" of the notes under the indenture.
Replacement of Notes
The issuer will replace at the expense of the holder any mutilated note,
upon surrender of that note to the indenture trustee. The issuer will replace
at the expense of the holder any notes that are destroyed, lost or stolen upon
delivery to the indenture trustee of evidence of the destruction, loss or
theft of those notes satisfactory to the issuer and the indenture trustee. In
the case of a destroyed, lost or stolen note, the issuer and the indenture
trustee may require the holder of the note to provide an indemnity
satisfactory to the indenture trustee and the issuer before a replacement note
will be issued.
Acquisition and Cancellation of Notes by the Issuer and the Seller
The issuer, the seller and their affiliates may acquire notes in the open
market or otherwise.
The issuer, the seller and their affiliates may cause the notes acquired
by them to be canceled and notes so canceled will no longer be outstanding.
37
Sources of Funds to Pay the Notes
General
The primary source of funds for the payment of principal of and interest
on the notes is the collateral certificate issued by the CARCO receivables
trust to the issuer. The collateral certificate is one of the series of
investor certificates issued by the CARCO receivables trust. For a description
of the CARCO receivables trust and its assets, see "DaimlerChrysler Wholesale
Receivables LLC and the CARCO Receivables Trust." For a description of how we
will determine the payments to be made on the investor certificates issued by
the CARCO receivables trust, including the collateral certificate, see
"Description of the Investor Certificates Issued by the CARCO Receivables
Trust."
Interest collections and principal collections allocated to the
collateral certificate will be deposited every month by the CARCO receivables
trust into the issuer's collection account.
The collateral certificate has no specified interest rate and will be
allocated its share of cash collections on the receivables and its share of
charge-offs on defaulted principal receivables.
Allocations of charge-offs and interest collections are made, first, pro
rata among each series of investor certificates issued by the CARCO
receivables trust, including the collateral certificate, based on the ratio
that the Adjusted Invested Amount of each series of investor certificates
bears to the Trust Adjusted Invested Amount. This ratio when expressed as a
percentage is the Series Allocation Percentage. The Adjusted Invested Amount
of the collateral certificate will be the sum of the series nominal
liquidation amounts for all series of notes. Next, within each series of
investor certificates (including the collateral certificate) allocations
between the seller's portion and the investor portion of series allocable
charge-offs and series allocable interest collections will be made based on
the ratio that:
o either (i) the Invested Amount (with respect to each series of
investor certificates other than the collateral certificate) or
(ii) the sum of the series nominal liquidation amounts for all
series of notes (with respect to the collateral certificate)
bears to
o the product of (a) the applicable Series Allocation Percentage
and (b) the Pool Balance.
This ratio when expressed as a percentage is known as the CARCO Floating
Allocation Percentage. Application of these percentages with respect to the
collateral certificate results in the investor portion of interest collections
and charge-offs allocable to the notes. The seller's portion of interest
collections is released to the seller.
The size of the collateral certificate will fluctuate according to the
sum of the series nominal liquidation amounts of all outstanding series of
notes issued by the issuer and represents the investment of the collateral
certificate in the Pool Balance. Unless we specify otherwise in the related
prospectus supplement, the series nominal liquidation amount of a series will
be the sum of the nominal liquidation amount of the notes of that series plus
any overcollateralization amount for that series. The overcollateralization
amount for a series will be subordinated to the notes of that series to the
extent described in the related prospectus supplement and, in effect, will
represent the interest of the seller in the series nominal liquidation amount
of that series. The Seller's Interest in the CARCO receivables trust owned by
DCWR represents the interest in the principal receivables in
38
the CARCO receivables trust not represented by any series of investor
certificates (including the collateral certificate) issued by the CARCO
receivables trust.
Principal collections on the receivables are allocated similarly to the
allocation of interest collections on the receivables when no principal
amounts are needed for deposit into a principal funding account or needed to
pay principal to investors. However, principal collections are allocated
differently when principal amounts need to be deposited into CARCO receivables
trust principal funding accounts or paid to CARCO receivables trust investors.
When one or more series of investor certificates begin to accumulate or
amortize, principal collections allocable to other series of certificates that
are not accumulating or amortizing will be used to satisfy the principal
accumulation or payment requirements of those series of investor certificates
that are accumulating or amortizing.
We will allocate principal collections on the receivables to the
collateral certificate at all times based on a calculation which is an
aggregate of the series nominal liquidation amounts for each series as
described above. For those series of notes that do not require principal
amounts to be deposited into a principal funding account or paid to
noteholders, the series nominal liquidation amount calculation will be
"floating," i.e. calculated as of each Transfer Date. For those series of
notes which require principal amounts to be deposited into a principal funding
account or paid to noteholders, the series nominal liquidation amount will be
"fixed" immediately before the issuer begins to allocate Available Principal
Amounts to the principal funding account for that series or upon the
occurrence of the expected principal payment date, an early redemption event,
an event of default or other optional or mandatory redemption, i.e. calculated
as of the Transfer Date prior to any reductions for deposits or payments of
principal.
If principal collections on the receivables allocated to the collateral
certificate are needed to pay the notes or to make a deposit into the issuer
accounts within a month, they will be deposited into the issuer's collection
account. Otherwise, collections of principal receivables allocated to the
collateral certificate will be reallocated to other series of investor
certificates that have principal collection shortfalls--which does not reduce
the size of the collateral certificate--or reinvested in the CARCO receivables
trust to maintain the Invested Amount of the collateral certificate. If the
collateral certificate has a shortfall in principal collections, but other
series of investor certificates have excess principal collections, a portion
of the excess principal collections allocated to other series of investor
certificates will be reallocated to the collateral certificate and any other
investor certificates which may have a shortfall in principal collections. The
collateral certificate's share of the excess principal collections will be
paid to the issuer and treated as Available Principal Amounts.
Upon a sale of receivables, or interests therein, following an insolvency
of DCS or DaimlerChrysler, an acceleration following an event of default, or
on the applicable legal final maturity date for a series of notes, as
described in the related prospectus supplement, the portion of the nominal
liquidation amount, and thereby the Invested Amount of the collateral
certificate, related to that series will be reduced to zero and that series
will no longer receive (i) any allocations of collections of interest or
principal on the receivables from the CARCO receivables trust and (ii) any
allocations of Available Funds or Available Principal Amounts from the issuer.
39
Following an Early Amortization Event with respect to the collateral
certificate, which is also an early redemption event for the notes, all
principal collections on the receivables for any Collection Period allocated
to the investor portion of the collateral certificate will be used to cover
principal payments on the collateral certificate.
For a detailed description of the application of collections and
allocation of charge-offs by the CARCO receivables trust, see "Description of
the Investor Certificates Issued by the CARCO Receivables Trust" in this
prospectus.
Deposit and Application of Funds
The amount of interest collections on the receivables that is allocated
and paid on the collateral certificate will first be allocated between the
seller's portion and the investor portion as described under "-- General"
above. These allocations will be made on each "Transfer Date," which is the
business day preceding each payment date. The interest collections allocated
to the investor portion are "Available Interest Amounts." Such Available
Interest Amounts will, in turn, be allocated pro rata to each series of notes
based on a fraction:
o the numerator of which is the series nominal liquidation amount
for that series on the day preceding the Transfer Date; and
o the denominator of which is the aggregate series nominal
liquidation amount for all series on that day.
This fraction will adjust to account for any additional issuances or
final payment of notes of that series since the prior Transfer Date.
The amount of principal collections and Miscellaneous Payments on the
receivables that is allocated and paid on the collateral certificate will
first be allocated between the seller's portion and the investor portion as
described under "-- General" above. The principal collections and
Miscellaneous Payments allocated to the investor portion are "Available
Principal Amounts." Such Available Principal Amounts, after any reallocations,
will, in turn, be allocated to each series of notes pro rata based on a
fraction:
o the numerator of which is the series nominal liquidation amount
of that series, except that for any series of notes that is
amortizing or accumulating principal, the series nominal
liquidation amount of that series will be the
series nominal liquidation amount as of the last day of the
Collection Period prior to the commencement of such
amortization or accumulation; and
o the denominator of which is the sum of the series nominal
liquidation amounts for all series of notes, except that for
any series of notes that is amortizing or accumulating
principal, the series nominal liquidation amount of that series
will be the series nominal liquidation amount as of the last
day of the Collection Period prior to the commencement of such
amortization or accumulation.
This fraction will adjust to account for any additional issuances of the
notes of each series since the prior Transfer Date. If Available Principal
Amounts for any Transfer Date are less than the aggregate monthly principal
payments or deposits required to be made for all series of notes,
40
and any series of notes has excess Available Principal Amounts remaining after
its application of its allocation described above, then any such excess will
be applied to each other series of notes to the extent such series still needs
to cover a monthly principal payment or deposit pro rata on the basis of their
respective shortfalls.
In the case of a series of notes having more than one class, Available
Principal Amounts and Available Interest Amounts allocated to that series will
be allocated and applied to each class in the manner and order of priority
described in the accompanying prospectus supplement.
Issuer Accounts
The issuer has established a collection account for the purpose of
receiving distributions on the collateral certificate.
If we so specify in the related prospectus supplement, the issuer may
direct the indenture trustee to establish and maintain in the name of the
indenture trustee supplemental accounts for any series or class of notes for
the benefit of the related noteholders. Most series will have an interest
funding account and a principal funding account. Typically, funds will be
transferred from the collection account to these supplemental accounts in
order to make payments of interest on and principal of the notes, to make
payments under any applicable derivative agreements, and for other purposes as
specified in the related prospectus supplement.
The supplemental accounts described in this section are referred to as
issuer accounts. Issuer accounts will be Qualified Accounts and amounts
deposited to issuer accounts may only be invested in Eligible Investments.
Derivative Agreements
Some notes may have the benefit of one or more derivative agreements,
which may be a currency, interest rate or other swap, a cap, a collar, a
guaranteed investment contract or other similar arrangements with various
counterparties. In general, the issuer will receive payments from
counterparties to the derivative agreements in exchange for the issuer's
payments to them, to the extent required under the derivative agreements.
Payments received from derivative counterparties with respect to interest
payments on dollar-denominated notes of a series will generally be treated as
Available Interest Amounts for such series. We will include the specific terms
of any derivative agreement applicable to a series or class of notes and a
description of the related counterparty in the related prospectus supplement.
Sale of Receivables
In addition to a sale of receivables following an insolvency of
DaimlerChrysler or DCS, if a series or class of notes has an event of default
and is accelerated before its legal final maturity date, the CARCO receivables
trust may sell receivables, or interests therein, if the conditions described
in "The Indenture -- Events of Default" and "--Events of Default Remedies" are
satisfied. This sale will take place at the option of the indenture trustee or
at the direction of the holders of a majority of aggregate outstanding dollar
principal amount of notes of that series or class.
41
If principal of or interest on a series or class of notes has not been
paid in full on its legal final maturity date, the sale will automatically
take place on that date. Proceeds from such sale will be immediately paid
toward payment on those notes.
Unless we specify otherwise in the related prospectus supplement, the
amount of receivables sold will be up to the series nominal liquidation amount
of the series. The nominal liquidation amount of a series or class in respect
of which a sale is made will be automatically reduced to zero upon such sale.
No more Available Principal Amounts or Available Funds will be allocated to
those notes. Noteholders will receive the proceeds of such sale in an amount
not to exceed the lesser of (i) the outstanding dollar principal amount of
those notes, plus unpaid interest on those notes and (ii) the nominal
liquidation amount of such series or class, as applicable, plus accrued
interest. Notes whose noteholders have directed sales of receivables are no
longer outstanding under the indenture once the sale occurs.
After giving effect to a sale of receivables for a series or class of
notes, the amount of proceeds on deposit in a principal funding account may be
less than the outstanding dollar principal amount of that series or class.
This deficiency can arise because the series nominal liquidation amount of
that series or class was reduced before the sale of receivables or because the
sale price for the receivables was less than the outstanding dollar principal
amount. Unless we specify otherwise in the prospectus supplement, these types
of deficiencies will not be reimbursed.
Limited Recourse to the Issuer; Security for the Notes
The portion of Available Funds and Available Principal Amounts allocable
to a series or class of notes after giving effect to all allocations and
reallocations, funds on deposit in the applicable issuer accounts, any
applicable derivative agreement and proceeds of sales of receivables provide
the only source of payment for principal of or interest on any series or class
of notes. Noteholders will have no recourse to any other assets of the issuer
or any other person or entity for the payment of principal of or interest on
the notes.
The notes of all series are secured by a shared security interest in the
collateral certificate and the collection account, but each series or class of
notes is entitled to the benefits of only that portion of those assets
allocated to it under the indenture and the related indenture supplement. Each
series or class of notes is also secured by a security interest in any
applicable supplemental account and any applicable derivative agreement.
The Indenture
The notes of a series will be issued pursuant to the terms of the
indenture and the related indenture supplement. The discussion under this
heading, the discussions under "The Notes" in this prospectus and certain
sections in the related prospectus supplement summarize the material terms of
the notes, the indenture and the related indenture supplement. These summaries
do not purport to be complete and are qualified in their entirety by reference
to the provisions of the notes, the indenture and the related indenture
supplement.
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Indenture Trustee
The Bank of New York is the trustee under the indenture for the notes.
Its principal corporate trust office is located at [o].
The indenture trustee may resign at any time. The issuer may also remove
the indenture trustee if the indenture trustee is no longer eligible to act as
trustee under the indenture or if the indenture trustee becomes insolvent. In
all circumstances, the issuer must appoint a successor indenture trustee for
the notes. Any resignation or removal of the indenture trustee and appointment
of a successor indenture trustee will not become effective until the successor
indenture trustee accepts the appointment.
The issuer or its affiliates may maintain accounts and other banking or
trustee relationships with the indenture trustee and its affiliates.
Issuer Covenants
The issuer will not, among other things:
o claim any credit on or make any deduction from the principal
and interest payable on the notes, other than amounts withheld
in good faith from such payments under the Internal Revenue
Code or other applicable tax law,
o voluntarily dissolve or liquidate, or
o permit (A) the validity or effectiveness of the indenture to be
impaired, or permit the lien created by the indenture to be
amended, hypothecated, subordinated, terminated or discharged,
or permit any person to be released from any covenants or
obligations with respect to the notes under the indenture
except as may be expressly permitted by the indenture, (B) any
lien, charge, excise, claim, security interest, mortgage or
other encumbrance (other than the lien created by the
indenture) to be created on or extend to or otherwise arise
upon or burden the collateral for the notes or proceeds thereof
or (C) the lien of the indenture not to constitute a valid
first priority security interest in the assets of the issuer.
The issuer may not engage in any activity other than the activities
described in "The Issuer" in this prospectus. The issuer will not incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the notes.
The issuer also covenants that if:
o the issuer defaults in the payment of interest on any series or
class of notes when such interest becomes due and payable and
such default continues for a period of five business days
following the date on which such interest became due and
payable, or
o the issuer defaults in the payment of the principal of any
series or class of notes on its legal final maturity date, or
32
o with respect to any series or class of notes that benefits from
a derivative agreement to which the issuer is a party, the
issuer defaults in any of its obligations under the applicable
derivative agreement;
o and any such default continues beyond any specified period of
grace for such series or class of notes, the issuer will, upon
demand of the indenture trustee, pay to the indenture trustee,
for the benefit of the holders of the notes of the affected
series or class, the whole amount then due and payable on those
notes for principal and interest (after giving effect to any
allocation requirements described in this prospectus and the
related prospectus supplement), with interest, to the extent
that payment of such interest will be legally enforceable, upon
the overdue installments of interest, at such rate or rates
described in the related prospectus supplement. In addition,
the issuer will pay an amount sufficient to cover the costs and
expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the indenture trustee,
its agents and counsel and all other compensation due to the
indenture trustee. If the issuer fails to pay such amounts upon
such demand, the indenture trustee may institute a judicial
proceeding for the collection of those unpaid amounts.
Events of Default
Each of the following events is an event of default for any related
series or class of notes:
o the issuer's failure, for a period of five business days, to
pay interest on any note of the related series or class when
due;
o the issuer's failure to pay the stated principal amount of any
note of the related series or class on its legal final maturity
date;
o the issuer's default in the performance, or breach, of any
other of its covenants or warranties in the indenture, for a
period of sixty (60) days after either the indenture trustee or
the holders of 25% of the aggregate outstanding dollar
principal amount of the outstanding notes of the affected
series or class has provided written notice requesting remedy
of that default or breach, and, as a result of that default or
breach, the interests of the related noteholders are materially
and adversely affected and continue to be materially and
adversely affected during the sixty (60) day period;
o the occurrence of certain events of bankruptcy, insolvency,
conservatorship or receivership of the issuer; and
o any additional events of default specified in the prospectus
supplement relating to the series or class.
Failure to pay the full stated principal amount of a note on its expected
principal payment date will not constitute an event of default. An event of
default with respect to one series or class of notes will not necessarily be
an event of default with respect to any other series or class of notes.
Events of Default Remedies
The occurrence of some events of default involving the bankruptcy or
insolvency of the issuer results in an automatic acceleration of all of the
notes. If other events of default occur and
44
are continuing with respect to any series or class, either the indenture
trustee or the holders of more than a majority in aggregate outstanding dollar
principal amount of the notes of that series or class may declare the
principal of all those outstanding notes to be immediately due and payable.
This declaration of acceleration may generally be rescinded by the holders of
a majority in aggregate outstanding dollar principal amount of outstanding
notes of that series or class.
If a series or class of notes is accelerated before its legal final
maturity date, the indenture trustee may at any time thereafter, and at the
direction of the holders of a majority of aggregate outstanding dollar
principal amount of notes of that series or class at any time thereafter will,
direct the CARCO receivables trust to sell receivables as described in
"Sources of Funds to Pay the Notes -- Sale of Receivables," but only if at
least one of the following conditions is met:
o the noteholders of 90% of the aggregate outstanding dollar
principal amount of the accelerated series or class of notes
consent; or
o the net proceeds of such sale (plus amounts on deposit in the
applicable accounts and payments to be received from any
applicable derivative agreement) would be sufficient to pay all
outstanding amounts due on the accelerated series or class of
notes; or
o the indenture trustee determines that the funds to be allocated
to the accelerated series or class of notes may 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 the
holders of not less than 66 2/3% of the aggregate outstanding
principal dollar amount of notes of the accelerated series or
class, as applicable, consent to the sale.
If an event of default occurs relating to the failure to pay
principal of or interest on a series or class of notes in full on the legal
final maturity date, the issuer will automatically direct the CARCO
receivables trust to sell receivables on the date, as described in "Sources of
Funds to Pay the Notes -- Sale of Receivables."
If a sale of receivables does not take place following an
acceleration of a series or class of notes, then:
o The issuer will continue to hold the collateral certificate,
and distributions on the collateral certificate will continue
to be applied in accordance with the distribution provisions of
the indenture and the related indenture supplement.
o Principal will be paid on the accelerated series or class of
notes to the extent funds are received from the CARCO
receivables trust and available to the accelerated series or
class after giving effect to all allocations and reallocations
and payment is permitted by the subordination provisions of the
senior notes, if any, of the same series.
o On the legal final maturity date of the accelerated notes, if
the notes have not been paid in full, the indenture trustee
will direct the CARCO receivables trust to sell receivables as
provided in the applicable indenture supplement.
The holders of a majority in aggregate outstanding dollar principal
amount of any accelerated series or class of notes have the right to direct
the time, method and place of conducting
45
any proceeding for any remedy available to the indenture trustee, or
exercising any trust or power conferred on the indenture trustee. However,
this right may be exercised only if the direction provided by the noteholders
does not conflict with applicable law or the indenture or the related
indenture supplement or have a substantial likelihood of involving the
indenture trustee in personal liability. The holder of any note will have the
right to institute suit for the enforcement of payment of principal of and
interest on such note on its legal final maturity date.
Generally, if an event of default occurs and any notes are accelerated,
the indenture trustee is not obligated to exercise any of its rights or powers
under the indenture unless the holders of affected notes offer the indenture
trustee reasonable indemnity. Upon acceleration of the maturity of a series or
class of notes following an event of default, the indenture trustee will have
a lien on the collateral for those notes ranking senior to the lien of those
notes for its unpaid fees and expenses.
The indenture trustee has agreed, and the noteholders will agree, that
they will not at any time institute against the issuer, DaimlerChrysler, DCS
or the CARCO receivables trust any bankruptcy, reorganization or other
proceeding under any federal or state bankruptcy or similar law.
Early Redemption Events
The issuer is required to redeem in whole or in part, to the extent that
funds are available for that purpose, each affected series or class of notes
upon the occurrence of an early redemption event. Early redemption events
include the following:
o the occurrence of a note's expected principal payment date;
o each of the Early Amortization Events applicable to the
collateral certificate, as described under "Description of the
Investor Certificates Issued by the CARCO Receivables Trust --
Early Amortization Events";
o the issuer becoming an "investment company" within the meaning
of the Investment Company Act of 1940, as amended; or
o any additional early redemption event specified in the related
prospectus supplement.
The redemption price of a note so redeemed will be the outstanding dollar
principal amount of that note, plus accrued interest--or, in the case of
discount notes, principal accreted but unpaid on that note--to but excluding
the date of redemption, which will be the next payment date. If the amount of
Available Interest Amounts and Available Principal Amounts allocable to the
series or class of notes to be redeemed, together with funds on deposit in the
applicable principal funding account and interest funding account and any
amounts payable to the issuer under any applicable derivative agreement are
insufficient to pay the redemption price in full on the next payment date
after giving effect to the subordination provisions and allocations to any
other notes ranking equally with that note, monthly payments on the notes to
be redeemed will thereafter be made on each payment date until the stated
principal amount of the notes plus all accrued and unpaid interest are paid in
full, or the legal maturity date of the notes occurs, whichever is earlier.
46
No Available Principal Amounts will be allocated to a series or class of
notes with a nominal liquidation amount of zero, even if the stated principal
amount of that series or class has not been paid in full. However, any funds
previously deposited in the applicable principal funding subaccount or
interest funding account and any amounts received from an applicable
derivative agreement will still be available to pay principal of and interest
on that series or class of notes. In addition, if Available Interest Amounts
are available, they can be applied to reimburse reductions in the nominal
liquidation amount of that series or class resulting from reallocations of
Available Principal Amounts to pay interest on senior classes of notes, or
from losses on uncovered defaults on principal receivables in the CARCO
receivables trust.
Payments on redeemed notes will be made in the same priority as described
in the related prospectus supplement. The issuer will give notice to holders
of the affected notes before an early redemption date.
Meetings
The indenture trustee may call a meeting of the holders of notes of a
series or class at any time. The indenture trustee will call a meeting upon
request of the issuer or the holders of at least 10% in aggregate outstanding
dollar principal amount of the outstanding notes of the series or class.
The quorum for a meeting is a majority of the holders of the outstanding
dollar principal amount of the related series or class of notes, as the case
may be, unless a higher percentage is specified for approving action taken at
the meeting, in which case the quorum is the higher percentage.
Voting
Any action or vote to be taken by the holders of a majority, or other
specified percentage, of any series or class of notes may be adopted by the
affirmative vote of the holders of a majority, or the applicable other
specified percentage, of the aggregate outstanding dollar principal amount of
the outstanding notes of that series or class, as the case may be.
Any action or vote taken at any meeting of holders of notes duly held in
accordance with the indenture will be binding on all holders of the affected
notes or the affected series or class of notes, as the case may be.
Notes held by the issuer, DaimlerChrysler, DCS or their affiliates will
not be deemed outstanding for purposes of voting or calculating quorum at any
meeting of noteholders.
Amendments to the Indenture and Indenture Supplements
Upon delivery of a CARCO receivables trust tax opinion and issuer tax
opinion, as described under "-- Tax Opinions for Amendments" below, and upon
delivery by the issuer to the indenture trustee of an officer's certificate to
the effect that the issuer reasonably believes that such amendment will not
and is not reasonably expected to (i) result in the occurrence of an early
redemption event or event of default, (ii) adversely affect the amount of
funds available to be distributed to the noteholders of any series of notes or
the timing of such distributions, or
46
(iii) adversely affect the security interest of the indenture trustee in the
collateral securing the notes, the indenture may be amended, supplemented or
otherwise modified without the consent of any noteholders to:
o evidence the succession of another entity to the issuer, and
the assumption by such successor of the covenants of the issuer
in the indenture and the notes;
o add to the covenants of the issuer, or have the issuer
surrender any of its rights or powers under the indenture, for
the benefit of the noteholders of any or all series or classes;
o add to the indenture certain provisions expressly permitted by
the Trust Indenture Act, as amended;
o cure any ambiguity, to establish any form of note under the
indenture, and to provide for the issuance of any series or
class of notes (as described under "The Notes -- Issuance of
New Series or Classes of Notes") and to set forth the terms
thereof, or to add to the rights of the noteholders of any
series or class;
o provide for the acceptance of a successor indenture trustee
under the indenture with respect to one or more series or
classes of notes and add to or change any of the provisions of
this indenture as will be necessary to provide for or
facilitate the administration of the trusts under the indenture
by more than one indenture trustee;
o provide for the consolidation of the CARCO receivables trust
and the issuer;
o if one or more additional sellers are added to, or replaced
under, the pooling and servicing agreement, or if one or more
additional beneficiaries are added to, or replaced under, the
trust agreement, make any necessary changes to the indenture or
any other related document;
o provide for the addition of collateral securing the notes and
the issuance of notes backed by any such additional collateral;
o provide for additional or alternative credit enhancement for
any notes;
o qualify for sale treatment under generally accepted accounting
principles;
o make any other amendment that could not reasonably be expected
to result in an early redemption event or event of default,
adversely affect the amount of funds available to the
noteholders of any series or class or adversely affect the
security interest of the indenture trustee in the collateral
securing the notes; or
o if the collateral certificate is the only outstanding investor
certificate issued by the CARCO receivables trust, to dissolve
the CARCO receivables trust and terminate the pooling and
servicing agreement, permit the issuer to acquire the
receivables directly and enter into a servicing agreement and
amend all documents to reflect the direct ownership of the
receivables by the issuer.
