As filed with the Securities and Exchange Commission on December 23, 2004
Registration Statement No. 333-120110
===========================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
-------------------
UNDER
THE SECURITIES ACT OF 1933
-------------------
DAIMLERCHRYSLER WHOLESALE RECEIVABLES LLC
(Beneficiary of DaimlerChrysler Master Owner Trust)
DAIMLERCHRYSLER MASTER OWNER TRUST
(Issuer of the Notes)
(Exact name of registrant as specified in its charter)
DELAWARE 6146 38-3523542
(State of (Primary Standard Industrial (I.R.S. Employer
Organization) Classification Code Number) Identification No.)
27777 Inkster Road
Farmington Hills, Michigan 48334
(248) 427-2625
(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 Inkster Road
Farmington Hills, Michigan 48334
(248) 427-2577
(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
787 Seventh Avenue
New York, New York 10019
(212) 839-5300
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 Aggregate Offering Registration Fee
Securities to be registered registered(1) Per Unit(3) Price(3) (4)
- -------------------------------------------- ----------------------- ------------------- ---------------------- ------------------
Auto Dealer Loan Asset Backed Notes......... $4,000,000,000(2) 100% $4,000,000,000 $470,800
============================================ ======================= =================== ====================== ==================
(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) In addition, pursuant to Rule 429 under the Securities Act of 1933,
when this Registration Statement is declared effective, the
$4,000,000,000 of securities that remain unsold under the Registration
Statement on Form S-3 (File No. 333-106332) of the Registrant will
be carried forward. When this Registration Statement is declared
effective, the prospectus which is a part of this Registration
Statement shall be a combined prospectus relating to a total of
$8,000,000,000 of securities.
(3) Estimated solely for the purpose of calculating the registration
fee.
(4) Includes a registration fee of $126.70 previously paid in connection
with this Registration Statement.
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Pursuant to Rule 429 under the Securities Act of 1933, when this
Registration Statement is declared effective, the prospectus included in this
Registration Statement shall be a combined prospectus and shall also relate to
any securities which remain unsold under Registration Statement on Form S-3
(File No. 333-106332) of the Registrant.
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 Securities and Exchange
Commission, acting pursuant to said Section 8(a), may determine.
Pursuant to Rule 429(b), the earlier Registration Statement to which the
combined prospectus relates is the Registration Statement on Form S-3 (File No.
333-106332).
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 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 [o]
DAIMLERCHRYSLER Prospectus Supplement
to Prospectus dated [o]
$[o]
DAIMLERCHRYSLER MASTER OWNER TRUST
Issuer
Floating Rate Auto Dealer Loan Asset Backed Notes, Series [o],
due [o]
DAIMLERCHRYSLER WHOLESALE RECEIVABLES LLC
Seller
DAIMLERCHRYSLER SERVICES NORTH AMERICA LLC
Servicer
Before you decide to invest in Principal amount.............................$[o]
the Series [o] notes, please read Per annum interest rate.........[one-month LIBOR]
this prospectus supplement and plus [o]%
the prospectus, especially the Expected principal payment date...............[o]
risk factors beginning on page Legal final...................................[o]
S-[o] of this prospectus Price to public per Series [o] note..........[o]%
supplement and page [o] of the Underwriting discount per Series [o] note....[o]%
prospectus. Proceeds to seller............................[o]
THE SERIES [O] NOTES ARE THE TOTAL PRICE TO PUBLIC IS $[O], THE TOTAL UNDERWRITING DISCOUNT
OBLIGATIONS OF THE ISSUER ONLY IS $[O] AND THE TOTAL AMOUNT OF PROCEEDS TO THE ISSUER IS $[O].
AND DO NOT REPRESENT INTERESTS
IN OR OBLIGATIONS OF THE SELLER MUST PAY EXPENSES ESTIMATED TO BE $[O].
DAIMLERCHRYSLER AG,
DAIMLERCHRYSLER WHOLESALE THE ISSUER WILL PAY INTEREST ON THE SERIES [O] NOTES ON THE [15TH]
RECEIVABLES LLC, DAY OF EACH MONTH, UNLESS THE [15TH] IS NOT A BUSINESS DAY, IN
DAIMLERCHRYSLER SERVICES WHICH CASE PAYMENT WILL BE MADE ON THE NEXT BUSINESS DAY.
NORTH AMERICA LLC OR ANY OF THE FIRST PAYMENT DATE WILL BE [O].
THEIR AFFILIATES.
We will deliver the Series [o] notes in book-entry form only on or
about [o].
These securities have not been approved or disapproved by the Securities
and Exchange Commission or any state securities commission nor has the
Securities and Exchange Commission or any state securities commission passed
upon the accuracy or adequacy of this prospectus supplement or the prospectus.
Any representation to the contrary is a criminal offense.
------------------------------
[underwriter[s]]
------------------------------
The date of this prospectus supplement is [o].
- ------------------------------------------------------------------------------
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. You should not assume that the information in this
prospectus supplement or the prospectus is accurate on any date other than the
dates stated on their cover pages.
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 pages iv and v in the prospectus to locate the
referenced sections. The definitions of the defined terms used in this
prospectus supplement and the prospectus may be found in glossaries beginning
on page S-[o] in this prospectus supplement and page [o] in the prospectus.
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
- ------------------------------------------------------------------------------
- ----------------------------------------
Section Page
- ----------------------------------------
Reading the Prospectus and
Prospectus Supplement S-2
- ----------------------------------------
Summary of Series Terms S-4
- ----------------------------------------
o Parties S-4
- ----------------------------------------
o Title of Securities S-4
- ----------------------------------------
o Series Issuance Date S-4
- ----------------------------------------
o Series Cut-Off Date S-4
- ----------------------------------------
o Stated Principal Amount;
Series Nominal Liquidation
Amount S-4
- ----------------------------------------
o Terms of the Series [o] Notes S-5
- ----------------------------------------
o Legal Final S-5
- ----------------------------------------
o Revolving Period S-5
- ----------------------------------------
o Accumulation Period S-5
- ----------------------------------------
o Early Redemption Period S-5
- ----------------------------------------
o Credit Enhancement S-6
- ----------------------------------------
o Excess Principal Collections S-6
- ----------------------------------------
o Monthly Servicing Fee S-6
- ----------------------------------------
o Optional Redemption S-6
- ----------------------------------------
o Other Series of Notes S-6
- ----------------------------------------
o ERISA Considerations S-7
- ----------------------------------------
o Tax Status S-7
- ----------------------------------------
o Note Ratings S-7
- ----------------------------------------
o Risk Factors S-7
- ----------------------------------------
o Notes Not Listed on any
Exchange S-7
- ----------------------------------------
Risk Factors S-8
- ----------------------------------------
o Only some of the assets of
the issuer will be available
to make payments on the Series
[o] notes S-8
- ----------------------------------------
o The timing of principal
payments may not be as
expected S-9
- ----------------------------------------
o Credit enhancement is limited
and may be reduced S-10
- ----------------------------------------
o The issuer is dependent on DCS
and DaimlerChrysler S-10
- ----------------------------------------
o Your ability to resell notes
is limited S-10
- ----------------------------------------
- ----------------------------------------
Section Page
- ----------------------------------------
Glossary S-10
- ----------------------------------------
Use of Proceeds S-10
- ----------------------------------------
The Dealer Floorplan Financing
Business S-10
- ----------------------------------------
The Accounts S-12
- ----------------------------------------
DCS's Performance History S-13
- ----------------------------------------
o Loss Experience S-13
- ----------------------------------------
o Aging Experience S-15
- ----------------------------------------
o Geographic Distribution S-15
- ----------------------------------------
Maturity and Principal Payment
Considerations S-15
- ----------------------------------------
Series Provisions S-16
- ----------------------------------------
o Interest S-17
- ----------------------------------------
o Principal S-17
- ----------------------------------------
o Early Redemption Events S-18
- ----------------------------------------
o Optional Redemption by the
Issuer S-21
- ----------------------------------------
Deposit and Application of Funds S-22
- ----------------------------------------
o Application of Series [o]
Available Amounts S-24
- ----------------------------------------
o Shared Excess Available S-26
Interest Amounts
- ----------------------------------------
o Shared Excess Available S-26
Principal Amounts
- ----------------------------------------
o Reduction and Reinstatement of
Nominal Liquidation Amounts S-27
- ----------------------------------------
o Series [o]
Overcollateralization Amount S-27
- ----------------------------------------
o Allocation Percentages S-27
- ----------------------------------------
o Required Participation
Percentage S-28
- ----------------------------------------
o Excess Funding Account S-29
- ----------------------------------------
o Sale of Receivables S-30
- ----------------------------------------
o Final Payment of the Series
[o] Notes S-32
- ----------------------------------------
Underwriting S-33
- ----------------------------------------
Legal Matters S-33
- ----------------------------------------
Note Ratings S-33
- ----------------------------------------
Glossary of Principal Terms for
Prospectus Supplement S-34
- ----------------------------------------
Other Series of Notes A-1
- ----------------------------------------
S-3
- ------------------------------------------------------------------------------
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")
o Owns the receivables
----------------------------------------------------
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 Inkster Road,
Farmington Hills, Michigan 48334,
and its telephone number is (248)
427-2625
----------------------------------------------------
Servicer o DCS, a wholly owned subsidiary of
DaimlerChrysler Corporation
("DaimlerChrysler")
----------------------------------------------------
Indenture o The Bank of New York
Trustee
----------------------------------------------------
Owner Trustee o Chase Manhattan Bank USA,
National Association
----------------------------------------------------
-------------------------------------------------------
Title of Securities
Floating Rate Auto Dealer Loan Asset Backed Notes, Series [o] (the "Series
[o] notes").
Series Issuance Date
[o], 200[o].
Series Cut-Off Date
[o], 200[o].
Stated Principal Amount;
Series Nominal Liquidation Amount
--------------------------------------------------------
Stated principal amount
of Series [o] notes....................$[o]
--------------------------------------------------------
Initial nominal liquidation amount
of Series [o] notes....................$[o]
--------------------------------------------------------
Initial Series [o] overcollateralization
amount.................................$[o]
--------------------------------------------------------
Initial Series [o] nominal
liquidation amount.....................$[o]
--------------------------------------------------------
------------------------------------------------------------
o The Series [o] nominal liquidation amount constitutes the portion of
the principal amount of the receivables allocated to Series [o].
o The Series [o] notes will be secured only by a principal amount of
receivables that corresponds to the Series [o] nominal liquidation
amount.
o The Series [o] nominal liquidation amount will equal the sum of:
-- the nominal liquidation amount of the Series [o] notes (initially,
$[o]) plus
-- the Series [o] overcollateralization amount (initially, $[o]).
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 --
S-4
Reduction and Reinstatement of Nominal Liquidation Amounts."
The Receivables
The primary assets of the issuer will consist of 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
Series [o] notes will be the Series [o] share of collections received on the
receivables. Only the portion of collections on the receivables 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. Collections on the receivables
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 "The Notes -- Allocation of
Collections" 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 15], [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 Accrual 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 principal collections to make principal payments on other
series and/or to pay the purchase price for additional receivables. 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 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.
S-5
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 "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 receivables 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 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:
-- [o]% of the nominal liquidation amount of the Series [o] notes
plus
-- the incremental overcollateralization amount, which is based on the
amount of ineligible receivables and dealer overconcentration
amounts in the pool of receivables.
Each of the above two component amounts may fluctuate from time to time.
o We will allocate collections on the receivables 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.
o The Series [o] overcollateralization amount will be reduced by:
-- reallocations of available principal amounts otherwise allocable
to the Series [o] overcollateralization amount to pay interest on
the Series [o] notes; and
-- charge-offs resulting from uncovered defaults on the receivables
allocated to Series [o].
o Reductions in the Series [o] overcollateralization amount will result in
a reduced amount of collections on the receivables 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 those other series, will be applied to
make principal payments or accumulations of principal when due in respect of
the Series [o] notes and of other series of notes then entitled to principal
payments.
Monthly Servicing Fee
The monthly servicing fee allocable to Series [o] is the product of 1/12 of
1.0% times the Series [o] nominal liquidation amount, or less if the servicer
waives any portion of the monthly servicing fee on any date. The annual
servicing fee rate is 1.0%.
S-6
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
The issuer has previously issued [five] series of notes, and may issue
additional series of notes. A summary of these prior series of notes is
contained in "Other Series of Notes" 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 income tax laws.
Note Ratings
This issuer will issue the Series [o] notes only if they are rated at the
time of issuance in the highest long-term rating category by at least one
nationally recognized rating agency.
The rating agencies and their ratings only address the likelihood that you
will timely receive your interest payments and the likelihood that 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 the 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-7
- ------------------------------------------------------------------------------
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 o The sole source of payment of principal of or interest on the notes
payments on the notes is of your series will be the Series [o] available principal
limited: amount and the Series [o] available interest amount for your series. The
Series [o] available principal amount will consist primarily of
principal collections allocated to your series; and the Series [o]
available interest amount will consist primarily of interest
collections allocated to your series. As a result, you must rely only
on the particular assets allocated as security for the Series [o]
notes for payment 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 "Deposit and Application of
Funds" in this prospectus supplement.
o In particular, if the interest rates charged on the receivables
decline, the amount of interest collections allocated to your series
might be reduced at a time when the interest rate on the Series [o]
notes is not declining. Conversely, the interest rate on the Series
[o] notes could increase at a time when the interest rates on the
receivables are not increasing. Either situation could result in the
use of principal collections allocable to your series to pay interest
on the Series [o] notes. If the Series [o] overcollateralization
amount is not sufficient to mitigate the effect of such a change in
rates, this could result in delayed or reduced principal and interest
payments to you.
o Also, following a sale of receivables due to the insolvency of the
seller, DCS or DaimlerChrysler, an acceleration of your 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 "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 Principal collections allocable to your series may be reallocated to
pay interest on the notes of your series to the extent that the
available interest amount for your series is
S-8
insufficient to make such interest payments. Also, charge-offs of
uncovered defaulted receivables allocated to your series 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 and you will incur a
loss on your notes. See "The Notes -- Stated Principal Amount,
Outstanding Dollar Principal Amount and Nominal Liquidation Amount of
Notes -- Nominal Liquidation Amount of Notes" in the prospectus and
"Deposit and Application of Funds -- Reduction and Reinstatement of
Nominal Liquidation Amounts" in this prospectus supplement.
