As filed with the Securities and Exchange Commission on May 6, 2002
Registration Statement No. 333-73570
===========================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
PRE-EFFECTIVE AMENDMENT NO. 2 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 Dealer 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) The entire amount of the registration fee has been previously paid.
(4) No additional consideration will be paid by the purchasers of the Auto
Dealer Loan Asset Backed Notes for the Collateral Certificate, which is pledged
as security for the Auto Dealer 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 May 6, 2002
DAIMLERCHRYSLER Prospectus Supplement
To Prospectus dated [o]
$[o]
DAIMLERCHRYSLER MASTER OWNER TRUST
Issuer
Floating Rate Auto Dealer 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 the Series [o] notes, please read this
prospectus supplement and the prospectus, especially the risk factors
beginning on page S-[o] of this prospectus supplement and page [o] of the
prospectus. The Series [o] notes are obligations of the issuer only and do not
represent interests in or obligations of the CARCO receivables trust,
DaimlerChrysler AG, DaimlerChrysler Wholesale Receivables LLC, DaimlerChrysler
Services North America LLC or any of their affiliates.
Principal amount............................ $[o]
Per annum interest rate..................... one-month LIBOR
plus [o]%
Expected principal payment
date..........................................................[o]
Legal final.........................................................[o]
Price to public per Series [o] note...................................%
Underwriting discount per Series [o] note.............................%
Proceeds to seller..................................................[o]
The total price to public is $[ ], the total underwriting discount is $[ ] and
the total amount of proceeds to the issuer is $[ ].
The seller must pay expenses estimated to be [o].
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 [ ].
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-2
Table of Contents
READING THE PROSPECTUS AND PROSPECTUS SUPPLEMENT............................2
SUMMARY OF SERIES TERMS.....................................................5
PARTIES 5
TITLE OF SECURITIES................................................5
STATED PRINCIPAL AMOUNT; NOMINAL LIQUIDATION AMOUNT................5
SERIES ISSUANCE DATE...............................................6
SERIES CUT-OFF DATE................................................6
COLLATERAL CERTIFICATE.............................................6
TERMS OF THE SERIES [O] NOTES......................................6
LEGAL FINAL........................................................6
REVOLVING PERIOD...................................................6
ACCUMULATION PERIOD................................................7
EARLY REDEMPTION PERIOD............................................7
CREDIT ENHANCEMENT.................................................7
EXCESS PRINCIPAL COLLECTIONS.......................................8
OPTIONAL REDEMPTION................................................8
OTHER SERIES OF NOTES AND CERTIFICATES.............................8
ERISA CONSIDERATIONS...............................................8
TAX STATUS.........................................................8
NOTE RATINGS.......................................................8
RISK FACTORS.......................................................9
NOTES NOT LISTED ON ANY EXCHANGE...................................9
RISK FACTORS...............................................................10
ONLY SOME OF THE ASSETS OF THE ISSUER WILL BE AVAILABLE TO MAKE
PAYMENTS ON THE SERIES [O]
NOTES.......................................................10
THE TIMING OF PRINCIPAL PAYMENTS MAY NOT BE AS
EXPECTED....................................................11
CREDIT ENHANCEMENT IS LIMITED AND MAY BE
REDUCED.....................................................12
THE CARCO RECEIVABLES TRUST AND THE ISSUER ARE DEPENDENT ON DCS AND
DAIMLERCHRYSLER.............................................12
YOUR ABILITY TO RESELL NOTES IS
LIMITED.....................................................12
GLOSSARY ..................................................................12
USE OF PROCEEDS............................................................13
THE DEALER FLOORPLAN FINANCING BUSINESS....................................13
THE ACCOUNTS...............................................................15
DCS' PERFORMANCE HISTORY...................................................16
LOSS EXPERIENCE...................................................16
AGING EXPERIENCE..................................................18
S-3
GEOGRAPHIC DISTRIBUTION...........................................19
MATURITY AND PRINCIPAL PAYMENT CONSIDERATIONS..............................19
SERIES PROVISIONS..........................................................21
GENERAL 21
INTEREST 22
PRINCIPAL.........................................................23
EXCESS FUNDING ACCOUNT............................................26
OPTIONAL REDEMPTION BY THE ISSUER.................................27
DEPOSIT AND APPLICATION OF FUNDS...........................................27
APPLICATION OF AVAILABLE AMOUNTS ALLOCATED TO SERIES [O]..........28
REDUCTION AND REINSTATEMENT OF NOMINAL LIQUIDATION AMOUNTS........30
REDUCTIONS...............................................30
REINSTATEMENTS...........................................31
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
SHARED EXCESS AVAILABLE PRINCIPAL 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...................................................A-I-1
SERIES OF INVESTOR CERTIFICATES ISSUED BY THE CARCO RECEIVABLES
TRUST...................................................................A-II-1
S-4
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 the issuer
Title of Securities
Floating Rate Auto Dealer 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 "Deposit
and Application of Funds-- Reduction and Reinstatement of Nominal
Liquidation Amounts."
S-5
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 a pool of
receivables arising from revolving floorplan financing agreements of selected
motor vehicle dealers. The issuer's primary source of funds to make payments
on the notes will be the distributions received 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. 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 outstanding 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 outstanding 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
S-6
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 [o] cut-off date and will end when the
accumulation period begins. The revolving period will also end if an early
redemption period begins.
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 Redemption 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
S-7
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 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 investor
certificates and may issue additional series of investor certificates. A
summary of each series of investor certificates currently outstanding is
contained in "Series of Investor Certificates Issued by the 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.
S-8
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
principal payments on a scheduled date or whether you will receive any
principal on the Series [o] notes prior to or after the expected principal
payment date.
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 notes is limited" in this prospectus
supplement or the prospectus.
S-9
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
the notes is limited. principal of or interest on 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,
charge-offs of 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 charge-offs 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-10
Stated Principal Amount,
Outstanding Dollar Principal
Amount and Nominal Liquidation
Amount of Notes-- 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 principal on o The shorter the accumulation
the Series [o] expected principal period, the greater the chance that
payment date because of the payment in full of the Series [o]
performance of other series: notes by their expected principal
payment date will depend on
available principal 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
issued by the issuer and the
outstanding series of investor
certificates issued by the CARCO
receivables trust. Those
documents describe the events
which could result in the start
of an early redemption or early
amortization period, as
applicable, for those series.
If an early redemption event occurs, o If an early redemption event
you may receive your occurs, you may receive your
principal sooner or later than you principal sooner or later than you
expected and you may not receive expected and you may not receive
all of your principal: all of your principal. In
particular, a significant decline
in the amount of receivables
generated could cause an early
redemption of the Series [o]
notes. If the balance of 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.
S-11
o If a bankruptcy event relating
to DCS or DaimlerChrysler 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 notes is limited. There may be no secondary
market for your notes. The underwriter[s] may participate in making a
secondary market in the Series [o] 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.
Glossary
You can find a "Glossary of Principal Terms for Prospectus
Supplement" beginning on page S-[o] in this prospectus supplement.
S-12
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 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 CARCO receivables trust were or will be selected from extensions
of credit and advances made by DaimlerChrysler and DCS to approximately 3,220
domestic motor vehicle dealers.
o DCS financed 57.6% of the total number of all
DaimlerChrysler-franchised dealers as of March 31, 2002.
o As of March 31, 2002, approximately 46% of the dealers to which
DCS had extended credit lines were DaimlerChrysler-franchised
dealers that operated only DaimlerChrysler franchises,
approximately 38% were DaimlerChrysler-franchised dealers that
also operated non-DaimlerChrysler franchises and approximately
16% were non-DaimlerChrysler dealers.
o As of March 31, 2002, the balance of principal receivables in
the U.S. Wholesale Portfolio was approximately $10.9 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 March 31, 2002, the average credit lines per dealer in
the U.S. Wholesale Portfolio for new and used vehicles (which
includes Auction Vehicles as used vehicles) were $3.92 million
and $0.56 million, respectively, and the average balance of
principal receivables per dealer was $3.39 million.
o As of March 31, 2002, the aggregate total receivables balance
as a percentage of the aggregate total credit lines was
approximately 75.6%.
The following table sets forth the percentages of dealer account
balances by year of credit line origination for the U.S. Wholesale Portfolio.
S-13
Portfolio Percentages by Year
of Credit Line Origination
As of March 31, 2002
Prior to
2002 2001 2000 1999 1998 1997 1996 1995 1995
---- ---- ---- ---- ---- ---- ---- ---- ====
1.80% 15.42% 8.04% 7.16% 5.08% 4.37% 2.26% 4.53% 51.34%
As of March 31, 2002, the weighted average spread over the prime
rate charged to dealers in the U.S. Wholesale Portfolio was approximately
0.62%.