Upon delivery of a CARCO receivables trust tax opinion and issuer tax
opinion as described under "-- Tax Opinions for Amendments" below, the issuer
and the indenture trustee may
48
modify and amend the indenture or any indenture supplement, for reasons other
than those stated in the prior paragraphs, with prior notice to each rating
agency and the consent of the holders of not less than 66 2/3% in aggregate
dollar principal amount of the outstanding notes of each series or class
affected by that modification or amendment. However, if the modification or
amendment would result in any of the following events occurring, it may be
made only with the consent of the holders of each outstanding series or class
of notes affected by the modification or amendment:
o a change in any date scheduled for the payment of interest on
any note, the expected principal payment date or legal final
maturity date of any note;
o a reduction of the stated principal amount of, or interest rate
on, any note, or a change in the method of computing the
outstanding dollar principal amount, the adjusted outstanding
dollar principal amount, or the nominal liquidation amount in a
manner that is adverse to any noteholder;
o a reduction of the amount of a discount note payable upon the
occurrence of an early redemption event or other optional or
mandatory redemption or upon the acceleration of its legal
final maturity date;
o an impairment of the right to institute suit for the
enforcement of any payment on any note;
o a reduction of the percentage in outstanding dollar principal
amount of notes of any series or class, the consent of whose
holders is required for modification or amendment of the
indenture or any indenture supplement or for waiver of
compliance with provisions of the indenture or indenture
supplement or for waiver of defaults and their consequences;
o a modification of any of the provisions governing the amendment
of the indenture, any indenture supplement or the issuer's
agreements not to claim rights under any law which would affect
the covenants or the performance of the indenture or any
indenture supplement, except to increase any percentage or to
provide that certain other provisions of the indenture cannot
be modified or waived without the consent of the holder of each
outstanding note affected by such modification;
o permission being given to create any lien or other encumbrance
on the collateral ranking senior to the lien of the indenture;
o a change in the city or political subdivision so designated
with respect to any series or class of notes where any
principal of, or interest on, any note is payable; or
o a change in the method of computing the amount of principal of,
or interest on, any note on any date.
The holders of a majority in aggregate outstanding dollar principal
amount of the notes of a series or class may waive, on behalf of the holders
of all the notes of that series or class compliance by the issuer with
specified restrictive provisions of the indenture or the indenture supplement.
The holders of a majority in aggregate outstanding dollar principal
amount of the notes of an affected series or class may, on behalf of all
holders of notes of that series or class, waive any
49
past default under the indenture or the indenture supplement with respect to
notes of that series or class. However, the consent of the holders of all
outstanding notes of a series or class is required to waive any past default
in the payment of principal of, or interest on, any note of that series or
class or in respect of a covenant or provision of the indenture that cannot be
modified or amended without the consent of the holders of each outstanding
note of that series or class.
Tax Opinions for Amendments
No amendment to the indenture, the Pooling and Servicing Agreement or the
CARCO receivables trust agreement will be effective unless the issuer has
delivered to the indenture trustee, the owner trustee and the rating agencies
an opinion of counsel that:
o for federal income tax purposes (1) the amendment will not adversely
affect the characterization as debt of any outstanding series or
class of investor certificates issued by the CARCO receivables trust
that were characterized as debt at the time of their issuance, (2)
the amendment will not cause a taxable event to holders of the CARCO
receivables trust investor certificates, and (3) following the
amendment, the CARCO receivables trust will not be an association,
or publicly traded partnership, taxable as a corporation; and
o for federal income tax purposes (1) the amendment will not adversely
affect the characterization of the notes of any outstanding series
or class as debt, (2) the amendment will not cause a taxable event
to holders of any outstanding notes, and (3) following the
amendment, the issuer will not be an association, or publicly traded
partnership, taxable as a corporation.
Addresses for Notices
Notices to holders of notes will be given by mail sent to the addresses
of the holders as they appear in the note register.
Issuer's Annual Compliance Statement
The issuer is required to furnish annually to the indenture trustee a
statement concerning its performance or fulfillment of covenants, agreements
or conditions in the indenture as well as the presence or absence of defaults
under the indenture.
Indenture Trustee's Annual Report
The indenture trustee is required to mail each year to all registered
noteholders a report concerning:
o its eligibility and qualifications to continue as trustee under the
indenture,
o any amounts advanced by it under the indenture,
o the amount, interest rate and maturity date or indebtedness owing by
the issuer to it in the indenture trustee's individual capacity,
50
o the property and funds physically held by it as indenture trustee,
o any release or release and substitution of collateral subject to the
lien of the indenture that has not previously been reported, and
o any action taken by it that materially affects the notes and that
has not previously been reported.
List of Noteholders
Three or more holders of notes of any series, each of whom has owned a
note for at least six months, may, upon written request to the indenture
trustee, obtain access to the current list of noteholders of the issuer for
purposes of communicating with other noteholders concerning their rights under
the indenture or the notes. The indenture trustee may elect not to give the
requesting noteholders access to the list if it agrees to mail the desired
communication or proxy to all applicable noteholders.
Reports
Monthly reports containing information on the notes and the collateral
securing the notes will be filed with the Securities and Exchange Commission
if such reports are required to be filed by applicable law. These reports will
not be sent to noteholders. See "Where You Can Find More Information" in this
prospectus for information as to how these reports may be accessed.
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Description of the Investor Certificates Issued by the CARCO Receivables Trust
- -------------------------------------------------------------------------------
General
The CARCO receivables trust will issue the investor certificates of a
series under an Amended and Restated Pooling and Servicing Agreement (as
amended and supplemented from time to time, the "Pooling and Servicing
Agreement"), among DCWR, as seller of the receivables, DCS, as servicer of the
receivables, and the CARCO receivables trust trustee. The collateral
certificate is a series of investor certificates issued by the CARCO
receivables trust. The Pooling and Servicing Agreement will be substantially
in the form filed as an exhibit to the Registration Statement of which this
prospectus is a part. The CARCO receivables trust trustee will make available
for inspection a copy of the Pooling and Servicing Agreement, without exhibits
or schedules, to a noteholder on written request. The following summary
describes terms that may be applicable to the investor certificates of each
series, is not complete and is qualified in its entirety by reference to the
Pooling and Servicing Agreement and the applicable Series Supplement.
The investor certificates of each series will evidence undivided
beneficial interests in assets of the CARCO receivables trust allocated to the
certificateholders of the series (the "Certificateholders' Interest"). Each of
these interests will represent the right to receive from the CARCO receivables
trust assets funds in order to make payments of interest on and principal of
the certificates of the applicable series under the Pooling and Servicing
Agreement as described in the related Series Supplement or, in the case of the
collateral certificate, the right to receive from the CARCO receivables trust
assets funds in order to make payments of interest on and principal of the
notes issued by the issuer under the indenture and indenture supplements.
51
Dissolution of CARCO receivables trust. When the Adjusted Invested
Amounts of all series of certificates have been reduced to zero, the seller,
in its sole discretion, may dissolve the CARCO receivables trust. If that
occurs, the receivables will be transferred to the issuer. The issuer would
enter into a purchase agreement with DCWR to purchase receivables from it on
terms comparable to the analogous purchase provisions of the Pooling and
Servicing Agreement. The issuer would also enter into a servicing agreement
with DCS or its then successor to service the receivables on terms comparable
to the analogous servicing provisions of the Pooling and Servicing Agreement.
Interest
The certificates of a series or class will accrue interest on their
principal balance at the per annum rate set forth in the related Series
Supplement. The collateral certificate, however, will not bear interest at a
specified interest rate. Nonetheless, the collateral certificate will entitle
its holder to receive an allocable share of interest collections on the
receivables owned by the CARCO receivables trust like any other series of
investor certificates. The indenture trustee will apply the amount of interest
collections so allocated to the collateral certificate among the notes
generally to cover interest payments and other amounts owed on or with respect
to the notes. See "Sources of Funds to Pay the Notes." In the case of each
series of investor certificates other than the collateral certificate, the
CARCO receivables trustee will apply the amount of interest collections
allocated to these investor certificates generally to cover interest payments
and other amounts owed on or with respect to them.
Principal
The amount of principal collections and Miscellaneous Payments allocated
to a series of investor certificates will be applied with respect to that
series or to classes of that series depending on whether the related investor
certificates are in a revolving, accumulation, reinvestment or early
amortization period. In the case of the collateral certificate, however, these
periods will not apply to the collateral certificate. Instead, the collateral
certificate will entitle its holder to receive at all times an allocable share
of principal collections and Miscellaneous Payments on the receivables owned
by the CARCO receivables trust. The indenture trustee will apply the amount of
principal collections and Miscellaneous Payments so allocated to the
collateral certificate among the notes to cover principal payments and, if
applicable, shortfalls of interest payments owed on the notes. See "Sources of
Funds to Pay the Notes." The manner in which the indenture trustee applies
principal collections and Miscellaneous Payments with respect to a particular
note will depend on whether that note is in a revolving, accumulation or early
redemption period. The prospectus supplement will specify the principal
payment structure applicable to the related notes.
In the remainder of this subsection entitled "-- Principal," we provide a
general description of the principal payment structures applicable to a series
of investor certificates other than the collateral certificate (the
"non-collateral certificates"). This summary is being provided for your
information only and does not apply to the collateral certificate.
The non-collateral certificates of each series or class will have a
revolving period (the "Revolving Period"). During the Revolving Period,
principal collections and other amounts otherwise allocable to the
Certificateholders' Interest of that series or class of non-collateral
certificates will not be paid to their certificateholders. Instead, they will
be:
52
o paid to the seller;
o deposited to the Excess Funding Account, if any, for the series; or
o distributed to, or for the benefit of, the certificateholders of
other classes or series of investor certificates.
A Revolving Period for a series of non-collateral certificates will begin on
the date stated in the related Series Supplement (the "Series Cut-off Date")
and end on the earlier of:
o the day immediately before the Accumulation Period commencement date
or the Controlled Amortization Period commencement date for the
series; and
o the day immediately before the day on which an Early Amortization
Event or a Reinvestment Event occurs with respect to the series.
If a series of non-collateral certificates has more than one class of
certificates, each class may have a different Revolving Period.
We may use any of the following structures for paying principal on a
series or class of non-collateral certificates.
A series of non-collateral certificates may have an accumulation period
(the "Accumulation Period"). The Accumulation Period will begin at the close
of business on the date specified in or determined in the manner specified in
the related Series Supplement and end on the earliest of:
o the beginning of a Reinvestment Period with respect to the series;
o the beginning of an Early Amortization Period with respect to the
series; and
o payment in full of the outstanding principal amount of the
non-collateral certificates of the series.
During the Accumulation Period for a series of non-collateral
certificates, we will deposit principal collections and other amounts
allocable to the Certificateholders' Interest of the series, which may include
some Excess Principal Collections, on each payment date in a trust account
established for the benefit of the certificateholders of the series (a
"Principal Funding Account"). The CARCO receivables trust trustee will apply
the amounts in the Principal Funding Account, together with any amounts in the
Excess Funding Account allocable to the series, to make principal
distributions to the certificateholders of the series when due. The amount to
be deposited in a Principal Funding Account for any series on any payment date
may, but will not necessarily, be limited to the Controlled Deposit Amount.
The "Controlled Deposit Amount" is an amount stated in the related prospectus
supplement plus, in the case of some payment dates, any amounts in the Excess
Funding Account allocable to the series. If a series has more than one class
of certificates, each class may have a different Accumulation Period and a
separate Principal Funding Account and Controlled Deposit Amount. Also, there
may be priorities among the classes with respect to deposits of principal into
the Principal Funding Accounts.
A series of non-collateral certificates may have a controlled
amortization period (the "Controlled Amortization Period"). The Controlled
Amortization Period will begin at the close
53
of business on the date stated in or determined in the manner stated in the
related prospectus supplement and will end on the earliest of:
o the beginning of a Reinvestment Period with respect to the series;
o the beginning of an Early Amortization Period with respect to the
series; and
o payment in full of the outstanding principal amount of the
non-collateral certificates of the series.
During the Controlled Amortization Period for a series of non-collateral
certificates, the CARCO receivables trust trustee will apply principal
collections and other amounts allocable to the Certificateholders' Interest of
the series, which may include Excess Principal Collections and amounts in the
Excess Funding Account, on each payment date to make principal distributions
to any class of certificateholders of the series then scheduled to receive
distributions. The amount to be distributed to those certificateholders may be
limited to the Controlled Amortization Amount for the series. If a series has
more than one class of certificates, each class may have a different
Controlled Amortization Period and a separate Controlled Amortization Amount.
In addition, the related prospectus supplement may describe priorities among
the classes with respect to the distributions.
A series of non-collateral certificates may have a reinvestment period
(the "Reinvestment Period"). The Reinvestment Period will begin on the day on
which a Reinvestment Event has occurred and end on the earliest of:
o the beginning of an Early Amortization Period with respect to the
series;
o the recommencement of the Revolving Period in accordance with the
related Series Supplement; and
o payment in full of the outstanding principal amount of the
non-collateral certificates of the series.
During the Reinvestment Period for a series, we will deposit principal
collections and other amounts allocable to the Certificateholders' Interest of
the series, which may include some Excess Principal Collections, on each
payment date in a Principal Funding Account. The trustee will apply the funds
in the Principal Funding Account, together with any amounts in the Excess
Funding Account allocable to the series, to make principal distributions to
the certificateholders of the series when due. The amount to be deposited in a
Principal Funding Account for any series on any payment date will not be
limited to any Controlled Deposit Amount or Controlled Amortization Amount. If
a series has more than one class of certificates, each class may have a
separate Principal Funding Account and there may be priorities among the
classes with respect to deposits of principal into the Principal Funding
Accounts.
The "Early Amortization Period" for a series is the period beginning on
the day on which an Early Amortization Event has occurred with respect to the
series and ending on the earliest of:
o payment in full of the outstanding principal amount of the
non-collateral certificates of the series;
54
o the recommencement of the Revolving Period in accordance with the
related Series Supplement; and
o the Termination Date for the series.
The start of an Early Amortization Period for a series of non-collateral
certificates will terminate its Revolving Period, Reinvestment Period,
Controlled Amortization Period or Accumulation Period, as applicable. Further,
we will no longer pay principal collections and some other amounts allocable
to the Certificateholders' Interest of that series to the seller or the
holders of any other outstanding series. Instead, the CARCO receivables trust
trustee will distribute them as principal payments to the applicable
certificateholders of that series monthly on each payment date beginning with
the payment date following the Collection Period in which that Early
Amortization Period begins (each of those payment dates, a "Special Payment
Date"). During an Early Amortization Period for a series of non-collateral
certificates, distributions of principal to certificateholders of the series
will not be limited to any Controlled Deposit Amount or Controlled
Amortization Amount. In addition, on the first Special Payment Date for any
series, to the extent stated in the related Series Supplement, the CARCO
receivables trust trustee will distribute any funds on deposit in its Excess
Funding Account, if any, and any funds on deposit in its Principal Funding
Account with respect to that series to the certificateholders of the relevant
class or series up to the outstanding principal balance of their certificates.
See "--Reinvestment Events and Early Amortization Events" for a discussion of
the events which might lead to the beginning of an Early Amortization Period
with respect to a Series.
The CARCO receivables trust may use any combination of the above
described structures for a series or class of non-collateral certificates.
We will invest funds on deposit in any Principal Funding Account in
Eligible Investments. The Eligible Investments in the related prospectus
supplement intended to assure a minimum rate of return on the investment of
the funds. To make it more likely that the principal amount of a series or
class of certificates will be paid in full at the end of its Accumulation
Period, the series or class may be subject to a maturity liquidity facility or
other similar mechanism stated in the relevant prospectus supplement. A
maturity liquidity facility is a financial contract that typically provides
that enough principal will be available to retire the notes at a specified
date.
The Seller's Certificate
The Pooling and Servicing Agreement provides that the seller may, from
time to time, exchange a portion of the certificate evidencing the Seller's
Interest (the "Seller's Certificate") for another certificate (a "Supplemental
Certificate") for transfer or assignment to a person or entity chosen by the
seller upon the execution and delivery of a supplement to the Pooling and
Servicing Agreement, if
o the seller shall at the time of that exchange and after giving
effect to the exchange have an interest in the Pool Balance of not
less than 2% of the aggregate amount of the principal balances of
the receivables (the "Pool Balance"),
o the seller shall have delivered to the trustee, the Rating Agencies
and any Enhancement provider a Tax Opinion with respect to the
exchange and
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o the seller shall have delivered to the trustee written confirmation
from the applicable Rating Agencies that the exchange will not
result in a reduction or withdrawal of the rating of any outstanding
series or class of certificates.
Any later transfer or assignment of a Supplemental Certificate is also subject
to the second and third conditions described in the preceding sentence. The
seller may transfer a Supplemental Certificate to a securitization vehicle
that in turn issues asset-backed securities based on that Supplemental
Certificate.
New Issuances
The Pooling and Servicing Agreement states that under one or more Series
Supplements, the CARCO receivables trust trustee may issue two types of
certificates:
o one or more series of certificates which are transferable and have
the characteristics described below and
o the Seller's Certificate, and any Supplemental Certificate, which
will evidence the Seller's Interest and will be transferable only
upon the satisfaction of conditions described under "The Seller's
Certificate."
The Pooling and Servicing Agreement also provides that, under one or more
Series Supplements, the seller may cause the CARCO receivables trust trustee
to issue one or more new series. Under the Pooling and Servicing Agreement,
the seller may specify, among other things, with respect to any series:
o its name or designation;
o its initial principal amount, or method for calculating that amount;
o its certificate rate, or the method for determining its certificate
rate;
o a date on which it will begin its Accumulation Period or Controlled
Amortization Period, if any;
o the method for allocating principal and interest to
certificateholders of the series;
o the percentage used to calculate monthly servicing fees;
o the issuer and terms of any Enhancement or the level of
subordination, if any, provided by the Seller's Interest;
o the terms on which the certificates of the series may be exchanged
for certificates of another series, be subject to repurchase,
optional redemption or mandatory redemption by the seller or be
remarketed by any remarketing agent;
o the Series Termination Date; and
o any other terms permitted by the Pooling and Servicing Agreement
(all of those terms, the "Principal Terms" of the series).
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The seller may offer any series to the public under a prospectus or other
disclosure document in transactions either registered under the Securities Act
or exempt from registration under the Securities Act, directly or through one
or more underwriters or placement agents. There is no limit to the number of
series that may be issued under the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement provides that the seller may specify
Principal Terms of a new series so that each series has a Controlled
Amortization Period or Accumulation Period which may have a different length
and begin on a different date than the Controlled Amortization Period or
Accumulation Period for any other series. Further, one or more series may be
in their Reinvestment Periods, Early Amortization Periods, Controlled
Amortization Periods or Accumulation Periods while other series are not. Thus,
some series may be amortizing or accumulating principal, while other series
are not. Moreover, different series may have the benefits of different forms
of Enhancement issued by different entities. Under the Pooling and Servicing
Agreement, the CARCO receivables trust trustee will hold each form of
Enhancement only on behalf of a specified series or a particular class within
that series. The seller may specify different certificate rates and Monthly
Servicing Fees with respect to each series, or a particular class. In
addition, the seller has the option to vary among series, or classes within a
series, the terms upon which the seller may repurchase a series, or classes
within a series.
Under the Pooling and Servicing Agreement and a Series Supplement, a new
series may be issued only if specified conditions are satisfied. The seller
may cause the issuance of a new series by notifying the CARCO receivables
trust trustee at least five business days in advance of the applicable Series
Issuance Date. The notice shall state the designation of any series, and
classes within a series, if any. The Pooling and Servicing Agreement states
that the CARCO receivables trust trustee will issue a new series only when it
is delivered the following:
o a Series Supplement in form satisfactory to the CARCO receivables
trust trustee signed by the seller and the servicer and specifying
the Principal Terms of the series;
o the form of any Enhancement and any related agreement;
o an opinion of counsel to the effect that, for federal income tax and
Michigan income and single business tax purposes;
o the issuance will not adversely affect the characterization of
the certificates of any outstanding series or class as debt of
the seller,
o such issuance will not cause a taxable event to any
certificateholders (an opinion of counsel to the effect
referred to in the first subclause above and this subclause
with respect to any action is referred to in this prospectus as
a "Tax Opinion"), and
o the new series will be characterized as debt of the seller; and
o written confirmation from each applicable Rating Agency that the
issuance will not cause it to reduce or withdraw the rating of any
outstanding series or class of certificates.
The issuance is also subject to the conditions that
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o the seller shall have represented and warranted that the issuance
shall not, in the reasonable belief of the seller, cause an Early
Amortization Event or Reinvestment Event to occur with respect to
any outstanding series; and
o after giving effect to the issuance, the seller's interest in the
Pool Balance shall not be less than 2% of the Pool Balance.
When all of these conditions are satisfied, the CARCO receivables trust
trustee will issue the series.
Conveyance of Receivables and Collateral Security
DCWR has sold and assigned or will sell and assign to the CARCO
receivables trust:
o all of its right, title and interest in and to the receivables and
the related Collateral Security as of the Initial Cut-Off Date;
o all receivables created in the Accounts after the Initial Cut-Off
Date;
o its interests in the related Collateral Security and the Receivables
Purchase Agreement; and
o the proceeds of all of the foregoing.
The "Collateral Security" in respect of the receivables is a security
interest in vehicles and parts inventory, equipment, fixtures, service
accounts and, in some cases, realty and a personal guarantee.
DCWR and DCS must indicate in their computer records that the receivables
in the Accounts and the related Collateral Security have been conveyed to the
trust. In addition, the seller must provide to the CARCO receivables trust
trustee a computer file or microfiche or written list containing a true and
complete list showing for each Account, as of the Initial Cut-Off Date and the
applicable Additional Cut-Off Date:
o its account number;
o the outstanding balance of the receivables in the Account; and
o the outstanding balance of principal receivables in the Account.
DCS will retain and will not deliver to the CARCO receivables trust
trustee any other records or agreements relating to the receivables. Except as
set forth above, DCS has not and will not segregate the records and agreements
relating to the trust's receivables from those relating to other accounts of
DCS. DCS has not and will not stamp or mark the physical documentation
relating to the receivables to reflect the transfer of the receivables to the
trust. The seller will file one or more financing statements in accordance
with applicable state law to perfect the CARCO receivables trust's interest in
the receivables, the Collateral Security, the Receivables Purchase Agreement
and the proceeds of those items. See "Risk Factors" and "Legal Aspects of the
Receivables."
As contemplated above and as described below under "-- Addition of
Accounts", the seller has the right, subject to limitations and conditions,
and in some circumstances is obligated, to designate
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from time to time additional accounts to be included as Additional Accounts, to
purchase from DCS the receivables then existing or created after that time in
the Additional Accounts and to convey the receivables to the CARCO receivables
trust. Each Additional Account must be an Eligible Account. In respect of any
conveyance of receivables in Additional Accounts, the seller will follow the
procedures set forth in the preceding paragraph, except the list will show
information for the Additional Accounts as of the date the Additional Accounts
are identified and selected (the "Additional Cut-Off Date").
Representations and Warranties
The seller will represent and warrant to the CARCO receivables trust,
among other things, that:
o as of each Series Cut-Off Date, and the date of issuance of any
series (a "Series Issuance Date"), or, in the case of the Additional
Accounts, as of the Additional Cut-Off Date and the date the related
receivables are transferred to the CARCO receivables trust (an
"Addition Date"), each Account or Additional Account was an Eligible
Account;
o as of the Series Cut-Off Date, or as of the Additional Cut-Off Date,
in the case of any Additional Accounts, or as of the date any future
receivable is generated (a "Receivables Transfer Date"), each
receivable is an Eligible Receivable or, if the receivable is not an
Eligible Receivable, the receivable is conveyed to the CARCO
receivables trust as described below under "-- Ineligible
Receivables, the Installment Balance Amount and the
Overconcentration Amount";
o each receivable and all Collateral Security conveyed to the CARCO
receivables trust on the Receivables Transfer Date or, in the case
of Additional Accounts, on the Addition Date, and all of the
seller's right, title and interest in the Receivables Purchase
Agreement, have been conveyed to the CARCO receivables trust free
and clear of any liens; and
o all appropriate consents and governmental authorizations required to
be obtained by the seller in connection with the conveyance of each
receivable or Collateral Security have been duly obtained.
If the seller breaches any representation and warranty described in the
preceding paragraph the CARCO receivables trust will reassign the related
receivables to the seller in the manner described in the following paragraph.
However, the CARCO receivables trust will be entitled to make that
reassignment only if:
o the breach remains uncured for 30 days or a longer period as may be
agreed to by the CARCO receivables trust trustee, after the earlier
to occur of the discovery of the breach by the seller or the
servicer or receipt of written notice of the breach by the seller or
the servicer; and
o the breach has a materially adverse effect on the
Certificateholders' Interest in the receivable or, in the case of a
breach relating to an Account, all receivables in the related
Account ("Ineligible Receivables").
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The CARCO receivables trust will reassign each Ineligible Receivable to
the seller on or before the end of the Collection Period in which the
reassignment obligation arises by deducting the principal balance of the
receivable from the Pool Balance. A deduction may cause the Pool Balance minus
the aggregate Invested Amounts for all outstanding series (the "Seller's
Participation Amount") to be less than the aggregate Available Subordinated
Amounts for all outstanding series (the "Trust Available Subordinated Amount")
on the second business day preceding the payment date (each second business
day preceding a Distribution Day, a "Determination Date"), after giving effect
to the allocations, distributions, withdrawals and deposits to be made on the
payment date. The Available Subordinated Amount for the collateral certificate
is the sum of the overcollateralization amounts for all of the series of
notes. If this happens, the seller must make a deposit into the Collection
Account in immediately available funds in an amount equal to the amount by
which the Seller's Participation Amount would be less than the Trust Available
Subordinated Amount (that amount, a "Transfer Deposit Amount"). If the
Transfer Deposit Amount is not so deposited, the principal balance of the
related Ineligible Receivables will be deducted from the Pool Balance only to
the extent the Seller's Participation Amount is not reduced below the Trust
Available Subordinated Amount. Any principal balance not so deducted will not
be reassigned and will remain part of the CARCO receivables trust. The
reassignment of any receivable to the seller and the payment of any related
Transfer Deposit Amount will be the sole remedy available against the seller
for any breach of the representations and warranties described above in this
section with respect to the receivables.