The timing of principal payments may not be as expected. Several factors will
have an effect on the amount and timing of principal payments on the Series
[o] notes. Some of those factors are described below.
You may not receive your o The shorter the accumulation period, the greater the chance that
principal on the Series [o] payment in full of the Series [o] notes by their expected
expected principal payment date principal payment date will depend on principal collections
because of the performance of from other series of notes. A series from which principal
other series: collections 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. Principal collections 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 any
other outstanding series of notes issued by the issuer. Those
documents describe the events which could result in the start of an
early redemption period for those series.
If an early redemption event o If an early redemption event occurs, you may receive your principal
occurs, you may receive your sooner or later than you expected and you may not receive all of
principal sooner or later than your principal. In particular, a significant decline in the amount of
you expected and you may not receivables generated could cause an early redemption of the Series [o]
receive all of your notes. If the balance of the receivables in the issuer is not
principal: maintained at a specified level, the seller must designate additional
accounts, the receivables of which will be sold to the issuer. If
additional accounts are not designated by the seller when required, an
early redemption event will occur.
S-9
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 issuer 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 "Series Provisions --
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 for the notes of your
series will be provided by the Series [o] overcollateralization amount as
described in this prospectus supplement. The amount of this credit enhancement
is limited and may be reduced from time to time. See "Deposit and Application
of Funds -- Series [o] Overcollateralization Amount" in this prospectus
supplement for more information about the credit enhancement for the Series
[o] notes.
The issuer is dependent on DCS and DaimlerChrysler. The issuer completely
depends on 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 underwriters 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.
- ------------------------------------------------------------------------------
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.
S-10
- ------------------------------------------------------------------------------
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 issuer were or will be selected from extensions of credit and advances
made by DaimlerChrysler and DCS to approximately 2,910 domestic motor vehicle
dealers.
o DCS financed 60.5% of the total number of all DaimlerChrysler-franchised
dealers as of June 30, 2004.
o As of June 30, 2004, approximately 40.9% of the dealers to which DCS had
extended credit lines were DaimlerChrysler-franchised dealers that
operated only DaimlerChrysler franchises, approximately 42.8% were
DaimlerChrysler-franchised dealers that also operated
non-DaimlerChrysler franchises and approximately 16.3% were
non-DaimlerChrysler dealers.
o As of June 30, 2004, the balance of principal receivables in the U.S.
Wholesale Portfolio was approximately $14.0 billion.
o DCS currently services the U.S. Wholesale Portfolio through its home
office and through a network of eight Chrysler Financial business
centers and three Mercedes-Benz regional offices located throughout the
United States.
o As of June 30, 2004, 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 approximately $4.7 million and $0.6
million, respectively, and the average balance of principal receivables
per dealer was approximately $4.8 million.
o As of June 30, 2004, the aggregate total receivables balance as a
percentage of the aggregate total credit lines was approximately 91.0%.
The following table sets forth the percentages of dealer account balances
by year of credit line origination for the U.S. Wholesale Portfolio.
-----------------------------------------------------------------------------------
U.S. Wholesale Portfolio Percentages by Year
of Credit Line Origination
As of June 30, 2004
------------------------------------------------------------------------------
Prior to
2004 2003 2002 2001 2000 1999 1998 1997 1997
------------------------------------------------------------------------------
3.44% 6.31% 6.55% 11.51% 6.22% 5.89% 4.74% 3.57% 51.77%
------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
As of June 30, 2004, the weighted average spread over the prime rate
charged to dealers in the U.S. Wholesale Portfolio was approximately 0.63%.
Used vehicles (which excludes Auction Vehicles) represented approximately
2.29% of the aggregate principal amount of receivables in the U.S. Wholesale
Portfolio as of June 30, 2004. As of June 30, 2004, used vehicles represented
approximately 2.25% of the aggregate principal amount of receivables in the
issuer (including Excluded Receivables).
S-11
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
June 30, As of December 31,
-------------------------------------------------------------------------------
2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994
-------------------------------------------------------------------------------
Percentage
of Dealers 1.2% 0.7% 1.8% 1.9% 0.8% 0.4% 0.9% 2.1% 1.1% 1.8% 1.6%
-----------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
DCS management's past experience has indicated that Finance Hold trends
tend to follow the cyclical nature of the present business economy. Finance
Hold experience has been reflective of overall macro-economic conditions.
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
June 30, As of December 31,
-------------------------------------------------------------------------------
2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994
-------------------------------------------------------------------------------
Number
of Dealers 11 13 7 24 27 27 21 24 20 6 12
-----------------------------------------------------------------------------------------
Percentage
of Dealers 0.4% 0.4% 0.2% 0.7% 0.8% 0.9% 0.7% 0.7% 0.6% 0.2% 0.3%
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
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 20 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 dealerships to the portfolio.
S-12
- ------------------------------------------------------------------------------
The Accounts
- ------------------------------------------------------------------------------
As of June 30, 2004, with respect to the Accounts in the CARCO receivables
trust (the owner of the receivables at that time):
o there were approximately 2,460 Accounts and the aggregate principal
receivables balance was approximately $11.4 billion;
o the average credit lines per dealer for new and used vehicles (which
include Auction Vehicles) were approximately $4.3 million and $0.6
million, respectively, and the average balance of principal receivables
per dealer was approximately $4.6 million; and
o the aggregate total receivables balance as a percentage of the aggregate
total credit line was approximately 94.1%.
Unless otherwise indicated, the statistics included in the preceding
paragraph, in the table below and under "DCS's Performance History --
Geographic Distribution" with respect to the Accounts and the receivables in
the issuer give effect to approximately $5.4 million of principal receivables
balances with respect to dealers (the "Excluded Receivables" and the "Excluded
Dealers," respectively) that are in voluntary or involuntary bankruptcy
proceedings or voluntary or involuntary liquidation or that, subject to
limitations, are being voluntarily removed by the seller from the issuer. 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 issuer
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 issuer are included in determining the principal receivables
balance of the receivables held by the issuer. See "Description of the Sale
and Servicing Agreement -- Removal of Accounts" in the prospectus for a
description of the manner in which an Account can be removed from the issuer.
The following table sets forth the percentages of dealer account balances
by year of credit line origination for the Accounts allocated to the issuer.
- --------------------------------------------------------------------------------
Account Portfolio Percentages by Year
of Credit Line Origination
As of June 30, 2004
------------------------------------------------------------------------------
Prior
2004 2003 2002 2001 2000 1999 1998 1997 to 1997
------------------------------------------------------------------------------
0.05% 0.00% 1.38% 13.02% 6.55% 7.19% 5.67% 4.01% 62.13%
------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
As of June 30, 2004, the weighted average spread over the prime rate
charged to Dealers was approximately 0.65%.
S-13
- ------------------------------------------------------------------------------
DCS's 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 issuer 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 receivables -- The ability of the issuer to make
payments on the notes depends in part on the ability of DaimlerChrysler and
DCS to generate receivables and the ability of DCS to perform its obligations
under the sale and servicing agreement" and "The Dealer Floorplan Financing
Business--Relationship with DaimlerChrysler" in the prospectus and "Risk
Factors -- The issuer is dependent on DCS and DaimlerChrysler" in this
prospectus supplement.
S-14
- -----------------------------------------------------------------------------------------------------------------------------
Loss Experience for the U.S. Wholesale Portfolio
($ in Millions)
Six Months
Ended June 30, Year Ended December 31,
------------------------------------------------------------------------------------------
2004 2003 2003 2002 2001 2000 1999
------------------------------------------------------------------------------------------
Average Principal
Receivables Balance (1) $12,220 $10,906 $10,781 $ 9,813 $ 9,689 $11,336 $ 9,947
------------------------------------------------------------------------------------------------------------------
Net Losses / (Net
Recoveries) (2)........ $ 0 $ 1 $ 3 $ 10 $ 2 $ 1 $ (0)
------------------------------------------------------------------------------------------------------------------
Net Losses / (Net
Recoveries) as a
Percent of Liquidations 0.001% 0.001% 0.005% 0.016% 0.004% 0.001% (0.001)%
------------------------------------------------------------------------------------------------------------------
Net Losses / (Net
Recoveries) as a
Percent of Average
Principal Receivables
Balance (3)............ 0.003% 0.008% 0.04% 0.11% 0.02% 0.01% (0.00)%
------------------------------------------------------------------------------------------------------------------
Year Ended December 31,
------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992
------------------------------------------------------------------------------------------
Average Principal
Receivables Balance (1) $ 9,236 $ 8,877 $ 8,825 $ 8,256 $ 6,754 $ 6,271 $ 5,344
------------------------------------------------------------------------------------------------------------------
Net Losses / (Net
Recoveries) (2)........ $ 11 $ 4 $ (0) $ (1) $ (1) $ 12 $ 26
------------------------------------------------------------------------------------------------------------------
Net Losses / (Net
Recoveries) as a
Percent of Liquidations 0.020% 0.008% (0.000)% (0.002)% (0.003)% 0.035% 0.098%
------------------------------------------------------------------------------------------------------------------
Net Losses / (Net
Recoveries) as a
Percent of Average
Principal Receivables
Balance (3)............ 0.12% 0.04% (0.00)% (0.01)% (0.01)% 0.19% 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 six months ended June 30, 2004 and 2003, which are based on a seven month
average.
(2) Net Losses in any period are gross losses less recoveries for such period.
(3) Percentages for the six months ended June 30, 2004 and 2003 are expressed on an annualized basis and are not necessarily
indicative of the experience for the whole year.
- -----------------------------------------------------------------------------------------------------------------------------
Except for the net loss experience of the U.S. Wholesale Portfolio for the
year ended December 31, 2002, net losses have shown favorable trends over the
last four years principally because of the availability of large amounts of
deficiencies collected after realization on the vehicles.
S-15
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. The
percentages below may not add to 100.0% because of rounding.
-----------------------------------------------------------------------------------------------------------------------
Age Distribution for the U.S. Wholesale Portfolio
As of
June 30, As of December 31,
----------- ----------------------------------------------------------------------------
Aging (Days) 2004 2003 2002 2001 2000 1999 1998 1997
----------- ----------------------------------------------------------------------------
<31...................... 33.2% 29.2% 28.3% 33.5% 23.0% 36.7% 32.2% 32.5%
------------------------------------------------------------------------------------------------------------------
31-60.................... 16.4% 19.2% 18.9% 23.0% 19.8% 21.9% 21.5% 21.9%
------------------------------------------------------------------------------------------------------------------
61-90.................... 12.7% 14.2% 16.3% 14.3% 18.3% 16.6% 15.3% 14.7%
------------------------------------------------------------------------------------------------------------------
91-120................... 12.3% 14.6% 14.4% 10.6% 16.6% 11.6% 12.6% 11.0%
------------------------------------------------------------------------------------------------------------------
121-150.................. 7.5% 9.4% 10.6% 7.7% 10.0% 4.4% 8.0% 7.4%
------------------------------------------------------------------------------------------------------------------
151-180.................. 3.5% 3.0% 4.3% 3.5% 2.9% 2.5% 2.9% 3.3%
------------------------------------------------------------------------------------------------------------------
181-210.................. 3.3% 3.4% 1.9% 1.9% 2.8% 1.5% 1.9% 1.9%
------------------------------------------------------------------------------------------------------------------
211-240.................. 2.9% 1.9% 1.3% 1.4% 1.6% 1.3% 1.3% 1.3%
------------------------------------------------------------------------------------------------------------------
241-270.................. 2.2% 1.2% 0.8% 0.9% 1.2% 0.9% 0.9% 1.0%
------------------------------------------------------------------------------------------------------------------
271-300.................. 2.2% 1.3% 0.7% 0.8% 1.1% 0.7% 0.7% 0.9%
------------------------------------------------------------------------------------------------------------------
301-330.................. 1.5% 0.6% 0.6% 0.5% 0.8% 0.4% 0.6% 0.8%
------------------------------------------------------------------------------------------------------------------
331-360.................. 0.6% 0.5% 0.3% 0.3% 0.6% 0.3% 0.4% 0.6%
------------------------------------------------------------------------------------------------------------------
>360..................... 1.7% 1.5% 1.6% 1.6% 1.3% 1.2% 1.7% 2.7%
------------------------------------------------------------------------------------------------------------------
Total................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
S-16
Geographic Distribution
The following table provides the geographic distribution of the vehicle
inventory for all dealers with accounts allocated to the issuer on the basis
of receivables outstanding and the number of dealers generating the portfolio.
The percentages below may not add to 100.00% because of rounding.