Used vehicles (which excludes Auction Vehicles) represented
approximately 2.72% of the aggregate principal amount of receivables in the
U.S. Wholesale Portfolio as of March 31, 2002. As of March 31, 2002, used
vehicles represented approximately 2.78% of the aggregate principal amount of
receivables in the CARCO receivables trust (including Excluded Receivables).
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
March 31, As of December 31,
----------- ---------- ---------- --------- ---------- ---------- ---------- ---------- --------- ---------- --------
2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992
----------- ---------- ---------- --------- ---------- ---------- ---------- ---------- --------- ---------- --------
Percentage
of Dealers 1.9% 1.9% 0.8% 0.4% 0.9% 2.1% 1.1% 1.8% 1.6% 3.2% 6.8%
The percentage of dealers 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.
S-14
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
March 31, As of December 31,
----------- ---------- ---------- -------- ---------- ---------- ---------- ---------- --------- ---------- ---------
2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992
----------- ---------- ---------- -------- ---------- ---------- ---------- ---------- --------- ---------- ---------
Number
of Dealers 16 24 27 27 21 24 20 6 12 21 56
- ---------- ------------ ---------- ---------- -------- ---------- ---------- ---------- ---------- --------- ---------- ---------
Percentage
of Dealers 0.5% 0.7% 0.8% 0.9% 0.7% 0.7% 0.6% 0.2% 0.3% 0.6% 1.8%
Dealer Trouble Status indicates those dealers that have probable
principal loss potential. Trends of Dealer Trouble Status over the past five
years have held at an average of less than 25 dealers in Dealer Trouble
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. Although there may be a correlation between dealers on
finance hold and dealers in Dealer Trouble Status, finance hold percentages
typically trend higher as management attempts to limit the actual loss
experience of dealers to the portfolio.
The Accounts
As of March 31, 2002, with respect to the Accounts in the CARCO
receivables trust:
o there were approximately 3,150 Accounts and the principal
receivables balance was approximately $10.3 billion;
o the average credit lines per dealer for new and used vehicles
(which include Auction Vehicles) were approximately $3.68
million and $0.57 million, respectively, and the average
balance of principal receivables per dealer was approximately
$3.25 million; and
o the aggregate total receivables balance as a percentage of the
aggregate total credit line was approximately 76.6%.
Unless otherwise indicated, the statistics included in this
paragraph, in the table below and under "DCS' Performance History --
Geographic Distribution" with respect to the Accounts and the receivables in
the CARCO receivables trust give effect to approximately $8.0 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
S-15
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 Investor Certificates Issued by
the CARCO Receivables Trust -- Removal of Accounts" in the prospectus for a
description of the manner in which an Account can be removed from the CARCO
receivables trust.
The following table sets forth the percentages of dealer account
balances by year of credit line origination for the accounts in the CARCO
receivables trust.
Portfolio Percentages by Year
of Credit Line Origination
As of March 31, 2002
Prior to
2002 2001 2000 1999 1998 1997 1996 1995 1995
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
1.39% 14.52% 6.84% 7.57% 5.29% 4.28% 2.19% 3.75% 54.17%
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
As of March 31, 2002, the weighted average spread over the Prime
Rate charged to Dealers was approximately 0.63%.
DCS' Performance History
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 -- 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
S-16
agreement" in the prospectus and "Risk Factors -- The CARCO receivables trust
and the issuer are dependent on DaimlerChrysler and DCS" in this prospectus
supplement.
Loss Experience for the U.S. Wholesale Portfolio
($ Millions)
Three Months
Ended March 31, Year Ended December 31,
---------------------------------------------------------------------------------------
2002 2001 2001 2000 1999 1998 1997 1996
---------------------------------------------------------------------------------------
Average Principal
Receivables Balance(1)
$ 9,836 $10,097 $ 9,689 $11,336 $ 9,947 $ 9,236 $ 8,877 $ 8,825
-----------------------------------------------------------------------------------------------------------------
Net Losses/ (Net
Recoveries)(2)
$ 1 $ 0 $ 2 $ 1 $ (0) $ 11 $ 4 $ (0)
-----------------------------------------------------------------------------------------------------------------
Net Losses/ (Net
Recoveries) as a
Percent of
Liquidations
0.008% 0.000% 0.004% 0.001% (0.001)% 0.020% 0.008% (0.000)%
-----------------------------------------------------------------------------------------------------------------
Net Losses/ (Net
Recoveries) as a
Percent of Average
Principal Receivables
Balance(3)
0.04% 0.00% 0.02% 0.01% (0.00)% 0.12% 0.04% (0.00)%
------------- ------------- -------------- ------------- ------------- -------------
1995 1994 1993 1992 1991 1990
------------- ------------- -------------- ------------- ------------- -------------
Average Principal
Receivables
Balance(1)
$ 8,256 $ 6,754 $ 6,271 $ 5,344 $ 4,826 $ 4,726
--------------------- ------------- ------------- -------------- ------------- ------------- -------------
Net Losses/ (Net
Recoveries)(2)
$ (1) $ (1) $ 12 $ 26 $ 36 $ 23
--------------------- ------------- ------------- -------------- ------------- ------------- -------------
Net Losses/ (Net
Recoveries) as a
Percent of
Liquidations
(0.002)% (0.003)% 0.035% 0.098% 0.163% 0.117%
--------------------- ------------- ------------- -------------- ------------- ------------- -------------
Net Losses/ (Net
Recoveries) as a
Percent of
Average
Principal
Receivables
Balance
(0.01)% (0.01)% 0.19% 0.49% 0.75% 0.49%
- --------------------------------------------- -------------------- ------------ ------------- ------------
(1) Average Principal Receivables Balance is the average of the month-end
principal balances for the thirteen months ending on the last day of the
period, except for the three months ended March 31, 2002 and 2001, which
are based on a four month average.
(2) Net Losses in any period are gross losses less recoveries for such
period.
(3) Percentages for the three months ended March 31, 2002 and 2001 are
expressed on an annualized basis and are not necessarily indicative of
the experience for the entire year.
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-17
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
(Days)
As of
March 31, As of December 31,
------------------------------------------------------------------------------------------
2002 2001 2000 1999 1998 1997 1996 1995
------------------------------------------------------------------------------------------
<31............... 35.1% 33.5% 23.0% 36.7% 32.2% 32.5% 31.1% 30.6%
31-60............. 21.4 23.0 19.8 21.9 21.5 21.9 20.6 22.2
61-90............. 11.1 14.3 18.3 16.6 15.3 14.7 16.7 17.5
91-120............ 8.5 10.6 16.6 11.6 12.6 11.0 12.0 11.8
121-150........... 7.2 7.7 10.0 4.4 8.0 7.4 6.7 6.9
151-180........... 5.4 3.5 2.9 2.5 2.9 3.3 3.2 2.4
181-210........... 4.1 1.9 2.8 1.5 1.9 1.9 2.4 1.6
211-240........... 3.2 1.4 1.6 1.3 1.3 1.3 1.5 1.1
241-270........... 1.3 0.9 1.2 0.9 0.9 1.0 1.1 1.1
271-300........... 0.6 0.8 1.1 0.7 0.7 0.9 0.9 1.0
301-330........... 0.5 0.5 0.8 0.4 0.6 0.8 0.7 0.7
331-360........... 0.3 0.3 0.6 0.3 0.4 0.6 0.5 0.6
>360.............. 1.3 1.6 1.3 1.2 1.7 2.7 2.6 2.5
Total............. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
-------------------------------------------------------------------------------------------------------------
S-18
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 March 31, 2002
Percentage of Total Number Percentage of
Receivables Receivables of Number of
Outstanding(2) Outstanding(2) Dealers(3) Dealers(3)
Texas.......................... $1,037,257,330.16 10.11% 219 6.95%
California..................... 795,272,293.52 7.75% 181 5.74%
Florida........................ 642,898,990.68 6.27% 146 4.63%
New York ...................... 623,418,576.41 6.08% 189 5.99%
Michigan....................... 534,397,462.93 5.21% 149 4.73%
New Jersey..................... 525,132,259.90 5.12% 138 4.38%
Illinois....................... 522,319,385.64 5.09% 158 5.01%
Other(1)....................... 5,575,108,640.48 54.37% 1,973 62.57%
Total ......................... $10,255,804,939.72 100.00% 3,153 100.00%
(1) No other state includes more than 5% of the outstanding receivables.
(2) Includes Excluded Receivables
(3) Includes Excluded Dealers.