The seller will also represent and warrant to the CARCO receivables trust
that, among other things, as of each Series Issuance Date:
o it is duly formed as a limited liability company and in good
standing, it has the authority to consummate the transactions
contemplated by the Pooling and Servicing Agreement and the Pooling
and Servicing Agreement constitutes a valid, binding and enforceable
agreement of the seller; and
o the Pooling and Servicing Agreement constitutes a valid sale,
transfer and assignment to the trust of all right, title and
interest of the seller in the receivables and the Collateral
Security, whether then existing or created after that time, the
Receivables Purchase Agreement, and the proceeds of those items,
including proceeds in any of the accounts established for the
benefit of the certificateholders of any series, subject to the
rights of the Purchasers with respect to some of the Collateral
Security, under the UCC as then in effect in the State of Michigan,
which is effective as to each receivable existing on the Initial
Closing Date, or as of the Addition Date, if applicable, or, as to
each receivable arising after those dates, upon the creation of that
receivable and until termination of the CARCO receivables trust.
If a breach of any of the representations and warranties described in the
preceding paragraph has a materially adverse effect on the Certificateholders'
Interest in the receivables, either the CARCO receivables trust trustee or the
holders of certificates of all outstanding series evidencing not less than a
majority of the aggregate unpaid principal amount of all outstanding series,
by written notice to the seller and the servicer, and to the trustee and the
provider of any Enhancement if given by certificateholders, may direct the
seller to accept the reassignment of the Certificateholders' Interest of all
series within 60 days of the notice, or within a longer period
60
specified in the notice. The seller must accept the reassignment of the
Certificateholders' Interest on a payment date occurring within the 60-day
period. However, the reassignment need not be made if at the end of the
applicable period, the representations and warranties shall then be true
and correct in all material respects and any materially adverse effect
caused by the breach shall have been cured. The price for the reassignment
will typically be equal to the sum of:
o the aggregate "Invested Amounts", as specified in the related Series
Supplements, of all series on the Determination Date preceding the
payment date on which the purchase is scheduled to be made;,
o accrued and unpaid interest on the unpaid principal amount of the
certificates at the applicable certificate rate, together with
interest on overdue interest; and
o with respect to any particular series, any other amounts stated in
its Series Supplement.
The payment of the reassignment price for all outstanding series will be
considered a payment in full of the Certificateholders' Interest. The CARCO
receivables trust trustee will distribute those funds to the applicable
certificateholders upon presentation and surrender of the certificates. If the
CARCO receivables trust trustee or the certificateholders give a notice as
provided in the preceding paragraph, the obligation of the seller to make any
deposit will be the sole remedy respecting a breach of the representations and
warranties available to certificateholders or the CARCO receivables trust
trustee on behalf of the certificateholders.
DCWR will be deemed to have made all the representations and warranties
of the seller in the Pooling and Servicing Agreement and in any Series
Supplement with respect to any series or class of certificates.
Eligible Accounts and Eligible Receivables
As discussed under "-- Representations and Warranties" above, the seller
represents that, as of specified times, the Accounts are Eligible Accounts and
the receivables are Eligible Receivables.
An "Eligible Account" is a wholesale financing line of credit extended by
DCS, directly or as successor to CFC LLC, CFC Corp. or CCC, to a dealer,
which, as of its date of determination:
o is established by DCS, directly or as successor to CFC LLC, CFC
Corp. or CCC, in the ordinary course of business under a
floorplan financing agreement;
o is in favor of an Eligible Dealer;
o is in existence and maintained and serviced by DCS, directly or
as successor to CFC LLC, CFC Corp. or CCC; and
o in respect of which no amounts have been charged off as
uncollectible or are classified as past due or delinquent.
An "Eligible Dealer" is a dealer:
o which is located in the United States of America, including its
territories and possessions;
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o which has not been identified by the servicer as being the
subject of any voluntary or involuntary bankruptcy proceeding
or in voluntary or involuntary liquidation;
o in which DaimlerChrysler or any affiliate of DaimlerChrysler
does not have an equity investment; and
o which has not been classified by the servicer as being under
Dealer Trouble status.
An "Eligible Receivable" is a receivable:
o which was originated or acquired by DCS, directly or as
successor to DCS Corp. or CCC, in the ordinary course of
business;
o which has arisen under an Eligible Account and is payable in
United States dollars;
o which is owned by DCS, CFC LLC, CFC Corp. or CCC at the time of
sale to the seller;
o which represents the obligation of a dealer to repay an advance
made to the dealer to finance the acquisition of vehicles;
o which at the time of creation and at the time of transfer to
the trust is secured by a perfected first priority security
interest in the related vehicle;
o which was created in compliance in all respects with all
requirements of law applicable to the receivable and under a
floorplan financing agreement which complies in all respects
with all requirements of law applicable to any party to the
agreement;
o with respect to which all consents and governmental
authorizations required to be obtained by DaimlerChrysler, CCC,
CFC LLC, CFC Corp., DCS or the seller in connection with the
creation of the receivable or the transfer of the receivable to
the CARCO receivables trust or the performance by CCC, CFC LLC,
CFC Corp. or DCS of the floorplan financing agreement under
which the receivable was created, have been duly obtained;
o as to which at all times following the transfer of the
receivable to the CARCO receivables trust, the CARCO
receivables trust will have good and marketable title to the
receivable free and clear of all liens arising prior to the
transfer or arising at any time, other than liens permitted
under the Pooling and Servicing Agreement;
o which has been the subject of a valid transfer and assignment
from the seller to the CARCO receivables trust of all the
seller's interest in the receivable, including any proceeds of
the receivable;
o which will at all times be the legal and assignable payment
obligation of the related dealer, enforceable against the
dealer in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy or other similar laws;
o which at the time of transfer to the CARCO receivables trust is
not subject to any right of rescission, setoff, or any other
defense, including defenses arising out of violations of usury
laws, of the dealer;
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o as to which, at the time of transfer of the receivable to the
CARCO receivables trust, DaimlerChrysler, CCC, CFC LLC, CFC
Corp., DCS and the seller have satisfied all their respective
obligations with respect to the receivable required to be
satisfied at that time;
o as to which, at the time of transfer of the receivable to the
CARCO receivables trust, neither DaimlerChrysler, CCC, CFC LLC,
CFC Corp. or DCS nor the seller has taken or failed to take any
action which would impair the rights of the trust or the
certificateholders;
o which constitutes "chattel paper" as defined in Article 9 of
the UCC as then in effect in the State of Michigan; and
o which was transferred to the CARCO receivables trust with all
applicable governmental authorization.
The CARCO receivables trust trustee did not and will not make any initial
or periodic general examination of the receivables or any records relating to
the receivables for the purpose of establishing the presence or absence of
defects, compliance with representations and warranties of the seller or for
any other purpose. Also, the CARCO receivables trust trustee will not make any
initial or periodic general examination of the servicer for the purpose of
establishing the compliance by the servicer with its representations or
warranties, the observation of its obligations under the Pooling and Servicing
Agreement or for any other purpose. The servicer, however, will deliver to the
CARCO receivables trust trustee on or before March 31 of each calendar year,
an opinion of counsel with respect to the validity of the interest of the
trust in and to the receivables and other components of the CARCO receivables
trust.
Ineligible Receivables, the Installment Balance Amount
and the Overconcentration Amount
For the purpose of facilitating the administration and reporting
requirements of the servicer under the Pooling and Servicing Agreement, the
seller will transfer all Ineligible Receivables arising in an Eligible Account
to the CARCO receivables trust. If, however, the Series Supplement for a
series so states, the Incremental Subordinated Amount for the series will be
adjusted by the portion of the aggregate principal amount of Ineligible
Receivables included in the series allocable to the Certificateholders'
Interest of the series. Also, if the Series Supplement for a series so states,
the Incremental Subordinated Amount for the series shall be adjusted to
reflect, on each payment date:
o the aggregate principal amount of receivables in the trust on
the payment date which are Dealer Overconcentrations (the
"Dealer Overconcentration Amount") allocable to the
Certificateholders' Interest of the series; and
o the portion of the aggregate amount of Installment Balances in
respect of which DCS has not received an offsetting payment
from the related dealer on the payment date (the "Installment
Balance Amount") allocable to the Certificateholders' Interest
of the series.
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"Dealer Overconcentrations" on any payment date means, with respect to
any dealer or group of affiliated dealers, the excess, if any, of:
o the aggregate principal amount of receivables due from the
dealer or group of affiliated dealers on the last day of the
Collection Period immediately preceding such payment date over
o 2% of the Pool Balance on the last day of the immediately
preceding Collection Period; provided that when the
certificates that were outstanding at the time the collateral
certificate was issued are no longer outstanding, the
percentage applicable to certain dealers or groups of dealers
will be 4% rather than 2%.
At its option, the servicer may purchase one or more Ineligible
Receivables or one or more receivables that are part of a Dealer
Concentration, in each case at a price equal to the principal amount plus
accrued and unpaid interest.
The collateral certificate will not have an Incremental Subordinated
Amount. However, unless we otherwise specify in the related prospectus
supplement, the series nominal liquidation amount for a series of notes will
include the overcollateralization amount for that series, which may in turn be
sized on the basis of the amount of Ineligible Receivables and an
overconcentration amount.
Addition of Accounts
Subject to the conditions described in this paragraph, the seller has the
right to designate from time to time additional accounts to be included as
Accounts (the "Additional Accounts"). Also, the seller must add the
receivables of Additional Accounts if the Pool Balance on the last day of any
Collection Period is less than the Required Participation Amount as of the
following payment date, after giving effect to the allocations, distributions,
withdrawals and deposits to be made on the payment date. In that case, unless
insolvency events have occurred with respect to the seller, DCS or
DaimlerChrysler, then DCS under the Receivables Purchase Agreement must sell
to the seller, and the seller under the Pooling and Servicing Agreement must
transfer and assign to the CARCO receivables trust, within 10 business days
after the end of the Collection Period, interests in all receivables arising
in the Additional Accounts, whether the receivables are then existing or
created after that time. Any designation of Additional Accounts is subject to
the following conditions, among others:
o each Additional Account must be an Eligible Account;
o the seller shall represent and warrant that the addition of the
Additional Accounts shall not, in the reasonable belief of the
seller, cause an Early Amortization Event or Reinvestment Event
to occur with respect to any series;
o the seller shall not select the Additional Accounts in a manner
that it believes is adverse to the interests of the
certificateholders or any Enhancement provider;
o if the addition is not required, the seller shall deliver a Tax
Opinion and other opinions of counsel with respect to the
addition of the Additional Accounts to the CARCO receivables
trust trustee, the Rating Agencies and any Enhancement
provider; and
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o the applicable Rating Agencies shall have provided written
confirmation that the addition will not cause the rating of any
outstanding series or class of certificates to be reduced or
withdrawn.
The seller may, however, from time to time, at its discretion, and
subject only to the limitations specified in this paragraph, designate
Additional Accounts. Additional Accounts designated in accordance with the
provisions described in this paragraph are referred to in this prospectus as
"Automatic Additional Accounts." Unless each Rating Agency otherwise consents:
o the number of Automatic Additional Accounts designated with
respect to any of the three consecutive Collection Periods
beginning in January, April, July and October of each calendar
year shall not exceed 8% of the number of Accounts as of the
first day of the calendar year during which the Collection
Periods begin; provided that such percentage will be 10% rather
than 8% when we have retired all those certificates that were
outstanding when the collateral certificate was issued; and
o the number of Automatic Additional Accounts designated during
any calendar year shall not exceed 20% of the number of
Accounts as of the first day of the calendar year.
On or before the first business day of each Collection Period beginning in
January, April, July and October of each calendar year, the seller shall have
requested and obtained notification from each Rating Agency of any limitations
to the right of the seller to designate Eligible Accounts as Automatic
Additional Accounts during any period which includes the Collection Period. On
or before January 31, April 30, July 31 and October 31 of each calendar year,
the CARCO receivables trust trustee shall have received confirmation from each
Rating Agency that the addition of all Automatic Additional Accounts included
as Accounts during the three consecutive Collection Periods ending in the
calendar month prior to that date shall not have resulted in any applicable
Rating Agency reducing or withdrawing its rating of any outstanding series or
class of certificates or notes, as applicable. On or before January 31 and
July 31 of each calendar year, or on or before the last day of each month in
some circumstances, the seller shall have delivered to the CARCO receivables
trust trustee, each Rating Agency and any Enhancement provider an opinion of
counsel with respect to the Automatic Additional Accounts included as Accounts
during the preceding calendar year confirming the validity and perfection of
each transfer of that Automatic Additional Accounts. If the CARCO receivables
trust trustee has not received the Rating Agency confirmation or opinion of
counsel with respect to any Automatic Additional Accounts, the seller must
remove the Automatic Additional Accounts from the CARCO receivables trust.
Each Additional Account, including each Automatic Additional Account,
must be an Eligible Account at the time of its addition. However, since
Additional Accounts may not have been a part of the initial portfolio of CCC,
DCS Corp. or DCS, they may not be of the same credit quality as the initial
Accounts. Additional Accounts may have been originated by CCC, DCS Corp. or
DCS at a later date using credit criteria different from those which were
applied to the initial Accounts or may have been acquired by CCC, DCS Corp. or
DCS from another wholesale lender that had different credit criteria. In
addition, the seller will be permitted to designate Additional Accounts that
contain receivables that have been sold or pledged to third parties. However,
following the applicable Additional Cut-Off Date, no receivables arising after
the Additional Cut-Off Date in any of those accounts shall be sold or pledged
to any third parties.
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The "Required Participation Amount" for any date is an amount equal to
the sum of:
o the sum of the amounts for each series obtained by multiplying
the Required Participation Percentage for the series by the
Initial Invested Amount for the series at that time. However,
each Excluded Series will be excluded from this calculation
until the Invested Amount of the related Paired Series is
reduced to zero; and
o the Trust Available Subordinated Amount on the immediately
preceding Determination Date, after giving effect to the
allocations, distributions, withdrawals and deposits to be made
on the payment date following the Determination Date.
The "Required Participation Percentage" for a series will be specified in
the related Series Supplement.
Removal of Accounts
The seller shall have the right at any time to require the removal from
the CARCO receivables trust of Eligible Accounts. The removal right may be
exercised only once a month. To remove any Eligible Account, the seller, or
the servicer on its behalf, shall, among other things:
o furnish to the CARCO receivables trust trustee, any Enhancement
provider and the Rating Agencies a written notice (the "Removal
Notice") stating the Determination Date on which removal of one
or more Accounts will commence (the "Removal Commencement
Date") and the Accounts to be removed from the CARCO
receivables trust (the "Designated Accounts");
o determine on the Removal Commencement Date the aggregate
principal balance of receivables in respect of each Designated
Account (the "Designated Balance");
o from and after the Removal Commencement Date, cease to transfer
to the CARCO receivables trust all receivables arising in the
Designated Accounts;
o from and after the Removal Commencement Date, allocate all
principal collections in respect of each Designated Account,
first to the oldest outstanding principal balance of the
Designated Account, until the Determination Date on which the
Designated Balance in the Designated Account is reduced to zero
(the "Removal Date");
o on each business day from and after the Removal Commencement
Date to and until the related Removal Date, allocate:
o to the CARCO receivables trust, to be further allocated
under the Pooling and Servicing Agreement, interest
collections in respect of each Designated Account with
respect to receivables in all Designated Accounts sold to
the CARCO receivables trust and
o to the seller the remainder of the interest collections in
all of those Designated Accounts;
o represent and warrant that the removal of any Eligible Account
on any Removal Date shall not, in the reasonable belief of the
seller, cause an Early Amortization Event or
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Reinvestment Event to occur with respect to any series or cause
the Pool Balance to be less than the Required Participation
Amount;
o represent and warrant that no selection procedures believed by
the seller to be adverse to the interests of the
certificateholders were utilized in selecting the Designated
Accounts and that the selection procedures were applied so as
to randomly select the Designated Accounts;
o represent and warrant that the removal will not cause the
rating of any outstanding series or class of certificates to be
reduced or withdrawn; and
o on or before the related Removal Date, deliver to the CARCO
receivables trust trustee and any Enhancement provider an
officers' note confirming the items set forth in the sixth,
seventh and eighth clauses above and a Tax Opinion with respect
to the removal.
No Designated Accounts shall be removed if the removal will cause the
rating of any outstanding series or class of certificates to be reduced or
withdrawn.
The seller shall also have the right, but shall not be obligated, to
remove from the CARCO receivables trust any Account with respect to which the
related dealer has gone into "Dealer Trouble Status" as described under "The
Dealer Floorplan Business--`Dealer Trouble Status' and DCS's Write-off
Policy." To do so, the seller will take the actions specified in the first
five clauses of the preceding paragraph.
On any date on which an Account becomes an Ineligible Account, which date
will be deemed the Removal Commencement Date for the Account, the seller will
start the removal of the Account from the CARCO receivables trust by taking
each of the actions specified in the first five clauses of the preceding
paragraph with respect to the Ineligible Account.
Upon satisfaction of the above conditions, on the Removal Date with
respect to any the Designated Account, the seller will stop allocating
collections of receivables to the Designated Account, which shall be deemed
removed from the CARCO receivables trust for all purposes (a "Removed
Account").
In addition to the removal rights described in the four paragraphs above,
the seller shall have the right at any time to remove Accounts from the CARCO
receivables trust and, in connection with the removal, repurchase the then
existing receivables in the Accounts. To remove Accounts and repurchase the
then existing receivables in those Accounts, the seller, or the servicer on
its behalf, shall, among other things:
o furnish to the CARCO receivables trust, each Enhancement
provider and the Rating Agencies a Removal Notice stating the
Designated Accounts which are to be removed, and the then
existing receivables in the Designated Accounts (the
"Designated Receivables") which are to be repurchased from the
CARCO receivables trust and the Determination Date on which the
removal of the Designated Accounts and the purchase of the
Designated Receivables will occur (the "Removal And Repurchase
Date");
o deliver to the CARCO receivables trust trustee on the Removal
and Repurchase Date a computer file or microfiche or written
list containing a true and complete list of the
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Removed Accounts stating for each Account its account number
and the aggregate amount of receivables outstanding in the
Account;
o represent and warrant that the removal of any Eligible Account
and the repurchase of the receivables then existing in the
Account on any Removal and Repurchase Date shall not, in the
reasonable belief of the seller, cause an Early Amortization
Event or Reinvestment Event to occur with respect to any Series
or cause the Pool Balance to be less than the Required
Participation Amount;
o represent and warrant that no selection procedures believed by
the seller to be adverse to the interests of the noteholders
were used in selecting the Designated Accounts;
o represent and warrant as of the Removal and Repurchase Date
that the list of Removed Accounts delivered to the CARCO
receivables trust trustee as of the Removal and Repurchase
Date, is true and complete in all material respects;
o represent and warrant that the removal and repurchase will not
cause the rating of any outstanding series or class of
certificates to be reduced or withdrawn by the applicable
Rating Agency;
o deliver to the CARCO receivables trust trustee, each Rating
Agency and any Enhancement providers a Tax Opinion, dated the
Removal and Repurchase Date, with respect to the removal and
repurchase; and
o deliver to the CARCO receivables trust trustee and any
Enhancement providers an officers' note confirming the items
set forth in the third through sixth clauses above.
Except for the removal of Accounts in Dealer Trouble Status, the seller
may not remove Designated Accounts or repurchase Designated Receivables unless
each Rating Agency shall have notified the seller, the servicer and the CARCO
receivables trust trustee in writing that the removal and repurchase will not
cause the Rating Agency's rating of any outstanding series or class of
certificates to be reduced or withdrawn.
Upon satisfaction of the above conditions, on the Removal and Repurchase
Date with respect to any Designated Account and Designated Receivables, the
Designated Account shall be deemed removed, and the Designated Receivables
("Repurchased Receivables") shall be deemed repurchased, from the CARCO
receivables trust for all purposes.
The seller, however, shall have the right to require the reassignment to
it of all the CARCO receivables trust's right, title and interest in the
receivables then existing and created after that time in Accounts ("Automatic
Removed Accounts") designated by the seller, together with existing and future
collections and proceeds from those receivables, upon satisfaction of the
following conditions:
o on or before the fifth business day immediately preceding the
date upon which the Accounts are to be removed, the seller
shall have given the CARCO receivables trust trustee, each
Enhancement provider and the Rating Agencies a Removal Notice
specifying the date for removal of the Automatic Removed
Accounts (the "Automatic Removal Date");
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o on or prior to the date that is five business days after the
Automatic Removal Date, the seller shall have delivered to the
CARCO receivables trust trustee a computer file or microfiche
or written list containing a true and complete list of the
Automatic Removed Accounts stating for each Account, as of the
removal notice date, its account number and the aggregate
amount of receivables outstanding in the Account;
o the seller shall have represented and warranted as of each
Automatic Removal Date that the list of Automatic Removed
Accounts delivered to the CARCO receivables trust trustee, as
of the Automatic Removal Date, is true and complete in all
material respects and that the selection procedures for
selecting Automatic Removed Accounts were applied so as to
randomly select the Automatic Removed Accounts from the entire
population of Accounts;
o the CARCO receivables trust trustee shall have received
confirmation from each Rating Agency that the removal will not
cause the Ratings Agency's rating of any outstanding series or
class of certificates to be reduced or withdrawn;
o the seller shall have delivered to the CARCO receivables trust
trustee, each Rating Agency and any Enhancement providers an
officers' certificate, dated the Automatic Removal Date, to the
effect that the seller reasonably believes the removal will not
cause an Early Amortization Event or Reinvestment Event to
occur with respect to any series; and
o the seller shall have delivered to the CARCO receivables trust
trustee, each Rating Agency and any Enhancement providers a Tax
Opinion, dated the Automatic Removal Date, with respect to the
removal.
However, from and after the date on which no series issued prior to March
10, 1999, is outstanding, the conditions specified in the first clause above
that relate to Enhancement providers and Rating Agencies and the conditions
specified in the fourth, fifth and sixth clauses above will not be required if
all of the Accounts to be removed have liquidated and have zero balances.
Upon satisfaction of the above conditions, on the Automatic Removal Date
the CARCO receivables trust's interest in the receivables arising in the
Automatic Removed Accounts, all monies due and to become due and all amounts
received with respect to the receivables and all proceeds of the receivables
shall be deemed removed from the trust for all purposes.
Excluded Series
A series of notes may be designated as an excluded series (an "Excluded
Series") with respect to a series of notes previously issued by the CARCO
receivables trust as to which the Accumulation Period or Controlled
Amortization Period has commenced (a "Paired Series"). This allows a seller,
in effect, to replace an amortizing series with a new series without waiting
for the amortizing series to be paid in full.
Each Excluded Series will be prefunded with an initial deposit to a
prefunding account in an amount equal to the initial principal balance of the
Excluded Series. The source of funds will primarily be the proceeds of the
offering of the Excluded Series. Any prefunding account will be held for the
benefit of the Excluded Series and not for the benefit of the Paired Series.
As funds are accumulated in the Principal Funding Account for the Paired
Series or distributed to holders of notes of the Paired Series, the CARCO
receivables trust trustee will distribute to the seller an equal amount of
funds from any prefunding account for the Excluded Series. Until payment in
full of the
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Paired Series, no interest collections, principal collections, Defaulted
Amounts or Miscellaneous Payments will be allocated to the related
Excluded Series. Also, it is expected that any Excluded Series will be
excluded from the calculation of the Required Participation Amount as
described under "-- Addition of Accounts."
Collection Account
In general, either the servicer, subject to limitations, will hold the
CARCO receivables trust's funds or the CARCO receivables trust trustee will
keep those funds in accounts that must be Eligible Deposit Accounts.
The servicer has established and will maintain an Eligible Deposit
Account for the benefit of the certificateholders in the name of the CARCO
receivables trust trustee, on behalf of the trust (the "Collection Account").
"Eligible Deposit Account" means either:
o a segregated account with an Eligible Institution; or
o a segregated trust account with the corporate trust department
of a depository institution organized under the laws of the
United States or any one of the states of the United States, or
any domestic branch of a foreign bank, having corporate trust
powers and acting as trustee for funds deposited in the
account, so long as any of the securities of the depository
institution has a credit rating from each Rating Agency in one
of its generic rating categories which signifies investment
grade.
"Eligible Institution" means:
o the corporate trust department of the trustee or
o a depository institution organized under the laws of the United
States or any one of the states of the United States, or the
District of Columbia, or a domestic branch of a foreign bank,
which at all times
o has either
o a long-term unsecured debt rating of A2 or better by
Moody's Investors Service, Inc. ("Moody's") and of AAA or
better by Standard & Poor's Ratings Services, a division
of The McGraw-Hill Companies ("Standard & Poor's") or
o a certificate of deposit rating of P-1 by Moody's or A-1+
by Standard & Poor's, and
o is a member of the FDIC.
Funds in the Collection Account generally will be invested in Eligible
Investments. "Eligible Investments" are book-entry securities, negotiable
instruments or physical securities having original or remaining maturities of
30 days or less, but in no event occurring later than the payment date next
succeeding the trustee's acquisition of the book-entry securitized, negotiable
instruments or physical securities, except as otherwise provided in the
related Series Supplement. Eligible Investments are limited to:
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o direct obligations of, and obligations fully guaranteed as
to timely payment by, the United States of America;
o demand deposits, time deposits or certificates of deposit
of any depositary institution or trust company
incorporated under the laws of the United States of
America or any state of the United States, or any domestic
branch of a foreign bank, and subject to supervision and
examination by Federal or state banking or depository
institution authorities. However, at the time of the CARCO
receivables trust's investment or contractual commitment
to invest in the demand deposits, the deposits or
certificates of deposit, the commercial paper or other
short-term unsecured debt obligations, other than
obligations the rating of which is based on the credit of
a person or entity other than the depository institution
or trust company of the depositary institution or trust
company, must have a credit rating from each of the Rating
Agencies in its highest investment category;
o commercial paper having, at the time of the CARCO
receivables trust's investment or contractual commitment
to invest in the commercial paper, a rating from each of
the Rating Agencies in its highest investment category;
o except during a Reinvestment Period with respect to any
series, investments in money market funds having a rating
from each of the Rating Agencies in its highest investment
category or otherwise approved in writing thereby;
o bankers' acceptances issued by any depository institution
or trust company referred to in the second clause of this
sentence;
o repurchase obligations, including those of appropriately
rated broker-dealers and financial institutions; and
o any other investment consisting of a financial asset that
by its terms converts to cash within a finite period of
time. However, each Rating Agency shall have notified the
seller, the servicer and the CARCO receivables trust
trustee that the CARCO receivables trust's investment in
the financial asset will not cause the Rating Agency to
reduce or withdraw its then rating of any outstanding
class or series.
Any earnings, net of losses and investment expenses, on funds in the
Collection Account will be credited to the Collection Account. The servicer
will have the revocable power to instruct the CARCO receivables trust trustee
to make withdrawals and payments from the Collection Account for the purpose
of making payments under the Pooling and Servicing Agreement. The servicer may
select an appropriate agent as representative of the servicer for the purpose
of choosing the investments.