--------------------------------------------------------------------------------------------------------------------------
Geographic Distribution of Accounts for the Issuer
As of June 30, 2004
-------------------------------- ------------------------ ------------------- ------------------
Percentage of Total Percentage of
Receivables Number of Dealers Number of
Receivables Outstanding (2) Outstanding (2) (3) Dealers (3)
-------------------------------- ------------------------ ------------------- ------------------
Texas $ 882,127,607.56 7.75% 143 5.81%
----------------------------------------------------------------------------------------------------------------
California 879,930,688.34 7.73% 141 5.73%
----------------------------------------------------------------------------------------------------------------
Florida 790,609,815.67 6.94% 113 4.59%
----------------------------------------------------------------------------------------------------------------
New York 737,218,604.97 6.47% 148 6.01%
----------------------------------------------------------------------------------------------------------------
Michigan 671,412,238.91 5.90% 125 5.08%
----------------------------------------------------------------------------------------------------------------
New Jersey 601,958,804.16 5.29% 117 4.76%
----------------------------------------------------------------------------------------------------------------
Other (1) 6,822,807,948.39 59.92% 1,674 68.02%
----------------------------------------------------------------------------------------------------------------
Total $ 11,386,065,708.00 100.00% 2,461 100.00%
----------------------------------------------------------------------------------------------------------------
(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 depend on the reallocation to
Series [o] of principal collections which are initially allocated to other
outstanding series of notes. If one or more other series of notes from which
principal collections 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, principal collections
allocated to those series of notes will not be available to be reallocated to
make principal payments on the Series [o] notes. As a result, you may receive
your final payment of principal later than the Series [o] Expected Principal
Payment Date.
S-17
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 the 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. Furthermore, 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
Six Months Ended
June 30, Year Ended December 31,
----------------- ---------------------------------------------------------------------------------
2004 2003 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994
----------------- ---------------------------------------------------------------------------------
Highest Month 51.3% 52.8% 55.6% 65.4% 64.4% 52.8% 60.5% 60.8% 57.7% 58.3% 59.1% 59.7%
----------------------------------------------------------------------------------------------------------------------
Lowest Month 42.4% 42.2% 37.2% 44.9% 42.4% 36.3% 44.7% 42.5% 41.1% 43.2% 36.5% 34.2%
----------------------------------------------------------------------------------------------------------------------
Average of the
Months in the 46.1% 46.5% 46.7% 55.7% 52.6% 45.6% 52.0% 50.0% 48.2% 49.0% 45.6% 50.3%
Period
----------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Series Provisions
- -------------------------------------------------------------------------------
The issuer will issue the Series [o] notes pursuant to the indenture and an
indenture supplement. The sole source of funds for the payment of principal of
and interest on the Series [o] notes will be collections in respect of the
receivables that are allocated to the Series [o] notes under the indenture,
the indenture supplement and the sale and servicing agreement, after giving
effect to all allocations and reallocations. If the payments received by the
issuer on the receivables are not sufficient to pay the Series [o] notes in
full, 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.
The discussions under this heading "Series Provisions" and the heading
"Deposit and Application of Funds" in this prospectus supplement and the
discussions under the headings "The Notes," "The Indenture" and "Description
of the Sale and Servicing Agreement" in the prospectus summarize the material
terms of the Series [o] notes, the indenture, the indenture supplement and the
sale and servicing agreement. These summaries do not purport to be complete
and are qualified in their entirety by reference to the provisions of the
Series [o] notes, the indenture, the indenture supplement and the sale and
servicing agreement.
Neither the indenture nor the indenture supplement limits the aggregate
principal amount of notes that may be issued.
S-18
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 the
Series [o] Available Interest Amounts. See "Deposit and Application of Funds
- -- Application of Series [o] Available Amounts -- Series Available Interest
Amount" in this prospectus supplement for additional details.
[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 as reported by Bloomberg Financial
Markets Commodities News, 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
for U.S. dollar deposits. If that rate appears on Telerate Page 3750, LIBOR
will be that rate. "LIBOR Business Day" as used in this prospectus supplement
means a day that is both a Business Day and a day on which banking
institutions in the City of London, England are not required or authorized by
law to be closed. If on any LIBOR Determination Date the offered rate does not
appear on Telerate Page 3750, the Calculation Agent will request each of the
reference banks, which shall be four 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
S-19
the Series [o] Expected Principal Payment Date, we will begin making principal
payments on the payment date in the month following the month in which the
Early Redemption Period begins.
Generally, the Series [o] share of principal collections for each
collection period during the Revolving Period will not be used to make
principal payments on the Series [o] notes. Instead, we will either:
o use this share of principal collections to cover a shortfall in the
Series [o] Available Interest Amount needed to pay interest on the
Series [o] notes; or
o use this share of principal collections 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, repaying or accumulating
principal, pay this share of principal collections to the issuer to
maintain its interest in the receivables pool and to be applied in
accordance with the sale and servicing agreement.
See "Deposit and Application of Funds -- Application of Series [o] Available
Amounts - Series Available Principal Amount" in this prospectus supplement for
additional details.
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 "-- Early Redemption Events" below for additional
details on how we may terminate an Early Redemption Period and recommence the
Revolving Period for the Series [o] notes.
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 principal collections
will no longer be used by another series of notes or paid to the issuer for
application under the sale and servicing agreement. Instead, the Series [o]
share of principal collections will be accumulated in specified amounts in the
principal funding account for the Series [o] notes. We will make these
deposits into 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.
S-20
Initially, the Accumulation Period is scheduled to be [five] months long.
However, depending on the performance of the receivables, 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 the principal collections
allocable to other series of notes to make larger monthly deposits into the
principal funding account for the Series [o] notes over a shorter period of
time or (ii) the payment rate on the receivables will permit larger monthly
deposits to that trust account over a shorter period of time. In order to
delay the start of the Accumulation Period, the following things must occur:
o the issuer must deliver to the indenture trustee a certificate to the
effect that the issuer believes that delaying the start of the
Accumulation Period will not delay any payment of principal to Series
[o] noteholders;
o Standard & Poor's and Moody's must advise the issuer that they will not
lower or withdraw their ratings on the notes of any series because of
the delay in the start of the Accumulation Period;
o the amount of principal that the indenture trustee will deposit into the
principal funding account each month during the Accumulation Period must
be increased, so that the sum of all deposits made during the shortened
Accumulation Period will equal the principal amount due to Series [o]
noteholders on the Series [o] Expected Principal Payment Date;
o the Accumulation Period must start no later than [o]; and
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.
During the Accumulation Period, we will accumulate each month in the
principal funding account a fixed amount equal to the "Controlled Accumulation
Amount," which will equal 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 principal
collections allocable to Series [o] for any payment date may fluctuate, we
will be required to deposit the Controlled Deposit Amount into 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:
o the Controlled Accumulation Amount over
o any funds in the excess funding account that are allocable to Series [o]
and will be deposited into the principal funding account on that payment
date.
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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 that are allocable to Series [o], 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 of an
Early Redemption Period are described in "-- Early Redemption Events" below.
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 "--
Early Redemption Events" below.
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" for any payment date relating to the Accumulation Period or any
Early Redemption Period will equal the Series [o] share of principal
collections for the related collection period 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 in any event 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 the Series [o] share of
principal collections to pay interest on the Series [o] notes or by
charge-offs due to uncovered defaulted receivables and is not reinstated, you
will incur a loss on your Series [o] notes.
Early Redemption Events
The early redemption events (each, an "Early Redemption Event") with
respect to the Series [o] notes will include each of the following events.
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 sale 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
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o to deliver a Monthly Noteholders' Statement or payment
instruction on the date required under the indenture, 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 sale 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 in the Receivables
Purchase Agreement or by DCWR in the sale and servicing agreement or
any information required to be given by DCWR to the issuer 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 noteholders 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 sale and servicing agreement;
3. the occurrence of certain events of bankruptcy, insolvency or
receivership relating to DCWR, DCS or DaimlerChrysler;
4. a failure by DCWR to convey receivables in Additional Accounts to
the issuer within five business days after the day on which it is
required to convey those receivables under the sale and servicing
agreement;
5. on any payment date, the Primary Series [o] overcollateralization
amount is reduced to an amount less than the Required Primary Series
[o] overcollateralization amount on that payment date after giving
effect to the reductions, reinstatements and distributions to be
made on that payment date[; provided that, for the purpose of
determining whether an Early Redemption Event has occurred pursuant
to this clause 5, any reduction of the Primary Series [o]
overcollateralization amount resulting from reallocations of the
Series [o] Available Principal Amounts to pay interest on the Series
[o] notes in the event LIBOR is equal to or greater than the prime
rate upon which interest on the receivables is calculated on the
applicable LIBOR Determination Date will be considered an Early
Redemption Event only if LIBOR remains equal to or greater than such
prime rate for the next 30 consecutive days following such LIBOR
Determination Date];
6. any Service Default occurs;
7. on any Determination Date, as of the last day of the preceding
collection period, the aggregate amount of principal receivables
relating to Used Vehicles exceeds [20%] of the Pool Balance on that
last day;
8. on any Determination Date, the average of the Monthly Payment Rates
for the three preceding collection periods, is less than [20%];
9. the outstanding dollar principal amount of the Series [o] notes is
not repaid by the Series [o] Expected Principal Payment Date;
10. DCWR or the issuer becomes an investment company within the meaning
of the Investment Company Act of 1940, as amended; and
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11. the occurrence of an event of default with respect to the Series [o]
notes under the indenture.
In the case of any event described in clause 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 holders of 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 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 event described in clause 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
issuer, 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 issuer. 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 Aggregate
Series Nominal Liquidation Amount due to principal payments made in respect of
any notes during the Early Redemption Period or as a result of the subsequent
addition of receivables to the issuer. However, if any Early Redemption Event,
other than an Early Redemption Event described in clause 3 or 10 above,
occurs, the Revolving Period will recommence following receipt of:
o written confirmation by the rating agency specified in the indenture
supplement, that its rating of the Series [o] notes will not be
withdrawn or lowered as a result of the recommencement; and
o holders of Series [o] notes evidencing more than 50% of the outstanding
dollar principal amount of the Series [o] notes consent to the
recommencement of the Revolving Period;
so long as 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.
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 $[o] 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,
the servicer will cause the issuer to notify the registered holders at least
30 days prior to the redemption date. The redemption price of the Series [o]
notes will equal 100% of the outstanding dollar principal amount of the Series
[o] notes, 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
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funding account for the Series [o] notes will be applied to make the principal
and interest payments on the Series [o] notes on the redemption date.
- -------------------------------------------------------------------------------
Deposit and Application of Funds
- -------------------------------------------------------------------------------
The servicer will deposit collections into the Collection Account at the
times and in the manner described in "Description of the Sale and Servicing
Agreement -- Allocation of Collections; Deposits in Collection Account." The
indenture trustee will then allocate those collections among each series of
notes as described in this prospectus supplement. The Series [o] share of
those collections is the only source of funds for payments on the Series [o]
notes.
As more fully described under this heading "Deposit and Application of
Funds," we will apply the interest collections allocable to Series [o] to pay
interest on the Series [o] notes, to pay the servicing fee and to cover
charge-offs from defaults on the receivables that are allocable to Series [o].
The Series [o] share of interest collections will be comprised of those
interest collections allocable to the nominal liquidation amount of the Series
[o] notes and the Series [o] overcollateralization amount. If the Series [o]
share of interest collections for any payment date is insufficient to make
these payments or to cover the Series [o] share of charge-offs, we will use
any excess available interest collections not required by other series of
notes to make up the shortfalls. If there remains any unpaid interest on the
Series [o] notes after the application of excess available interest
collections from other series of notes, we will then use the Series [o] share
of principal collections to do so. When it is time to pay principal to Series
[o] noteholders or to accumulate principal collections for that purpose, we
will use the Series [o] share of principal collections. The Series [o] share
of principal collections will be comprised of those principal collections
allocable to the nominal liquidation amount of the Series [o] notes and the
Series [o] overcollateralization amount. Under some circumstances, we may use
principal collections allocated to one or more other series of notes to the
extent that such amounts are not then needed by those series.
The preceding paragraph is a very simplified description of the primary
allocations and uses of collections in respect of the receivables. 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 collections. 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.
Application of Series [o] Available Amounts
Series Available Interest Amount
We describe how we will allocate the interest collections for each
collection period among each series of notes under "-- Allocation Percentages"
below. On each payment date, the amount of interest collections that has been
allocated to Series [o] will be supplemented by certain additional funds in
the following manner:
o any net investment earnings on funds in the principal funding account
will be withdrawn from the principal funding account and added to the
Series [o] share of interest collections;
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 will be
deducted
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from collections otherwise allocable to the seller and added to the
Series [o] share of interest collections;
o the Series [o] share of any net investment earnings on funds in the
excess funding account will be withdrawn from the excess funding account
and added to the Series [o] share of interest collections; and
o any shared excess interest collections from other series will be added
to the Series [o] share of interest collections to the extent described
in "-- Shared Excess Available Interest Amounts" below.
The Series [o] share of interest collections, together with the additional
funds described in the above three bullet points, are collectively referred to
as the "Series [o] Available Interest Amount." On each payment date, the
indenture trustee, at the direction of the administrator, will apply the
Series [o] Available Interest Amount for that payment date in the following
order:
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 into 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 Series [o] Available Interest Amount exceeds the amounts
payable in clauses first, second and third, then we will add that excess
to the Series [o] share of principal collections for the related
collection period to the extent of:
-- the amount of charge-offs on defaulted receivables that are
allocable to Series [o] for the related collection period; and
-- the Series [o] nominal liquidation amount deficit, if any; and
o fifth, any Series [o] Available Interest Amount that remains after
giving effect to clauses first, second, third and fourth and
reimbursement of waived servicing fees, if any, will be treated as part
of the "Shared Excess Available Interest Amount" for that payment date
and will be applied to cover 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 for distribution to the seller.