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 to Series [o] 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.
S-19
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 of receivables in the U.S. Wholesale Portfolio 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.
Monthly Payment Rates for the U.S. Wholesale Portfolio
Three Months
Ended March 31, Year Ended December 31,
-----------------------------------------------------------------------------------------------------------
2002 2001 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992
-----------------------------------------------------------------------------------------------------------
Highest Month 49.3% 51.7% 62.8% 52.8% 60.5% 60.8% 57.7% 58.3% 59.1% 59.7% 54.7% 50.6%
- --------------------------------------------------------------------------------------------------------------------------------
Lowest Month 44.0 41.5 41.5 36.3 44.7 42.5 41.1 43.2 36.5 34.2 35.9 34.4
- --------------------------------------------------------------------------------------------------------------------------------
Average of the
Months in the Period 47.5 45.5 49.9 45.6 52.0 50.0 48.2 49.0 45.6 50.3 46.6 41.3
S-20
Series Provisions
General
The CARCO receivables trust will issue the collateral certificate
under the Pooling and Servicing Agreement and a Series Supplement relating to
the collateral certificate. The indenture trustee will be the pledgee holder
of the collateral certificate for the benefit of the noteholders of all
series. 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 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
S-21
defaulted receivables. If we still have not covered the interest shortfall, we
will use the Series [o] share of Available Principal Amounts to do so. 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 one or more 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 section
called "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 that
amount at the Series [o] rate, 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 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
S-22
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
Series [o] 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 a shortfall in the Series [o] share of
Available Interest Amounts needed to pay interest on the
Series [o] notes; or
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 period; or
o if no other series is then amortizing, prepaying 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
Allocated to Series [o]" and "-- Allocation Percentages" for additional
details.
S-23
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 immediately preceding the
day on which 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 no longer be paid for use by another Series of notes or to the
issuer. Instead, those 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 Series [o] Expected
Principal Payment Date.
The "Accumulation Period" for the Series [o] notes will be the period
beginning on the Accumulation Period Commencement Date and terminating on the
earlier of:
o the payment date on which the outstanding dollar principal
amount of the Series [o] notes is reduced to zero; and
o the close of business on the day immediately preceding the day
on which an Early Redemption Period commences.
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" for the Series [o] notes
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;
S-24
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
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, we will use the funds
accumulated in the principal funding account, including available funds from
the excess funding account, to pay the outstanding dollar principal amount of
the Series [o] notes on the Series [o] Expected Principal Payment Date.
If the outstanding dollar principal amount of the Series [o] notes
is not paid in full on the Series [o] Expected Principal Payment Date, an
Early Redemption Event will occur, resulting in the start of an Early
Redemption Period. Other Early Redemption Events that will also trigger the
start an Early Redemption Period are described in "Deposit and Application of
Funds -- Early Redemption Events."
An "Early Redemption Period" for the Series [o] notes will be a
period beginning on the day on which an Early Redemption Event occurs and
terminating on the earliest of:
o the payment date on which the outstanding dollar principal
amount of the Series [o] notes is reduced to zero;
o the legal final; and
o if this Early Redemption Period has commenced before the
scheduled termination of the Revolving Period, the day on which
the Revolving Period recommences under the limited
circumstances described in "Deposit and Application of Funds --
Early Redemption Events."
On each payment date with respect to the Early Redemption Period,
the Series [o] noteholders will receive payments of Monthly Principal and
Monthly Interest.
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
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payment date relating to the Accumulation Period or any Early Redemption
Period will equal the Available Principal Amounts 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. 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 of the Series [o] notes 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 will be
required to deposit the Controlled Deposit Amount in the principal funding
account on each 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].
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At the end of the Revolving Period, 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.
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 [$ ] or less. 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 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
We describe how interest collections and principal collections
received by the CARCO receivables trust are allocated among the various series
of investor certificates (including the collateral certificate) under "Sources
of Funds to Pay the Notes--General" and "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 of the collateral certificate 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.
In the following discussion under this heading "Deposit and
Application of Funds," we describe how the investor portions of those
collections are then further allocated among each series of notes and applied
to cover required distributions with respect to the Series [o] notes in
particular.
"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
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certificate. The Available Interest Amounts and the Available Principal
Amounts are collectively referred to as "Available Amounts".
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 payment date, the indenture
trustee will also include the following amounts as part of 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
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
payment date, the indenture trustee, at the direction of the administrator,
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 that 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 payment date exceeds the amounts 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
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- 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.
The "Series [o] nominal liquidation amount deficit" is the amount, if any, by
which (i) the outstanding dollar amount of the Series [o] notes less the
amount (other than investment earnings) in the principal funding account
exceeds (ii) the nominal liquidation amount of the Series [o] notes.
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 payment 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 payment date, at
the direction of the administrator, 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 an amount not to exceed the
Series [o] nominal liquidation amount (after taking into
account any reductions due to charge-offs from defaulted
receivables);
o second, if Series [o] is in its Accumulation Period, the
indenture trustee will deposit the Controlled Deposit
Amount, to the extent of any remaining Series 2002-A
Available Principal Amounts, to the principal funding
account and 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 to be used as described in
clause second; 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
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principal funding account, we will treat any remaining
Available Principal Amounts for Series [o] as Shared
Excess Available Principal Amounts to be used as described
in clause second. 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 reductions and reinstatements of the series
nominal liquidation amount other than on account of principal payments or
deposits to the principal funding account.
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
payment date. Generally, the Series [o] nominal liquidation amount for each
payment 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 payment date by the following amounts allocated on that payment
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
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Principal Amounts to cover such charge-offs 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 (other than investment earnings)
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 payment 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
Series [o] notes (the "Primary Series [o] Overcollateralization Amount"). In
general, if the Primary Series [o] Overcollateralization Amount is reduced
below its original amount on any payment 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 payment 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 payment 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
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earnings) in the principal funding account and any
principal payments made 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 "SerHies [o] overcollateralization percentage")
of the then-current nominal liquidation amount of the
Series [o] notes (this amount is the "Primary Series [o]
Overcollateralization Amount"); and
(ii) the incremental overcollateralization amount.
The "incremental overcollateralization amount" on any determination
date will equal the product 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
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."
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Notwithstanding the foregoing, if the long-term unsecured debt of
DaimlerChrysler 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, 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
"Sources of Funds to Pay the Notes--General" and "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 investor 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 charge-offs on defaulted
receivables will be allocated to each series of notes
based on its series floating allocation percentage;
o if a series of notes is not in an amortization, early
redemption or accumulation 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 payment 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 last
day of the immediately preceding Collection Period 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.
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The series principal allocation percentage is, in general, based on
the series nominal liquidation amount of each series and is fixed 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 payment 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 immediately
preceding Collection Period or, if the Accumulation Period
or an Early Redemption Period has commenced, as of the
last day of the Collection Period prior to the
commencement of the 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, as of the
last day of the immediately preceding Collection Period,
except that for any series that is amortizing, repaying 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,
repayment or accumulation.
This fraction will be adjusted to account for any additional issuances of
series of notes since the prior Collection Period.
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
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) 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.
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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, each holder of Series [o]
notes may notify the indenture trustee that it desires to exercise the put
feature that is part of its Series [o] notes. The "put feature" will be
deemed to be exercised only if at least one of the following conditions is
met:
(i) the holders of at least 90% of the outstanding dollar
principal amount of the Series [o] notes have notified the
indenture trustee that they desire to exercise the put feature
in respect of their Series [o] notes;
(ii) the holders of a majority of the outstanding dollar
principal amount of the Series [o] notes have notified the
indenture trustee that they desire to exercise the put feature
in respect of their Series [o] notes and the net proceeds of
the sale of Receivables pursuant to such exercise (as described
below) plus amounts on deposit in the principal funding account
would be sufficient to pay all amounts due on the Series [o]
notes; or
(iii) (A) the indenture trustee determines that the funds
to be allocated to the Series [o] notes, including (1)
Series [o] Available Interest Amounts and Series [o]
Available Principal Amounts and (2) amounts on deposit in the
principal funding account may not be sufficient on an ongoing
basis to make payments on the Series [o] notes as such
payments would have become due if such obligations had not been
declared due and payable and (B) holders of at least 66 2/3% of
the outstanding dollar principal amount of the Series [o]
notes have notified the indenture trustee that they desire to
exercise the put feature in respect of their Series [o]
notes.