Excess Funding Account
Except, to the extent provided in the related Series Supplement, during
an Early Amortization Period or Reinvestment Period for a series, we will keep
the Excess Funded Amount, if any, for that series in an Eligible Account (the
"Excess Funding Account") established with the CARCO receivables trust trustee
for the series. The "Excess Funded Amount" for a series will initially equal
the excess, if any, of the initial principal balance of the certificates of
the series over the
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Initial Invested Amount of the series. The CARCO receivables trust trustee will
invest funds on deposit in the Excess Funding Account for a series at the
direction of the servicer in Eligible Investments. The investments must mature
on or prior to the next payment date. The servicer may select an agent for the
purpose of designating the investments.
The CARCO receivables trust trustee will distribute funds on deposit in
the Excess Funding Account for a series to the seller or allocate them to one
or more other series which are in Controlled Amortization, Early Amortization,
Reinvestment or Accumulation Periods to the extent of any increases in the
Invested Amount of that series as a result of the addition of receivables to
the CARCO receivables trust, a reduction in the Seller's Interest, or a
reduction in the Initial Invested Amount of any other series. The trustee will
deposit additional amounts in the Excess Funding Account for a series on a
payment date to the extent that the sum of the Certificateholders' Interest of
the series in principal receivables and the amount on deposit in the Excess
Funding Account, if any, for the series prior to that date is less than the
outstanding principal balance of the certificates of the series, but only to
the extent that funds are available as provided in the related Series
Supplement. The allocation of additional receivables to increase the Invested
Amount of each series that provides for an Excess Funding Account or similar
arrangement involving fluctuating levels of investment in the receivables will
generally be made pro rata on the basis of the amounts in the excess Funding
Accounts or a similar basis. The deposit of amounts in the Excess Funding
Accounts for each of those series will generally be made pro rata on the basis
of their respective Adjusted Invested Amounts.
On each payment date, we will apply all investment income earned on
amounts in the Excess Funding Account for any series since the preceding
payment date as described in this prospectus and in the related prospectus
supplement.
The trustee will distribute funds on deposit in the Excess Funding
Account for a series on the earliest of:
o the commencement of a Reinvestment Period with respect to the
series;
o the commencement of an Early Amortization Period with respect
to the series; and
o the payment date or payment dates specified in or determined in
the manner provided in the Series Supplement for the series
to the certificateholders of the series or a class of the series or deposit
those amounts in the Principal Funding Account for the series or a class of
the series, in each case if and to the extent the related Series Supplement so
states. Also, except as otherwise provided in the related Series Supplement,
we will not deposit funds in the Excess Funding Account for a series during
any Early Amortization Period or Reinvestment Period with respect to the
series or with respect to any Collection Period following the Collection
Period stated in or determined in the manner provided in the Series Supplement
for the series.
Allocation Percentages
We will allocate collections to each series and then between the seller
and the certificateholders of that series on the basis of various percentages.
Which percentage we use
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depends on whether the collections being allocated are interest collections or
principal collections or other amounts and whether or not the collections are
received in the Revolving Period for a series.
Allocations Among Series of Certificates. Under the Pooling and Servicing
Agreement, during each Collection Period the servicer will allocate to each
outstanding Series its share of interest collections, principal collections,
Defaulted Receivables and Miscellaneous Payments based on the applicable
Series Allocable Interest Collections, Series Allocable Principal Collections,
Series Allocable Defaulted Amount and Series Allocable Miscellaneous Payments.
"Series Allocable Interest Collections", "Series Allocable Principal
Collections", "Series Allocable Defaulted Amount" and "Series Allocable
Miscellaneous Payments" are, with respect to any series of certificates for
any Collection Period, the product of the Series Allocation Percentage for the
series and the amount of interest collections, principal collections, the
Defaulted Amounts and Miscellaneous Payments, respectively, with respect to
the Collection Period.
"Miscellaneous Payments" for any Collection Period are the sum of:
o Adjustment Payments and Transfer Deposit Amounts received
with respect to the Collection Period; and
o Unallocated Principal Collections on the payment date
available to be treated as Miscellaneous Payments as
described below under "-- Principal Collections for all
Series."
"Series Allocation Percentage" is, with respect to a series for any
Collection Period, the percentage equivalent of a fraction, the numerator of
which is the Adjusted Invested Amount of the series as of the last day of the
immediately preceding Collection Period and the denominator of which is the
Trust Adjusted Invested Amount as of that last day.
"Adjusted Invested Amount" is, with respect to a series other than the
collateral certificate for any date, an amount equal to the sum of
o the Initial Invested Amount of the series, minus
unreimbursed Investor Charge-Offs for the series and
o the Available Subordinated Amount with respect to the
series, after giving effect to the allocations,
distributions, withdrawals and deposits to be made on the
payment date during the Collection Period in which the
date occurs.
The Adjusted Invested Amount for the collateral certificate will be the sum of
the series nominal liquidation amounts for all series of notes.
"Trust Adjusted Invested Amount" is, with respect to any Collection
Period, the sum of the Adjusted Invested Amounts for all outstanding series.
"Initial Invested Amount" is, with respect to any series and for any
date, the amount stated in the related Series Supplement. The Initial Invested
Amount for any series may be increased or
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decreased from time to time as stated in the related Series Supplement,
including as a result of deposits to or withdrawals from the Excess Funding
Account, if any, for the series.
Allocation between the Certificateholders and the Seller. The servicer
will allocate amounts initially allocated to each series between the
Certificateholders' Interest and the Seller's Interest for each Collection
Period as stated in the related Series Supplement and described in the related
prospectus supplement. The manner in which amounts allocated to the collateral
certificate are allocated between the seller and the investors is described
under "Sources of Funds to Pay the Notes -- General."
Principal Collections For All Series. We will allocate principal
collections allocated to the Certificateholders' Interest of any series, for
any Collection Period with respect to any Accumulation Period, Controlled
Amortization Period, Reinvestment Period or Early Amortization Period with
respect to the series or a class of the series, first to make required
payments of principal to the Principal Funding Account or to the
Certificateholders of the series or class, in each case if and to the extent
stated in the Series Supplement for the series. The servicer will determine
the amount of available certificateholder principal collections for each
series and any Collection Period remaining after the required payments, if any
("Excess Principal Collections"). The servicer will allocate Excess Principal
Collections to cover any principal distributions to certificateholders of any
series which are either scheduled or permitted and which have not been covered
out of principal collections and other amounts allocated to the series
("Principal Shortfalls"). Excess Principal Collections will not be used to
cover Investor Charge-Offs for any series other than the collateral
certificate. If Principal Shortfalls exceed Excess Principal Collections for
any Collection Period, Excess Principal Collections will be allocated pro rata
among the applicable series based on the relative amounts of Principal
Shortfalls, unless otherwise provided in the applicable Series Supplements. To
the extent that Excess Principal Collections exceed Principal Shortfalls, the
CARCO receivables trust trustee will pay the balance to the seller if the
Seller's Participation Amount, determined after giving effect to any principal
receivables transferred to the CARCO receivables trust on that date, exceeds
the Trust Available Subordinated Amount for the immediately preceding
Determination Date, after giving effect to the allocations, distributions,
withdrawals and deposits to be made on the payment date immediately following
the Determination Date. Any amount not allocated to the seller because the
Seller's Participation Amount does not exceed the Trust Available Subordinated
Amount will be held unallocated ("Unallocated Principal Collections") until
the Seller's Participation Amount exceeds the Trust Available Subordinated
Amount, at which time we will allocate the amount to the seller. However, if
an Early Amortization Period, Accumulation Period, Controlled Amortization
Period or Reinvestment Period commences for any series, the amount will be
treated as a Series Allocable Miscellaneous Payment.
Allocation of Collections; Deposits in Collection Account
On each Determination Date, the servicer will calculate the amounts to be
allocated in respect of collections on receivables received with respect to
the related Collection Period to the certificateholders of each outstanding
series or class or the seller in accordance with the Series Supplements.
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The servicer, no later than two business days after the processing date,
will deposit all collections received with respect to the receivables,
excluding, with exceptions, portions allocable to the seller, in each
Collection Period into the Collection Account. However, the servicer need not
make daily deposits if:
o DCS remains the servicer under the Pooling and Servicing
Agreement;
o no Service Default has occurred and is continuing; and
o DCS has and maintains a short-term debt rating of at
least A-1 by Standard & Poor's and P-1 by Moody's,
o DCS arranges for and maintains a letter of credit or
other form of Enhancement in respect of the
servicer's obligation to make deposits of collections
on the receivables in the Collection Account that is
acceptable in form and substance to each Rating
Agency, or
o DCS otherwise obtains the Rating Agency confirmations
described below in this paragraph.
In that case, subject to any limitations referred to below, DCS may use for
its own benefit all collections until the related payment date. At that time
DCS will make the deposits in an amount equal to the net amount of the
deposits and withdrawals which would have been made if deposits were made on a
daily basis. However, before ceasing daily deposits as described above, the
seller must deliver to the trustee written confirmation from the applicable
Rating Agencies that the failure by DCS to make daily deposits will not cause
the Rating Agencies to reduce or withdraw rating of any outstanding series or
class of certificates.
In addition, during any Collection Period the servicer will be required
to deposit interest collections and principal collections into the Collection
Account only to the extent of:
o the distributions the CARCO receivables trust must make to
certificateholders;
o the amounts the CARCO receivables trust must deposit into any
account maintained for the benefit of certificateholders of any
series and other parties; and
o the amounts the CARCO receivables trust must pay to any
Enhancement provider on the payment date relating to the
Collection Period.
Also, if, at any time prior to that payment date, the amount of collections
deposited in the Collection Account exceeds the amount the servicer is
required to deposit, the servicer will be permitted to withdraw the excess
from the Collection Account.
On any date on which the servicer deposits collections in the Collection
Account, the servicer will distribute directly to the seller the amount of the
interest collections allocable to each series specified in the related Series
Supplement and described in the related prospectus supplement. However, the
CARCO receivables trust trustee will make that distribution only if the
Seller's Participation Amount, determined after giving effect to any Principal
Receivables transferred to the CARCO receivables trust on the date, exceeds
the Trust Available Subordinated Amount for the immediately preceding
Determination Date, after giving effect to the allocations, distributions,
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withdrawals and deposits required to be made on the payment date immediately
following the Determination Date. Also, during the Revolving Period for any
series, subject to limitations, the servicer will distribute directly to the
seller on each date of deposit the amount of principal collections allocable
to each series stated in the related Series Supplement and described in the
related prospectus supplement if the Seller's Participation Amount, determined
after giving effect to any principal receivables transferred to the trust on
that date, exceeds the Trust Available Subordinated Amount for the immediately
preceding Determination Date, after giving effect to the allocations,
distributions, withdrawals and deposits the servicer is to make on the payment
date immediately following the Determination Date.
Limited Subordination of Seller's Interest; Enhancements
Subordination of Seller's Interest. With respect to any series of
certificates other than the collateral certificate, we will subordinate the
Seller's Interest to the rights of certificateholders of the series to the
extent described in the related prospectus supplement. This will provide
credit enhancement to the series. The amount of the subordination with respect
to any series is the "Available Subordinated Amount" for the series. We will
decrease and increase the Available Subordinated Amount for any series from
time to time if and to the extent described in the related prospectus
supplement. We will describe in the prospectus supplement for each series the
manner in which the servicer may draw upon collections attributable to the
Available Subordinated Amount for the series to make payments to or for the
benefit of the holders of certificates of the series. If we so state in the
related Series Supplements, the Available Subordinated Amount for a series may
be available to more than one series of certificates.
In the case of the collateral certificate, the credit enhancement for the
noteholders will be in the form of the overcollateralization amount for each
series of notes. The Adjusted Invested Amount of the collateral certificate
will be the sum of the series nominal liquidation amounts for all series of
notes. The series nominal liquidation amount for a series of notes includes
the overcollateralization amount for that series. The calculation of the
overcollateralization amount for a series of notes will be described in the
related prospectus supplement.
Enhancements. In addition to the subordination described above, for any
series, we may provide enhancements ("Enhancements") with respect to one or
more classes of the series, including one or more of the following:
o letter of credit;
o surety bond;
o cash collateral account;
o spread account;
o guaranteed rate agreement;
o swap, including without limitation currency swaps, or other
interest protection agreement;
o repurchase obligation;
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o cash deposit; or
o another form of credit enhancement described in the related
prospectus supplement.
We may also provide enhancements to a series or class or classes of a series
by subordination provisions which require that distributions of principal
and/or interest be made with respect to the certificates of the series or the
class or classes before distributions are made to one or more series or one or
more classes of the series. If we so provide in the related prospectus
supplement, any form of Enhancement may be available to more than one class or
series. The trust may use a currency swap to issue certificates payable in a
currency other than United States dollars.
If we provide Enhancement with respect to a series, we will include in
the related prospectus supplement a description of:
o the amount payable under the Enhancement;
o any conditions to payment we do not otherwise describe in this
prospectus;
o the conditions, if any, under which we may reduce the amount
payable under the Enhancement and under which we may terminate
or replace the Enhancement; and
o any material provisions of any agreement relating to the
Enhancement.
Additionally, we may set forth in the related prospectus supplement the
information with respect to the applicable Enhancement provider, including:
o a brief description of its principal business activities;
o its principal place of business, place of incorporation and the
jurisdiction under which it is chartered or licensed to do
business;
o if applicable, the identity of regulatory agencies which
exercise primary jurisdiction over the conduct of its business;
and
o its total assets, and its stockholders' equity or
policyholders' surplus, if applicable, as of a date we state in
the prospectus supplement.
Limitations on Subordination and Enhancements. We intend the presence of
an Available Subordinated Amount or Enhancement with respect to a series or
class to enhance the likelihood of receipt by certificateholders of the series
or class of the full amount of principal and interest and to decrease the
likelihood that the certificateholders will experience losses. However, unless
we otherwise state in the prospectus supplement for a series, neither
subordination of the Seller's Interest nor the Enhancement, if any, will
provide protection against all risks of loss or will guarantee repayment of
the entire principal balance of the certificates and interest on the
certificates. If losses exceed the amount covered by the subordination or
Enhancement or are not covered by the subordination or Enhancement,
certificateholders (including the issuer) will bear their allocable share of
deficiencies. In addition, if we provide specific Enhancement for the benefit
of more than one class or series, certificateholders of that class or series
will be subject to the risk that the Enhancement will be exhausted by the
claims of certificateholders of other classes or series.
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Distributions
The servicer will make payments to certificateholders of a series or a
class from the Collection Account and any accounts established for the benefit
of the certificateholders as we describe in the related prospectus supplement.
Defaulted Receivables and Recoveries
"Defaulted Receivables" on any Determination Date are:
o all receivables which the servicer charged off as uncollectible
in respect of the immediately preceding Collection Period; and
o all receivables which were Eligible Receivables when
transferred to the trust, which arose in an Account which
became an Ineligible Account after the date of transfer of the
receivables to the trust and which were not Eligible
Receivables for any six consecutive Determination Dates after
the date of transfer of the receivables to the trust.
The "Defaulted Amount" for any Collection Period will be an amount, which
shall not be less than zero, equal to:
o the principal amount of receivables that became Defaulted
Receivables during the preceding Collection Period minus
o the sum of
o the full amount of any Defaulted Receivables subject to
reassignment to the seller or purchase by the servicer for
the Collection Period unless events of bankruptcy,
insolvency or receivership have occurred with respect to
either of the seller or the servicer, in which event the
Defaulted Amount will not be reduced for those Defaulted
Receivables, and
o the excess, if any, for the immediately preceding
Determination Date of the amount determined under this
second clause for the Determination Date over the amount
determined under the first clause for the Determination
Date.
The servicer will charge off receivables as uncollectible in accordance with
the servicer's customary and usual policies and procedures for servicing its
own comparable revolving dealer wholesale loan accounts. The servicer will
allocate a portion of the Series Allocable Defaulted Amount for each series
and Collection Period between the certificateholders of the series and the
seller as we state in the related Series Supplement. The portion of the
Defaulted Amount allocated to the certificateholders of a series (including
the issuer as the holder of the collateral certificate) will be the "Investor
Default Amount" for the series. The servicer will further allocate the
Investor Default Amount for any series that consists of more than one class
between those classes as we state in the related Series Supplement. In the
case of the collateral certificate, the issuer will allocate the Investor
Default Amount for the collateral certificate to each series of notes as
described in the related prospectus supplement.
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If the servicer adjusts the amount of any receivable because of a rebate,
billing error or other non-cash items to a dealer, or because the receivable
was created in respect of inventory which was refused or returned by a dealer,
we will reduce the principal amount of each of the Seller's Interest and the
Pool Balance by the amount of the adjustment or charge-off. Further, to the
extent that the reduction in the Seller's Interest would reduce the Seller's
Participation Amount below the Trust Available Subordinated Amount for the
immediately preceding Determination Date, after giving effect to the
allocations, distributions, withdrawals and deposits to be made on the payment
date immediately following that Determination Date, the seller will deposit a
cash amount equal to the deficiency into the Collection Account in immediately
available funds (an "Adjustment Payment") on the day on which the servicer
makes the adjustment.
Optional Repurchase
If so provided in the Series Supplement relating to a series of
certificates, on any payment date occurring after the Invested Amount of the
certificates of the series is reduced to the percentage of the initial
outstanding principal amount of the notes of the series we state in the
prospectus supplement, the servicer will have the option, subject to
conditions, to repurchase the Certificateholders' Interest of the series. The
purchase price will be equal to the Invested Amount of the series on the
Determination Date preceding the payment date on which the servicer will make
the repurchase plus accrued and unpaid interest on the unpaid principal amount
of the certificates of the series at the applicable certificate rate, together
with interest on overdue interest, to the extent lawful, plus any other
amounts we state in the related Series Supplement. The servicer will deposit
the purchase price in the Collection Account in immediately available funds on
the payment date on which DCS exercises that option. Following any purchase,
the certificateholders of the series will have no further rights with respect
to the Certificateholders' Interest of the series, other than the right to
receive the final distribution on the certificates of that series. If DCS
fails for any reason to deposit the purchase price, the servicer will continue
to make payments to the certificateholders of the series as we describe in the
related prospectus supplement.
Reinvestment Events and Early Amortization Events
Beginning on the first payment date following the Collection Period in
which a Reinvestment Event has occurred with respect to any series:
o the servicer will no longer pay to DCWR principal collections
allocable to the Certificateholders' Interest of the series or
allocate those collections to any other series but instead will
deposit those collections to the Principal Funding Account for
the series monthly on each payment date; and
o the Controlled Deposit Amount or Controlled Amortization
Amount, if any, will no longer apply to distributions of
principal in respect of the notes of the series,
in each case except as we describe below under this heading or as we state in
the related Series Supplement. A "Reinvestment Event" is, for any series, any
of the events we so describe in the related Series Supplement and describe in
the related prospectus supplement. The collateral certificate will not have
any Reinvestment Events.
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If any event we so define occurs, we will deem a Reinvestment Event to
have occurred with respect to the series without any notice or other action on
the part of any other party immediately upon the occurrence of the event. The
Reinvestment Period with respect to the series will begin as of the close of
business on the business day immediately preceding the day on which we deem
the Reinvestment Event to have occurred. Monthly deposits of principal to the
Principal Funding Account for the series will, except as we describe below
under "-- Reinvestment Events and Early Amortization Events" or state in the
related Series Supplement, begin on the first payment date following the
Collection Period in which a Reinvestment Period has begun with respect to the
series.
Beginning on the first payment date following the Collection Period in
which an Early Amortization Event has occurred with respect to any series:
o the servicer will no longer pay to DCWR Principal Collections
allocable to the Certificateholders' Interest of the series,
allocate those collections to any other series or retain those
collections in the Principal Funding Account for the series but
instead will distribute those collections to certificateholders
of the series monthly on each payment date; and
o the Controlled Deposit Amount or Controlled Amortization
Amount, if any, will no longer apply to distributions of
principal on the certificates of the series,
in each case except as we describe below under "-- Reinvestment Events and
Early Amortization Events" or state in the related Series Supplement. An
"Early Amortization Event" is, for any series, any of the events we so define
in the related Series Supplement and describe in the related prospectus
supplement, as well as each of the following events:
o the occurrence of events of bankruptcy, insolvency or
receivership relating to the CARCO receivables trust or the
seller; and
o the trust or DCWR becomes an investment company within the
meaning of the Investment Company Act of 1940.
If any event we describe above or in the prospectus supplement for a
series occurs, we will deem an Early Amortization Event to have occurred with
respect to the series without any notice or other action on the part of any
other party immediately upon the occurrence of the event. The Early
Amortization Period with respect to the series will begin as of the close of
business on the business day immediately preceding the day on which we deem
the Early Amortization Event to have occurred. Monthly distributions of
principal to the certificateholders of the series will begin on the first
payment date following the Collection Period in which an Early Amortization
Period has begun with respect to the series, except as we describe below under
this heading. The failure of the CARCO receivables trust to pay the
outstanding principal amount of the certificates of any series or class by
their Expected Payment Date will have the same consequences as the occurrence
of an Early Amortization Event with respect to the series or class. We shall
deem all references in this prospectus to Early Amortization Events to include
that type of failure.
Even if a Reinvestment Period or an Early Amortization Period begins with
respect to a series, that period may terminate and the Revolving Period with
respect to the series and any class may
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recommence when the event giving rise to the beginning of the Reinvestment
Period or Early Amortization Period no longer exists, whether as a result of
the distribution of principal to certificateholders of the series or otherwise,
in each case if and to the extent we state in the Series Supplement for the
series.
In addition, if an insolvency event occurs with respect to DCWR, or DCWR
violates its covenant not to create any lien on any receivable, in each case
as provided in the Pooling and Servicing Agreement, on the day of the
insolvency event or violation, as applicable, DCWR will, subject to the
actions of the certificateholders, immediately cease to transfer receivables
to the CARCO receivables trust and promptly give notice to the trustee of the
insolvency event or violation, as applicable. Under the terms of the Pooling
and Servicing Agreement, within 15 days the CARCO receivables trust trustee
will publish a notice of the insolvency event or violation stating that the
CARCO receivables trust trustee intends to sell, liquidate or otherwise
dispose of the receivables in a commercially reasonable manner and on
commercially reasonable terms, unless within a stated period of time holders
of notes of each outstanding series representing more than 50% of the
aggregate unpaid principal amount of the certificates of each outstanding
series, or, with respect to any series with two or more classes, the
certificates of each class, and each person holding a Supplemental
Certificate, instruct the CARCO receivables trust trustee not to sell, dispose
of or otherwise liquidate the receivables and to continue transferring
receivables as before the insolvency event or violation, as applicable. If the
portion of the proceeds allocated to the Certificateholders' Interest and the
proceeds of any collections on the receivables in the Collection Account
allocable to the Certificateholders' Interest are not enough to pay the
aggregate unpaid principal balance of the certificates in full plus accrued
and unpaid interest on the certificates, certificateholders will incur a loss.
Termination; Fully Reinvested Date
Termination. The CARCO receivables trust will terminate on the earliest
to occur of:
o the day following the payment date on which the aggregate
Invested Amounts for all series is zero;
o May 31, 2012; and
o the date on which the Servicer distributes to the
certificateholders proceeds from the sale, disposal or other
liquidation of the receivables following an insolvency event
with respect to DCWR or any violation by DCWR of its covenant
not to create any lien on any receivable, in each case as
stated in the Pooling and Servicing Agreement and as we
describe above under "-- Reinvestment Events and Early
Amortization Events."
When the CARCO receivables trust is terminated, the trust will transfer to
DCWR all right, title and interest in the receivables and other funds of the
CARCO receivables trust, other than amounts in the CARCO receivables trust's
accounts for the final distribution of principal and interest to
certificateholders.
In any event, the last payment of principal and interest on any series of
certificates will be due and payable no later than the date we state in the
related prospectus supplement (the "Series Termination Date").
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Fully Reinvested Date. The "Fully Reinvested Date" is the date on which
the amount on deposit in the Principal Funding Account with respect to a
series equals the outstanding principal amount of the notes of the series.
After the Fully Reinvested Date occurs with respect to any series,
certificateholders of that series will no longer have any interest in the
receivables. Further, all the representations and covenants of the seller and
the servicer relating to the receivables, as well as other provisions of the
Pooling and Servicing Agreement and all remedies for breaches of those
representations, covenants and other provisions, will no longer accrue to the
benefit of the certificateholders of that series, in each case unless the
Revolving Period with respect to the series recommences as we state in the
related Series Supplement. Those representations, covenants and other
provisions include:
o the conditions to the exchange of the Seller's Certificate we
describe under "The Seller's Certificate";
o the conditions to the issuance of a new series we describe
under "--New Issuances";
o the representations we describe under "--Representations and
Warranties" to the extent they relate to the receivables and
the Collateral Security,
o the limitations on additions and removals of Accounts we
describe under "--Addition of Accounts" and "-- Removal of
Accounts", respectively, and
o the obligations of the servicer with respect to servicing the
receivables we describe under "-- Collection and Other
Servicing Procedures" and "-- Servicer Covenants."
Also, if the Fully Reinvested Date occurs with respect to any series, the
servicer will allocate to that series no interest collections, principal
collections, Defaulted Receivables or Miscellaneous Payments, unless the
series' Revolving Period begins again as we describe above. However, when the
servicer has made the final distribution with respect to each series of
certificates or the series' Fully Reinvested Date has occurred, the CARCO
receivables trust trustee will convey and transfer to DCWR, all right, title
and interest in the receivables.
Indemnification
The Pooling and Servicing Agreement states that the servicer will
indemnify the CARCO receivables trust and the CARCO receivables trust trustee
from and against any loss, liability, expense, damage or injury suffered or
sustained arising out of any acts, omissions or alleged acts or omissions
arising out of activities of the CARCO receivables trust, the CARCO
receivables trust trustee or the servicer under the Pooling and Servicing
Agreement. The servicer will not so indemnify the CARCO receivables trust or
the CARCO receivables trust trustee, however, if the acts, omissions or
alleged acts or omissions constitute fraud, gross negligence, breach of
fiduciary duty or willful misconduct by the CARCO receivables trust trustee.
Also, the servicer will not indemnify the CARCO receivables trust, the CARCO
receivables trust trustee or the certificateholders for any act taken by the
CARCO receivables trust trustee at the request of the noteholders or for any
tax which the trust or the certificateholders is required to pay.