The "Series [o] nominal liquidation amount deficit" is the sum of (i) the
nominal liquidation amount deficit of the Series [o] notes and (ii) the Series
[o] overcollateralization amount deficit. The "nominal liquidation amount
deficit of the Series [o] notes" is the amount, if any by which (x) the
outstanding dollar principal amount of the Series [o] notes less the amount
(other than investment earnings) in the principal funding account and the
Series [o] share of the amount (other than investment earnings) in the excess
funding account exceeds (y) the nominal liquidation amount of the Series [o]
notes. The "Series [o] overcollateralization amount deficit" is the amount, if
any, by which (a) the aggregate of reallocations and reductions of the Series
[o] overcollateralization amount to cover charge-offs and interest shortfalls
exceeds (b) the aggregate amount of reimbursements of such reallocations and
reductions.
The annual Servicing Fee Rate is 1.0%. The monthly servicing fee for all
series of notes in the aggregate is 1/12 of 1.0% of the aggregate series
nominal liquidation amounts of all of the notes of the outstanding series. A
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portion of that monthly servicing fee will be allocated to each series of
notes pro rata on the basis of the series nominal liquidation amount of each
series. If the servicer, in its sole discretion, elects to waive any portion
of its servicing fee for a payment date, the servicer will receive such
servicing fee on a future payment date out of the amount, if any, available
pursuant to clause fifth above.
Series Available Principal Amount
We describe how we will allocate the principal collections for each
collection period among each series of notes under "-- Allocation Percentages"
below. On each payment date, the amount of principal collections that has been
allocated to Series [o] will be supplemented by certain additional funds in
the following manner:
o the amount of any Series [o] Available Interest Amount used to cover the
Series [o] share of any charge-offs on defaulted receivables or to cover
any Series [o] nominal liquidation amount deficit (as described in
clause fourth of the second paragraph under "-- Series Available
Interest Amount" above) will be added to the Series [o] share of
principal collections; and
o the amount of any Miscellaneous Payments allocated to Series [o] will be
added to the Series [o] share of principal collections;
The Series [o] share of principal collections, together with the additional
funds described in the above two bullet points, are collectively referred to
as the "Series [o] Available Principal Amount." On each payment date, the
indenture trustee, at the direction of the administrator, will apply the
Series [o] Available Principal Amount for that payment date in the following
order:
o first, if the Series [o] Available Interest Amount is not enough to
cover the full amount of interest owed on the Series [o] notes on that
payment date, the indenture trustee will deposit into the interest
funding account the amount of the shortfall in an amount not to exceed
the Series [o] nominal liquidation amount (after taking into account any
reductions due to charge-offs from uncovered 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 the
amount of the Series [o] Available Principal Amount after application
pursuant to clause first of this paragraph, and will treat any remaining
Series [o] Available Principal Amount as part of the "Shared Excess
Available Principal Amount" for that payment date to be used to satisfy
the principal funding requirements of other series of notes or to be
reinvested in receivables;
o third, if Series [o] is in an Early Redemption Period, the indenture
trustee will deposit any remaining Series [o] Available Principal
Amount, to the extent of the Series [o] nominal liquidation amount
(after taking into account any reductions due to charge-offs of
uncovered defaulted receivables and any application pursuant to clause
first of this paragraph), into the principal funding account for payment
to the Series [o] noteholders;
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 Amount as part of the Shared Excess Available Principal Amount
for that payment date to be used as described in clause second of this
paragraph; 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 into the principal funding account, we will
treat any remaining Series [o] Available Principal Amount as part of the
Shared Excess Available
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Principal Amount for that payment date to be used as described in clause
second of this paragraph. The amount in this clause fifth will represent
the Series [o] overcollateralization amount.
The use of any Series [o] Available Principal Amount 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 Nominal Liquidation Amounts" below.
If the Series [o] noteholders cause the issuer to sell receivables as
described below 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 collections
on the receivables or other assets of the issuer.
Shared Excess Available Interest Amounts
The amount of any Series [o] Available Interest Amount that is 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 part of the Shared Excess Available Interest Amount and will be used for
the benefit of other outstanding series to cover any required payments or
deposits in respect of those series that, before giving effect to the Shared
Excess Available Interest Amount, have not been covered by the respective
series available interest amounts for those other series. If these interest
shortfalls exceed the Shared Excess Available Interest Amount for any payment
date, the amount of the Shared Excess Available Interest Amount will be
allocated pro rata among the applicable series based on their respective
interest shortfalls. To the extent that the Shared Excess Available Interest
Amount for any payment date exceeds those interest shortfalls, the balance
will be paid to the issuer for application under the sale and servicing
agreement.
Shared Excess Available Principal Amounts
The amount of any Series [o] Available Principal Amount that is 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 part of the Shared Excess Available Principal Amount and will be used for
the benefit of other outstanding series to cover any required payments or
deposits in respect of those series that, before giving effect to the Shared
Excess Available Principal Amount, have not been covered by the respective
series available principal amounts for those other series. If these principal
shortfalls exceed the Shared Excess Available Principal Amount for any payment
date, the amount of the Shared Excess Available Principal Amount will be
allocated pro rata among the applicable series based on their respective
principal shortfalls. Any reallocation of the Series [o] Available Principal
Amount for this purpose will not reduce the nominal liquidation amount of the
Series [o] notes. To the extent that the Shared Excess Available Principal
Amount for any payment date exceeds those principal shortfalls, the balance
will be paid to the issuer for application under the sale and servicing
agreement.
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
into the principal funding account.
The Series [o] nominal liquidation amount at the Series [o] Cut-Off Date is
the sum of:
o the $[o] initial nominal liquidation amount of the Series [o] notes
(which equals the initial outstanding dollar principal amount of the
Series [o] notes) plus
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o the $[o] Series [o] overcollateralization amount at the initial
issuance of the Series [o] 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:
o the amount of any Series [o] Available Principal Amount used to pay
interest on the Series [o] notes as described above under "--
Application of Series [o] Available Amounts -- Series Available
Principal Amount"; and
o 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 the portion of the Series [o] Available Interest
Amount that is applied to cover such charge-offs as described above
under "-- Application of Series [o] Available Amounts -- Series
Available Interest Amount."
In addition, the portion of the Series [o] nominal liquidation amount
constituting the nominal liquidation amount of the Series [o] notes will be
(i) reduced by (x) 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 and (y) the amount (other
than investment earnings) deposited into the excess funding account since the
prior calculation date in connection with a reduction in principal receivables
that is allocable to Series [o] and (ii) increased by amounts (other than
investment earnings) that are withdrawn from the excess funding account since
such prior calculation date in connection with the purchase of additional
principal receivables and are allocable to Series [o].
On each payment date, we will allocate the amount of any reduction in the
Series [o] nominal liquidation amount due to the above two bullet points in
the following order:
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 constituting the Primary Series [o]
overcollateralization amount. Initially, the Primary Series [o]
overcollateralization amount equals the Series [o] overcollateralization
percentage of the initial nominal liquidation amount of the Series [o] notes.
In general, if the Primary Series [o] overcollateralization amount on any
payment date (after giving effect to any reductions and reinstatements) is
reduced below the then-required level, an Early Redemption Event will occur.
This required level, referred to as the "Required Primary Series [o]
overcollateralization amount," will be calculated on each payment date to be
an amount equal to the product of the Series [o] overcollateralization
percentage and the nominal liquidation amount of the Series [o] notes on that
payment date, after giving effect to all allocations and distributions on that
date (but without giving effect to any reductions or reinstatements described
under this heading except for reductions due to deposits to the principal
funding account and reductions and increases related to deposits to and
withdrawals from the excess funding account).
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While we will reduce the nominal liquidation amount of the Series [o] notes
due to reallocations and charge-offs as described above, the outstanding
dollar principal amount of the Series [o] notes will not be similarly reduced
for these amounts. Consequently, if the Series [o] overcollateralization
amount is reduced to zero and the nominal liquidation amount of the Series [o]
notes is thereafter reduced by charge-offs or reallocations as described above
and not reinstated as described below, then the issuer will not have
sufficient assets allocable to your series to pay the outstanding dollar
principal amount of the Series [o] notes in full. In this case, you will incur
a loss on your notes.
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 Series [o] Available Amounts -- Series
Available Interest Amount" above. We will allocate the amount of that
reinstatement on that payment date in the following order:
o first, if the nominal liquidation amount of the Series [o] notes has
been reduced by charge-offs or reallocations as described above and not
fully reinstated, we will allocate the reinstatement amount to the
nominal liquidation amount of the Series [o] notes until it equals the
outstanding dollar principal amount of the Series [o] less any amounts
(other than investment earnings) in the principal funding account, any
principal payments made to the Series [o] noteholders and the Series [o]
share of amounts (other than investment earnings) in the excess funding
account; 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.
We will apply any reinstatement allocated to the Series [o]
overcollateralization amount, as described in clause second above, to the
portion of the Series [o] overcollateralization amount constituting the
Primary Series [o] overcollateralization amount.
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 equal the sum of (i) the
Primary Series [o] overcollateralization amount and (ii) the incremental
overcollateralization amount. Each of these component amounts may fluctuate
from time to time as described below.
The "Primary Series [o] overcollateralization amount" initially will equal
the Series [o] overcollateralization percentage of the initial nominal
liquidation amount of the Series [o] notes. Afterwards, the Primary Series [o]
overcollateralization amount will be calculated on each payment date to be the
product of (i) the Series [o] overcollateralization percentage times (ii) the
nominal liquidation amount of the Series [o] notes on that payment date (after
giving effect to all allocations, deposits and payments), which product will
be decreased by all reductions that have been allocated to the Series [o]
overcollateralization amount, as described above under "-- Reduction and
Reinstatement of Nominal Liquidation Amounts," and increased by all
reinstatements that have been allocated to the Series [o]
overcollateralization amount, as described under the same heading. However, if
an Early Redemption Period has commenced and the Revolving Period has not
recommenced, the nominal liquidation amount of the Series [o] notes referred
to in clause (ii) above will be the nominal liquidation amount of the Series
[o] notes at the commencement of that Early Redemption Period. A more detailed
definition of the Primary Series [o] overcollateralization amount is provided
in the "Glossary of Principal Terms for Prospectus Supplement" at the end of
this prospectus supplement.
S-30
The "Series [o] overcollateralization percentage" is [o]%, except that 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]% until that rating is increased to at least BBB-.
In general, if the Primary Series [o] overcollateralization amount on any
payment date (after giving effect to any reductions and reinstatements) is
reduced below the Required Primary Series [o] overcollateralization amount for
that payment date, an Early Redemption Event will occur. See "Series
Provisions -- Early Redemption Events" above.
The "incremental overcollateralization amount" on any determination date
will equal the product of:
o 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 times
o the excess, if any, of:
-- the sum of the Overconcentration Amount and the aggregate amount of
Ineligible Receivables on that determination date over
-- 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 issuer, unless any
insolvency event relating to the seller or DCS has occurred, as
further described in the sale and servicing agreement.
The terms used in this definition are defined in the "Glossary of Principal
Terms for Prospectus" at the end of the prospectus.
As of the Series [o] Cut-Off Date, the Series [o] overcollateralization
amount was $[o].
The issuer may change the Series [o] overcollateralization amount,
including the component amounts comprising the Series [o]
overcollateralization amount, at any time without any notice to or consent of
any noteholder so long as
o the issuer receives confirmation from the rating agencies that the
change will not result in a reduction or withdrawal of the rating of the
Series [o] notes; and
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
franchise tax purposes (1) the change will not adversely affect in any
material respect the characterization of the notes of any outstanding
series, class or subclass as debt, (2) the change will not cause a
taxable event to holders of any outstanding notes and (3) following the
change, the issuer will not be an association, or a publicly traded
partnership, taxable as a corporation.
Allocation Percentages
We will allocate to Series [o] all collections on the receivables, any
charge-offs on defaulted receivables and any Miscellaneous Payments for each
collection period on the basis of various percentages. Which percentage we use
depends on the amount that we are allocating and, in the case of principal
collections, on whether the principal collections are received in the
Revolving Period, the Accumulation Period or an Early Redemption Period.
S-31
We will make allocations among each series of notes (including Series [o])
as follows:
o interest collections and charge-offs on defaulted receivables will be
allocated to each series of notes based on its series floating
allocation percentage;
o principal collections will be allocated to each series based on its
series principal allocation percentage; and
o Miscellaneous Payments will be allocated to each series of notes based
on its series miscellaneous allocation percentage.
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 collection period 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 the
Series [o] issuance date in the case of the first collection period);
and
o the denominator of which is the Pool Balance as of the last day of the
immediately preceding collection period (or the Series [o] Cut-Off Date
in the case of the first collection period).