If the put feature is deemed to be exercised as provided in the preceding
sentence, it will be deemed to be exercised by all holders of the Series
[o] notes, whether or not they have actually given notice of their desire
to exercise the put feature. Upon such deemed exercise of the put feature, the
indenture trustee will cause the CARCO receivables trust to sell principal
receivables and the related non-principal receivables (or interest therein) in
the amount described below. The holders of the Series [o] notes will
maintain their rights in their Series [o] notes until such sale proceeds
have been applied to payment of the amounts due on the Series [o] notes and
will shall deliver their Series [o] notes to the issuer as part of their
exercise of the put feature.
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.
In the case of any such sale, 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
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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.
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 have 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
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o the date on which a sale of receivables has taken place, as
described in "--Sale of Receivables."
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 payment 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,
if any, in payments or deposits to be covered by Available Interest Amounts
for other series, 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 payment 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 payment 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,
if any in payments or deposits to be covered by Available Principal Amounts
for other series, 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 payment 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 to be reinvested in the collateral
certificate to maintain the Invested Amount of the collateral certificate.
Early Redemption Events
The early redemption events (each, an "Early Redemption Event") 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
S-37
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 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 CARCO receivables 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 payment date, the Primary Series [o]
Overcollateralization Amount is reduced to an amount less than
the required amount on that payment 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;
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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
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.
The Early Redemption Period begins upon the occurrence of an Early
Redemption Event. Under limited circumstances, an Early Redemption Period
which commences before 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 CARCO
receivables trust. However, the Revolving Period 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 investor 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 consent to the
S-39
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.
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.
S-40
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 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 principal
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" means the period beginning on the Accumulation
Period Commencement Date and terminating on the earlier of:
o the payment date on which the outstanding dollar principal
amount of the Series [o] notes is reduced to
zero; and
o the close of business on the day immediately preceding the day
on which an Early Redemption Period commences.
S-41
If an Early Redemption Period that is not terminated, as described in "Deposit
and Application of Funds -- Early Redemption Events," has commenced before the
Accumulation Period Commencement Date, the Series [o] notes will not have an
Accumulation Period.
"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.
"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.
"Early Redemption Events" are described under "Deposit and
Application of Funds--Early Redemption Events".
"Early Redemption Period" means a period beginning on the day on
which an Early Redemption Event occurs and terminating on the earliest of:
o the payment date on which the outstanding dollar principal
amount of the Series [o] notes is reduced to zero;
S-42
o the legal final; and
o if this Early Redemption Period has commenced before the
scheduled termination of the Revolving Period, the day on which
the Revolving Period recommences under the limited
circumstances described in "Deposit and Application of Funds --
Early Redemption Events."
"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 CARCO receivables trust.
"Excluded Receivables" means principal receivables with respect to
Excluded Dealers.
"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.
"Invested Amount" means, with respect to the collateral certificate
and the date of determination, the sum of the series nominal liquidation
amounts for all outstanding series of notes on such 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 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
S-43
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 less any portion thereof
used to pay interest on the Series [o] notes on 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 other than investement earnings.
"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].
"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.
"Required Participation Percentage" means, for the 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) 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
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.
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"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
Accumulation Period Commencement Date; and
o the close of business on the day immediately preceding the day
on which an Early Redemption Period commences.
The Revolving Period, however, may recommence upon the termination of an Early
Redemption Period.
"seller" means DCWR.
"Series [o] Available Interest Accounts" is described under "Deposit
and Application of Funds -- Application of Available Amounts Allocated 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 Allocated 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.
"Series [o] floating allocation percentage" means, for any payment
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
last day of the immediately preceding Collection Period 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.
"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 Dealer 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 [___]%.
S-45
"Series [o] principal allocation percentage" means, for any payment
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 immediately preceding
Collection Period or, if the Accumulation Period or an Early
Redemption Period has commenced, as of the last day of the
Collection Period prior to the commencement of the 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 as of the last day
of the immediately preceding Collection Period, except that for
any series that is amortizing, repaying 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, repayment or accumulation.
This fraction will be adjusted to account for any additional issuances of
series of notes since the prior Collection Period.
"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 payment 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 payment 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 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
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 2000-C, and
o the Floating Rate Auto Loan Asset Backed Certificates,
Series 2001-A("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. Series 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. Series 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. Series 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. Series 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
DAIMLERCHRYSLER PROSPECTUS
DAIMLERCHRYSLER MASTER OWNER TRUST
Issuer
Auto Dealer 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 May 6, 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
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Table of Contents
- ------------------------------------------------------------------------------
Page
- -----------------------------------------------------
Summary.............................................1
- -----------------------------------------------------
Risk Factors........................................5
- -----------------------------------------------------
o Your ability to resell notes is limited.......5
o Risk factors relating to the collateral
certificate and the CARCO receivables
trust.........................................5
o Credit enhancement for a series of notes is
limited. If the credit enhancement is
exhausted, you may incur a loss...............8
o Credit ratings of the notes reflect the rating
agency's assessment of the likelihood that
you will receive your payments of
interest and principal........................8
o Book-entry registration may limit your ability
to resell or pledge your notes................8
o Only some of the assets of the issuer are
available for payments on any series or
class of notes................................9
o Allocations of charged-off receivables in
the CARCO receivables trust could reduce
payments to you...............................9
o You may receive principal payments earlier or
later than the expected payment date.........10
o Class B notes and Class C notes bear losses
before Class A notes bear any losses.........10
o Payment of Class B notes and Class C notes
may be delayed due to the subordination
provisions...................................10
o You may not be able to reinvest any early
redemption proceeds in a comparable
security.....................................11
o Issuance of additional notes may affect the
timing and amount of payments to you.........11
o You may have limited control of actions
under the indenture and the pooling and
servicing agreement..........................11
o Your remedies upon default may be limited....11
- -----------------------------------------------------
DaimlerChrysler Wholesale Receivables LLC and
the CARCO Receivables Trust......................13
- -----------------------------------------------------
o DaimlerChrysler Wholesale Receivables LLC....13
o The CARCO Receivables Trust..................14
- -----------------------------------------------------
The Issuer.........................................15
- -----------------------------------------------------
Use of Proceeds....................................16
- -----------------------------------------------------
The Dealer Floorplan Financing Business............16
- -----------------------------------------------------
o General......................................16
o Creation of Receivables......................17
o Credit Underwriting Process..................18
o Billing, Collection Procedures and Payment
Terms........................................19
o Revenue Experience...........................19
o Relationship with DaimlerChrysler............19
o Dealer Monitoring............................20
o "Dealer Trouble" Status and DCS's Write-
Off Policy...................................20
o Additional Information.......................21
- -----------------------------------------------------
The Accounts.......................................21
- -----------------------------------------------------
DaimlerChrysler Services North America LLC.........22
- -----------------------------------------------------
The Notes..........................................23
- -----------------------------------------------------
o Interest.....................................24
o Principal....................................25
o Stated Principal Amount, Outstanding
Dollar Principal Amount and Nominal
Liquidation Amount of Notes..................26
o Subordination of Principal...................29
o Redemption and Early Redemption of Notes.....29
o Issuances of New Series, Classes and
Subclasses of Notes..........................30
o Payments on Notes; Paying Agent..............31
o Book-Entry Notes.............................33
- -----------------------------------------------------
Sources of Funds to Pay the Notes..................38
- -----------------------------------------------------
o General......................................38
o Deposit and Application of Funds.............40
o Issuer Accounts..............................41
o Derivative Agreements........................42
o Sale of Receivables..........................42
o Limited Recourse to the Issuer; Security
for the Notes................................42
- -----------------------------------------------------
The Indenture......................................43
- -----------------------------------------------------
o Indenture Trustee............................43
o Issuer Covenants.............................43
o Events of Default............................44
o Events of Default Remedies...................45
o Early Redemption Events......................47
o Meetings.....................................48
o Voting.......................................48
o Amendments to the Indenture and
Indenture Supplements........................48
o Tax Opinions for Amendments..................51
o Addresses for Notices........................51