The Pooling and Servicing Agreement states that, except as we describe
above and with other exceptions, neither the seller, the servicer nor any of
their directors, officers, employees or agents will be under any liability to
the CARCO receivables trust, the CARCO receivables trust trustee,
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the certificateholders or any other person for taking any action, or for
refraining from taking any action, under the Pooling and Servicing Agreement.
However, neither the seller, the servicer nor any of their directors,
officers, employees or agents will be protected against any liability which
would otherwise be imposed by reason of willful misfeasance, bad faith or
gross negligence of any of those persons in the performance of their duties or
by reason of reckless disregard of their obligations and duties under the
Pooling and Servicing Agreement.
Also, the Pooling and Servicing Agreement states that the servicer is not
under any obligation to appear in, prosecute or defend any legal action which
is not incidental to its servicing responsibilities under the Pooling and
Servicing Agreement. The servicer may, in its sole discretion, undertake any
legal action which it may deem necessary or desirable for the benefit of the
certificateholders with respect to the Pooling and Servicing Agreement and the
rights and duties of the parties to that agreement and the interest of the
certificateholders under that agreement.
Collection and Other Servicing Procedures
Under the Pooling and Servicing Agreement, the servicer is responsible
for servicing, collecting, enforcing and administering the receivables. The
servicer must do so in accordance with customary and usual procedures for
servicing its own revolving credit line dealer wholesale loans, except where
the failure to so act would not materially and adversely affect the rights of
the CARCO receivables trust.
DCS covenants that it may only change the terms relating to the Accounts
if:
o in the servicer's reasonable judgment, the change will not
cause any Early Amortization Event or Reinvestment Event to
occur with respect to any series; and
o the servicer applies the change to the comparable segment of
the portfolio of revolving credit line dealer wholesale loan
accounts with similar characteristics owned or serviced by DCS
and not only to the Accounts.
When acting as a servicer, the servicer will, among other things:
o collect and record payments;
o communicate with dealers;
o investigate payment delinquencies;
o evaluate the increase of credit limits; and
o maintain internal records with respect to each Account.
Managerial and custodial services performed by the servicer on behalf of
the trust include:
o providing assistance in any inspections of the documents and
records relating to the Accounts and receivables by the CARCO
receivables trust trustee under the Pooling and Servicing
Agreement;
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o maintaining the agreements, documents and files relating to the
Accounts and receivables as custodian for the CARCO receivables
trust; and
o providing related data processing and reporting services for
certificateholders and on behalf of the CARCO receivables trust
trustee.
Servicer Covenants
In the Pooling and Servicing Agreement the servicer covenants that:
o it will duly satisfy all obligations on its part to be
fulfilled under or in connection with the receivables and the
Accounts, will maintain in effect all qualifications required
in order to service the receivables and the Accounts and will
comply in all material respects with all requirements of law in
connection with servicing the receivables and the Accounts, the
failure to comply with which would have a materially adverse
effect on the certificateholders of any outstanding series;
o it will not permit any rescission or cancellation of a
receivable except as ordered by a court of competent
jurisdiction or other government authority;
o it will do nothing to impair the rights of the
certificateholders in the receivables or the Accounts; and
o it will not reschedule, revise or defer payments due on any
receivable except in accordance with its guidelines for
servicing revolving credit line dealer wholesale loans.
Under the terms of the Pooling and Servicing Agreement, if the seller or
the servicer discovers, or receives written notice, that any covenant of the
servicer set forth above has not been complied with in all material respects
and the noncompliance has not been cured within 30 days, or a longer period as
the trustee may agree to, and has a materially adverse effect on the interests
of all certificateholders in any receivable or Account, DCS, as servicer, will
purchase the receivable or all receivables in the Account, as applicable. If
DCS is the servicer, DCS will purchase the receivable or receivables on the
Determination Date following the expiration of the 30-day cure period and the
servicer will be obligated to deposit into the Collection Account an amount
equal to the amount of the receivable or receivables plus accrued and unpaid
interest on that amount. We shall deem the amount of the deposit a Transfer
Deposit Amount. The purchase by the servicer constitutes the sole remedy
available to the certificateholders if the covenant or warranty of the
servicer is not satisfied and the trust's interest in any purchased
receivables shall be automatically assigned to the servicer.
Servicing Compensation and Payment of Expenses
Unless we state otherwise in the related Series Supplement or prospectus
supplement, the servicer's compensation with respect to the certificates of a
series for its servicing activities and reimbursement for its expenses will be
a monthly servicing fee (the "Servicing Fee"). The Servicing Fee is an amount
payable in arrears on each payment date on or before the Series Termination
Date of the series and the Fully Reinvested Date, if any, of the series, and
after that date during the Revolving Period with respect to the series, if the
Revolving Period begins again, equal to one-twelfth of the product of:
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o the "Servicing Fee Rate" set forth in the series Supplement;
o the Pool Balance as of the last day of the second preceding
Collection Period; and
o the Series Allocation Percentage for the series for the
immediately preceding Collection Period.
Unless we state otherwise in a related Series Supplement or prospectus
supplement, the share of the Servicing Fee allocable to certificateholders of
any series with respect to any payment date (the "Monthly Servicing Fee")
shall be equal to one-twelfth of the product of:
o the Servicing Fee Rate; and
o the Invested Amount of the series as of the last day of the
second preceding Collection Period.
The seller shall pay the remainder of the Servicing Fee with respect to any
series. The servicer shall be paid the Monthly Servicing Fee with respect to
any series solely to the extent amounts are available for distribution of the
Monthly Servicing Fee under the terms of the Pooling and Servicing Agreement.
The servicer may waive its right to receive the Servicing Fee with
respect to any series on any payment date, so long as it believes that enough
interest collections will be available on a future payment date to pay the
Monthly Servicing Fee relating to the waived Servicing Fee. If that happens,
we shall deem the Servicing Fee and the Monthly Servicing Fee for the series
and the payment date to be zero.
The servicer will pay from its servicing compensation expenses it incurs
when servicing the Accounts and the receivables including, without limitation,
payment of fees and disbursements of the CARCO receivables trust trustee and
independent accountants and all other fees and expenses which are not
expressly stated in the Pooling and Servicing Agreement to be payable by the
CARCO receivables trust or the certificateholders other than federal, state
and local income and franchise taxes, if any, of the trust or the
certificateholders.
Matters Regarding the Servicer
The servicer may not resign from its obligations and duties under the
Pooling and Servicing Agreement, except upon determination that those duties
are no longer permissible under applicable law. No resignation will become
effective until the CARCO receivables trust trustee or a successor to the
servicer has assumed the servicer's responsibilities and obligations under the
Pooling and Servicing Agreement (DCS or any successor servicer, the
"servicer"). The servicer may delegate any of its duties as servicer to any of
its affiliates, but any delegation will not relieve the servicer of its
obligation under the Pooling and Servicing Agreement.
Any person into which, in accordance with the Pooling and Servicing
Agreement, the servicer may be merged or consolidated or any person resulting
from any merger or consolidation to which the servicer is a party, or any
person succeeding to the business of the servicer, will be the successor to
the servicer under the Pooling and Servicing Agreement.
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Service Default
In the event of any Service Default, the CARCO receivables trustee, by
written notice to the servicer, may terminate all of the rights and
obligations of the servicer, as servicer, under the Pooling and Servicing
Agreement and in and to the receivables and the proceeds of the receivables
and appoint a new servicer (a "Service Transfer"). The rights and interest of
the seller under the Pooling and Servicing Agreement in the Seller's Interest
will not be affected by any Service Transfer. The CARCO receivables trust
trustee shall as promptly as possible appoint a successor servicer and if no
successor servicer has been appointed by the CARCO receivables trust trustee
and has accepted the appointment by the time the servicer ceases to act as
servicer, all rights, authority, power and obligations of the servicer under
the Pooling and Servicing Agreement shall pass to and be vested in the CARCO
receivables trust trustee. Before any Service Transfer, the CARCO receivables
trust trustee will review any bids obtained from potential servicers meeting
eligibility requirements set forth in the Pooling and Servicing Agreement to
serve as successor servicer for servicing compensation not in excess of the
Servicing Fee, plus excess amounts payable to the seller.
A "Service Default" refers to any of the following events:
o failure by the servicer to make any payment, transfer or
deposit, or to give instructions to the trustee to make any
payment, transfer or deposit, on the date the Pooling and
Servicing Agreement requires the servicer to do so, which is
not cured within a five business day grace period;
o failure by the servicer duly to observe or perform any other
covenants or agreements of the servicer in the Pooling and
Servicing Agreement which failure has a materially adverse
effect on the noteholders of any outstanding series and which
continues unremedied for a period of 30 days after the date the
trustee shall have given written notice of the failure to the
servicer;
o the servicer delegates its duties under the Pooling and
Servicing Agreement, except as specifically permitted under
that agreement;
o any representation, warranty or certification made by the
servicer in the Pooling and Servicing Agreement or in any
certificate delivered under the Pooling and Servicing Agreement
proves to have been incorrect in any material respect when
made, has a materially adverse effect on the rights of the
certificateholders of any outstanding Series, and which
materially adverse effect continues for a period of 60 days
after the trustee shall have given written notice of that
fact to the servicer; or
o events of bankruptcy, insolvency or receivership occur with
respect to the servicer.
However, a delay in or failure of performance referred to under the first
clause for a period of ten business days or referred to under the second,
third or fourth clauses for a period of 60 business days, shall not constitute
a Service Default if the delay or failure was caused by an act of God or other
similar occurrence. If any of those events occurs, the servicer shall not be
relieved from using its best efforts to perform its obligations in a timely
manner in accordance with the terms of the Pooling and Servicing Agreement and
the servicer shall provide the CARCO receivables trust trustee, any
Enhancement provider, the seller and the certificateholders prompt notice of
the failure
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or delay by it, together with a description of its efforts to so perform its
obligations. The servicer shall immediately notify the CARCO receivables trust
trustee in writing of any Service Default.
Reports
On each payment date, including each payment date that corresponds to an
interest payment date or any Special Payment Date, the trustee will forward to
each certificateholder of record of any series a statement (the "Distribution
Date Statement") prepared by the servicer. The Distribution Date Statement
will set forth information with respect to the trust and the certificates of
the series, as we state in the related Series Supplement and describe in the
related prospectus supplement.
With respect to each interest payment date or Special Payment Date, the
Distribution Date Statement with respect to any Series will include the
following information with respect to the certificates of the series:
o the total amount distributed on the certificates of the series;
o the amount of the distribution allocable to principal on the
certificates of the series; and
o the amount of the distribution allocable to interest on the
certificates of the series.
On or before January 31 of each calendar year, the trustee will furnish,
or cause to be furnished, to each person who at any time during the preceding
calendar year was a certificateholder of record a statement containing the
information required to be provided by an issuer of indebtedness under the
Code for the preceding calendar year or the applicable portion of that year
during which the person was a certificateholder, together with other customary
information which the Code requires issuers of indebtedness to provide and
other customary information which certificateholders need to prepare their tax
returns. See "Tax Matters."
Evidence as to Compliance
The Pooling and Servicing Agreement states that on or before March 31 of
each calendar year, the servicer will cause a firm of nationally recognized
independent public accountants, who will also render other services to the
servicer or the seller, to furnish a report regarding matters in connection
with the servicing of DCS's portfolio of wholesale receivables.
The Pooling and Servicing Agreement states that on or before March 31 of
each calendar year, the servicer will deliver to the trustee a statement,
signed by an officer of the servicer. The statement will state that the
servicer has fully performed, or caused to be fully performed, its obligations
in all material respects under the Pooling and Servicing Agreement throughout
the preceding year or, if there has been a default in the performance of any
obligation, will state the nature and status of the default.
You may obtain copies of all statements, certificates and reports
furnished to the CARCO receivables trust trustee by delivering a written
request to the CARCO receivables trust trustee.
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Amendments
The seller, the servicer and the CARCO receivables trust trustee may
amend the Pooling and Servicing Agreement and any Series Supplement, without
certificateholder consent, so long as any amendment shall not, as evidenced by
an opinion of counsel, adversely affect in any material respect the interests
of the certificateholders.
The seller, the servicer and the CARCO receivables trust trustee may
amend the Pooling and Servicing Agreement and any Series Supplement with the
consent of the holders of certificates evidencing not less than 66 2/3% of the
aggregate unpaid principal amount of the certificates of all adversely
affected series for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of the Pooling and Servicing
Agreement or of modifying in any manner the rights of certificateholders. No
amendment, however, may
o reduce in any manner the amount of or delay the timing of
distributions the servicer is required to make to
certificateholders or deposits of amounts to be so distributed
without the consent of each affected certificateholder,
o change the definition or the manner of calculating any
Certificateholders' Interest without the consent of each
affected certificateholder,
o reduce the amount available under any Enhancement without the
consent of each affected certificateholder,
o adversely affect the rating of any series or class by each
Rating Agency without the consent of the holders of
certificates of the series or class evidencing not less than 66
2/3% of the aggregate unpaid principal amount of the
certificates of the series or class or
o reduce that percentage of the unpaid principal amount of
certificates the holders of which are required to consent to
any amendment without the consent of each certificateholder.
Promptly following the execution of any amendment to the Pooling and Servicing
Agreement, other than an amendment described in the preceding paragraph, the
trustee will notify each certificateholder in writing of the substance of the
amendment.
However, we will deem each holder of a certificate offered by this
prospectus, by its acceptance of the certificate, to have consented to an
amendment to the Pooling and Servicing Agreement that
o provides that funds in the Collection Account may be invested
in any Eligible Investments,
o provides that the seller need not make any deposit to the
Collection Account in respect of the Repurchased Receivables
Price of any Designated Receivables repurchased from the CARCO
receivables trust,
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o otherwise changes the procedures for removing receivables from
the CARCO receivables trust as described under "--Removal of
Accounts",
o provides that, subject to the limitations we describe in this
prospectus, DCS need not deposit collections with respect to
any Collection Period in the Collection Account until the
related payment date or
o permits the designation of Automatic Additional Accounts as we
describe in this prospectus.
The Pooling and Servicing Agreement may not be amended in any manner
which materially adversely affects the interests of any Enhancement provider
without its prior consent.
List of Certificateholders
Upon written request of any three or more certificateholders of record,
the CARCO receivables trust trustee will give those certificateholders access
during business hours to the current list of certificateholders of a series or
all outstanding series, as applicable, for purposes of communicating with
other certificateholders of the series or all outstanding series, as
applicable, with respect to their rights under the Pooling and Servicing
Agreement.
The Pooling and Servicing Agreement will not provide for any annual or
other meetings of certificateholders.
The CARCO Receivables Trustee
The Bank of New York, a New York banking corporation, will act as trustee
under the Pooling and Servicing Agreement. On August 23, 1996, The Bank of New
York, a New York banking corporation, succeeded Manufacturers and Traders
Trust Company, as trustee, under the Pooling and Servicing Agreement and under
an Agreement of Resignation, Appointment and Acceptance dated as of August 23,
1996 between DCWR, DCS, as successor to DCS Corp., Manufacturers and Traders
Trust Company, as resigning trustee, and The Bank of New York, as successor
trustee. The Corporate Trust Office of the Bank of New York is located at 101
Barclay Street, New York, New York 10286. The seller, the servicer and their
respective affiliates may from time to time enter into normal banking and
trustee relationships with the trustee and its affiliates. The CARCO
receivables trust trustee may hold certificates in its own name with the same
rights it would have if it were not the CARCO receivables trust trustee. In
addition, for purposes of meeting the legal requirements of local
jurisdictions, the CARCO receivables trust trustee shall have the power to
appoint a co-trustee or separate trustees of all or a part of the CARCO
receivables trust. In the event of those appointments, all rights, powers,
duties and obligations shall be conferred or imposed upon the CARCO
receivables trust trustee and the separate trustee or co-trustee jointly, or,
in any jurisdiction in which the CARCO receivables trust trustee shall be
incompetent or unqualified to perform some acts, singly upon the separate
trustee or co-trustee, who shall exercise and perform those rights, powers,
duties and obligations solely at the direction of the CARCO receivables trust
trustee.
The CARCO receivables trust trustee may resign at any time, in which
event the seller must appoint a successor CARCO receivables trust trustee. The
servicer may also remove the CARCO
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receivables trust trustee if the CARCO receivables trust trustee ceases to be
eligible to continue as the CARCO receivables trust trustee under the Pooling
and Servicing Agreement or if the CARCO receivables trust trustee becomes
insolvent. If that happens, the servicer may appoint a successor CARCO
receivables trust trustee. Any resignation or removal of the CARCO receivables
trust trustee and appointment of a successor CARCO receivables trust trustee
does not become effective until the acceptance of the appointment by the
successor CARCO receivables trust trustee.
Description of the Receivables Purchase Agreement
The parties to the Receivables Purchase Agreement are DCS, as seller
(together with its predecessors as appropriate, the "RPA seller"), and DCWR,
as purchaser. DCS became the RPA seller as successor by merger. DCWR became
the purchaser as assignee of USA, which was in turn an assignee of CARCO. In
the following summary we describe terms of the Receivables Purchase Agreement.
The summary, however, is qualified in its entirety by reference to the
Receivables Purchase Agreement.
Sale or Transfer of Receivables
Under the Receivables Purchase Agreement, the RPA seller sold or
transferred to the seller all of its right, title and interest in and to all
of the receivables and the Collateral Security as of the Initial Cut-Off Date
and all of the receivables created after that date. In addition, the RPA
seller has previously designated Additional Accounts, and has previously
conveyed to the seller the Principal Receivables in the Additional Accounts,
together with the related Collateral Security, as of the applicable Additional
Cut-Off Date and all receivables, and related Collateral Security, created
after that date. As we describe in this prospectus, under the Pooling and
Servicing Agreement, the seller has transferred to the CARCO receivables trust
all of its right, title and interest in and to the Receivables Purchase
Agreement.
In connection with the sale or transfer of the receivables to the seller,
the RPA seller must indicate in its computer files that the receivables have
been sold or transferred to the seller, and that the receivables have been
transferred by the seller to the CARCO receivables trust. In addition, the RPA
seller must provide to the seller a computer file or microfiche or written
list containing a true and complete list of all the receivables. The records
and agreements relating to the Accounts and receivables have not and will not
be segregated by the RPA seller from other documents and agreements relating
to other accounts and receivables and are not and will not be stamped or
marked to reflect the sale or transfer of the receivables to the seller. The
computer records, however, of the RPA seller have been and will be marked to
evidence the sale or transfer. The RPA seller has filed UCC financing
statements with respect to the receivables meeting the requirements of
Michigan state law. See "Risk Factors -- Risk factors relating to the
collateral certificate and the CARCO receivables trust -- Various legal
aspects may cause delays in your receiving payments or may result in reduced
payments or losses on your notes" and "Legal Aspects of the Receivables --
Transfer of Receivables."
Representations and Warranties
The RPA seller has or will make representations and warranties to the
seller that, among other things, as of the Initial Closing Date and each
Series Issuance Date, it was duly formed and in good
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standing and that it has the authority to consummate the transactions
contemplated by the Receivables Purchase Agreement.
The RPA seller has or will also make representations and warranties to
the seller relating to the receivables to the effect, among other things,
that:
o as of the Initial Closing Date and each Series Issuance Date,
each of the Accounts is an Eligible Account; and
o as of the date any new receivable is created, the receivable is
an Eligible Receivable.
If any representation and warranty set forth in this paragraph is
breached and the breach results in an Ineligible Receivable and the
requirement that the seller accept retransfer of the Ineligible Receivable
under the Pooling and Servicing Agreement, the RPA seller shall repurchase the
Ineligible Receivable from the seller on the date of the retransfer. The
purchase price for the Ineligible Receivable shall be the face amount of the
Ineligible Receivable, of which at least the amount of any cash deposit
required to be made by the seller under the Pooling and Servicing Agreement in
respect of the retransfer of the Ineligible Receivable shall be paid in cash.
The RPA seller has or will also make representations and warranties to
the seller to the effect, among other things, that as of the Initial Closing
Date and each Series Issuance Date:
o the Receivables Purchase Agreement is a legal, valid and
binding obligation of the RPA seller; and
o the Receivables Purchase Agreement is a valid sale or transfer
to the seller of all right, title and interest of the RPA
seller in and to the receivables, whether then existing or
created after that time in the Accounts, the Collateral
Security and the proceeds of those items which is effective as
to each receivable upon the creation of that receivable.
If any of the representations and warranties described in this paragraph are
breached and the breach results in the obligation of the seller under the
Pooling and Servicing Agreement to accept retransfer of the receivables, the
RPA seller will repurchase the receivables retransferred to the seller for an
amount of cash equal to the amount of cash the seller is required to deposit
under the Pooling and Servicing Agreement in connection with the retransfer.
The RPA seller has agreed to indemnify the seller and to hold the seller
harmless from and against any and all losses, damages and expenses, including
reasonable attorneys' fees, suffered or incurred by the seller if the
foregoing representations and warranties are materially false.
Covenants
In the Receivables Purchase Agreement, the RPA seller has covenanted that
it will perform its obligations under the agreements relating to the
receivables and the Accounts in conformity with its current policies and
procedures relating to the receivables and the Accounts.
The RPA seller has covenanted further that, except for the sale and
conveyances under the Receivables Purchase Agreement and the interests created
under the Pooling and Servicing Agreement, the RPA seller will not sell,
pledge, assign or transfer any interest in the receivables to
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any other person. The RPA seller also has covenanted to defend and indemnify
the seller for any loss, liability or expense incurred by the seller in
connection with a breach by the RPA seller of any of its representations,
warranties or covenants contained in the Receivables Purchase Agreement.
In addition, the RPA seller has expressly acknowledged and consented to
the seller's assignment of its rights relating to the receivables under the
Receivables Purchase Agreement to the trustee.
Termination
The Receivables Purchase Agreement will terminate immediately after the
CARCO receivables trust terminates. Also, if under provisions of federal law
the RPA seller becomes party to any bankruptcy or similar proceeding, other
than as a claimant, and if the proceeding is not voluntary and is not
dismissed within 60 days of its institution, the RPA seller will immediately
cease to sell or transfer receivables to the seller and will promptly give
notice of that event to the seller and to the CARCO receivables trust trustee.
Legal Aspects of the Receivables
Transfer of Receivables
On the Initial Closing Date, the RPA seller sold and assigned the
receivables to the seller, and the seller immediately transferred the
receivables to the CARCO receivables trust. The seller has represented and
warranted and will represent and warranty on the Series Issuance Date with
respect to each Series that:
o the transfer to the trust constituted a valid transfer to the
CARCO receivables trust of all right, title and interest of the
seller in and to the receivables; and
o under the UCC, as in effect in Michigan, there exists a valid,
subsisting and enforceable first-priority perfected ownership
interest in the receivables, in existence at the time of the
formation of the trust or at the date of addition of any
Additional Accounts, in favor of the trust and a valid,
subsisting and enforceable first-priority perfected ownership
interest in the receivables created after that time in favor of
the trust on and after their creation.
However, the transfer of receivables by the seller to the CARCO receivables
trust could be deemed to create a security interest under the UCC. For a
discussion of the trust's rights arising from these representations and
warranties not being satisfied, see "Description of the Investor Certificates
Issued by the CARCO Receivables Trust -- Representations and Warranties."
Each of the RPA seller and the seller has represented that the
receivables are "chattel paper" for purposes of the UCC as in effect in
Michigan. If the receivables are deemed to be chattel paper and the transfer
of the receivables by either the RPA seller to the seller or by the seller to
the trust is deemed either to be a sale or to create a security interest, the
UCC as in effect in Michigan applies. In that case, the transferee must either
take possession of the chattel paper or file an appropriate financing
statement or statements in order to perfect its interest in the chattel paper.
Both the seller and the CARCO receivables trust have filed financing
statements covering the
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receivables under the UCC as in effect in Michigan to perfect their respective
interests in the receivables and continuation statements will be filed as
required to continue the perfection of those interests. The receivables have
not and will not be stamped to indicate the interest of the seller or the
CARCO receivables trustee.
There are circumstances under the UCC and applicable federal law in which
prior or subsequent transferees of receivables could have an interest in the
receivables with priority over the CARCO receivables trust's interest. A
purchaser of the receivables who gives new value and takes possession of the
instruments which evidence the receivables, i.e., the chattel paper, in the
ordinary course of the purchaser's business may, under some circumstances,
have priority over the interest of the CARCO receivables trust in the
receivables. A tax or other government lien on property of the RPA seller or
the seller arising prior to the time a receivable is conveyed to the CARCO
receivables trust may also have priority over the interest of the CARCO
receivables trust in the receivable. Under the Receivables Purchase Agreement,
the RPA seller will warrant to the seller, and under the Pooling and Servicing
Agreement, the seller has warranted to the CARCO receivables trust, that the
receivables have been transferred free and clear of the lien of any third
party. Each of the RPA seller and the seller has also covenanted that it will
not sell, pledge, assign, transfer or grant any lien on any receivable or,
except as we describe under "Description of the Investor Certificates Issued
by the CARCO Receivables Trust -- The Seller's Certificate", the Seller's
Certificate, or any interest in the Seller's Certificate, other than to the
CARCO receivables trust. Also, while DCS is the servicer, cash collections on
the receivables may, in some cases, be commingled with the funds of DCS prior
to each payment date and, in the event of the bankruptcy of DCS, the CARCO
receivables trust may not have a perfected interest in those collections.
Matters Relating to Bankruptcy
The RPA seller has warranted to the seller in the Receivables Purchase
Agreement that the sale of the receivables by it to the seller is a valid sale
of the receivables to the seller. Also, the RPA seller and the seller have
agreed to treat the transactions described in this prospectus as a sale of the
receivables to the seller, and the RPA seller has or will take all actions
that are required under Michigan law to perfect the seller's ownership
interest in the receivables. However, the RPA seller could become a debtor in
a bankruptcy case and a creditor or trustee-in-bankruptcy of the debtor or the
debtor itself could take the position that the sale of receivables from the
debtor to the seller should be recharacterized as a pledge of the receivables
to secure a borrowing from the debtor. In that event, payments of collections
of receivables to the seller could be delayed, or, if the court should rule in
favor of any trustee, debtor in possession or creditor, reduced in amount. See
"Risk Factors -- Risk factors relating to the collateral certificate and the
CARCO receivables trust -- Various legal aspects may cause delays in your
receiving payments or may result in reduced payments or losses on your notes."