The series principal allocation percentage is, in general, based on the
series nominal liquidation amount of each series, which will be fixed for any
series at the end of its revolving period. Consequently, even though we are
distributing or accumulating principal collections for the noteholders of a
series, the numerator used for the calculation for that series will not
decline. The series principal allocation percentage for Series [o], referred
to as the "Series [o] principal allocation percentage," for any collection
period 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 the
Series [o] issuance date in the case of the first collection period),
except that if the Accumulation Period or an Early Redemption Period has
commenced, the numerator will be the Series [o] nominal liquidation
amount as of the last day of the collection period ending prior to the
commencement of the Accumulation Period or Early Redemption Period, as
applicable; and
o the denominator of which is the greater of (i) the Pool Balance as of
the last day of the immediately preceding collection period (or the
Series [o] Cut-Off Date in the case of the first collection period) and
(ii) the sum of the numerators used to calculate the percentages for
allocating principal collections to all outstanding series of notes
(including the Series [o] notes) for that collection period.
This Series [o] principal allocation percentage will adjust if the Series
[o] notes or any other series of notes has entered into an early redemption
period since the prior collection period.
The series miscellaneous allocation for Series [o], referred to as the
"Series [o] miscellaneous allocation percentage," for any collection period
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; and
S-32
o the denominator of which is the Aggregate Series Nominal Liquidation
Amount as of that last day.
Required Participation Percentage
As described under "Description of the Sale and Servicing Agreement --
Addition of Accounts" in the prospectus, the seller will be required to add to
the issuer 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 Series [o] 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 indenture trustee and the rating agencies
and without any notice to or consent of any noteholder, 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 such 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.
Excess Funding Account
Unless and until an Early Redemption Event has occurred or the Accumulation
Period has commenced, the indenture trustee will keep the Series [o] share of
the funds on deposit in the excess funding account in this trust account. The
indenture trustee will generally invest funds on deposit in the excess funding
account at the direction of the servicer in Permitted Investments. Those
investments must mature on or prior to the next payment date unless the rating
agencies confirm that a longer maturity will not result in the downgrade or
withdrawal of their ratings of the Series [o] notes.
We will pay funds on deposit in the excess funding account to the seller or
allocate them to one or more series of notes that are in amortization or
accumulation periods, but only to the extent of any increases in the Pool
Balance as a result of the addition of receivables to the issuer, certain
reductions in the Seller's Interest, or certain reductions in the nominal
liquidation amount of any other series of notes. We will deposit additional
amounts in the excess funding account on a payment date to the extent
described under "Description of the Sale and Servicing Agreement -- Excess
Funding Account Deposits and Withdrawals" in the prospectus.
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 part of the Series [o] Available Interest Amount.
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 allocable to Series [o]
will be deposited in the excess funding account during any Early Redemption
Period.
Sale of Receivables
Receivables may be sold upon the insolvency of the seller, 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 such an insolvency
occurs or the Series [o] notes are accelerated after an event of default, 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:
S-33
o 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;
or
o 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
o both:
-- the indenture trustee determines that the funds to be allocated to
the Series [o] notes, including (1) the 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
-- 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 issuer to sell principal receivables and the
related non-principal receivables (or interests 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 shall deliver their
Series [o] notes to the issuer as part of their exercise of the put feature.
We will pay any remaining amount to the seller.
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 in an
amount not exceeding the Series [o] nominal liquidation amount. The nominal
liquidation amount of the Series [o] notes will be automatically reduced to
zero upon the sale. After the sale, we will not allocate any further interest
collections or principal collections 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
interest collections and be allocated and applied as described in "--
Application of Series [o] Available Amounts."
S-34
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, the Series [o] Available Principal Amount 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 and reallocations of any portion of the
Series [o] Available Principal Amount 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 has not been
reinstated to that amount as described in this prospectus supplement, Series
[o] noteholders will not receive full payment of the outstanding dollar
principal amount 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; and
o the date on which a sale of receivables in respect of Series [o] has
taken place, as described in "-- Sale of Receivables."
- -------------------------------------------------------------------------------
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 amount indicated opposite its name:
------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Principal Amount
Underwriters of Series [o] notes
--------------------------------------------------------------------------------------
[Underwriters]................................................ $ [o]
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Total................................................ $ [o]
--------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
[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.
S-35
The underwriters 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 [o]% of the principal amount of the Series [o] notes. The
underwriters may allow, and the securities dealers may reallow to other
securities dealers, concessions not greater than [o]% 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 underwriters.]
[Distribution of the Series [o] notes will be made from time to time in
negotiated transactions or otherwise at varying prices to be determined at the
time of sale. Proceeds to the seller will be [o]% of the aggregate principal
amount of the Series [o] notes plus accrued interest from [o], before
deducting expenses estimated to be $[o]. In connection with the purchase and
sale of the Series [o] notes, the underwriters may be deemed to have received
compensation from the seller in the form of underwriting discount.]
In the ordinary course of its business, the underwriters and their
affiliates have engaged and may engage in investment banking transactions with
the seller and its affiliates.
The underwriters intend to make a secondary market in the Series [o] notes,
but have no obligation to do so. We cannot assure you that a secondary market
for the Series [o] notes will develop or, if it does develop, that it will
continue or that it will provide holders of the Series [o] notes with a
sufficient level of liquidity of the Series [o] notes.
- -------------------------------------------------------------------------------
Legal Matters
- -------------------------------------------------------------------------------
Certain legal matters relating to the Series [o] notes will be passed upon
for DCWR by Sidley Austin Brown & Wood LLP, New York, New York, and for the
underwriters 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 underwriters, 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 the likelihood that 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.
S-36
- -------------------------------------------------------------------------------
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.
If an Early Redemption Period that is not terminated, as described under
"Series Provisions -- Early Redemption Events" in this prospectus supplement,
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" in this prospectus
supplement.
"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 and the indenture
trustee.
"Calculation Agent" means, initially, the indenture trustee.
"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 of the Series [o] notes as of the Accumulation Period
Commencement Date, divided by the Accumulation Period Length.
"Controlled Deposit Amount" means, for a payment date, the excess of:
o the Controlled Accumulation Amount over
o any funds in the excess funding account that are allocable to Series [o]
and will be deposited into the principal funding account on 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.
S-37
"Early Redemption Events" are described under "Series Provisions -- Early
Redemption Events" in this prospectus supplement.
"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;
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 under
"Series Provisions -- Early Redemption Events" in this prospectus
supplement.
"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
issuer.
"Excluded Receivables" means principal receivables with respect to Excluded
Dealers.
"incremental overcollateralization amount" is described under "Deposit and
Application of Funds -- Series [o] Overcollateralization Amount" in this
prospectus supplement.
"interest funding account" means a Qualified Trust Account maintained 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.
"issuer" means DaimlerChrysler Master Owner Trust and its successors.
"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
four 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
S-38
York City time, on that date to leading European banks for United States
dollar deposits for one month. If, however, those banks are not quoting as
described above, LIBOR for that date will be LIBOR applicable to the Interest
Period immediately preceding that Interest Period.]
["LIBOR Business Day" means a day that is both a Business Day and a day on
which banking institutions in the City of London, England are not required or
authorized by law to be closed.]
["LIBOR Determination Date" means, with respect to any Interest Period, the
second LIBOR Business Day prior to that Interest Period.]
"Monthly Interest" means, for any payment date, the amount of interest
accrued in respect of the Series [o] notes during the Interest Period for that
payment date.
"Monthly Principal" means, for any payment date relating to the
Accumulation Period or any Early Redemption Period will equal the Series [o]
share of principal collections for the related collection period 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 in any event will not exceed the nominal
liquidation amount of the Series [o] notes.
"nominal liquidation amount of the Series [o] notes" means the outstanding
dollar principal amount of the Series [o] notes (which upon initial 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" in this prospectus
supplement, plus the increases in the nominal liquidation amount of the Series
[o] notes described under that heading.
"nominal liquidation amount deficit of the Series [o] notes" is described
under "Deposit and Application of Funds -- Application of Series [o] Available
Amounts -- Series Available Interest Amount" in this prospectus supplement.
"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 on [o].
"Primary Series [o] overcollateralization amount" means, initially, the
Series [o] overcollateralization percentage of the initial nominal liquidation
amount of the Series [o] notes. Afterwards, the Primary Series [o]
overcollateralization amount will be calculated on each payment date to be an
amount equal to, without duplication:
o the product of (i) the Series [o] overcollateralization percentage times
(ii) the nominal liquidation amount of the Series [o] notes on that
payment date (after giving effect to all allocations, deposits and
payments); minus
o all reductions that have been allocated to the Series [o]
overcollateralization amount, as described under "Deposit and
Application of Funds -- Reduction and Reinstatement of Nominal
Liquidation Amounts," due to the use of Series [o] Available Principal
Amounts to pay interest on the Series [o] notes; minus
o all reductions resulting from uncovered charge-offs that have been
allocated to the Series [o] overcollateralization amount, as described
under the same heading; plus
S-39
o all reinstatements that have been allocated to the Series [o]
overcollateralization amount, as described under the same heading, due
to the application of Series [o] Available Interest Amounts to cover the
Series [o] nominal liquidation amount deficit.
However, if an Early Redemption Period has commenced and the Revolving
Period has not recommenced, the nominal liquidation amount of the Series [o]
notes referred to in clause (ii) of the first bullet point above will be the
nominal liquidation amount of the Series [o] notes at the commencement of that
Early Redemption Period.
"principal funding account" means a Qualified Trust Account maintained 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.
"put feature" is described under "Deposit and Application of Funds -- Sale
of Receivables" in this prospectus supplement.
"Required Participation Percentage" means [103%]. However, if either (a)
the aggregate amount of principal receivables due from either AutoNation, Inc.
and its affiliates or United Auto Group, Inc. and its affiliates on the close
of business on the last day of any collection period is greater than 4% of the
Pool Balance on that day or (b) if the aggregate amount of principal
receivables due from any other dealer at such time is greater than 1.5% of the
Pool Balance on that day, the Required Participation Percentage shall mean, as
of that last day and with respect to that collection period and the
immediately following collection period only, [104%]. Furthermore, the seller
may, upon ten days' prior notice to the indenture trustee and the rating
agencies and without any notice to or consent of any noteholder, 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 such
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.
"Required Primary Series [o] overcollateralization amount" means, for any
payment date, the product of the Series [o] overcollateralization percentage
and the nominal liquidation amount of the Series [o] notes on that payment
date, after giving effect to all allocations and distributions on that date
(but without giving effect to any reductions or reinstatements described under
"Deposit and Application of Funds -- Reduction and Reinstatement of Nominal
Liquidation Amounts," except for reductions due to deposits to the principal
funding account and reductions and increases related to deposits to and
withdrawals from the excess funding account).
"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 as described under "Series Provisions -- Early
Redemption Events" in this prospectus supplement.
"seller" means DCWR.
S-40
"Series [o] Available Interest Amount" is described under "Deposit and
Application of Funds -- Application of Series [o] Available Amounts -- Series
Available Interest Amount" in this prospectus supplement.
"Series [o] Available Principal Amount" is described under "Deposit and
Application of Funds -- Application of Series [o] Available Amounts -- Series
Available Principal Amount" in this prospectus supplement.
"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 collection
period, 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 the
Series [o] issuance date in the case of the first collection period);
and
o the denominator of which is the Pool Balance as of the last day of the
immediately preceding collection period (or the Series [o] Cut-Off Date
in the case of the first collection period).
"Series [o] issuance date" means the date on which the Series [o] notes are
initially issued.
"Series [o] miscellaneous allocation percentage" means, for any collection
period, 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; and
o the denominator of which is the Aggregate Series Nominal Liquidation
Amount as of that last day.
"Series [o] nominal liquidation amount" means the sum of:
o the nominal liquidation amount of the Series [o] notes; plus
o the Series [o] overcollateralization amount.
"Series [o] nominal liquidation amount deficit" is described under "Deposit
and Application of Funds -- Application of Series [o] Available Amounts --
Series Available Interest Amount" in this prospectus supplement.
"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" in this
prospectus supplement.
"Series [o] overcollateralization amount deficit" is described under
"Deposit and Application of Funds -- Application of Series [o] Available
Amounts -- Series Available Interest Amount" in this prospectus supplement.
S-41
"Series [o] overcollateralization percentage" means [9.89]%, except that,
if the long-term unsecured debt of DaimlerChrysler AG is reduced below BBB--
by Standard & Poor's, the Series [o] overcollateralization percentage will be
[11.11]% until that rating is increased to at least BBB--.
"Series [o] principal allocation percentage" means, for any collection
period, 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 the
Series [o] issuance date in the case of the first collection period),
except that if the Accumulation Period or an Early Redemption Period has
commenced, the numerator will be the Series [o] nominal liquidation
amount as of the last day of the collection period ending prior to the
commencement of the Accumulation Period or Early Redemption Period, as
applicable; and
o the denominator of which is the greater of (i) the Pool Balance as of
the last day of the immediately preceding collection period (or the
Series [o] Cut-Off Date in the case of the first collection period) and
(ii) the sum of the numerators used to calculate the percentages for
allocating principal collections to all outstanding series of notes
(including the Series [o] notes) for that collection period.
This Series [o] principal allocation percentage will adjust if the Series
[o] notes or any other series of notes has entered into an early redemption
period since the prior collection period.
"Series [o] rate" means the per annum rate equal to [the applicable LIBOR
plus [o]%].
"Shared Excess Available Interest Amount" means, for any payment date, the
sum of, for each series of notes, the series available interest amount for
that series that are not required to be applied in respect of that series
pursuant to the indenture supplement for that series.
"Shared Excess Available Principal Amount" means, for any payment date, the
sum of, for each series of notes, the series available principal amount for
that series that are not required to be applied in respect of that series
pursuant to the indenture supplement for that series.
"Telerate Page 3750" means the display page so designated as reported by
Bloomberg Financial Markets Commodities News 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 for U.S. dollar deposits.