o Issuer's Annual Compliance Statement.........51
iv
o Indenture Trustee's Annual Report............51
o List of Noteholders..........................52
o Reports......................................52
- -----------------------------------------------------
Description of the Investor Certificates Issued by
the CARCO Receivables Trust......................52
- -----------------------------------------------------
o General......................................52
o Interest.....................................53
o Principal....................................53
o The Seller's Certificate.....................56
o New Issuances................................57
o Conveyance of Receivables and Collateral
Security.....................................59
o Representations and Warranties...............60
o Eligible Accounts and Eligible Receivables...62
o Ineligible Receivables, the Installment
Balance Amount and the Overconcentration
Amount.......................................64
o Addition of Accounts.........................65
o Removal of Accounts..........................67
o Excluded Series..............................70
o Collection Account...........................71
o Excess Funding Account.......................73
o Allocation Percentages.......................74
o Allocation of Collections; Deposits in
Collection Account...........................76
o Limited Subordination of Seller's Interest;
Enhancements.................................77
o Distributions................................79
o Defaulted Receivables and Recoveries.........79
o Optional Repurchase..........................80
o Reinvestment Events and Early
Amortization Events..........................81
o Termination; Fully Reinvested Date...........83
o Indemnification..............................84
o Collection and Other Servicing Procedures....84
o Servicer Covenants...........................85
o Servicing Compensation and Payment of
Expenses.....................................86
o Matters Regarding the Servicer...............87
o Service Default..............................87
o Reports......................................88
o Evidence as to Compliance....................89
o Amendments...................................89
o List of Certificateholders...................90
o The CARCO Receivables Trustee................91
- -----------------------------------------------------
Description of the Receivables Purchase Agreement..91
- -----------------------------------------------------
o Sale or Transfer of Receivables..............91
o Representations and Warranties...............92
o Covenants....................................93
o Termination..................................93
- -----------------------------------------------------
Legal Aspects of the Receivables...................93
- -----------------------------------------------------
o Transfer of Receivables......................93
o Matters Relating to Bankruptcy...............95
- -----------------------------------------------------
Tax Matters........................................96
- -----------------------------------------------------
o Federal Income Tax Consequences..............96
o State and Local Tax Consequences............103
- -----------------------------------------------------
ERISA Considerations..............................104
- -----------------------------------------------------
o General.....................................104
- -----------------------------------------------------
Experts...........................................106
- -----------------------------------------------------
Plan of Distribution..............................106
- -----------------------------------------------------
Legal Matters.....................................108
- -----------------------------------------------------
Glossary of Principal Terms for Prospectus........109
- -----------------------------------------------------
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
---------------------------------------------------------
Party Description
---------------------------------------------------------
Issuer o DaimlerChrysler Master Owner Trust
Seller o DaimlerChrysler Wholesale
Receivables LLC ("DCWR"), an
indirectly owned subsidiary of
DaimlerChrysler Services North
America LLC ("DCS")
Servicer o DCS, a wholly owned subsidiary of
DaimlerChrysler Corporation
("DaimlerChrysler"), the successor
to Chrysler Corporation
Indenture o The Bank of New York
Trustee
Owner Trustee o Chase Manhattan Bank USA, National
Association
CARCO o CARCO Auto Loan Master Trust (the
Receivables "CARCO receivables trust")
Trust
o Owns the receivables and has issued
the collateral certificate to the
issuer
Trustee of o The Bank of New York
CARCO
Receivables
Trust
--------------------------------------------------------
Title of Securities
Auto Dealer Loan Asset Backed Notes (the "notes").
The Issuer
The issuer will be governed by a trust agreement between DCWR and the
owner trustee. The primary asset of the issuer will be a certificate (the
"collateral certificate") issued by the CARCO receivables trust. The CARCO
receivables trust has or will have outstanding ten series of investor
certificates, including the collateral certificate, that evidence interests in
the CARCO receivables trust and receive a share of the collections on the
receivables owned by that trust. The assets of the CARCO receivables trust
include:
o receivables existing under the accounts at the close of business on
May 31, 1991, receivables generated under the accounts from time to
time after that date during the term of the CARCO receivables trust
as well as receivables generated under any accounts added to the
CARCO receivables trust from time to time;
o all funds collected or to be collected in respect of the receivables;
o all funds on deposit in the accounts of the CARCO receivables trust;
o any other enhancement issued with respect to any particular series or
class; and
1
o a security interest in motor vehicles and parts inventory, equipment,
fixtures, service accounts and, in some cases, realty and/or a
personal guarantee securing the receivables.
The Accounts
The accounts under which the receivables have been 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
automobile and light duty truck and other vehicle inventory. Accounts may be
added to, or removed from, the CARCO receivables trust. See "The Accounts",
"Description of the Investor Certificates Issued by the CARCO Receivables
Trust -- Eligible Accounts and Eligible Receivables", "-- Addition of
Accounts" and " -- Removal of Accounts."
The Receivables Owned by
CARCO Receivables Trust
The receivables consist of advances made by DCS to domestic motor
vehicle dealers to purchase the vehicles. The vehicles consist primarily of
new automobiles, light duty trucks and other vehicles. The principal amount of
an advance in respect of a vehicle typically is equal to the wholesale
purchase price of the vehicle plus destination charges and, subject to
exceptions, is due upon the retail sale of the vehicle. See "The Dealer
Floorplan Financing Business -- Creation of Receivables" and "-- Billing,
Collection Procedures and Payment Terms." The receivables bear interest at a
floating rate. See "The Dealer Floorplan Financing Business -- Revenue
Experience."
Form and Denomination
of Notes; Record Date
You may purchase notes in book-entry form only and in $1,000 increments.
The record date for payments on the notes will be the day preceding the
related payment date.
Interest
The issuer will pay interest on the notes in a series with the frequency
specified in the prospectus supplement. Each series or class of notes will
have its own interest rate, which may be fixed, variable, contingent or
adjustable or have any combination of these characteristics and will be
specified in the prospectus supplement. The issuer's sources of funds for the
payment of interest on a series of notes will include:
o interest and principal distributions on the collateral
certificate allocable to that series; and
o any available credit enhancement for that series.
Only the amounts allocated to a series are available to make payments on that
series.
Principal
The issuer will make principal payments on a series of notes on one or
more dates specified in the prospectus supplement. We will specify in the
prospectus supplement the sources of funds that the issuer will use to pay
principal. Typically, these sources will include:
o all or a portion of the principal distributions on the
collateral certificate allocable to that series;
o all or a portion of the interest distributions on the collateral
certificate allocable to that series remaining after the issuer
has made interest payments on that series; and
o any available credit enhancement for that series.
Only the amounts allocated to a series are available to make payments on that
series.
2
We will set forth in the prospectus supplement for a series the manner
in which the issuer will accumulate or apply available funds toward principal
payments on that series of notes.
Each series of notes will have a revolving period during which we will
make no principal payments on that series of notes. We may structure principal
payments for a class of notes in the following ways, among others:
o a single expected principal payment date, on which we will repay
all principal at once; or
o an amortization period, during which we will repay principal on
each specified payment date until we have repaid all principal.
If a series has more than one class of notes, we may repay principal
differently for the various classes.
However, it is possible that principal payments on a class or series of
notes will begin earlier than the date we specify in the prospectus
supplement. If an early redemption event or event of default for a series of
notes occurs, the issuer will apply all principal distributions allocated to
that series to the repayment of the outstanding principal of notes in that
series, unless we provide in the prospectus supplement that those funds will
be set aside for payment on a later date. An early redemption event or an
event of default will likely cause us to repay principal on the notes earlier
than the expected date we specified in the prospectus supplement for that
series. Also, an early redemption event or an event of default may result in
delays or reductions in the payments on your notes.
The servicer or other designated person may have the option to purchase
the outstanding notes of a series when its stated principal amount is reduced
to a specified level.
Overcollateralization Amount;
Enhancements
Unless we otherwise specify in the related prospectus supplement, the
overcollateralization amount for a series will be subordinated to the rights
of the noteholders of that series to the extent described in the related
prospectus supplement. Also, we may provide other enhancements. See "Sources
of Funds to Pay the Notes."
Tax Matters
In the opinion of Sidley Austin Brown & Wood LLP, special federal income
tax counsel for the seller, the CARCO receivables trust and the issuer,
o the notes of each series will be characterized as debt for federal
income tax purposes; and
o the issuer will not be classified as an association, or a publicly
traded partnership, taxable as a corporation under federal income
tax law.
By your acceptance of a note, you will agree to treat your notes as
indebtedness of the seller for federal, state and local income and single
business tax purposes. We might issue the notes with original issue discount.
See "Tax Matters" for additional information concerning the application of
federal and Michigan tax laws.
ERISA Considerations
If you are an employee benefit plan, you should review the
considerations discussed under "ERISA Considerations" in this prospectus and
consult counsel before investing in the notes. In general, subject to those
considerations and to the conditions described in that section and unless
otherwise specified in the prospectus supplement, you may purchase notes of
any series.
3
Note Ratings
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.
The rating agencies and their ratings do not address whether you will
receive any principal on your notes prior to or after the expected principal
payment date.
Risk Factors
An investment in any series of notes involves 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 dealer 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 CARCO receivables trust 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 master trust, has previously issued
several series of investor certificates and may 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
7
applied to the investor certificates of another series. See "Description of
the Investor 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 overcollateralization 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 "Description of the Investor Certificates Issued by the
CARCO Receivables Trust -- 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 overcollateralization amount 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 credit enhancement or
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 -- 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 able to make payments on your notes as
we had intended. See "Description of the Investor
9
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 of that series. 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
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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 investor certificates outstanding as of May 31, 2000.