In addition, the RPA seller could become a debtor in a bankruptcy case
and a creditor or trustee-in-bankruptcy of the debtor or the debtor itself
could request a court to order that the RPA seller should be substantively
consolidated with the seller. In that event, payments on the certificates
could be delayed, or, if a bankruptcy court should rule in favor of any
creditor, trustee-in-bankruptcy or the debtor, reduced in amount.
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The seller has warranted to the CARCO receivables trust that the transfer
of the receivables to the CARCO receivables trust is a sale of the receivables
to the CARCO receivables trust. The seller has or will take all actions that
are required under Michigan law to perfect the CARCO receivables trust's
ownership interest in the receivables and the seller has warranted to the
CARCO receivables trust that the CARCO receivables trust will at all times
have a first priority perfected ownership interest in the receivables and,
with exceptions, in proceeds of the receivables. Nevertheless, a tax or
government lien on property of DCS or the seller arising prior to the time a
receivable is conveyed to the CARCO receivables trust may have priority over
the interest of the CARCO receivables trust in the receivable. DCWR's limited
liability agreement provides that it shall not file a voluntary application
for relief under Title 11 of the United States Code (the "Bankruptcy Code")
without the affirmative vote of the two independent directors of its member.
Under the Pooling and Servicing Agreement, the CARCO receivables trust
trustee, all certificateholders and any Enhancement provider will covenant
that they will not at any time institute against the seller any bankruptcy,
reorganization or other proceedings under any federal or state bankruptcy or
similar law. In addition, other steps will be taken to avoid the seller's
becoming a debtor in a bankruptcy case. However, the seller could become a
debtor in a bankruptcy case, and a bankruptcy trustee for the seller or the
seller as debtor in possession or a creditor of the seller could take the
position that the transfer of the receivables from the seller to the trust
should be recharacterized as a pledge of the receivables. In that event,
payments on the certificates could be delayed or, should the court rule in
favor of any trustee, debtor in possession or creditor, reduced in amount.
The seller does not intend to file, and DCS has agreed that it will not
cause the seller to file, a voluntary application for relief under the
Bankruptcy Code or any similar applicable state law with respect to the seller
so long as the seller is solvent and does not foresee becoming insolvent.
If the RPA seller or the seller were to become a debtor in a bankruptcy
case, a Reinvestment Event or an Early Amortization Event would occur with
respect to the certificates of each series. In that event, under the
Receivables Purchase Agreement, new receivables would no longer be transferred
to the seller and, under the Pooling and Servicing Agreement, only collections
on receivables already sold to the seller and transferred to the CARCO
receivables trust would be available to be applied to pay interest accruing on
the certificates and to pay the principal amount of the certificates. If that
happens, the servicer must allocate all collections on Principal Receivables
to the oldest principal balance first. If the bankruptcy court were to alter
the allocation method, the rate of payment on the certificates might be
adversely affected. In addition, distributions in respect of principal on each
certificate would not be subject to any applicable Controlled Distribution
Amount.
The occurrence of events of bankruptcy, insolvency or receivership with
respect to the servicer will result in a Service Default. The Service Default,
in turn, may result in a Reinvestment Event or an Early Amortization Event
with respect to a series. If no other Service Default other than the
commencement of the bankruptcy or similar event exists, a
trustee-in-bankruptcy of the servicer may have the power to prevent either the
trustee or the certificateholders from appointing a successor servicer.
Payments made in respect of repurchases of receivables by DCS or the
seller under the Pooling and Servicing Agreement may be recoverable by DCS or
the seller, as debtor in possession, or by a
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creditor or a trustee-in-bankruptcy of DCS or the seller as a preferential
transfer from DCS or the seller if the payments are made within one year prior
to the filing of a bankruptcy case in respect of DCS.
DCWR does not intend to file, and DCS has agreed that it will not cause
DCWR to file, a voluntary application for relief under the Bankruptcy Code or
any similar applicable state law with respect to DCWR so long as DCWR is
solvent and does not foresee becoming insolvent.
Tax Matters
Federal Income Tax Consequences
General
The following summary describes the anticipated material United States
federal income tax consequences of the purchase, ownership and disposition of
the notes. This discussion is based upon current provisions of the Internal
Revenue Code, existing and proposed Treasury regulations, and current
administrative rulings, judicial decisions and other applicable authorities.
There are no cases or Internal Revenue Service ("IRS") rulings on similar
transactions involving debt issued by a trust with terms similar to those of
the notes and no ruling from the IRS has been or will be sought on any of the
issues discussed below. As a result, we cannot assure you that the IRS will
not challenge the conclusions reached in this discussion. Furthermore,
legislative, judicial or administrative changes may occur, possibly with
retroactive effect, which could affect the accuracy of the statements and
conclusions set forth in this prospectus as well as the tax consequences to
noteholders.
This discussion does not address all aspects of federal income taxation
that may be relevant to the holders of notes in light of their personal
investment circumstances or, except for specific limited discussions of
particular topics, that are relevant to noteholders subject to special
treatment under the federal income tax laws, such as financial institutions,
broker-dealers, life insurance companies, tax-exempt organizations, real
estate investment trusts, regulated investment companies ("RICs"), dealers in
securities or currencies, holders that hold the notes as part of a hedge,
straddle, "synthetic security" or other integrated transaction for United
States federal income tax purposes and holders whose functional currency is
not the U.S. dollar. Further, this summary does not include any description of
any alternative minimum tax consequences, United States federal estate or gift
tax laws or the tax laws of any state, local or foreign government that may be
applicable to the notes. Unless otherwise specified, this information is
directed only to prospective purchasers who:
o purchase notes in the initial distribution of the notes;
o are U.S. noteholders (as defined below); and
o hold the notes as "capital assets" within the meaning of
Section 1221 of the Internal Revenue Code.
As used in this discussion, the term "U.S. noteholder" means a beneficial
owner of a note that is for United States federal income tax purposes:
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o a citizen or resident of the United States;
o a corporation (including a person treated as a corporation 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;
o an estate whose income is subject to United States federal
income tax regardless of its source; or
o a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and
one or more United States persons have the authority to control
all substantial decisions of the trust.
Notwithstanding the preceding sentence, to the extent provided in
Treasury regulations, a trust in existence on August 20, 1996 and treated as a
United States person under the Internal Revenue Code and the applicable
Treasury regulations thereunder before such date, that elects to continue to
be treated as a United States person under the Internal Revenue Code or
applicable Treasury regulations thereunder also will be a U.S. noteholder. As
used in this discussion, the term "non-U.S. noteholder" means a beneficial
owner of a note that is not a U.S. noteholder. If a partnership (including for
this purpose any entity treated as a partnership for United States federal
income tax purposes) is a beneficial owner of the notes, the treatment of a
partner in the partnership will generally depend upon the status of the
partner and upon the activities of the partnership. A holder of the notes that
is a partnership and partners in such partnership should consult their tax
advisors about the United States federal income tax consequences of holding
and disposing of the notes.
Prospective investors should consult with their tax advisors as to the
federal, state, local, foreign and any other tax consequences to them of the
purchase, ownership and disposition of notes.
Tax Characterization of the Issuer
Sidley Austin Brown & Wood LLP, special U.S. federal tax counsel to the
transferor ("Tax Counsel"), is of the opinion that, assuming that the terms of
the trust agreement and related documents are complied with, the issuer will
not be an association or publicly traded partnership taxable as a corporation
for United States federal income tax purposes.
The seller will agree, and the noteholders will agree by their purchase
of notes, to treat the notes as debt for federal, state and local income,
franchise and single business tax purposes. Assuming such characterization of
the notes, the United States federal income tax consequences to noteholders
described below under "-- Tax Characterization and Treatment of Notes --
Characterization as Debt" will apply to the noteholders.
If, contrary to the opinion of Tax Counsel, the IRS were to successfully
assert that one or more classes of notes did not represent debt for federal
income tax purposes, such class or classes of notes may be treated as equity
interests in the issuer. If so treated, the issuer may be treated as a
publicly traded partnership taxable as a corporation with potentially adverse
tax consequences (for instance, the issuer may not be able to reduce its
taxable income by deductions for interest expense on notes recharacterized as
equity). Alternatively, the issuer may be treated as a publicly traded
96
partnership that is not be taxable as a corporation because it falls within an
applicable safe harbor. Nonetheless, treatment of notes as equity interests in
such a partnership may 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
non-U.S. noteholders may be subject to United States withholding tax and
United States tax return filing requirements, and individual holders might be
subject to certain limitations on their ability to deduct their share of trust
expenses.
Because the seller will, for federal income tax purposes, treat all notes
as indebtedness issued by the issuer characterized as either a partnership or
a division of whichever person owns all of its transferor interest, the
beneficial will not comply with the tax reporting requirements that would
apply under any alternative characterization of the trust or the notes.
Tax Characterization and Treatment of the Notes
Characterization as Debt
For each series of notes, except for any series which is specifically
identified as receiving different tax treatment in the related prospectus
supplement, Tax Counsel will deliver its opinion to the effect that the notes
will be treated as debt for federal income tax purposes. The seller, the
servicer and each noteholder, by acquiring an interest in a note, will agree
to treat the notes as indebtedness for federal, state and local income, single
business and franchise tax purposes. See "--Tax Characterization of the
Issuer" above in this prospectus for a discussion of the potential federal
income tax consequences to noteholders if the IRS were to successfully in
challenge the characterization of the notes for federal income tax purposes.
Treatment of Stated Interest
Based on Tax Counsel's opinion that the notes will be treated as debt for
federal income tax purposes, and assuming the notes are not issued with
original issue discount or ("OID"), unless otherwise provided in the
applicable prospectus supplement, the stated interest on a note will be
taxable to a noteholder as ordinary income when received or accrued in
accordance with each noteholder's method of tax accounting. Interest received
on a note may constitute "investment income" for purposes of some provisions
in the Internal Revenue Code limiting the deductibility of investment interest
expense.
Original Issue Discount
Except to the extent indicated in the related prospectus supplement, no
series of notes will be issued with original issue discount ("OID") in excess
of the statutorily defined de minimis amount. In general, OID is the excess of
the "stated redemption price at maturity" of a debt instrument over its "issue
price". A note's "stated redemption price at maturity" is the total of all
payments required to be made under the note through maturity except for
payments of "qualified stated interest." Generally, interest is qualified
stated interest if it is unconditionally payable in cash or property other
than debt instruments of the issuer at fixed intervals of one year or less
during the entire term of the instrument at specified rates. The "issue price"
of a note is the initial price at which a substantial amount of the notes are
sold, excluding sales to bond houses, brokers or similar persons acting as
underwriters, placement agents or wholesalers.
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Although it is not anticipated, except to the extent indicated in the
related prospectus supplement, that any series of notes will be issued at a
greater than de minimis discount, a series of notes may nonetheless be deemed
to have been issued with greater than de minimis OID. First, interest payments
on a series of notes may not be deemed "qualified stated interest" under
applicable Treasury regulations if (i) reasonable legal remedies do not exist
to compel timely payment or (ii) the notes do not otherwise provide terms and
conditions that make the likelihood of late payment (other than a late payment
that occurs within a reasonable grace period) or nonpayment a remote
contingency. If a series of notes does not pay qualified stated interest, all
of the taxable income thereon would be includible in income as OID. Second,
the IRS could take the position (under regulations that have not yet been
issued pursuant to Section 1272(a)(6) of the Internal Revenue Code) that a
series of notes has OID.
If a note were treated as being issued with greater than de minimis OID,
a noteholder would be required to include such OID in its income as interest
over the term of the note under a constant yield method. In general, OID must
be included in income in advance of the receipt of cash representing that
income. Thus, each cash distribution would be treated as an amount already
included in income (to the extent OID has accrued as of the date of the
interest distribution and is not allocated to prior distributions) or as a
repayment of principal. This treatment would have no significant effect on
noteholders using the accrual method of accounting. However, cash method
noteholders may be required to report income with respect to the notes in
advance of the receipt of cash attributable to such income. In this situation,
a cash method noteholder would have to rely on other income sources to pay the
taxes on its OID income. Even if a note has OID falling within the de minimis
exception, the noteholder must include such de minimis OID in income
proportionately as principal payments are made on such note.
Short Term Notes
U.S. noteholders may generally, upon election, include in income all
interest (including stated interest, acquisition discount, original issue
discount, de minimis original issue discount, market discount, de minimis
market discount, and unstated interest, as adjusted by any amortizable bond
premium or acquisition premium) that accrues on a debt instrument by using the
constant yield method applicable to original issue discount, subject to
certain limitations and exceptions.
A holder of a note that has a fixed maturity date not more than one year
from the issue date of such note (a "Short-Term Note") will generally not be
required to include OID income on the note as it accrues. However, the
foregoing rule may not apply if such holder holds the instrument as part of a
hedging transaction, or as a stripped bond or stripped coupon or if the holder
is:
o an accrual method taxpayer; or
o a bank;
o a broker or dealer that holds the note as inventory;
o a regulated investment company or common trust fund; or
o the beneficial owner of specified pass-through entities
specified in the Internal Revenue Code.
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A holder of a Short-Term-Note that is not required to include OID income
on the note as it accrues will instead include the OID accrued on the note in
gross income upon a sale or exchange of the note or at maturity, or if the
Short-Term Note is payable in installments, as principal is paid thereon. A
holder would be required to defer deductions for any interest expense on an
obligation incurred to purchase or carry the Short-Term Note to the extent it
exceeds the sum of any interest income and OID accrued on such note. However,
a holder may elect to include OID in income as it accrues on all obligations
having a maturity of one year or less held by the holder in that taxable year
or thereafter, in which case the deferral rule of the preceding sentence will
not apply. For purposes of this paragraph, OID accrues on a Short-Term Note on
a straight-line basis, unless the holder irrevocably elects, under regulations
to be issued by the Treasury Department, to apply a constant interest method,
using the holder's yield to maturity and daily compounding.
Market Discount and Premium
A holder who purchases a note after its initial distribution at a
discount that exceeds a statutorily defined de minimis amount will be subject
to the "market discount" rules of the Internal Revenue Code. These rules
provide, in part, that gain on the sale or other disposition of a note and
partial principal payments on a note are treated as ordinary income to the
extent of accrued market discount which has not been previously included in
income. The market discount rules also provide for deferral of interest
deductions with respect to debt incurred to purchase or carry a note that has
market discount. Market discount will be considered to accrue ratably during
the period from the date of acquisition to the maturity date of the note,
unless the U.S. noteholder elects to accrue market discount on the basis of
semiannual compounding. A U.S. noteholder may elect to include market discount
in income currently as it accrues (on either a ratable or semiannual
compounding basis), in which case the rules described above regarding the
treatment as ordinary income of gain upon the disposition of the note and upon
the receipt of certain cash payments and regarding the deferral of interest
deductions will not apply. Generally, such currently included market discount
is treated as ordinary interest for United States federal income tax purposes.
Such an election will apply to all debt instruments acquired by the U.S.
noteholder on or after the first day of the first taxable year to which such
election applies and may be revoked only with the consent of the IRS.
If a U.S. noteholder purchases a note for an amount that is greater than
the sum of all amounts payable on the notes after the purchase date other than
payments of qualified stated interest, such U.S. noteholder will be considered
to have purchased the note with "amortizable bond premium" equal in amount to
such excess. A U.S. noteholder may elect to amortize such premium using a
constant yield method over the remaining term of the note and may offset
interest otherwise required to be included in respect of the note during any
taxable year by the amortized amount of such excess for the taxable year. Any
election to amortize bond premium applies to all taxable debt instruments
acquired by the U.S. noteholder on or after the first day of the first taxable
year to which such election applies and may be revoked only with the consent
of the IRS.
Disposition of Notes
If a noteholder sells a note, the holder generally 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 the note to a particular noteholder will equal the holder's cost for the
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note, increased by any OID and market discount previously included by such
noteholder in income with respect to the note and decreased by any bond
premium previously amortized and any payments other than qualified stated
interest previously received by such noteholder with respect to such note. Any
gain or loss on sale will be capital gain or loss if the note was held as a
capital asset, except for gain representing accrued interest or accrued market
discount not previously included in income. Capital gain or loss will be
long-term if the note was held by the holder for more than one year and
otherwise will be short-term. Any capital losses realized generally may be
used by a corporate taxpayer only to offset capital gains, and by an
individual taxpayer only to the extent of capital gains plus $3,000 of other
income.
Notes Subject to Contingencies
The United States federal income tax consequences to an owner or seller
of notes that provide for one or more contingent payments will vary depending
on the exact terms of the notes and related factors. Such notes may be subject
to rules that differ from the general rules discussed above. The United States
federal income tax consequences to a holder of notes that provide for
contingent payments will be summarized in the related prospectus supplement.
Foreign Currency Notes
Special tax considerations relating to notes denominated in one or more
foreign currencies will be set forth in the applicable Prospectus Supplement
relating thereto.
Information Reporting and Backup Withholding
The indenture trustee will be required to report annually to the IRS and
to withhold on payments of interest made to the noteholder at the applicable
rate, except as to payments made to exempt holders (generally, corporations,
tax-exempt organizations, qualified pension and profit-sharing trusts,
individual retirement accounts or nonresident aliens who provide certification
as to their status). In addition, upon the sale of a note to (or through) a
broker, the broker must report the sale and withhold on the entire purchase
price at the applicable rate, unless either (i) the broker determines that the
seller is a corporation or other exempt recipient or (ii) the seller certifies
that such seller is a Non-U.S. noteholder (and certain other conditions are
met). Each holder will be required to provide to the indenture trustee, a
certificate, signed under penalties of perjury, containing the holder's name,
address, correct federal taxpayer identification number and a statement that
the holder is not subject to backup withholding. Certification of the
noteholder's non-U.S. status would be made normally on an IRS Form W-8BEN
under penalties of perjury, although in certain cases it may be possible to
submit other documentary evidence. Should a noteholder who is not otherwise
exempt from backup withholding fail to provide the required certification, the
Trustee will be required to withhold on payments of interest made to the
noteholder at the applicable rate and pay the withheld amount to the IRS.
Backup withholding does not constitute a tax and may be credited against the
noteholder's federal income tax liability.
Tax Consequences to Non-U.S. Noteholders
Under United States federal income tax law now in effect, subject to
exceptions applicable to certain types of interest, payments of interest by
the issuer to a holder of a note will be considered "portfolio interest". If
such interest is not portfolio interest, then it will be subject to United
States
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federal income and withholding tax at a rate of 30%, unless such rate
is reduced or eliminated pursuant to an applicable tax treaty or such interest
is effectively connected with the conduct of a trade or business within the
United States and, in either case, the appropriate statement has been
provided. A non-U.S. noteholder that is an individual or corporation (or an
entity treated as a corporation for federal income tax purposes) holding the
notes on its own behalf generally will be exempt from United States federal
income taxes and withholding on payments of principal, premium, interest or
original issue discount on a note, unless such non-U.S. noteholder is a direct
or indirect 10% or greater shareholder of the issuer, a controlled foreign
corporation related to the issuer or a bank extending credit pursuant to a
loan agreement entered into in the ordinary course of its trade or business.
To qualify for the exemption from taxation, the Withholding Agent, as defined
below, must have received a statement (generally made on IRS Form W-8BEN) 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. noteholder and
o provides the beneficial owner's name and address.
A "Withholding Agent" is the last U.S. payor (or a non-U.S. payor who 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.
holder (which itself is not a Withholding Agent). Generally, an IRS Form
W-8BEN is effective for the remainder of the year of signature plus three full
calendar years unless a change in circumstances renders any information on the
form incorrect. Notwithstanding the preceding sentence, a 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 . 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. noteholder that is not 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 and should consult its tax advisor.
A non-U.S. noteholder 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, provided that the
holder files an IRS Form W-8ECI.
Certain securities clearing organizations and other entities who are not
beneficial owners, may be able to provide a signed statement to the
Withholding Agent instead of the beneficial owner. However, in such case, the
signed statement may require a copy of the beneficial owner's IRS Form W-8BEN
(or a substitute form).
Any gain realized on the sale, redemption, retirement or, other taxable
disposition of a note by a non-U. S. noteholder will be exempt from United
States federal income and withholding tax so long as:
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o the gain is not effectively connected with the conduct of a
trade or business in the United States by the non-U.S.
noteholder; and
o in the case of a foreign individual, the non-U.S. noteholder is
not present in the United States for 183 days or more in the
taxable year.
If the interest, gain or income on a note held by a non-U.S. noteholder
is effectively connected with the conduct of a trade or business in the United
States by the non-U.S. noteholder, such holder, although exempt from the
withholding tax previously discussed if an appropriate statement is furnished,
will generally be subject to United States federal income tax on the interest,
gain or income at regular federal income tax rates. In addition, if the
non-U.S. noteholder is a foreign corporation, it may be subject to a branch
profits tax equal to 30 percent of its "dividend equivalent amount" within the
meaning of the Internal Revenue Code for the year, subject to adjustment,
unless it qualifies for a lower rate under an applicable tax treaty.
State and Local Tax Consequences
In addition to the federal income tax considerations described above,
potential investors should consider the state and local income tax
consequences of acquiring, owning and disposing of the notes. The activities
of servicing and collecting the receivables will be undertaken by the
servicer, which is a Michigan limited liability company. Because of the
variation in each state's tax laws based in whole or in part upon income,
state and local income tax law may differ substantially from the corresponding
federal law, and it is thus impossible to predict tax consequences to the
noteholders in all of the state taxing jurisdictions in which they are already
subject to tax. Accordingly, this discussion does not purport to describe any
aspect of the income tax laws of any state or locality. Therefore, potential
investors should consult their own tax advisors with respect to the various
state and local tax consequences of an investment in the notes.
ERISA Considerations
General
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." The acquisition or holding of
securities by or on behalf of or with plan assets of a Plan could give rise to
a prohibited transaction if the issuer, the underwriters, the seller or any of
their respective affiliates is or becomes a party in interest or disqualified
person with respect to the Plan. 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 notes - for
example:
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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; and
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 notes, 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 issuer if, as described below, the
assets of the issuer were considered to include Plan assets.
ERISA also imposes certain duties on persons who are fiduciaries of Plans
subject 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 notes and
the operations of the issuer would result in prohibited transactions if Plans
that purchase the notes were deemed to own an interest in the underlying
assets of the issuer under the rules discussed below. There may also be an
improper delegation of the responsibility to manage Plan assets if Plans that
purchase the notes are deemed to own an interest in the underlying assets of
the issuer.
Pursuant to Department of Labor Regulation Section 2510.3-101 (the "Plan
Assets Regulation"), in general when a Plan acquires an equity interest in an
entity such as the issuer 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.
Unless we specify otherwise in the related prospectus supplement, the
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 of the issuer, the owner trustee or any of their affiliates.
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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 of 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 notes of a series
should consult its tax and/or legal advisors regarding whether the assets of
the issuer would be considered plan assets, the possibility of exemptive
relief from the prohibited transaction rules and other issues and their
potential consequences.
Experts
The financial statements of CARCO Auto Loan Master Trust as of December
31, 2001 and 2000, and for each of the years in the three-year period ended
December 31, 2001, have been incorporated by reference herein and in the
registration statement in reliance upon the report by KPMG LLP,
independent certified public accountants, incorporated by reference herein,
and upon the authority of that firm as experts in accounting and auditing. The
audit report covering the December 31, 2001 financial statements contains
explanatory language stating that the financial statements were prepared on the
basis of cash receipts and disbursements, which is a comprehensive basis of
accounting other than accounting principles generally accepted in the United
States of America.
Plan of Distribution
The seller may sell notes offered by this prospectus in any of three
ways:
o through underwriters or dealers;
o directly to one or more purchasers; or
o through agents.
We will set forth in the related prospectus supplement the terms of the
offering of any series, including, without limitation
o the names of any underwriters,
o the purchase price of the notes and the proceeds to the seller
from the sale,
o any underwriting discounts and other items constituting
underwriter's compensation,
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o any initial public offering price and
o any discounts or concessions allowed or reallowed or paid to
dealers.
If the seller uses underwriters in a sale of any notes of a series, the
notes will be acquired by the underwriters for their own account and may be
resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices to be
determined at the time of sale or at the time of commitment for the
certificates. The notes may be offered to the public either through
underwriting syndicates represented by managing underwriters or by
underwriters without a syndicate. Unless we specify otherwise in the related
prospectus supplement, the obligations of the underwriters to purchase the
notes will be subject to conditions precedent, and the underwriters will be
obligated to purchase all of the notes if any of the notes are purchased. Any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
Notes of a series may also be offered and sold, if we so state in the
related prospectus supplement, in connection with a remarketing upon their
purchase, in accordance with a redemption or repayment under their terms, by
one or more firms ("remarketing firms") acting as principals for their own
accounts or as agents for the seller. We will identify in the related
prospectus supplement any remarketing firm and describe the terms of its
agreement, if any, with the seller and its compensation. Remarketing firms may
be deemed to be underwriters in connection with the notes they remarket.
Notes may also be sold directly by the seller or through agents
designated by the seller from time to time. We will name any agent involved in
the offer or sale of notes, and we will set forth any commissions payable by
the seller to the agent, in the related prospectus supplement. Unless we
indicate otherwise in the related prospectus supplement, any agent will act on
a best efforts basis for the period of its appointment.
Each underwriting agreement and placement agreement will provide that
DCWR and DCS will indemnify the underwriters and agents, respectively, against
civil liabilities, including liabilities under the Securities Act, or
contribute to payments the several underwriters and agents, as applicable, may
be required to make in respect of those civil liabilities.
The issuer may, from time to time, invest the funds in its accounts in
Eligible Investments acquired from the underwriters, agents or the seller.
We will set forth the place and time of delivery for a series of notes in
the prospectus supplement.
Until the distribution of the notes of a series is completed, rules of
the Commission may limit the ability of the underwriters and selling group
members to bid for and purchase those notes. As an exception to these rules,
the underwriters are permitted to engage in transactions that stabilize the
price of those notes. Those transactions consist of bids or purchases for the
purpose of pegging, fixing or maintaining the price of the notes. Purchases of
a note for the purpose of stabilization could cause the price of the note to
be higher than it might be in the absence of the purchases.
105
In connection with the offering of a series, the underwriters may make
short sales of the notes of that series and may purchase those notes on the
open market to cover positions created by short sales. Short sales involve the
sale by the underwriters of a greater number of notes than they are required
to purchase in the offering. The underwriters must close out any short
position by purchasing notes in the open market. The underwriters are more
likely to create a short position if they are concerned that there may be
downward pressure on the price of the notes in the open market after pricing
that could adversely affect investors who purchase in the offering. Similar to
other purchase transactions, the underwriters' purchases to cover the short
sales may have the effect of raising or maintaining the market price of the
notes or preventing or retarding a decline in the market price of notes. As a
result, the price of the notes may be higher than the price that might
otherwise exist in the open market.