"underwriter" means any of [o].
"underwriting agreement" means the underwriting agreement among the
underwriters, DCWR and DCS dated [o].
S-42
Annex I
- ------------------------------------------------------------------------------
Other Series of Notes
- ------------------------------------------------------------------------------
This Annex I sets forth the principal characteristics of the [five] series
of Floating Rate Auto Dealer Loan Asset Backed Notes previously issued by the
issuer. For more specific information with respect to any of these series of
notes, prospective investors should contact DCWR at (248) 427-2565. DCWR will
provide, without charge, to prospective investors, a copy of the disclosure
document with respect to the series.
1. Series 2002-A notes
o Series issuance date................ June 11, 2002
o Stated Principal Amount of
Series 2002-A notes................. $2,000,000,000
o Initial nominal liquidation
amount of Series 2002-A notes....... $2,000,000,000
o Initial Series 2002-A
overcollateralization amount........ $197,802,198
o Initial Series 2002-A nominal
liquidation amount.................. $2,197,802,198
o Scheduled interest payment
dates............................... 15th day of each month (or if that 15th day is not a business
day, the next following business day)
o Required participation
percentage.......................... 103%, subject to increase or decrease
o Series 2002-A
overcollateralization
percentage.......................... 9.89% (or, so long as the long-term unsecured debt of
DaimlerChrysler AG is below BBB-- by Standard &
Poor's, 11.11%)
o Current outstanding dollar
principal amount.................... $2,000,000,000
o Revolving period.................... May 31, 2002 to the commencement of the earlier of the
related accumulation period or an early redemption period
o Expected principal payment date..... May 2005 payment date
o Legal final......................... May 2007 payment date
2. Series 2002-B notes
o Series issuance date................ November 26, 2002
o Stated Principal Amount of
Series 2002-B notes................. $1,000,000,000
o Initial nominal liquidation
amount of Series 2002-B notes.,,,,,, $1,000,000,000
A-1
o Initial Series 2002-B
overcollateralization amount........ $98,901,099
o Initial Series 2002-B nominal
liquidation amount.................. $1,098,901,099
o Scheduled interest payment
dates............................... 15th day of each month (or if that 15th day is not a business
day, the next following business day)
o Required participation
percentage.......................... 103%, subject to increase or decrease
o Series 2002-B
overcollateralization
percentage.......................... 9.89% (or, so long as the long-term unsecured debt of
DaimlerChrysler AG is rated below BBB- by Standard &
Poor's, 11.11%)
o Current outstanding dollar
principal amount.................... $1,000,000,000
o Revolving period.................... October 31, 2002 to the commencement of the earlier of
the related accumulation period or an early redemption period
o Expected principal payment date..... November 2005 payment date
o Legal final......................... November 2007 payment date
3. Series 2003-A notes
o Series issuance date...,,,,,,....... March 3, 2003
o Stated Principal Amount of
Series 2003-A notes................. $1,500,000,000
o Initial nominal liquidation
amount of Series 2003-A notes....... $1,500,000,000
o Initial Series 2003-A
overcollateralization amount........ $148,351,648
o Initial Series 2003-A nominal
liquidation amount.................. $1,648,351,648
o Scheduled interest payment
dates............................... 15th day of each month (or if that 15th day is not a business
day, the next following business day)
o Required participation
percentage.......................... 103%, subject to increase or decrease
o Series 2003-A
overcollateralization
percentage.......................... 9.89% (or, so long as the long-term unsecured debt of
DaimlerChrysler AG is rated below BBB- by Standard &
Poor's, 11.11%)
o Current outstanding dollar
principal amount.................... $1,500,000,000
o Revolving period.................... February 28, 2003 to the commencement of the earlier of
the related accumulation period or an early redemption period
A-2
o Expected principal payment
date................................ February 2006 payment date
o Legal final......................... February 2008 payment date
4. Series 2004-A notes
o Series issuance date................ January 16, 2004
o Stated Principal Amount of
Series 2004-A notes................. $1,000,000,000
o Initial nominal liquidation
amount of Series 2004-A notes....... $1,000,000,000
o Initial Series 2004-A
overcollateralization amount........ $98,901,099
o Initial Series 2004-A nominal
liquidation amount.................. $1,098,901,099
o Scheduled interest payment
dates............................... 15th day of each month (or if that 15th day is not a business
day, the next following business day)
o Required participation
percentage.......................... 103%, subject to increase or decrease
o Series 2004-A
overcollateralization
percentage.......................... 9.89% (or, so long as the long-term unsecured debt of
DaimlerChrysler AG is rated below BBB- by Standard &
Poor's, 11.11%)
o Current outstanding dollar
principal amount.................... $1,000,000,000
o Revolving period.................... December 31, 2003 to the commencement of the earlier of the
related accumulation period or an early redemption period
o Expected principal payment
date................................ January 2007 payment date
o Legal final......................... January 2009 payment date
5. Series 2004-B notes
o Series issuance date................ August 31, 2004
o Stated Principal Amount of
Series 2004-B notes................. $1,000,000,000
o Initial nominal liquidation
amount of Series 2004-B notes....... $1,000,000,000
o Initial Series 2004-B
overcollateralization amount........ $98,901,099
o Initial Series 2004-B nominal
liquidation amount.................. $1,098,901,099
o Scheduled interest payment
dates............................... 15th day of each month (or if that 15th day is not a business
day, the next following business day)
A-3
o Required participation
percentage.......................... 103%, subject to increase or decrease
o Series 2004-B
overcollateralization
percentage.......................... 9.89% (or, so long as the long-term unsecured debt of
DaimlerChrysler AG is rated below BBB- by Standard &
Poor's, 11.11%)
o Current outstanding dollar
principal amount.................... $1,000,000,000
o Revolving period.................... July 31, 2004 to the commencement of the earlier of
the related accumulation period or an early redemption period
o Expected principal payment
date................................ August 2007 payment date
o Legal final......................... August 2009 payment date
A-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
-- receivables arising from a portfolio of automobile dealer
revolving floorplan financing agreements;
-- collections on those receivables; and
-- other property, if any, described in this prospectus and in the
prospectus supplement.
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 or cash flow
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 THE NOTES.
PLEASE READ THE RISK FACTORS BEGINNING ON PAGE [9] OF THIS PROSPECTUS. The
notes will be obligations of the issuer only and neither the notes nor the
assets of the issuer will represent interest 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 SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS OR THE ATTACHED PROSPECTUS SUPPLEMENT.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- ------------------------------------------------------------------------------
The date of this prospectus is [o].
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 175 West Jackson Boulevard, Suite 900,
Chicago, Illinois 60604.
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: (i) the issuer's Annual Report on Form 10-K for the years ended
December 31, 2002 and December 31, 2003 and (ii) all reports and other
documents filed by, or on behalf of, the issuer, in accordance with Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended,
subsequent to the date of this prospectus and prior to the termination of the
offering of the notes.
2
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, 27777 Inkster Road, Farmington Hills,
Michigan 48334 (telephone: 248-427-2565)
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.
3
- ------------------------------------------------------------------------------
TABLE OF CONTENTS
- ------------------------------------------------------------------------------
- ------------------------------------
Section Page
------- ----
- ------------------------------------
Summary 6
- ------------------------------------
Risk Factors 9
- ------------------------------------
o Your ability to resell
notes is limited 9
- ------------------------------------
o Risk factors relating
to the receivables 9
- ------------------------------------
o Credit enhancement for
a series of notes is
limited. If the credit
enhancement is exhausted,
you may incur a loss 11
- ------------------------------------
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 11
- ------------------------------------
o Book-entry registration
may limit your ability to
resell or pledge your notes 11
- ------------------------------------
o Only some of the assets
of the issuer are
available for payments on
any series or class of
notes 11
- ------------------------------------
o Allocations of
charged-off receivables
and reallocations of
principal collections
could reduce payments to
you 12
- ------------------------------------
o You may receive
principal payments earlier
or later than the expected
principal payment date 12
- ------------------------------------
o Class B notes and Class C
notes bear losses before
Class A notes bear any
losses 12
- ------------------------------------
o Payment of Class B
notes and Class C notes
may be delayed due to the
subordination provisions 13
- ------------------------------------
o You may not be able to
reinvest any early
redemption proceeds in a
comparable security 13
- ------------------------------------
o Issuance of additional
notes may affect the
timing and amount of
payments to you 13
- ------------------------------------
o You may have limited
control of actions under
the indenture and the sale
and servicing agreement 14
- ------------------------------------
o Your remedies upon
default may be limited 14
- ------------------------------------
DaimlerChrysler Wholesale
Receivables LLC 14
- ------------------------------------
The Issuer 16
- ------------------------------------
o General
- ------------------------------------
o Assets of the Issuer
- ------------------------------------
o Amendments to the Trust
Agreement
- ------------------------------------
Use of Proceeds 17
- ------------------------------------
The Dealer Floorplan
Financing Business 17
- ------------------------------------
o General 17
- ------------------------------------
o Creation of Receivables 18
- ------------------------------------
o Credit Underwriting
Process 18
- ------------------------------------
o Billing, Collection
Procedures and Payment
Terms 19
- ------------------------------------
o Revenue Experience 19
- ------------------------------------
o Relationship with
DaimlerChrysler 20
- ------------------------------------
o Dealer Monitoring 20
- ------------------------------------
- ------------------------------------
Section Page
------- ----
- ------------------------------------
o "Dealer Trouble Status" 21
and DCS's Write-Off Policy
- ------------------------------------
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 25
- ------------------------------------
o Subordination of
Principal 30
- ------------------------------------
o Other Enhancements 31
- ------------------------------------
o Limitations on
Overcollateralization and
Other Enhancements 32
- ------------------------------------
o Allocation of
Collections 32
- ------------------------------------
o Trust Accounts of the
Issuer 33
- ------------------------------------
o Sale of Receivables 34
- ------------------------------------
o Limited Recourse to the
Issuer; Security for the
Notes 34
- ------------------------------------
o Redemption and Early
Redemption of Notes 34
- ------------------------------------
o Issuances of New
Series, Classes and
Subclasses of Notes 35
- ------------------------------------
o Payments on Notes;
Paying Agent 36
- ------------------------------------
o Book-Entry Notes 37
- ------------------------------------
The Indenture 40
- ------------------------------------
o Indenture Trustee 40
- ------------------------------------
o Issuer Covenants 40
- ------------------------------------
o Events of Default 41
- ------------------------------------
o Events of Default
Remedies 42
- ------------------------------------
o Early Redemption Events 43
- ------------------------------------
o Meetings 44
- ------------------------------------
o Voting 44
- ------------------------------------
o Amendments to the
Indenture and Indenture
Supplements 44
- ------------------------------------
o Tax Opinions for
Amendments 46
- ------------------------------------
o Addresses for Notices 47
- ------------------------------------
o Issuer's Annual
Compliance Statement 47
- ------------------------------------
o Indenture Trustee's
Annual Report 47
- ------------------------------------
o List of Noteholders 47
- ------------------------------------
o Reports 47
- ------------------------------------
4
- ------------------------------------
Section Page
------- ----
- ------------------------------------
Description of the Sale
and Servicing Agreement 48
- ------------------------------------
o Conveyance of
Receivables and Collateral
Security 48
- ------------------------------------
o Representations and
Warranties 49
- ------------------------------------
o Eligible Accounts and
Eligible Receivables 51
- ------------------------------------
o Ineligible Receivables
and the Overconcentration
Amount 53
- ------------------------------------
o Addition of Accounts 53
- ------------------------------------
o Removal of Accounts 55
- ------------------------------------
o Seller's Interest 59
- ------------------------------------
o Miscellaneous Payments 60
- ------------------------------------
o Excess Funding Account
Deposits and Withdrawals 60
- ------------------------------------
o Allocation of
Collections; Deposits in
Collection Account 61
- ------------------------------------
o Defaulted Receivables
and Recoveries 61
- ------------------------------------
o Termination 62
- ------------------------------------
o Indemnification 62
- ------------------------------------
o Collection and Other
Servicing Procedures 63
- ------------------------------------
o Servicer Covenants 63
- ------------------------------------
o Servicing Compensation
and Payment of Expenses 64
- ------------------------------------
o Matters Regarding the
Servicer 65
- ------------------------------------
o Service Default 65
- ------------------------------------
o Reports 66
- ------------------------------------
o Evidence as to
Compliance 66
- ------------------------------------
o Amendments 67
- ------------------------------------
- ------------------------------------
Section Page
------- ----
- ------------------------------------
Description of the
Receivables Purchase
Agreement 68
- ------------------------------------
o Sale or Transfer of
Receivables 68
- ------------------------------------
o Representations and
Warranties 68
- ------------------------------------
o Covenants 69
- ------------------------------------
o Amendments
- ------------------------------------
o Termination 70
- ------------------------------------
Legal Aspects of the
Receivables 70
- ------------------------------------
o Transfer of Receivables 70
- ------------------------------------
o Matters Relating to
Bankruptcy 71
- ------------------------------------
Tax Matters 72
- ------------------------------------
o Federal Income Tax
Consequences 72
- ------------------------------------
o State and Local Tax
Consequences 78
- ------------------------------------
ERISA Considerations 79
- ------------------------------------
o General 79
- ------------------------------------
Experts 80
- ------------------------------------
Plan of Distribution 81
- ------------------------------------
Legal Matters 83
- ------------------------------------
Glossary of Principal
Terms for Prospectus 84
- ------------------------------------
Annex A: Global Clearance,
Settlement and Tax
Documentation Procedures A-1
- ------------------------------------
5
- ------------------------------------------------------------------------------
Summary
- ------------------------------------------------------------------------------
The following summary describes 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 (the "issuer")
------------- ------------------------------------
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 o Chase Manhattan Bank USA,
Trustee National Association
------------- ------------------------------------
-------------- --------------------------------------
Title of Securities
Auto Dealer Loan Asset Backed Notes (the "notes").