In addition, DCWR has assumed the obligations of USA under the investor
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 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, indirect 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, DCS or their affiliates 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.
13
However, the existence of a claim against the seller could permit the claimant
to subject the seller to an involuntary proceeding under the Bankruptcy Code
or other Insolvency Law. See "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.
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The Issuer
- ------------------------------------------------------------------------------
DaimlerChrysler Master Owner Trust will be the issuer of the notes. It
will be a Delaware statutory business trust.
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 will be operated pursuant to a trust agreement between DCWR
and Chase Manhattan Bank USA, National Association, as owner trustee. The
issuer will not have any officers or directors. Its administrator is DCS. As
administrator of the issuer under an administration agreement, DCS will
generally direct the administrative actions to be taken by the issuer.
15
The assets of the issuer will 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.
DCWR and the owner trustee may amend the trust agreement without the
consent of the noteholders or the indenture trustee so long as the issuer
delivers to the indenture trustee an officer's certificate to the effect that
the issuer reasonably believes that the amendment will not adversely affect in
any material respect the interests of the noteholders. Accordingly, neither
the indenture trustee nor any holder of any note will be entitled to vote on
any such amendment.
In addition, the trust agreement may also be amended with the consent
of the indenture trustee and holders of at least 66 2/3% of the outstanding
dollar principal amount of the notes affected by the amendment in any material
respect. However, an amendment to the trust agreement that increases or
reduces the amount of, or accelerates or delays the timing of, collections of
payments in respect of the collateral certificate or distributions to the
noteholders requires the consent of all noteholders affected by the amendment.
- ------------------------------------------------------------------------------
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.
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The Dealer Floorplan Financing Business
- ------------------------------------------------------------------------------
General
The receivables transferred to the CARCO receivables trust under 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
16
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-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 vehicles and other vehicles
distributed by DaimlerChrysler franchised dealers 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
17
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 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
18
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.
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 0.00% to
1.00% 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 dealer 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.
19
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."
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.
20
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.
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.
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The Accounts
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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
21
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 CARCO receivables 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 Investor
Certificates Issued by the CARCO Receivables Trust -- Removal of Accounts."
During the term of the CARCO receivables trust, the Accounts from which the
receivables arise will be the same Accounts designated by the seller on the
Initial Cut-Off Date plus any Additional Accounts, minus any Accounts removed
from the CARCO receivables trust.
We will provide additional information about the Accounts in each
prospectus supplement.
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DaimlerChrysler Services North America LLC
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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 limited liability
company resulting from a merger on October 28, 1998, of CFC Corp. into CFC
LLC. CFC Corp., a Michigan corporation, was the continuing corporation
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.
22
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.
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.
We will provide additional information about DCS in the prospectus
supplement for each series.
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The Notes
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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 class, 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
23
any issuer account relating to that class of notes, and amounts received
under any derivative agreement or any enhancement 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;
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
24
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 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.
25
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.
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 defaulted 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 notes of the same series, or as a result of charge-offs of
defaulted 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
defaulted principal receivables in the CARCO receivables trust or by
reallocations of principal collections to pay interest on notes, the holders
of notes with the reduced nominal liquidation amount may receive less than the
full stated principal amount of their
26
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 defaulted 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
nominal liquidation amounts of 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
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 series or class of notes
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 series' or 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 without
duplicating the reductions due to any related deposits to the
principal funding account.
27
o If the holders of a class or series of notes direct a sale of
receivables after an event of default and acceleration or on its
legal final maturity date, the nominal liquidation amount of
that class or series is automatically reduced to zero. See
"Sources of Funds to Pay the Notes -- Sale of Receivables."
The nominal liquidation amount of a class or series of notes can be
increased as follows:
o For a class of 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 defaulted 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 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.
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 defaulted 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.
28
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.
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 defaulted 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
defaulted 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.
29
If we so specify in the related prospectus supplement, the servicer may,
at its option, cause the issuer to 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 in respect of a series,
the issuer will be required to redeem each affected note of that series 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 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;
30
-- 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 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.
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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.
Record Date
If the notes are in book-entry form, the record date for payment of the
notes will be the day before the related payment date. If the notes are in
definitive form, the record date for a payment date will be the last day of
the calendar month ending prior to that 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.
32
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 its name or the name of
its nominee. 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 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. or
another nominee of DTC 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.
33
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. 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
34
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 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
35
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.
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
36
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 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
37
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.
- ------------------------------------------------------------------------------
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 of
series allocable charge-offs and series allocable interest collections to the
seller's portion, on the one hand, and the investor portion, on the other,
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.
38
This ratio, when expressed as a percentage, is referred to as the CARCO
Floating Allocation Percentage. Application of this percentage as calculated
for 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 and is not available for
payments on the notes.
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 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 among series of
investor certificates (including the collateral certificate) similarly to the
allocation of interest collections on the receivables (i.e., on the basis of
the Series Allocation Percentage). However, when one or more series of
investor certificates begin to accumulate principal or amortize, principal
collections allocable to other series of investor 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. For this purpose, the collateral certificate will
be treated as accumulating principal or amortizing to the extent that any
series of notes is accumulating or amortizing.
We will allocate to the seller's portion, on the one hand, and the
investor portion, on the other, those principal collections on the receivables
that we have allocated to the collateral certificate. We will allocate to the
investor portion in the proportion that the sum of the series nominal
liquidation amounts for all outstanding series of notes bears to the product
of the Series Allocation Percentage for the collateral certificate and the
Pool Balance. 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 the last day of each Collection Period. 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" as of the last day of the Collection Period immediately before the
issuer begins to allocate Available Principal Amounts to the principal funding
account for that series or before 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 last day of the first
Collection Period prior to any reductions in the series nominal liquidation
amount due to 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
39
shortfalls or reinvested in the CARCO receivables trust to maintain the
Invested Amount of the collateral certificate. The reallocation of those
principal collections to other series of investor certificates will not reduce
the size 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 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 Interest Amounts or Available Principal Amounts from
the issuer.
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.
A prospectus supplement for a series of notes may provide for
allocations for that series that are different from those described above.
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 payment date. The
interest collections allocated to the investor portion are "Available Interest
Amounts." 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 last day of the immediately preceding
Collection Period; 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 Collection Period.
The amount of principal collections and Miscellaneous Payments on the
receivables that is allocated to and paid on the collateral certificate will
first be allocated between the seller's portion
40
and the investor portion as described under "-- General" above. The principal
collections and Miscellaneous Payments allocated to the investor portion are
"Available Principal Amounts." 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 as of the last day of the immediately preceding
Collection Period (or the issuance date of that series in the
case of the first payment date) or, if the Accumulation Period
or an Early Redemption Period has commenced, as of the last day
of the Collection Period prior to the commencement of the
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 as of the last day
of the immediately preceding Collection Period, except that for
any series of notes that is amortizing, repaying 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, repayment or accumulation.
This fraction will adjust to account for any additional issuances of the
notes of each series since the prior Collection Period. If Available Principal
Amounts for any payment date are less than the aggregate monthly principal
payments or deposits required to be made for all series of notes, and any
series of notes has excess Available Principal Amounts remaining after the
application of its allocation in accordance with its indenture supplement,
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 collection account, together with 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. Each supplemental account for a series
may be a subaccount of the master account for that series.
41
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.
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 for that series or class on deposit in the applicable
issuer accounts, any applicable derivative agreement for that series or class
and proceeds of sales of receivables for that series or class provide the only
source of payment for principal of or interest on that series or class of
notes. Noteholders will have no recourse to any
42
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.
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The Indenture
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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.
Indenture Trustee
The Bank of New York, a New York banking corporation, will act as
trustee under the indenture for the notes. Its principal corporate trust
office is located at 101 Barclay Street, New York, New York 10286.