Neither DCS, DCWR 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 notes of any
series. In addition, neither DCS, DCWR nor any of the underwriters makes any
representation that the underwriters will engage in the transactions or that
the transactions, once commenced, will not be discontinued without notice.
If any notes of a series are offered in the United Kingdom, each
underwriter and placement agent will represent and agree that
o it has not offered or sold, and will not offer or sell, any of
those notes to persons in the United Kingdom except to persons
whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments, as principal or agent,
for the purposes of their businesses or otherwise in
circumstances that do not constitute an offer to the public in
the United Kingdom for the purposes of the Public Offers of
Securities Regulations 1995 (the "U.K. Regulations"),
o it has complied and will comply with all applicable provisions
of the U.K. Regulations and of the Financial Services and
Markets Act 2000 (the "FSMA") 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 communicated or caused to be communicated and it
will only communicate or cause to be communicated any
invitation or inducement to engage in investment activity
(within the meaning of section 21 of the FSMA) received by it
in connection with the issue or sale of any series of notes in
circumstances in which section 21(1) of the FSMA does not apply
to the issuer.
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 Matters
Certain legal matters relating to the notes will be passed upon for DCWR
by Sidley Austin Brown & Wood LLP, New York, New York, and for any
underwriters, agents or dealers by the
106
counsel we name in the applicable prospectus supplement, which may be Sidley
Austin Brown & Wood LLP. Federal income tax and ERISA matters will be passed
upon for DCWR and the issuer by the counsel we named in the applicable
prospectus supplement, which may also be Sidley Austin Brown & Wood LLP.
Sidley Austin Brown & Wood LLP from time to time represents DaimlerChrysler
Services North America LLC and its affiliates on other matters.
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Glossary of Principal Terms for Prospectus
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"Accounts" means the revolving financing arrangements with dealers
franchised by DaimlerChrysler and/or other automobile manufacturers in which
the receivables arise.
"Accumulation Period" means, for any applicable series of non-collateral
certificates, the period beginning at the close of business on the date
specified in or determined in the manner specified in the related Series
Supplement and ending on the earliest of:
o the beginning of a Reinvestment Period with respect to the series;
o the beginning of an Early Amortization Period with respect to the
series; and
o payment in full of the outstanding principal amount of the
non-collateral certificates of the series.
The collateral certificate will not have an Accumulation Period.
"Addition Date" means, in the case of an Additional Account, the date on
which the receivables in the Additional Account are first transferred to the
trust.
"Additional Accounts" means the additional accounts which the seller has
the right, subject to conditions, to designate from time to time to be
included as Accounts.
"Additional Cut-Off Date" means, with respect to any Additional Accounts,
the date those Additional Accounts are identified and selected.
"Adjusted Invested Amount" means, for any series of investor certificates
(other than the collateral certificate) for any date, an amount equal to the
sum of:
o the Initial Invested Amount of the series, minus unreimbursed
Investor Charge-Offs for the series; and
o the Available Subordinated Amount with respect to the series,
after giving effect to the allocations, distributions, withdrawals
and deposits to be made on the payment date during the Collection
Period in which that date occurs.
The Adjusted Invested Amount for the collateral certificate is the sum of the
series nominal liquidation amounts for all outstanding series of notes.
"Adjustment Payment" means, to the extent that a reduction in the
Seller's Interest would reduce the Seller's Participation Amount below the
Trust Available Subordinated Amount for the immediately preceding
Determination Date, after giving effect to the allocations, distributions,
withdrawals and deposits to be made on the payment date, a cash amount equal
to the deficiency which will be deposited by the seller into the Collection
Account in immediately available funds on the day on which the servicer makes
the adjustment.
"Auction Vehicles" means, collectively, the vehicles purchased by a
dealer at a closed auction conducted by DaimlerChrysler.
108
"Automatic Additional Accounts" means the Additional Accounts which the
seller may designate from time to time, at its discretion, subject only to
some limitations.
"Automatic Removal Date" means the date upon which the Automatic Removed
Accounts are to be removed.
"Automatic Removed Accounts" means the Accounts, designated by the
seller, with respect to which the seller shall have the right to require the
reassignment to it of all the trust's right, title and interest in, to and
under the receivables then existing and created after that time, all monies
due or to become due and all amounts received with respect to those
receivables and all proceeds of those receivables in or with respect to the
Accounts, upon satisfaction of the following conditions:
o on or before the fifth business day immediately preceding the
date upon which the Accounts are to be removed, the seller
shall have given the trust, each Enhancement provider and the
Rating Agencies a Removal Notice specifying the Automatic
Removal Date of the Automatic Removed Accounts;
o on or prior to the date that is five business days after the
Automatic Removal Date, the seller shall have delivered to the
trustee a computer file or microfiche or written list
containing a true and complete list of the Automatic Removed
Accounts stating for each Account, as of the removal notice
date, its account number and the aggregate amount of
receivables outstanding in the Account;
o the seller shall have represented and warranted as of each
Automatic Removal Date that the list of Automatic Removed
Accounts delivered pursuant to the second clause above, as of
the Automatic Removal Date, is true and complete in all
material respects;
o the CARCO receivables trust trustee shall have received
confirmation from each Rating Agency that the removal will not
cause the Ratings Agency's rating of any outstanding series or
class of certificates to be reduced or withdrawn;
o the seller shall have delivered to the CARCO receivables trust
trustee, each Rating Agency and any Enhancement providers an
officers' certificate, dated the Automatic Removal Date, to the
effect that the seller reasonably believes the removal will not
cause an Early Amortization Event or Reinvestment Event to
occur with respect to any series; and
o the seller shall have delivered to the trustee, each Rating
Agency and any Enhancement providers a Tax Opinion, dated the
Automatic Removal Date, with respect to the removal.
"Available Subordinated Amount" means, with respect to a series of
non-collateral certificates, the amount of the subordination for that series
of non-collateral certificates.
"Bankruptcy Code" means Title 11 of the United States Code.
"Benefit Plans" means, collectively, employee benefit plans subject to
ERISA or the Code or individual retirement accounts.
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"CARCO" means Chrysler Auto Receivables Company.
"CARCO receivables trust" means CARCO Auto Loan Master Trust.
"CCC" means Chrysler Credit Corporation.
"Certificateholders' Interest" means, for any series of investor
certificates (including the collateral certificate), the undivided beneficial
interests in certain assets of the CARCO receivables trust allocated to the
Interest of the Certificateholders of the series.
"certificates" or "investor certificates" means the Auto Loan Asset
Backed Certificates issued by the CARCO receivables trust, including the
collateral certificate.
"CFC Corp." means Chrysler Financial Corporation.
"CFC LLC" means Chrysler Financial Company L.L.C.
"Clearstream" means Clearstream Banking, societe anonyme.
"Code" means the Internal Revenue Code of 1986, as amended.
"collateral certificate" means the investor certificate issued by the
CARCO receivables trust and registered in the name of the indenture trustee
for the benefit of the noteholders.
"Collateral Security" means, in respect of the receivables, a security
interest in vehicles and parts inventory, equipment, fixtures, service
accounts and, in some cases, realty and a personal guarantee.
"Collection Account" means an Eligible Deposit Account which the servicer
has established and will maintain for the benefit of the certificateholders in
the name of the CARCO receivables trust trustee, on behalf of the CARCO
receivables trust.
"Collection Period" means, for any payment date, the calendar month
preceding the month in which that payment date occurs.
"Commission" or "SEC" means the Securities and Exchange Commission.
"Controlled Amortization Period" means, for any applicable series of
non-collateral certificates, a controlled amortization period which will begin
at the close of business on the date stated in or determined in the manner
stated in the related Series Supplement and will end on the earliest of:
o the beginning of a Reinvestment Period with respect to the
series,
o the beginning of an Early Amortization Period with respect to
the series and
o payment in full of the outstanding principal amount of the
non-collateral certificates of the series.
The collateral certificate will not have a Controlled Amortization
Period.
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"Controlled Deposit Amount" means, for any series of non-collateral
certificates, an amount stated in the related Series Supplement plus, in the
case of some payment dates, any amounts in the Excess Funding Account
allocable to the series.
"DaimlerChrysler" means DaimlerChrysler Corporation, the successor to
Chrysler Corporation.
"DCS" means DaimlerChrysler Services North America LLC.
"DCWR" means DaimlerChrysler Wholesale Receivables LLC.
"Dealer Overconcentrations" means, on any payment date, with respect to
any Dealer or group of affiliated Dealers, the excess of:
o the aggregate principal amount of receivables due from the
Dealer or group of affiliated Dealers on the last day of the
Collection Period immediately preceding that payment date over
o 2% (or with respect to certain dealers, 4%) of the Pool Balance
on the last day of the immediately preceding Collection Period.
"Dealer Trouble" means a status under which a dealer will be classified
by DCS under some circumstances which include:
o failure to remit any principal or interest payment when due;
o any notifications of liens, levies or attachments; and
o a general deterioration of its financial condition.
"dealers" or "Dealers" means domestic automobile dealers franchised by
DaimlerChrysler and/or other automobile manufacturers.
"Defaulted Amount" means for any Collection Period will be an amount,
which shall not be less than zero, equal to (a) the principal amount of
receivables that became Defaulted Receivables during the preceding Collection
Period minus (b) the sum of (i) the full amount of any Defaulted Receivables
subject to reassignment to the seller or purchase by the servicer for the
Collection Period unless events of bankruptcy, insolvency or receivership have
occurred with respect to either of the seller or the servicer, in which event
the Defaulted Amount will not be reduced for those Defaulted Receivables and
(ii) the excess, if any, for the immediately preceding Determination Date of
the amount determined pursuant to this clause (b) for that Determination Date
over the amount determined pursuant to clause (a) for that Determination Date.
"Defaulted Receivables" means on any Determination Date:
o all receivables which were charged off as uncollectible in
respect of the immediately preceding Collection Period; and
o all receivables which were Eligible Receivables when
transferred to the CARCO receivables trust, which arose in an
Account which became an Ineligible Account after
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the date of transfer of the receivables to the CARCO
receivables trust and which were not Eligible Receivables for
any six consecutive Determination Dates after that date.
"Definitive Certificates" means the notes of a series or class issued in
fully registered, certificated form to certificateholders or their nominees.
"Depository" means DTC, together with any successor depository selected
by the seller.
"Designated Accounts" means the Accounts to be removed from the CARCO
receivables trust.
"Designated Balance" means the aggregate principal balance of receivables
in respect of each of the Designated Accounts.
"Designated Receivables" means, at any time, the then existing
receivables in the Designated Accounts. "Determination Date" means each second
business day preceding a Distribution Date.
"Distribution Date Statement" means a statement prepared by the servicer
and forwarded by the CARCO receivables trust trustee to each investor
certificateholder of record of any series on each payment date, including each
payment date that corresponds to an interest payment date or any Special
Payment Date, that sets forth information with respect to the CARCO
receivables trust and the investor certificates of the series, as stated in
the related Series Supplement.
"DOL" means the Department of Labor.
"Early Amortization Event" means, for any series of investor certificates
(including the collateral certificate), any of the events so defined in the
related Series Supplement, as well as each of the following events:
o the occurrence of events of bankruptcy, insolvency or
receivership relating to the trust or the seller; and
o the trust or DCWR becomes an investment company within the
meaning of the Investment Company Act of 1940.
"Early Amortization Period" means, for any series of non-collateral
certificates, the period beginning on the day on which an Early Amortization
Event has occurred with respect to a series and ending on the earliest of:
o payment in full of the outstanding principal amount of the
non-collateral certificates of the series;
o the recommencement of the Revolving Period in accordance with
the related Series Supplement; and
o the Termination Date for the series.
The collateral certificate will not have an Early Amortization Period.
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"Eligible Account" means a wholesale financing line of credit extended by
DCS, directly or as successor to CFC LLC, CFC Corp. or CCC, to a Dealer,
which, as of its date of determination:
o is established by DCS, directly or as successor to CFC LLC, CFC
Corp. or CCC, in the ordinary course of business under a
floorplan financing agreement,
o is in favor of an Eligible Dealer,
o is in existence and maintained and serviced by DCS, directly or
as successor to CFC LLC, CFC Corp. or CCC, and
o in respect of which no amounts have been charged off as
uncollectible or are classified as past due or delinquent.
"Eligible Dealer" means a Dealer:
o which is located in the United States of America, including its
territories and possessions,
o which has not been identified by the servicer as being the
subject of any voluntary or involuntary bankruptcy proceeding
or in voluntary or involuntary liquidation,
o in which DaimlerChrysler or any affiliate of DaimlerChrysler
does not have an equity investment and
o which has not been classified by the servicer as being under
Dealer Trouble status.
"Eligible Deposit Account" means either:
o a segregated account with an Eligible Institution; or
o a segregated trust account with the corporate trust department
of a depository institution organized under the laws of the
United States or any one of the states of the United States, or
any domestic branch of a foreign bank, having corporate trust
powers and acting as trustee for funds deposited in such
account, so long as any of the securities of the depository
institution has a credit rating from each Rating Agency in one
of its generic rating categories which signifies investment
grade.
"Eligible Institution" means
o the corporate trust department of the CARCO receivables trustee
or
o a depository institution organized under the laws of the United
States or any one of the states of the United States, or the
District of Columbia, or a domestic branch of a foreign bank,
which at all times (i) has either (x) a long-term unsecured
debt rating of A2 or better by Moody's and of AAA or better by
Standard & Poor's or (y) a certificate of deposit rating of P-1
by Moody's or A-1+ by Standard & Poor's and (ii) is a member of
the FDIC.
"Eligible Investments" means book-entry securities, negotiable
instruments or physical securities having original or remaining maturities of
30 days or less, but in no event occurring later
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than the payment date next succeeding the trustee's acquisition of those
securities or instruments, except as otherwise provided in the related Series
Supplement. Eligible Investments are limited to:
o direct obligations of, and obligations fully guaranteed as to
timely payment by, the United States of America;
o demand deposits, time deposits or certificates of deposit of
any depositary institution or trust company incorporated under
the laws of the United States of America or any state of the
United States, or any domestic branch of a foreign bank, and
subject to supervision and examination by Federal or state
banking or depository institution authorities. However, at the
time of the trust's investment or contractual commitment to
invest in those investments, the commercial paper or other
short-term unsecured debt obligations, other than obligations
the rating of which is based on the credit of a person or
entity other than the depository institution or trust company,
of that entity shall have a credit rating from each of the
Rating Agencies in its highest investment category;
o commercial paper having, at the time of the CARCO receivables
trust's investment or contractual commitment to invest in the
commercial paper, a rating from each of the Rating Agencies in
its highest investment category;
o except during a Reinvestment Period with respect to any series,
investments in money market funds having a rating from each of
the Rating Agencies in its highest investment category or
otherwise approved in writing by each of the Rating Agencies;
o bankers' acceptances issued by any depository institution or
trust company referred to in the second clause of this
sentence;
o certain repurchase obligations, including those of
appropriately rated broker-dealers and financial institutions;
and
o any other investment consisting of a financial asset that by
its terms converts to cash within a finite period of time,
provided that each Rating Agency shall have notified the
seller, the servicer and the CARCO receivables trust trustee
that the trust's investment in that investment will not cause
its then rating of any outstanding class or series with respect
to which it is a Rating Agency to be reduced or withdrawn.
"Eligible Portfolio" means all the wholesale accounts in the U.S.
Wholesale Portfolio that are Eligible Accounts.
"Eligible Receivable" means a receivable:
o which was originated or acquired by DCS, directly or as
successor to CFC LLC, CFC Corp. or CCC, in the ordinary course
of business;
o which has arisen under an Eligible Account and is payable in
United States dollars;
o which is owned by DCS, CFC LLC, CFC Corp. or CCC at the time of
sale to the seller;
o which represents the obligation of a Dealer to repay an advance
made to the Dealer to finance the acquisition of vehicles;
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o which at the time of creation and at the time of transfer to
the CARCO receivables trust is secured by a perfected first
priority security interest in the related vehicle;
o which was created in compliance in all respects with all
requirements of law applicable to it and pursuant to a
floorplan financing agreement which complies in all respects
with all requirements of law applicable to any party to the
agreement;
o with respect to which all consents and governmental
authorizations required to be obtained by DaimlerChrysler, CCC,
CFC Corp., CFC LLC, CFC or the seller in connection with the
creation of the receivable or the transfer of the receivable to
the CARCO receivables trust or the performance by CCC, DCS
Corp. or DCS of the floorplan financing agreement under which
the receivable was created, have been duly obtained;
o as to which at all times following the transfer of the
receivable to the CARCO receivables trust, the CARCO
receivables trust will have good and marketable title to the
receivable free and clear of all liens arising prior to the
transfer or arising at any time, other than liens permitted
under the Pooling and Servicing Agreement;
o which has been the subject of a valid transfer and assignment
from the seller to the CARCO receivables trust of all the
seller's interest in the receivable, including any proceeds of
the receivable;
o which will at all times be the legal and assignable payment
obligation of the related Dealer, enforceable against the
Dealer in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy or other similar laws;
o which at the time of transfer to the CARCO receivables trust is
not subject to any right of rescission, setoff, or any other
defense, including defenses arising out of violations of usury
laws, of the Dealer;
o as to which, at the time of transfer of the Receivable to the
CARCO receivables trust, DaimlerChrysler, CCC, CFC Corp., CFC
LLC, and the seller have satisfied all their respective
obligations with respect to the Receivable required to be
satisfied at that time;
o as to which, at the time of transfer of the Receivable to the
CARCO receivables trust, neither DaimlerChrysler, CCC, CFC
Corp., CFC LLC or DCS nor the seller has taken or failed to
take any action which would impair the rights of the trust or
the certificateholders;
o which constitutes "chattel paper" as defined in Article 9 of
the UCC as then in effect in the State of Michigan; and
o which was transferred to the trust with all applicable
governmental authorization.
"Enhancements" means enhancements which may be provided with respect to
one or more classes of a series, including one or more of the following:
o letter of credit;
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o surety bond;
o cash collateral account;
o spread account;
o guaranteed rate agreement;
o swap, including without limitation currency swaps, or other
interest protection agreement;
o repurchase obligation;
o cash deposit; or
o another form of credit enhancement described in the related
prospectus supplement.
"Euroclear" means the Euroclear System.
"Euroclear Operator" means Euroclear Bank, S.A./N.V.
"Euroclear Participants" means participants of Euroclear.
"Excess Funded Amount" means, initially, the initial principal balance of
the certificates of a series over the Initial Invested Amount of the series.
"Excess Funding Account" means an Eligible Account established with the
CARCO receivables trust trustee for a series in which the Excess Funding
Amount will be maintained, except, to the extent provided in the related
Series Supplement, during an Early Amortization Period or Reinvestment Period
for the series.
"Excess Principal Collections" means the amount of available
certificateholder principal collections for each series and any Collection
Period remaining after required payments, if any.
"Excluded Series" means a series of certificates designated as an
excluded series with respect to a Paired Series.
"Fleet Receivables" means receivables originated in connection with
multiple new vehicle orders of at least five vehicles by specified Dealers.
"Fully Reinvested Date" means the date on which the amount on deposit in
the Principal Funding Account with respect to a series of certificates equals
the outstanding principal amount of the certificates.
"Global Securities" means the globally offered notes.
"Holders" means the certificateholders of record under the Pooling and
Servicing Agreement.
"Indirect Participants" means entities including banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship
with a Participant, either directly or indirectly.
116
"Ineligible Receivables" means any receivable as to which the
Certificateholders' Interest with respect to the receivable will be reassigned
to the seller on the terms and conditions set forth in this prospectus as a
result of a breach by the seller of any representation and warranty described
in the first paragraph of "Representations and Warranties" in this prospectus,
which breach remains uncured for 30 days or a longer period as may be agreed
to by the CARCO receivables trust trustee, after the earlier to occur of the
discovery of such breach by the seller or the servicer or receipt of written
notice of such breach by the seller or the servicer, and which breach has a
materially adverse effect on the Certificateholders' Interest in any
receivable or Account.
"Initial Cut-Off Date" means May 31, 1991.
"Initial Invested Amount" means with respect to any series of
certificates (other than the collateral certificate) and for any date, the
amount stated as the "Initial Invested Amount" in the related Series
Supplement. The Initial Invested Amount for any series may be increased or
decreased from time to time as stated in the related Series Supplement,
including as a result of deposits to or withdrawals from the Excess Funding
Account, if any, for the series.
"Insolvency Laws" means the United States Bankruptcy Code or similar
applicable state laws.
"Installment Balance" means, with respect to any dealer, the balance
outstanding after the initial payment by that dealer on any receivable and not
immediately required to be remitted under the related floorplan financing
agreement and floorplan financing guidelines following the date of sale of the
related vehicle.
"Installment Balance Amount" means the portion of the aggregate amount of
Installment Balances in respect of which DCS has not received an offsetting
payment from the related Dealer on a payment date.
"interest collections" or "Interest Collections" means collections under
the receivables that consist of interest and other non-principal charges,
including insurance fees, amounts recovered with respect to Defaulted
Receivables and insurance proceeds.
"Interest Funding Account" means the one or more trust accounts in which
collections or other amounts, or the portion allocable to a class, will be
deposited if the interest payment dates for a series or class occur less than
monthly.
"Investor Default Amount" means the portion of the Defaulted Amount
allocated to the certificateholders of a series.
"IRA" means an individual retirement account.
"Miscellaneous Payments" means, for any Collection Period, the sum of:
o Adjustment Payments and Transfer Deposit Amounts received with
respect to the Collection Period; and
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o Unallocated Principal Collections on the payment date available
to be treated as Miscellaneous Payments as described in this
prospectus under "Principal Collections for all Series."
"Monthly Payment Rate" means, for a Collection Period, the percentage
obtained by dividing Principal Collections for the Collection Period by the
daily average Pool Balance for the Collection Period.
"Monthly Servicing Fee" means, unless a related Series Supplement or
prospectus supplement states otherwise, the share of the Servicing Fee
allocable to certificateholders of any series with respect to any payment
date, which shall generally be equal to one-twelfth of the product of:
o the Servicing Fee Rate; and
o the Invested Amount of the series as of the last day of the
second preceding Collection Period.
"Moody's" means Moody's Investors Service, Inc. or its successors.
"New Vehicles" means:
o current and prior model year unmiled vehicles;
o current model year miled vehicles purchased at a closed auction
conducted by DaimlerChrysler; and
o prior model year and two year old miled vehicles.
"non-collateral certificates" means the investor certificates other than
the collateral certificate.
"OID" means original issue discount.
"OID regulations" means the Treasury regulations relating to OID.
"Overconcentration Amount" means the aggregate principal amount of
receivables in the CARCO receivables trust on a payment date which are Dealer
Overconcentrations.
"Paired Series" means a series of notes previously issued by the CARCO
receivables trust as to which the Accumulation Period or Controlled
Amortization Period has commenced with respect to which a series of
certificates may be designated as an Excluded Series.
"Participants" means the participating organizations of DTC which include
securities brokers and dealers, banks, trust companies and clearing
corporations and may include certain other organizations.
"Plan Assets Regulation" means the final regulation issued by DOL
concerning the definition of what constitutes the "plan assets" of Benefit
Plans.
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"Pool Balance" means the aggregate amount of the principal balances of
the receivables.
"Pooling and Servicing Agreement" means the Amended and Restated Pooling
and Servicing Agreement, as amended and supplemented from time to time, among
DCWR, as seller of the receivables, DCS, as servicer of the receivables, and
the CARCO receivables trust trustee.
"prime rate" means the rate designated as the "prime rate" from time to
time by certain financial institutions selected by DCS.
"principal collections" or "Principal Collections" means collections of
principal on the receivables.
"Principal Funding Account" means the trust account established for the
benefit of the certificateholders of a series in which, during the
Accumulation Period for the series, Principal Collections and other amounts
allocable to the Certificateholders' Interest of the series, which may include
some Excess Principal Collections, will be deposited.
"principal receivables" means the portion of the receivables that
represents principal.
"Principal Shortfalls" means any principal distributions to
certificateholders of any series which are either scheduled or permitted and
which have not been covered out of principal collections and certain other
amounts allocated to the series.
"Principal Terms" means the terms of a series which, under the Pooling
and Servicing Agreement, the seller may specify, including, among other
things:
o its name or designation;
o its initial principal amount, or method for calculating such
amount;
o its certificate rate, or the method for determining its note
rate;
o a date on which it will begin its Accumulation Period or
Controlled Amortization Period, if any;
o the method for allocating principal and interest to
certificateholders of such series;
o the percentage used to calculate monthly servicing fees;
o the issuer and terms of any Enhancement or the level of
subordination provided by the Seller's Interest;
o the terms on which the certificates of such series may be
exchanged for certificates of another Series, be subject to
repurchase, optional redemption or mandatory redemption by the
seller or be remarketed by any remarketing agent;
o the Series Termination Date; and
o any other terms permitted by the Pooling and Servicing
Agreement.
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"Qualified Account" means either:
o a segregated account (including a securities account) with a
Qualified Institution; or
o a segregated trust account with the corporate trust department
of a depository institution organized under the laws of the
United States of America or any one of the states thereof or
the District of Columbia (or any domestic branch of a foreign
bank), so long as any of the securities of such depository
institution shall have a credit rating from each rating agency
in one of its generic rating categories which signifies
investment grade.
"Qualified Institution" means either:
o a depository institution, which may include the indenture
trustee or the owner trustee (so long as it is a paying agent),
organized under the laws of the United States of America or any
one of the states thereof or the District of Columbia, the
deposits of which are insured by the Federal Deposit Insurance
Corporation and which at all times has a short-term unsecured
debt rating in the applicable investment category of each
rating agency; or
o a depository institution acceptable to each rating agency.
"Rating Agency" means each rating agency designated by the seller in
respect of any outstanding series or class of certificates or each rating
agency designated by the seller for a series of Notes, as the case may be.
"Receivables Transfer Date" means the Series Cut-Off Date, or the
Additional Cut-Off Date, in the case of any Additional Accounts, or the date
any future receivable is generated.
"Registration Statement" means the registration statement, together with
all amendments and exhibits, which the seller has filed under the Securities
Act with the Commission with respect to the collateral certificate and the
notes.