The Issuer
The issuer is governed by a trust agreement between DCWR and the owner
trustee. The primary assets of the issuer include:
o receivables generated under the accounts from time to time as well as
receivables generated under any accounts added to the issuer from time
to time, in each case exclusive of any accounts that become removed
accounts;
o all funds collected or to be collected in respect of the receivables;
o all funds on deposit in the trust accounts of the issuer;
o any other credit or cash flow enhancement provided with respect to any
particular series or class; and
o a security interest in motor vehicles and, in many cases, in non-vehicle
collateral, such as parts inventory, equipment, fixtures, service
accounts, chattel paper, instruments, franchise rights 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 issuer. See "The Accounts," "Description of the Sale and Servicing
Agreement -- Eligible Accounts and Eligible Receivables," "-- Addition of
Accounts" and " -- Removal of Accounts."
The Receivables
The receivables consist of advances made by DCS to domestic motor vehicle
dealers to purchase
6
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. In the unlikely event that the issuer issues notes in
definitive form, the record date will be a date at least 15 days prior to the
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 collections on the receivables; and
o any available credit or cash flow 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 collections on the receivables
allocable to that series;
o all or a portion of the interest collections on the receivables
allocable to that series remaining after the issuer has made interest
payments on that series; and
o any available credit or cash flow enhancement for that series.
Only the amounts allocated to a series are available to make payments on that
series.
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 collections allocated to
that series to the repayment of the outstanding principal of notes in
7
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;
Other 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 "Other
Enhancements."
Tax Matters
In the opinion of Sidley Austin Brown & Wood LLP, special U.S. federal
income tax counsel for the seller 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 note 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.
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.
8
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Risk Factors
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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 receivables.
The primary assets of the issuer are the receivables. Consequently, the
factors that affect the collectibility of the receivables 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 issuer. 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 issuer'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
issuer described in this prospectus as a sale of the receivables to the seller
and then to the issuer. 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 issuer should be recharacterized as a pledge of the receivables to
secure a borrowing of the debtor. In that case, the issuer 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. Notwithstanding the treatment by DCS
and the seller of their transfers of receivables as a legal sale, accounting
principles that are expected to apply to DCS and/or the seller at some point
in the future may require these transfers of receivables to be treated as
financings for accounting purposes. See "Legal Aspects of the Receivables --
Matters Relating to Bankruptcy."
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.
9
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
accumulation 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 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 issuer to make payments on the notes depends in
part on the ability of DaimlerChrysler and DCS to generate
receivables and the ability of DCS to perform its obligations under
the sale and servicing agreement.
Neither DCS nor DaimlerChrysler is obligated to make any payments in
respect of the receivables or any notes. However, the issuer depends
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 will continue to
generate receivables at the same rate as receivables were generated in prior
years. If the amount of principal receivables held by the issuer falls below
the amount required under the sale and servicing agreement in order to
collateralize the notes, excess principal collections that would have been
released to the seller will instead be accumulated in a trust account called
the excess funding account. Funds in the excess funding account will be
invested in short-term, highly liquid permitted investments that will earn
interest at lower rates than the receivables, resulting in a reduction in the
interest collections available to the issuer. While the credit enhancement for
your series may be used to offset these reductions in interest collections, if
the rates at which new receivables are generated do not subsequently increase,
the credit enhancement for your series may be
10
exhausted. In this case, an early redemption event or an event of default
could occur. See "Description of the Sale and Servicing Agreement -- Excess
Funding Account Deposits and Withdrawals."
DCS services the receivables under the sale and servicing agreement. 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 also makes representations and
warranties with respect to the characteristics of the receivables. In some
cases, DCS would be required to repurchase those receivables affected by a
breach of these representations and warranties. If DCS fails to make a
required repurchase, the issuer may have less funds available for payments on
the notes. 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."
Credit enhancement for a series of notes is limited.
If the credit enhancement is exhausted, you may incur a loss.
We may 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 credit enhancement, if any, in any form will be
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 "The Notes -- Subordination of Principal,"
"-- Other Enhancements" and "-- Limitations on Overcollateralization and Other
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, the
overcollateralization amount and the availability of any other
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
11
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. Such
book-entry registration may limit your ability to resell or pledge your
securities. See "The Notes" and "-- Book-Entry Notes."
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 on the receivables 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 or cash flow enhancement
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.
A further restriction applies if the holders of a series or class of notes
direct the issuer to sell receivables following an insolvency of the seller,
DCS or DaimlerChrysler, an event of default and acceleration or on the
applicable legal maturity date, as described in "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
and reallocations of principal collections could reduce payments to you.
The servicer will charge off the receivables arising in the accounts in the
issuer's portfolio if the receivables become uncollectible. Each series of
notes will be allocated a portion of these charged-off receivables. If the
amount of charged-off receivables allocated to your series of notes exceeds
the amount of funds available for reimbursement of those charge-offs, the
nominal liquidation amount of your notes may be reduced. The nominal
liquidation amount of your notes may also be reduced as the result of
reallocations of principal collections to pay interest on the notes of your
series. If any of these reductions to the nominal liquidation amount of your
notes are not reimbursed from excess interest collections, you will not
receive full repayment of your notes. See "The Notes -- Stated Principal
Amount, Outstanding Dollar Principal Amount and Nominal Liquidation Amount of
Notes."
12
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
by their 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 "The Indenture -- Early Redemption 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/or 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 will be 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 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 of Notes"
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 after a default by the servicer, the
net proceeds of the sale allocable to principal 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."
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.
13
Issuance of additional notes may affect
the timing and amount of payments to you.
The issuer expects to issue additional series of 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 sale and servicing agreement."
You may have limited control of actions
under the indenture and the sale 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
to the indenture. 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 the related series or that 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 of that series until the earlier of the date those notes are no longer
necessary to provide subordination protection for those senior classes of
notes or until the legal maturity date of those notes.
Any funds in the applicable principal funding account for a series 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 insolvency of the seller, DCS or DaimlerChrysler, an event of
default and acceleration, and on the applicable legal final maturity date,
holders of notes will have the ability to cause a sale of receivables, or a
sale of interests in receivables, only under the limited circumstances as
described in "The Indenture -- Events of Default Remedies" and "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.
14
You can find a "Glossary of Principal Terms for Prospectus" beginning on
page [86] in this prospectus.
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DaimlerChrysler Wholesale Receivables LLC
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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. Prior to
December 16, 2004, DCWR purchased receivables from DCS and sold them pursuant
to a pooling and servicing agreement to a trust governed by that pooling and
servicing agreement. We refer to that trust as the "CARCO receivables trust."
DCWR was the successor by transfer to two other affiliates of DCS that used to
purchase receivables from DCS and sell them to the CARCO receivables trust.
Prior to December 16, 2004, the issuer owned an investor certificate issued
by the CARCO receivables trust. That investor certificate represented a
fractional undivided interest in the receivables owned by the CARCO
receivables trust and the collections thereon. The issuer used the
distributions on that investor certificate to make payment on its notes. Each
series of notes was only entitled to its proportionate share of available
distributions on the investor certificate. DCWR owned the remaining interest
in the CARCO receivables trust. On December 16, 2004, the issuer transferred
the investor certificate to the CARCO receivables trust in exchange for all of
the receivables owned by the CARCO receivables trust as of November 30, 2004
(the "Initial Cut-Off Date"), and the CARCO receivables trust was dissolved.
Since December 16, 2004, the issuer has been using the amounts collected in
respect of the receivables to make payments on the notes as described in this
prospectus and the related prospectus supplements. DCWR owns the Seller's
Interest in the issuer and is selling receivables to the issuer pursuant to
the sale and servicing agreement. DCS is servicing the receivables pursuant to
the sale and servicing agreement.
Obligations transferred to and assumed by DCWR include each of its
predecessors' obligations 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 arising in the Accounts. 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 consent of the two independent directors of one of
its members. 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 receivables
- -- 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 issuer, the issuer's interest in the receivables would
be prior to the interest of the claimant with respect to the liabilities.
However, the existence of a claim against the seller could permit the
claimant to subject the seller to an involuntary proceeding under the
Bankruptcy Code or other Insolvency Law. See "Risk Factors -- Risk factors
15
relating to the receivables -- 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 receivables -- The ability of the issuer
to make payments on the notes depends in part on the ability of
DaimlerChrysler and DCS to generate receivables and the ability of DCS to
perform its obligations under the sale and servicing agreement" and "Legal
Aspects of the Receivables -- Matters Relating to Bankruptcy."
DCWR's executive offices are located at 27777 Inkster Road, Farmington
Hills, Michigan 48334, and its telephone number is (248) 427-2625.
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The Issuer
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General
DaimlerChrysler Master Owner Trust will be the issuer of the notes. It is a
Delaware statutory trust that exists for the exclusive purposes of:
o acquiring and holding the receivables and other assets, including the
proceeds of these assets;
o issuing series of notes;
o making payments on the notes; and
o engaging in other activities that are necessary or incidental to
accomplish these limited purposes.
The issuer is operated pursuant to a trust agreement between DCWR and Chase
Manhattan Bank USA, National Association, as owner trustee. The issuer does
not have any officers or directors. Its administrator is DCS. As administrator
of the issuer under an administration agreement, DCS will generally direct the
administrative actions to be taken by the issuer.
Assets of the Issuer
The assets of the issuer consist primarily of:
o the receivables existing in the Accounts as of Initial Cut-Off Date;
o all receivables generated in the Accounts from time to time after the
Initial Cut-Off Date as well as receivables generated in any Additional
Accounts added to the issuer from time to time, but excluding
receivables in any Accounts that are removed from the issuer from time
to time after the Initial Cut-Off Date;
o the issuer's rights and remedies under the sale and servicing agreement;
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 the trust accounts of the issuer;
16
o any other credit or cash flow enhancement provided with respect to any
particular series or class of notes; and
o a security interest in the vehicles and any other collateral security.
The issuer does not expect to have any other significant assets. Under the
sale 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 the receivables of the Additional Accounts to the
issuer; and
o to designate from time to time Accounts to be removed and to require the
indenture trustee to convey receivables in the Removed Accounts to the
seller.
See "Description of the Sale and Servicing Agreement -- Addition of Accounts."
See "Description of the Receivables Purchase Agreement" for a summary of terms
of the Receivables Purchase Agreement.
The Seller's Interest in the assets of the issuer is held by DCWR and is
evidenced by the Seller's Certificate issued under the trust agreement. DCWR
may in the future, without any notice to or consent of any noteholder,
transfer portions of the Seller's Interest to other persons or entities
through the issuance of Supplemental Certificates to these persons or
entities. DCWR also may, without any notice to or consent of any noteholder,
transfer and assign the entire Seller's Interest and all of its rights and
obligations in respect of the issuer to a Designated Affiliate of DCS. These
transfers of the Seller's Interest by DCWR are subject to the satisfaction of
the conditions described in "Description of the Sale and Servicing Agreement
- -- Seller's Interest."
Amendments to the Trust Agreement
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, and the indenture
trustee receives written confirmation from each rating agency that the
amendment will not result in the reduction or withdrawal of the ratings of any
outstanding notes rated by that rating agency. Accordingly, neither the
indenture trustee nor any holder of any note will be entitled to vote on any
such amendment.
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 receivables or distributions to the noteholders requires the
consent of all noteholders affected by the amendment.
In addition, no amendment may be made to the trust agreement that would
adversely affect in any material respect the interests of any holder of the
Seller's Certificate or of any Supplemental Certificates, without the consent
of the holders of a majority of the interests evidenced by these certificates.
However, an amendment to the trust agreement that increases or reduces the
amount of, or accelerates or delays the timing of, distributions to the
holders of these certificates requires the consent of all holders of these
certificates affected by the amendment.
17
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Use of Proceeds
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Unless we otherwise provide in the related prospectus supplement:
o we will pay the net proceeds from the sale of the notes of a series
offered by this prospectus 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," 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
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General
The receivables transferred to the issuer under the sale and servicing
agreement were or will be selected from extensions of credit and advances,
known as "wholesale" or "floorplan" financing, made by DCS to domestic motor
vehicle dealers. These funds are used by dealers to purchase new and used
vehicles manufactured or distributed by DaimlerChrysler and other
manufacturers pending sale to retail buyers. As described in this prospectus,
receivables transferred to the issuer are secured by the vehicles and, in many
cases, parts inventory, equipment, fixtures, service accounts, chattel paper,
instruments and franchise rights 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 may also operate
non-DaimlerChrysler franchises and to non-DaimlerChrysler dealers. DCS
services the accounts of domestic dealers financed by it (the "U.S. Wholesale
Portfolio") through its Farmington Hills Support office located in Farmington
Hills, Michigan and through a network of Chrysler Financial business centers
and Mercedes-Benz regional 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.
18
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.
The receivables transferred to the issuer will not include any "Fleet
Receivables," which are receivables originated in connection with multiple new
vehicle orders of at least five vehicles by specified dealers. Accordingly,
the terms "receivables" and "principal receivables" as used in this prospectus
will not refer to Fleet Receivables.
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 business center or regional office of DCS assumes control of vehicle
releases to the dealer. DCS makes special arrangements to finance inter-dealer
sales of vehicles.