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
43
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
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 other 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
44
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 are continuing with respect to any
series or class, either the indenture trustee or the holders of a majority in
aggregate outstanding dollar principal amount of the notes of that series or
class (or of all notes (treated as one class) in the case of certain events of
defaults with respect to all notes) 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, each holder of the accelerated notes may notify the indenture
trustee that it desires to exercise the put feature that is part of its
notes. The "put feature" will be deemed to be exercised only if at least one of
the following conditions is met:
(i) the holders of at least 90% of the outstanding
dollar principal amount of the notes of that series or class
have notified the indenture trustee that they desire to
exercise the put feature in respect of their notes;
(ii) the holders of a majority of the outstanding
dollar principal amount of the notes of that series or class
have notified the indenture trustee that they desire to
exercise the put feature in respect of their notes and the
net proceeds of the sale of Receivables pursuant to such
exercise (as described below) plus amounts on deposit in the
principal funding account would be sufficient to pay all
amounts due on the notes of that series or class; or
(iii) the indenture trustee determines that the
funds to be allocated to the notes of that series or class,
including (1) Available Interest Amounts and Available
Principal Amounts allocated to that series or class and (2)
amounts on deposit in the principal funding account may not
be sufficient on an ongoing basis to make payments on the
notes of that series or class as such payments would have
become due if such obligations had not been declared due and
payable and (B) holders of at least
45
66 2/3% of the outstanding dollar principal amount of the
notes of that series or class have notified the indenture
trustee that they desire to exercise the put feature in
respect of their notes.
If the put feature is deemed to be exercised as provided in the
preceding sentence, it will be deemed to be exercised by all holders of the
notes of that series or class, whether or not they have actually given notice
of their desire to exercise the put feature. Upon such deemed exercise of the
put feature, the indenture trustee will cause the CARCO receivables trust to
sell principal receivables and the related non-principal receivables (or
interest therein) in the amount described below. The holders of the
accelerated notes will maintain their rights in their notes until such sale
proceeds have been applied to payment of the amounts due on their notes and
will shall deliver their notes to the issuer as part of their exercise of the
put feature.
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 outstanding dollar principal amount of
any accelerated series or class of notes have the right to direct the time,
method and place of conducting 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
46
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, DCWR, 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 each of 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 --
Reinvestment Events and Early Amortization Events";
o the issuer becoming an "investment company" within the meaning of
the Investment Company Act of 1940, as amended; and
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.
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 account 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 charge-offs of defaulted 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.
47
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 (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;
48
o cure any ambiguity, to correct or supplement any provision that
may be inconsistent with any other provision or to make any
other provisions with respect to matters or questions arising
under the indenture;
o 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 -- Issuances of New Series, Classes
and Subclasses 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; 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 sale and servicing
agreement that contains, to the extent applicable, the sale and
servicing provisions of the Pooling and Servicing Agreement and
amend all documents to reflect the direct ownership of the
receivables by the issuer.
The indenture or any indenture supplement may also be amended without
the consent of the indenture trustee or any noteholders upon delivery of a
CARCO receivables trust tax opinion and issuer tax opinion, as described under
"--Tax Opinions for Amendments" below, for the purpose of adding provisions
to, or changing in any manner or eliminating any of the provisions of, the
indenture or any indenture supplement or of modifying in any manner the rights
of the holders of the notes under the indenture or any indenture supplement,
provided, however, that the issuer shall (i) deliver to the indenture trustee
and the owner trustee an officer's certificate to the effect that the issuer
reasonably believes that such amendment will not and is not reasonably
expected to (a) result in the occurrence of an early redemption event or event
of default, (b) adversely affect the amount of funds available to be
distributed to the noteholders or any series or class of notes or the timing
of such distributions, or (c) adversely affect the security interest of the
indenture trustee in the collateral securing the notes and (ii) receive
written confirmation from each rating agency that such amendment will not
result in the reduction or withdrawal of the ratings of any outstanding notes
which it has rated.
49
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 modify and amend the indenture or any indenture
supplement, 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
holder of each note 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.
50
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 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,
51
o the amount, interest rate and maturity date or indebtedness
owing by the issuer to it in the indenture trustee's
individual capacity,
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
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General
The CARCO receivables trust has isssued and 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 will be 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
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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.
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 sale and servicing agreement with DCWR and DCS to purchase
receivables from it on terms comparable to the analogous purchase provisions
of the Pooling and Servicing Agreement and 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. 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.
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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:
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, 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 of non-collateral
certificates 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 of non-collateral certificates has more than one class, each class may
have a different Accumulation
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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 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 of
non-collateral certificates has more than one class, 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 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 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 of non-collateral
certificates has more than one class, 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.
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The "Early Amortization Period" for a series of non-collateral
certificates 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;
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 of non-collateral
certificates 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 of non-collateral certificates, 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.
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 of investor certificates after the
issuance of the collateral certificate. 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 such new series (if consisting of
non-collateral certificates) 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 of non-collateral certificates. Further, one or more series of
non-collateral certificates may be in their Reinvestment Periods, Early
Amortization Periods, Controlled Amortization Periods or Accumulation Periods
while other series are not.
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 except in the case of the collateral certificate,
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 investor certificates.
The issuance is also subject to the conditions that
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 of investor certificates;
and
58
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 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
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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").
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
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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 CARCO receivables 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 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
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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 non-collateral certificates at the applicable certificate
rate, together with interest on overdue interest;
o in the case of the collateral certificate, accrued and unpaid
interest on the outstanding dollar principal amount of the notes
at the applicable note rate; and
o with respect to any particular series of investor certificates
(including the collateral certificate), 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:
62
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.
An "Eligible Receivable" is 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;
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;
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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 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
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"Installment Balance Amount") allocable to the
Certificateholders' Interest of the series.
"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 of investor certificates;
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;
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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
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. 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,
CFC Corp., CFC LLC or DCS, they may not be of the same credit quality as the
initial Accounts. Additional Accounts may have been originated by CCC, CFC
Corp., CFC LLC 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, CFC Corp., CFC LLC or DCS from another wholesale lender that had
different credit criteria. In addition, the seller will be
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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.
The "Required Participation Amount" for any date is an amount equal to
the sum of:
o the sum of the amounts for each series of investor 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 the Determination Date.
The "Required Participation Percentage" for a series of non-collateral
certificates will be specified in the related Series Supplement.
Removal of Accounts
The seller shall have the right at any time, but no more frequently than
once a month, to require the removal from the CARCO receivables trust of
Eligible Accounts. 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
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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 Reinvestment Event
to occur with respect to any series of investor certificates 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 of any series of investor certificates 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' certificate 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
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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 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
of investor certificates 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 certificate-
holders of any series of investor certificates were used in
selecting the Designated Accounts and that the selection
procedures were applied so as to randomly select the Designated
Accounts from the entire population of 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
investor 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:
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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");
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 of investor certificates; 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 of investor
certificates 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 investor certificates may be designated as an excluded
series (an "Excluded Series") with respect to a series of investor
certificates previously issued by the CARCO receivables trust as to which the
Accumulation Period or Controlled Amortization Period has
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commenced (a "Paired Series"). This allows a seller, in effect, to replace an
accumulating or amortizing series with a new series without waiting for the
accumulating or 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 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 CARCO receivables 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
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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:
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
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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 investor
certificates of the series over the Initial Invested Amount of the series.
Initially, the collateral certificate will not have an Excess Funding Amount.
The CARCO receivables trust trustee will invest funds on deposit in the Excess
Funding Account for a series of investor certificates 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. In the case of
the collateral certificate, it will be allocated funds from the Excess Funding
Account if any of the notes secured by the collateral certificate is in an
accumulation or amortization period and has insufficient principal collections
and other funds to cover required distributions on it. The CARCO receivables
trust 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 (or the notes in the case of the collateral
certificate), 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 CARCO receivables trust 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
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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 of investor certificates
(including the collateral certificate) and then between the seller and the
certificateholders of that series on the basis of various percentages. Which
percentage we use depends on whether the collections being allocated are
interest collections or principal collections or other amounts and, in the
case of the non-collateral certificates, 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 of investor
certificates 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
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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 of
investor certificates.
"Initial Invested Amount" is, with respect to any series of
non-collateral certificates and for any date, the amount stated 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.
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 required principal
payments in the case of the collateral certificate are the sum of the required
principal payments on the notes or required deposits to a principal funding
account at the time of determination. 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,
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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
of non-collateral certificates, 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.
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;
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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,
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 other than the collateral certificate 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.
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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;
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
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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 indenture trustee) 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.
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
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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 indenture trustee 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.
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 investor certificates 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.
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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.
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
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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 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.
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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").
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."
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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, 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:
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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;
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.
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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:
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
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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.
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
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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 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.
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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.
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,
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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,
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.
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The CARCO Receivables Trustee
The Bank of New York, a New York banking corporation, will act as
trustee under the Pooling and Servicing Agreement. The Bank of New York is
also the indenture trustee. On August 23, 1996, The Bank of New York 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 CFC
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 CARCO receivables
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 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.
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Description of the Receivables Purchase Agreement
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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
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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 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
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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 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.