"Reinvestment Event" means, for any series of non-collateral
certificates, any of the events so defined in the related Series Supplement.
"Reinvestment Period" means, for any applicable series of non-collateral
certificates, the period beginning on the day on which a Reinvestment Event
has occurred and ending on the earliest of:
o the beginning of an Early Amortization Period with respect to
the series;
o the recommencement of the Revolving Period in accordance with
the related Series Supplement; and
o payment in full of the outstanding principal amount of the
non-collateral certificates of the series.
The collateral certificate will not have a Reinvestment Period.
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"remarketing firms" means one or more firms which, acting as principals
for their own accounts or as agents for the seller, may offer and sell the
notes of a series, if the related prospectus supplement so states, in
connection with a remarketing upon their purchase, in accordance with a
redemption or repayment pursuant to their terms.
"Removal and Repurchase Date" means the Determination Date on which the
removal of the Designated Accounts and the purchase of the Designated
Receivables will occur.
"Removal Commencement Date" means the Determination Date on which removal
of one or more Accounts will commence.
"Removal Date" means the Determination Date on which the Designated
Balance in a Designated Account is reduced to zero.
"Removal Notice" means a written notice furnished to the CARCO
receivables trust trustee, any Enhancement provider and the Rating Agencies by
the seller, or the servicer on its behalf stating the Removal Commencement
Date and the Designated Accounts.
"Removed Account" means a Designated Account as to which the seller has
stopped allocating collections of receivables and which has been deemed
removed from the trust for all purposes.
"Repurchased Receivables" means Designated Receivables which have been
deemed repurchased from the trust for all purposes.
"Required Participation Amount" means for any date an amount equal to the
sum of:
o the sum of the amounts for each series of certificates obtained
by multiplying the Required Participation Percentage for the
series by the Initial Invested Amount for the series at that
time. However, each Excluded Series will be excluded from this
calculation until the Invested Amount of the related Paired
Series is reduced to zero; and
o the Trust Available Subordinated Amount on the immediately
preceding Determination Date, after giving effect to the
allocations, distributions, withdrawals and deposits to be made
on the payment date following that Determination Date.
"Required Participation Percentage" means, for a series, the required
participation percentage specified in the related Series Supplement.
"Revolving Period" means, for any series of non-collateral certificates,
the period during which Principal Collections and other amounts otherwise
allocable to the Certificateholders' Interest of that series or class will be:
o paid to the seller;
o deposited to the Excess Funding Account, if any, for that
series; or
o distributed to, or for the benefit of, the certificateholders
of other classes or series.
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The collateral certificate will not have a Reinvestment Period. A
Revolving Period for a series of non-collateral certificates will begin on the
Series Cut-off Date and end on the earlier of:
o the day immediately before the Accumulation Period commencement
date or the controlled amortization period commencement date
for the series; and
o the day immediately before the day on which an Early
Amortization Event or a Reinvestment Event occurs with respect
to the series.
"RPA seller" means DCS, as seller, together with its predecessors as
appropriate, under the Receivables Purchase Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller's Certificate" means the certificate evidencing the Seller's
Interest.
"Seller's Participation Amount" means the Pool Balance minus the
aggregate Invested Amounts for all outstanding series of certificates.
"Series Allocable Defaulted Amount" means, with respect to any series of
certificates for any Collection Period, the product of the Series Allocation
Percentage for the series and the amount of the Defaulted Amount with respect
to the Collection Period.
"Series Allocable Interest Collections" means, with respect to any series
of certificates for any Collection Period, the product of the Series
Allocation Percentage for the series and the amount of Interest Collections,
with respect to the Collection Period.
"Series Allocable Miscellaneous Payments" means, with respect to any
series of certificates for any Collection Period, the product of the Series
Allocation Percentage for the series and the amount of Miscellaneous Payments,
with respect to the Collection Period.
"Series Allocable Principal Collections" means, with respect to any
series of certificates for any Collection Period, the product of the Series
Allocation Percentage for the series and the amount of Principal Collections,
with respect to the Collection Period.
"Series Allocation Percentage" means, with respect to a series for any
Collection Period, the percentage equivalent of a fraction, the numerator of
which is the Adjusted Invested Amount of the series as of the last day of the
immediately preceding Collection Period and the denominator of which is the
Trust Adjusted Invested Amount as of that last day.
"Series Cut-off Date" means, for a series, the date stated in the related
prospectus supplement on which a revolving period for the series of
certificates will begin.
"Series Issuance Date" means the date of issuance of any series.
"Series Termination Date" means, for any series, the date stated in the
related prospectus supplement, on which the last payment of principal and
interest on any series of certificates will be due and payable, if not
previously paid.
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"Service Default" means any of the following events:
o failure by the servicer to make any payment, transfer or
deposit, or to give instructions to the CARCO receivables trust
trustee to make any payment, transfer or deposit, on the date
the servicer is required to do so under the Pooling and
Servicing Agreement, which is not cured within a five business
day grace period;
o failure by the servicer duly to observe or perform any other
covenants or agreements of the servicer in the Pooling and
Servicing Agreement which failure has a materially adverse
effect on the certificateholders of any outstanding series and
which continues unremedied for a period of 30 days after the
date written notice of the failure shall have been given to the
servicer by the CARCO receivables trust trustee;
o the servicer delegates its duties under the Pooling and
Servicing Agreement, except as specifically permitted
thereunder;
o any representation, warranty or certification made by the
servicer in the Pooling and Servicing Agreement or in any
certificate delivered pursuant to the Pooling and Servicing
Agreement proves to have been incorrect in any material respect
when made, has a materially adverse effect on the rights of the
certificateholders of any outstanding Series, and which
materially adverse effect continues for a period of 60 days
after written notice of that fact shall have been given to the
servicer by the trustee; or
o events of bankruptcy, insolvency or receivership occur with
respect to the servicer.
Notwithstanding the foregoing, a delay in or failure of performance
referred to under the first clause for a period of ten business days or
referred to under the second, third or fourth clauses for a period of 60
business days, shall not constitute a Service Default if the delay or failure
was caused by an act of God or other similar occurrence.
"Service Transfer" means, in the event of any Service Default, an action
by the CARCO receivables trust trustee, by written notice to the servicer,
terminating all of the rights and obligations of the servicer, as servicer,
under the Pooling and Servicing Agreement and in and to the receivables and
the proceeds thereof and appointing a new servicer.
"servicer" means DCS or any successor servicer.
"Servicing Fee" means a monthly servicing fee which constitutes the
servicer's compensation with respect to the certificates of a series for its
servicing activities and reimbursement for its expenses, unless the related
Series Supplement or prospectus supplement states otherwise.
"Servicing Fee Rate" means, for a series, the servicing fee rate set
forth in the related Series Supplement.
"Special Payment Date" means, during an Early Amortization Period for a
series, each payment date beginning with the payment date following the
Collection Period in which the Early Amortization Period begins.
123
"Standard & Poor's" means Standard & Poor's Ratings Services, a division
of The McGraw-Hill Companies, or its successors.
"Supplemental Certificate" means a certificate for which the seller may,
from time to time, exchange a portion of the Seller's Certificate for transfer
or assignment to a person or entity chosen by the seller upon the execution
and delivery of a supplement to the Pooling and Servicing Agreement, if:
o the seller shall at the time of that exchange and after giving
effect to the exchange have an interest of not less than 2% in
the Pool Balance;
o the seller shall have delivered to the CARCO receivables trust
trustee, the Rating Agencies and any Enhancement provider a Tax
Opinion with respect to the exchange; and
o the seller shall have delivered to the CARCO receivables trust
trustee written confirmation from the applicable Rating
Agencies that the exchange will not result in a reduction or
withdrawal of the rating of any outstanding series or class of
certificates. Any later transfer or assignment of a
Supplemental Certificate is also subject to the second and
third conditions described in the preceding sentence.
"Tax Counsel" means Sidley Austin Brown & Wood LLP, special federal
income tax counsel to the seller, the trust and the issuer.
"Tax Opinion" means an opinion of counsel to the effect that, for federal
income tax and Michigan income and single business tax purposes:
o such action, other than some specified actions, will not
adversely affect the characterization of the certificates of
any outstanding series or class as debt of the seller; and
o the issuance will not cause a taxable event to any
certificateholders.
"Terms and Conditions" means, collectively, the Terms and Conditions
Governing Use of Euroclear and the related Operative Procedures of the
Euroclear System, and applicable Belgian law.
"Transfer Date" means, with respect to a payment date for the notes, the
business day next preceding such payment date.
"Transfer Deposit Amount" means, for any Determination Date, the amount
by which the Seller's Participation Amount would be less than the Trust
Available Subordinated Amount, after giving effect to the allocations,
distributions, withdrawals and deposits to be made on that payment date,
following a deduction by the servicer of the principal balance of a receivable
from the Pool Balance.
"Trust Adjusted Invested Amount" means with respect to any Collection
Period, the sum of the Adjusted Invested Amounts for all outstanding series of
certificates.
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"Trust Available Subordinated Amount" means the aggregate Available
Subordinated Amounts for all outstanding series of certificates.
"U.S. Wholesale Portfolio" means the accounts of domestic dealers
financed and serviced by DCS.
"UCC" means the Uniform Commercial Code.
"Unallocated Principal Collections" means any amount of Principal
Collections which are held unallocated.
"USA" means U.S. Auto Receivables Company.
"Used Vehicles" means previously owned vehicles, other than current model
year miled vehicles purchased at a closed auction conducted by DaimlerChrysler
and prior model year and two year old miled vehicles.
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Annex A
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Global Clearance, Settlement
and Tax Documentation Procedures
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Except in limited circumstances, we will make available the globally
offered notes (the "Global Securities") only in book-entry form. Unless we
state otherwise in a prospectus supplement for a series, investors in the
Global Securities may hold the Global Securities through any of DTC,
Clearstream or Euroclear. Investors may trade the Global Securities as home
market instruments in both the European and U.S. domestic markets. Initial
settlement and all secondary trades will settle in same-day funds.
Investors holding Global Securities through Clearstream and Euroclear
will conduct secondary market trades between each other in the ordinary way
under their normal rules and operating procedures and under conventional
eurobond practice, i.e., seven calendar day settlement.
Investors holding Global Securities through DTC will conduct secondary
market trades between each other under the rules and procedures applicable to
U.S. corporate debt obligations.
Clearstream or Euroclear and DTC participants holding Global Securities
will effect secondary cross-market trades between each other on a
delivery-against-payment basis through their respective depositaries, who are
participants in DTC.
Non-U.S. holders of Global Securities will be exempt from U.S.
withholding taxes if those holders meet requirements and deliver appropriate
U.S. tax documents to the securities clearing organizations or their
participants.
Initial Settlement
DTC, in the name of Cede & Co. as nominee of DTC, will hold all Global
Securities in book-entry form. Financial institutions acting on the behalf of
investors as direct and indirect participants in DTC will represent those
investors' interests in the Global Securities. As a result, Clearstream and
Euroclear will hold positions on behalf of their participants through their
respective depositaries, Citibank and Morgan, which in turn will hold those
positions in accounts as participants of DTC.
Investors electing to hold their Global Securities through DTC will
follow the settlement practices applicable to securities previously issued by
the trust. DTC will credit investor securities custody accounts with their
holdings against payment in same-day funds on the settlement date.
Investors electing to hold their Global 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. Clearstream or Euroclear will credit
Global Securities to the securities custody accounts on the settlement date
against payment in same-day funds.
A-1
Secondary Market Trading
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that purchasers and sellers can settle on the
desired value date.
Trading between DTC participants. DTC participants will settle secondary
market trades between each other using the procedures applicable to securities
previously issued by the trust in same-day funds.
Trading between Clearstream and/or participants. Clearstream
participants and/or Euroclear participants will settle secondary market trades
between each other using the procedures applicable to conventional eurobonds
in same-day funds.
Trading between DTC seller and Clearstream or Euroclear purchaser. When
a DTC participant desires to transfer Global Securities from its account to
the account of a Clearstream participant or a Euroclear participant the
purchaser will send instructions to Clearstream or Euroclear through a
participant at least one business day prior to settlement. Clearstream or
Euroclear will instruct their respective depositary to receive the Global
Securities against payment. Payment will include interest accrued on the
Global Securities from and including the last coupon payment date to and
excluding the settlement date. For transactions settling on the 31st day of
the month, payment will include interest accrued to and excluding the first
day of the following month the depositary will then make payment to the DTC
participant's account against delivery of the Global Securities. After
settlement has been completed, the respective clearing system will credit the
Global Securities to its system and, in accordance with its usual procedures,
to the Clearstream participant's or Euroclear participant's account. The
Global Securities credit will appear the next day, European time, and the cash
debit will be back-valued to, and the interest on the Global Securities will
accrue from, the value date, which would be the preceding day when settlement
occurred in New York. If settlement is not completed on the intended value
date, i.e., the trade fails, the 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. They may do so the most directly by prepositioning
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 Global Securities are credited to their accounts one day later.
As an alternative, if Clearstream or Euroclear has extended a line of
credit to them, participants can elect not to preposition funds and allow that
credit line to be drawn upon to finance settlement. Under this procedure,
Clearstream participants or Euroclear participants purchasing Global
Securities would incur overdraft charges for one day, assuming they cleared
the overdraft when the Global Securities were credited to their accounts.
However, interest on the Global Securities would accrue from the value date.
Therefore, in many cases the investment income on the Global Securities earned
during that one-day period may substantially reduce or offset the amount of
the overdraft charges, although this result will depend on each participant's
particular cost of funds.
A-2
Since the settlement is taking place during New York business hours, DTC
participants can employ their usual procedures for sending Global Securities
to the related 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 and Euroclear
participants may employ their customary procedures for transactions in which
they are to transfer Global Securities by the respective clearing system,
through the related depositary, to a DTC participant. The seller will send
instructions to Clearstream or Euroclear through a participant at least one
business day prior to settlement. In these cases, Clearstream or Euroclear
will instruct the related depositary to deliver the bonds to the DTC
participant's account against payment. Payment will include interest accrued
on the Global Securities from and including the last coupon payment date to
and excluding the settlement date. For transactions settling on the 31st day
of the month, payment will include interest accrued to and excluding the first
day of the following month. Clearstream or Euroclear will then reflect the
payment in the account of the Clearstream participant or Euroclear participant
the following day, and back-value to the value date, which would be the
preceding day, when settlement occurred in New York, the receipt of the cash
proceeds in the Clearstream or Euroclear participant's account. Should the
Clearstream or Euroclear participant have a line of credit with its respective
clearing system and elect to be in debit in anticipation of receipt of the
sale proceeds in its account, the back-valuation will extinguish any overdraft
charges incurred over that one-day period. If settlement is not completed on
the intended value date, i.e., the trade fails, Clearstream or Euroclear would
instead value as of the settlement date the receipt of the cash proceeds in
the Clearstream or Euroclear participant's account.
Finally, day traders that use Clearstream or Euroclear and that purchase
Global 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 Global Securities in the U.S. from a DTC
participant no later than one day prior to settlement, which
would give the Global Securities enough 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.
U.S. Federal Income Tax Documentation Requirements
A holder of Global Securities holding securities through Clearstream or
Euroclear, or through DTC if the holder has an address outside the U.S., will
be subject to the 30% U.S. withholding tax
A-3
that applies to payments of interest, including original issue discount, on
registered debt issued by U.S. persons, unless the holder takes one of the
following steps to obtain an exemption or reduced tax rate:
o Exemption for non-U.S. persons (Form W-8BEN). Non-U.S. persons
that are beneficial owners can obtain a complete exemption from
the withholding tax by filing a signed Form W-8BEN (Certificate
of Foreign Status).
o Exemption for non-U.S. persons 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).
o Exemption or reduced rate for non-U.S. persons resident in
treaty countries (Form W-8BEN). Non-U.S. persons that are
beneficial owners residing in a country that has a tax treaty
with the United States can obtain an exemption or reduced tax
rate, depending on the treaty terms, by filing Form W-8BEN.
o Exemption for U.S. persons (Form W-9). U.S. persons can obtain
a complete exemption from the withholding tax by filing Form
W-9 (Request for Taxpayer Identification Number and
Certification).
o U.S. Federal Income Tax Reporting Procedure. The Global
Security holder, or in the case of a Form W-8ECI filer, his
agent, files by submitting the appropriate form to the person
through whom he holds, which is the clearing agency, in the
case of persons holding directly on the books of the clearing
agency. Form W-8BEN are effective for three calendar years and
Form W-8ECI is effective for one calendar year.
In this summary, we have not dealt with all aspects of federal income
tax withholding that may be relevant to foreign holders of these Global
Securities. We advise investors to consult their own tax advisors for specific
tax advice concerning their holding and disposing of these Global Securities.
A-4
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No dealer, salesman or other person has DAIMLERCHRYSLER
been authorized to give any information or to [LOGO]
make any representations, other than those
contained in the prospectus or prospectus DAIMLERCHRYSLER
supplement. Any information or MASTER OWNER TRUST
representations, other than those contained in
the prospectus or prospectus supplement, are
not authorized by the seller or by the
underwriters. Do not rely on any information or $[o?]
representations other than those contained in the Auto Loan
prospectus or prospectus supplement. Asset Backed Notes,
Series [o],
We only intend the prospectus supplement due [o]
to be an offer to sell or a solicitation of any
offer to buy the offered securities if:
o used in jurisdictions in which the
offer or solicitation is authorized,
o the person making the offer or
solicitation is qualified to do so, and DAIMLERCHRYSLER WHOLESALE
RECEIVABLES LLC
o the offer or solicitation is made to Seller
anyone to whom it is lawful to make
the offer or solicitation.
DAIMLERCHRYSLER SERVICES NORTH
The information in the prospectus or AMERICA LLC
prospectus supplement is only accurate as of the Servicer
date of this prospectus supplement.
All dealers effecting transactions in the PROSPECTUS SUPPLEMENT
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 [underwriters]
obligation of dealers to deliver the prospectus
supplement when acting as underwriters or
when selling their unsold allotments or
subscriptions.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Set forth below is an estimate of the amount of fees and expenses
(other than underwriting discounts and commissions) to be incurred in
connection with the issuance and distribution of the Securities.
SEC Filing Fee.......................................... $552,000
Trustee's Fees and Expenses (including counsel fees).... $15,000
Accounting Fees and Expenses............................ $35,000
Legal Fees and Expenses................................. $20,000
Printing and Engraving Expenses......................... $25,000
Rating Agency Fees...................................... $175,000
Miscellaneous........................................... $7,000
Total.............................................. $829,000
Item 15. Indemnification of Directors and Officers.
DaimlerChrysler Corporation (parent of DaimlerChrysler Services North
America LLC and therefore the indirect parent of the Registrant) is
incorporated under Delaware law. Section 145 of the Delaware General
Corporation Law provides that a Delaware corporation may indemnify any
persons, including officers and directors, who are, or are threatened to be
made, parties to any threatened, pending or completed legal action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of such corporation), by reason of the fact
that such person was an officer or director of such corporation, or is or was
serving at the request of such corporation as a director, officer, employee or
agent of another corporation or enterprise. The indemnity may include expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such
action, suit or proceeding, provided such officer or director acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
corporation's best interests and, for criminal proceedings, had no reasonable
cause to believe that his conduct was illegal. A Delaware corporation may
indemnify officers and directors in an action by or in the right of the
corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to
be liable to the corporation. Where an officer or director is successful on
the merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses which such officer or
director actually and reasonably incurred.
Section B of Article VIII of the Certificate of Incorporation of
DaimlerChrysler Corporation, the indirect parent of the Registrant, provides,
in effect, that, subject to certain limited exceptions, DaimlerChrysler
Corporation will indemnify the officers and directors of DaimlerChrysler
Corporation or its subsidiaries to the extent permitted by Delaware law. In
addition, DaimlerChrysler Corporation maintains insurance providing for
payment, subject to certain exceptions, on behalf of officers and directors of
DaimlerChrysler Corporation and its subsidiaries of money damages incurred as
a result of legal actions instituted against them in their capacities as such
officers or directors.
The Registrant, DaimlerChrysler Wholesale Receivables LLC, is formed
under Delaware law. Section 18-108 of the Delaware Limited Liability Company
Act provides, in effect, that a Delaware limited liability company may
indemnify and hold harmless any member or manager or other person from and
against any and all claims and demands whatsoever.
Section 8.2 of the Registrant's Amended and Restated Limited
Liability Company Agreement indemnifies each member, employee or agent of the
Registrant against expenses, judgments and amounts paid in settlement actually
and reasonably incurred by such person in connection with actions, suits or
proceedings by reason of such person being a member, employee or agent of the
Registrant.
II-1
Item 16. Exhibits:
1.1 -- Form of Underwriting Agreement.*
3.1 -- Certificate of Formation of the Registrant is incorporated by
reference from Exhibit 3.1 of the Registrant's Registration
Statement on Form S-3 (File No. 333-37882).
3.2 -- Limited Liability Company Agreement of the Registrant is
incorporated by reference from Exhibit 3.2 of the Registrant's
Registration Statement on Form S-3 (File No. 333-37882).
3.3 -- Form of Certificate of Trust for DaimlerChrysler Master Owner Trust
(the "Issuer") (included in Exhibit 4.5).
4.1 -- Amended and Restated Pooling and Servicing Agreement among the
Registrant, the Servicer and the The Bank of New York, as Trustee.
4.2 -- Form of Series Supplement to the Amended and Restated Pooling and
Servicing Agreement (including form of Certificates).
4.3 -- Form of Master Indenture between the Issuer and the Indenture
Trustee.
4.4 -- Form of Series Indenture Supplement between the Issuer and the
Indenture Trustee (including forms of Notes).
4.5 -- Form of Trust Agreement between the Registrant and the Owner
Trustee.
5.1 -- Opinion of Sidley Austin Brown & Wood LLP with respect to certain
matters involving the Notes and the Collateral Certificate.
8.1 -- Opinion of Sidley Austin Brown & Wood LLP with respect to certain
federal tax matters.
23.1 -- Consent of Sidley Austin Brown & Wood LLP (included in opinions
filed as Exhibits 5.1 and 8.1).
23.2 -- Consent of KPMG LLP.*
24.1 -- Powers of Attorney.
25.1 -- Form of T-1 Statement of Eligibility under the Trust Indenture Act
of 1939 of The Bank of New York.
- -------------
* to be filed by amendment
II-2
Item 17. Undertakings.
(a) As to Rule 415: The undersigned registrants hereby undertake:
(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 registrants pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934, as amended,
that are incorporated by reference in this amendment to the
registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, 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) 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 registrants pursuant to the
provisions described in Item 15 herein, or otherwise, the registrants have
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
a registrant of expenses incurred or paid by a director, officer or
controlling person of a 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 registrants
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 the Securities Act of 1933, as amended, and will be governed by
the final adjudication of such issue.
(c) As to documents subsequently filed that are incorporated by
reference: Each undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing, if any, 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 information omitted in reliance on Rule 430A: The
undersigned registrants hereby undertake that:
(1) For purposes of determining any liability under the
Securities Act of 1933, as amended, the information omitted from the
form of prospectus filed as part of this registration statement in
reliance
II-3
upon Rule 430A and contained in a form of prospectus filed by the
registrants pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act of 1933, as amended, shall be deemed to be part of
this registration statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, as amended, each post-effective amendment
that contains a form of prospectus 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.
II-4
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 of the requirements for filing on Form S-3 and has duly caused this
amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Southfield, State of
Michigan, on the 18th day of April, 2002.
DAIMLERCHRYSLER WHOLESALE RECEIVABLES LLC, as
depositor to CARCO Auto Loan Master Trust and
DaimlerChrysler Master Owner Trust
By Chrysler Financial Receivables Corporation, a
Member
By /s/ B. C. BABBISH
----------------------------------------------
B. C. Babbish
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this Form
S-3 Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Principal executive officer of Chrysler Financial Receivables
Corporation:
/s/ JUERGEN WALKER President April 19, 2002
- ---------------------------------
Juergen Walker
Principal financial officer and sole director of Chrysler Financial
Receivables Corporation:
Vice President, Sole
Director and Chief
/s/ DAVID H. OLSEN Financial Officer April 19, 2002
- ---------------------------------
David H. Olsen
Principal accounting officer of Chrysler Financial
Receivables Corporation:
/s/ NORBERT MEDER Vice President and April 19, 2002
- ---------------------------------
Norbert Meder Controller
II-5
BOARD OF DIRECTORS OF CHRYSLER FINANCIAL RECEIVABLES CORPORATION:
/s/ D. H. OLSEN* Director April 19, 2002
- ---------------------------------
D. H. Olsen
*By: B. C. BABBISH
- ---------------------------------
B. C. Babbish
Attorney-in-Fact
April 19, 2002
II-6
EXHIBIT INDEX
Exhibit
Number Description
1.1 -- Form of Underwriting Agreement.*
3.1 -- Certificate of Formation of the Registrant is incorporated by
reference from Exhibit 3.1 of the Registrant's Registration
Statement on Form S-3 (File No. 333-37882).
3.2 -- Limited Liability Company Agreement of the Registrant is
incorporated by reference from Exhibit 3.2 of the Registrant's
Registration Statement on Form S-3 (File No. 333-37882).
3.3 -- Form of Certificate of Trust for DaimlerChrysler Master Owner Trust
(the "Issuer") (included in Exhibit 4.5).
4.1 -- Amended and Restated Pooling and Servicing Agreement among the
Registrant, the Servicer and the The Bank of New York, as Trustee.
4.2 -- Form of Series Supplement to the Amended and Restated Pooling and
Servicing Agreement (including form of Certificates).
4.3 -- Form of Master Indenture between the Issuer and the Indenture
Trustee.
4.4 -- Form of Series Indenture Supplement between the Issuer and the
Indenture Trustee (including forms of Notes).
4.5 -- Form of Trust Agreement between the Registrant and the Owner
Trustee.
5.1 -- Opinion of Sidley Austin Brown & Wood LLP with respect to certain
matters involving the Notes and the Collateral Certificate.
8.1 -- Opinion of Sidley Austin Brown & Wood LLP with respect to certain
federal tax matters.
23.1 -- Consent of Sidley Austin Brown & Wood LLP (included in opinions
filed as Exhibits 5.1 and 8.1).
23.2 -- Consent of KPMG LLP.*
24.1 -- Powers of Attorney.
25.1 -- Form of T-1 Statement of Eligibility under the Trust Indenture Act
of 1939 of The Bank of New York.
- -------------
* to be filed by amendment
E-1