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Legal Aspects of the Receivables
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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
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represented and warranted and will represent and warranty on the Series
Issuance Date with respect to each Series that:
o the transfer to the CARCO receivables 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 CARCO receivables trust or at the date of
addition of any Additional Accounts, in favor of the CARCO
receivables trust and a valid, subsisting and enforceable
first-priority perfected ownership interest in the receivables
created after that time in favor of the CARCO receivables 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 CARCO receivables 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 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.
The seller will represent and warrant that its transfer of the
collateral certificate to the issuer is perfected and free and clear of the
lien or interest of any other entity. If this is not correct, the issuer's and
the indenture trustee's interest in the collateral certificate could be
impaired. For example, a prior or subsequent transferee of the collateral
certificate could have an interest in the collateral certificate superior to
the interest of the issuer and the indenture trustee. Also, a tax, governmental
or other nonconsensual lien that attaches to the property of the seller could
have priority over the interest of the issuer and the indenture trustee in the
collateral certificate. The seller will not make any representation as to
whether its transfer of the collateral certificate is a sale or a transfer for
security.
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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.
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 CARCO
receivables trust should be recharacterized as a pledge of the receivables or
that the transfer of the collateral certificate to the issuer should be
recharacterized as a pledge of the collateral certificate. In either such
event, payments on the collateral certificate 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.
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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 (including the
collateral certificate) 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 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.
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Tax Matters
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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 issued by the issuer. 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.
96
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:
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.
97
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
seller, the CARCO receivables trust and the issuer ("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
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
98
federal income tax consequences to noteholders if the IRS were to successfully
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 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.
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
99
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.
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.
Short Term Notes
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.
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
100
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 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.
101
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 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.
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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:
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,
103
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.
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ERISA Considerations
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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:
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.
104
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.
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.
105
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.
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Experts
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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 said 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.
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Plan of Distribution
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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,
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 notes. 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.
106
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.
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
107
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.
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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 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 name 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.
108
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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
CARCO receivables 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.
109
"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 CARCO receivables 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.
110
"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 Notes" means the notes of a series or class issued in fully
registered, certificated form to noteholders 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 payment
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.
"DTC" means The Depository Trust Company.
"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.
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The collateral certificate will not have an Early Amortization Period.
"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.
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"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 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;
115
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
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, 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
Corp., CFC LLC 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, 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
Corp., CFC LLC or DCS nor the seller has taken or failed to take
any action which would impair the rights of the CARCO
receivables 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.
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"Enhancements" means enhancements which may be provided with respect to
one or more classes of a series of non-collateral certificates, 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;
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 of investor certificates 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 of investor
certificates and any Collection Period remaining after required payments, if
any.
"Excluded Series" means a series of non-collateral 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 non-collateral
certificates equals the outstanding principal amount of the certificates.
"Global Securities" means the globally offered notes.
117
"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.
"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 "Description of the Receivables Purchase
Agreement--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 investor
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, with respect to a series of
non-collateral certificates, 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.
"Invested Amount" means, with respect to any series of investor
certificates (other than the collateral certificate) and for any date, the
amount stated as the "Invested Amount" in the related Series Supplement. In
general, the Invested Amount for a series of investor certificates (other than
the collateral certificate) is the Initial Invested Amount minus principal
payments (other than principal payments made from the Excess Funding Account)
to certificateholders or deposited in the Principal Funding Account minus
unreimbursed Investor Charge-Offs allocated to such investor certificates. The
Invested
118
Amount for the collateral certificate is the sum of the series notional amounts
for all outstanding series of notes.
"Investor Default Amount" means the portion of the Defaulted Amount
allocated to the certificateholders of a series (including the issuer as
holder of the collateral certificate).
"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
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.
119
"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 non-collateral certificates 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.
"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 of non-collateral certificates
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 of investor certificates 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 of investor certificates
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
certificate rate;
o a date on which it will begin its Accumulation Period or
Controlled Amortization Period, if any;
120
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.
"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.
121
"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.
"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 CARCO receivables trust for all purposes.
"Repurchased Receivables" means Designated Receivables which have been
deemed repurchased from the CARCO receivables 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.
122
"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.
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.
"SEC" or "Commission" means the Securities and Exchange Commission.
"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.
123
"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 Series 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 Supplement" means a supplement to the Pooling and Servicing
Agreement that provides for a series of investor certificates.
"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.
"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
124
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.
"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 CARCO receivables 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.
125
"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 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.
"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.
126
Annex A
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Global Clearance, Settlement
and Tax Documentation Procedures
- -----------------------------------------------------------------------------
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
===================================================== ======================================
No dealer, salesman or other person has
been authorized to give any information or to DAIMLERCHRYSLER
make any representations, other than those [LOGO]
contained in the prospectus or prospectus
supplement. Any information or representations, DAIMLERCHRYSLER
other than those contained in the prospectus or MASTER OWNER TRUST
prospectus supplement, are not authorized by the
seller or by the underwriters. Do not rely on any
information or representations other than those
contained in the prospectus or prospectus supplement.
$[o]
We only intend the prospectus supplement to be Auto Dealer Loan
an offer to sell or a solicitation of any offer to Asset Backed Notes,
buy the offered securities if: Series [o],
due [o]
o used in jurisdictions in which the
offer or solicitation is authorized,
o the person making the offer or solicitation DAIMLERCHRYSLER WHOLESALE
is qualified to do so, and RECEIVABLES LLC
Seller
o the offer or solicitation is made to anyone to
whom it is lawful to make the offer or
solicitation. DAIMLERCHRYSLER SERVICES NORTH
AMERICA LLC
The information in the prospectus or prospectus Servicer
supplement is only accurate as of the date of this
prospectus supplement.
All dealers effecting transactions in the offered
securities within 90 days after the date of this prospectus PROSPECTUS SUPPLEMENT
supplement may be required to deliver the prospectus and
prospectus supplement, regardless of their participation in
this distribution. This is in addition to the obligation of
dealers to deliver the prospectus supplement when acting as [underwriters]
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 Bank of New York, as
Trustee.*
4.2 -- Form of Series Supplement to the Amended and Restated Pooling and
Servicing Agreement (including form of collateral certificate).*
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 form of notes).
4.5 -- Form of Trust Agreement between the Registrant and the Owner Trustee.
4.6 -- Form of collateral certificate (included in Exhibit 4.2)
4.7 -- Form of notes (included in Exhibit 4.4)
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.
99.1-- Form of Administration Agreement among the Issuer, the Administrator
and the Indenture Trustee.
- -------------------------------------------
* previously filed
II-2
Item 17. Undertakings.
(a) As to Rule 415: The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made of the securities registered hereby, a post-effective
amendment to this registration statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, as amended;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of this registration
statement (or the most recent post-effective amendment hereof)
which, individually or in the aggregate, represent a
fundamental change in the information set forth in this
registration statement; and
(iii) to include any material information with
respect to the plan of distribution not previously disclosed
in this registration statement or any material change to such
information in this registration statement;
provided, however, that the undertakings set forth in clauses (i) and
(ii) above do not apply if the information required to be included in a
post-effective amendment by those clauses is contained in periodic
reports filed by the registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934, as amended, that are
incorporated by reference in this 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 may be permitted to
directors, officers and controlling persons of the registrant pursuant to the
provisions described in Item 15 herein, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 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 the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933, and will be governed by the final adjudication of such
issue.
(c) As to documents subsequently filed that are incorporated by
reference: The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, 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 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
registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the
form of prospectus filed as part of this registration statement in
reliance
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upon Rule 430A and contained in a form of prospectus filed by
the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act of 1933 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, 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.
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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
6th day of May, 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 May 6, 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 May 6, 2002
- ------------------------------------------------------------
David H. Olsen
Principal accounting officer of Chrysler Financial
Receivables Corporation:
/s/ NORBERT MEDER Vice President and May 6, 2002
- ------------------------------------------------------------ Controller
Norbert Meder
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BOARD OF DIRECTORS OF CHRYSLER FINANCIAL RECEIVABLES CORPORATION:
/s/ D. H. OLSEN* Director May 6, 2002
- ------------------------------------
D. H. Olsen
*By: B. C. BABBISH
-----------------------
B. C. Babbish
Attorney-in-Fact
May 6, 2002
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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 Bank of New York, as Trustee.*
4.2 -- Form of Series Supplement to the Amended and Restated Pooling and
Servicing Agreement (including form of collateral certificate).*
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.
4.6 -- Form of collateral certificate (included in Exhibit 4.2)
4.7 -- Form of notes (included in Exhibit 4.4)
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.
99.1-- Form of Administration Agreement among the Issuer, the Administrator
and the Indenture Trustee.
- -------------------------------------------
* previously filed
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