The floorplan financing arrangements grant DCS a security interest in the
related vehicles. Generally, the security interest granted in a vehicle
terminates as a matter of law upon the retail sale of the vehicle by the
dealer. In connection with their vehicle credit lines, some dealers also grant
to DCS a security interest in non-vehicle collateral, such as parts inventory,
equipment, fixtures, service accounts, chattel paper, instruments, franchise
rights and, in some cases, realty and/or a personal guarantee. Pursuant to the
Receivables Purchase Agreement, DCS assigns its security interests in the
vehicles and in any non-vehicle collateral to DCWR and represents that DCWR
will have a first-priority perfected ownership interest in such property.
These security interests are then assigned by DCWR to the issuer pursuant to
the sale and servicing agreement. In its other lending activities, DCS may
make capital loans, equipment loans or other advances to a dealer, or its
parent holding company or other affiliates. These other loans and advances may
also be secured by a security interest in the dealer's vehicles and
non-vehicle collateral. In the Receivables Purchase Agreement, DCS has agreed
not to assert its security interest in any vehicle or non-vehicle collateral
until the issuer (as transferee of DCWR) has been paid in full on the
receivables secured by the issuer's security interest in the vehicle and
non-vehicle collateral. Although the issuer will have a first-priority
perfected security interest in such collateral, a default under any capital
loans, equipment loans or other advances made by or to a dealer, or its parent
holding company or other affiliates, may nonetheless result in a default in
respect of the dealer's receivables that have been transferred to the issuer.
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.
19
A newly franchised dealer requesting the establishment of a new vehicle
credit line must submit an application to the applicable DCS business center
or regional office. After receipt of the application, the business center or
regional office investigates the prospective dealer. The business center or
regional 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 business center
or regional office reviews the dealer's credit reports, including the
experience of the dealer's current financing source, and bank references.
Further, the business center or regional office investigates the dealer's
current state of operations and management, including evaluating a factory
reference, and marketing capabilities. For credit lines within a business
center's or regional office's approval limits, the business center or regional
office either approves or disapproves the dealer's request. For credit lines
in excess of a business center's or regional office's approval limits, the
business center or regional office transmits the requisite documentation to
the Farmington Hills 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 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 to the extent required by DCS.
The size of a credit line initially offered to a dealer is based upon the
dealer's sales record, or, in the case of a prospective dealer, expected
annual sales, and the dealer's effective net worth. The amount of a dealer's
credit line for new vehicles is adjusted quarterly by DCS. The adjustment is
based upon the dealer's average new vehicle sales during the prior 180 days
and is, typically, in an amount sufficient to finance a 75-day supply of
vehicles. The amount of a dealer's credit line for used vehicles is also
adjusted periodically. This adjustment is based upon the dealer's average used
vehicle sales for the prior 180 days and is, typically, in an amount
sufficient to finance 50% of a 30 to 45-day supply of vehicles. DCS determines
the size of a dealer's auction vehicle credit line on a case by case basis and
makes adjustments periodically based on DCS's practices and procedures.
The aggregate amount advanced for each Used Vehicle is equal to the
National Automotive Dealers Association's Official Wholesale Used Car Trade-in
Guide wholesale book value for the vehicle. However, the aggregate amount of
the credit line for the used vehicles may not exceed 50% of the value of the
dealer's total inventory of used vehicles. The amount advanced for New
Vehicles and all Auction Vehicles is equal to the amount invoiced with respect
to the vehicles and the auction purchase price, including auction fees, of the
Auction Vehicles, respectively.
Billing, Collection Procedures and Payment Terms
DCS prepares and distributes each month to each dealer a statement setting
forth billing and related account information. DCS generates and mails each
dealer's bills on the sixth and seventh calendar day of the month. Interest
and other nonprincipal charges must be paid by the end of the month in which
they are billed. DCS bills interest and handling fees in arrears, but bills
insurance costs in advance. Upon the sale of a vehicle for which it has
provided floorplan financing, DCS is entitled to receive payment in full of
the related advance. Dealers remit payments by check directly to DCS's local
business centers and regional offices or electronically via an electronic
funds transfer system maintained by the Farmington Hills Support office.
20
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 dealership termination, at the vehicles'
wholesale prices less a specified margin. DaimlerChrysler only repurchases
current model year vehicles that are new, undamaged and unused.
DaimlerChrysler also agrees to repurchase from dealers, at the time of
franchise termination, parts inventory at specified percentages of the invoice
price. If DCS takes possession of a dealer's parts inventory, DaimlerChrysler
is only obligated to pay DCS 55% of the invoice price of the inventory. All of
the assistance, however, is provided by DaimlerChrysler for the benefit of its
dealers, and does not relieve the dealers of any of their obligations to DCS.
Much of the assistance is provided at the option of DaimlerChrysler, which
may terminate any of the optional programs in whole or in part at any time. If
DaimlerChrysler is unable to or elects not to provide the assistance, the loss
experience of DCS in respect of the U.S. Wholesale Portfolio may be adversely
affected. In addition, because a substantial number of the vehicles sold by
the dealers are manufactured or distributed by DaimlerChrysler, if
DaimlerChrysler were temporarily or permanently no longer in that business,
the rate of sales of DaimlerChrysler-manufactured vehicles would decrease.
This would adversely affect payment rates and the loss experience of the U.S.
Wholesale Portfolio. See "Risk Factors -- Risk factors relating to the
receivables -- The ability of the issuer to make payments on the notes depends
in part on the ability of DaimlerChrysler and DCS to generate receivables and
the ability of DCS to perform its obligations under the sale and servicing
agreement."
Under the terms of agreements entered into by DCS with manufacturers and
distributors other than DaimlerChrysler, DCS provides private-label automotive
financing to some dealers that are similar to those offered to
DaimlerChrysler-franchised dealers. In connection with these and other
agreements with non-DaimlerChrysler manufacturers or distributors, some of the
manufacturers or distributors agree to repurchase unsold vehicles in the
dealer's inventory upon termination of the dealer's franchise, whether
voluntary or otherwise. The agreements vary, but typically provide for
repurchase of unused, current models that are new, undamaged and untitled.
This assistance is provided for the benefit of the dealer in the event of a
voluntary termination and for the benefit of DCS in the event of an
involuntary termination. Many of these types of assistance are provided at the
option of non-DaimlerChrysler manufacturers and distributors and may be
terminated by the manufacturers and distributors in whole or in part at any
time. If these manufacturers and
21
distributors are unable or elect not to provide assistance to the applicable
dealers, the loss experience of DCS in respect of its U.S. Wholesale Portfolio
may be adversely affected. In addition, if a manufacturer or distributor that
supplies vehicles to these dealers exited the vehicle business temporarily or
permanently, the sales rate of its vehicles would decrease and the payment
rates and loss experience of the U.S. Wholesale Portfolio may be adversely
affected.
Dealer Monitoring
DCS's local business centers and regional 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
Finance Hold. See "-- Creation of Receivables."
Personnel from the business centers and regional offices conduct audits of
dealer vehicle inventories on a regular basis. The timing of each visit is
varied and no advance notice is given to the audited dealer. Auditors review
dealers' financial records and conduct a physical inventory of the vehicles on
the dealers' premises. Through the audit process, DCS reconciles each dealer's
physical inventory with its records of financed vehicles. Audits are intended
to identify instances where a dealer sold vehicles but did not immediately
repay the related advances. The audit process also aids DCS in determining in
those instances whether a dealer received sale proceeds but diverted the
proceeds to uses other than the repayment of the obligations to DCS.
"Dealer Trouble Status" and DCS's Write-Off Policy
Under some circumstances, DCS will classify a dealer under "Dealer Trouble
status." The circumstances include:
o failure to remit any principal or interest payment when due;
o any notifications of liens, levies or attachments; and
o a general deterioration of its financial condition.
Once a dealer is assigned to Dealer Trouble status, DCS determines any more
extension of credit on a case-by-case basis.
DCS attempts to work with dealers to resolve instances of Dealer Trouble
status. If, however, a dealer remains on that status, it can result in one of
the following:
o an orderly liquidation in which the dealer voluntarily liquidates its
inventory through normal sales to retail customers;
o a forced liquidation in which DCS repossesses the dealer's inventory
and, in the case of DaimlerChrysler-franchised dealers, closes the
franchise;
o a voluntary surrender of the dealer's inventory and, in the case of
DaimlerChrysler-franchised dealers, franchise closure; or
22
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 sale and servicing agreement. See "Description of the
Sale and Servicing Agreement -- 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.
The Accounts may contain special subaccounts relating to financing provided
by DCS other than for dealers' vehicle inventories. For example, these special
subaccounts may relate to capital loans, equipment loans or other advances or
relate to financing for fleet purchases. These special subaccounts are not
included when the Account is designated for the issuer. Accordingly, any right
to receive payments in respect of these special subaccounts are not
transferred to the issuer.
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. Any such reborrowing will be
treated as a new advance to the dealer, resulting in a corresponding increase
in the dealer's outstanding principal receivables balance.
Under the sale 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 issuer some of the receivables of the Additional Accounts,
including receivables created after the conveyance. These accounts must meet
the eligibility criteria set forth above as of the date the accounts are
designated as Additional Accounts. DCS will convey the receivables then
existing, with exceptions, or later created under the Additional Accounts to
the seller. The seller will then convey them to the issuer. See "Description
of the Sale and Servicing Agreement -- 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 issuer, that the
receivables meet the eligibility requirements set forth in the sale and
servicing agreement. See "Description of the Sale and Servicing Agreement --
Conveyance of Receivables and Collateral Security." Under some circumstances
specified in the
23
sale and servicing agreement, the seller has the right to remove Accounts, and
the receivables arising from the Accounts, from the issuer. See "Description
of the Sale and Servicing Agreement -- Removal of Accounts." 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 issuer.
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 25, 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 receivables --
The ability of the issuer to make payments on the notes depends in part on the
ability of DaimlerChrysler and DCS to generate receivables and the ability of
DCS to perform its obligations under the sale and servicing agreement." DCS's
executive offices are located at 27777 Inkster Road, Farmington Hills,
Michigan 48334 and its telephone number is (248) 427-2625.
DCS will sell the receivables to the seller under the Receivables Purchase
Agreement and will service the receivables on behalf of the issuer under the
sale and servicing 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 or other classes of notes. Each class of notes
24
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 additional enhancements in the form
of one or more derivative or other agreements, such as 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 or other 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 on the
receivables that are available to that class of notes after giving effect to
all allocations and reallocations, amounts in any of the issuer's trust
accounts relating to that class of notes, and amounts received under 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,
Class C notes or other class of 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 (the "legal final") of the notes;
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 any other credit or cash flow
enhancement, the terms of that enhancement and the provider of the
enhancement; and
o other terms of the notes.
25
Holders of notes of any outstanding series or class will not have the right
to review or consent to any subsequent issuance of notes. A series or class of
notes may be issued privately, which series or class would therefore not be
offered pursuant to this prospectus and a prospectus supplement.
The issuer may, without the consent of any noteholders, issue additional
notes of an existing class of notes. Any such issuance of additional notes
must satisfy the applicable conditions under "-- Issuances of New Series,
Classes and Subclasses of Notes" below.
Interest
Each note, except zero-coupon discount notes, will bear interest at either
a fixed rate or a floating rate, which will be specified in the related
prospectus supplement. We will specify the interest accrual period in the
related prospectus supplement. Until the expected principal payment date for a
discount note, accreted principal will be capitalized as part of the principal
of the note and reinvested in the receivables. 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 a series of notes are less than
expected, principal collections allocable to (i) the overcollateralization
amount for the applicable series or (ii) the notes of that series may be used
to pay interest on the notes of that series. However, this reallocation of
principal would reduce the overcollateralization amount or the nominal
liquidation amount of the specified classes of notes of that series.
Reductions of these amounts would have the effect of reducing principal
collections and interest collections on the receivables that are allocable to
that series, unless these reductions are reimbursed from excess interest
collections.
If interest on a note is not paid within five business days after it is
due, or such longer period of time specified in the prospectus supplement, 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 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.
26
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 may 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 of Notes
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 -- and increases
described under this heading. The nominal liquidation amount of a note
corresponds to the portion of the principal receivables that would be
allocated to that note if the receivables were liquidated.
In most circumstances, the nominal liquidation amount of a note, together
with its share of any funds on deposit in the applicable principal funding
account and its share of any funds in the excess 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, 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 receivables, 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 of a note 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 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 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
27
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 class or series of notes may be reduced
as follows:
o If there are charge-offs of defaulted principal receivables, the portion
of charge-offs allocated to a series of notes will reduce the series
nominal liquidation amount for that series 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 class of
notes of a series to pay interest on a class or classes of notes of that
series, the nominal liquidation amount of that class from which the
reallocation is made 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 (other
than investment earnings) 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. The nominal liquidation amount of a series or class
of notes will also be reduced by its allocable share of deposits to the
excess funding account in connection with a reduction in principal
receivables.
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.
o If the holders of a class or series of notes direct a sale of
receivables after an insolvency of the seller, DCS or DaimlerChrysler,
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 "The Notes -- Sale of Receivables."
The nominal liquidation amount of a class or series of notes can be
increased as follows:
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o The nominal liquidation amount of a series or class of notes will be
increased by its allocable share of withdrawals from the excess funding
account in connection with the purchase of an interest in additional
principal receivables.
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 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 because of
charge-offs or reallocations to pay interest 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 Aggregate Series Nominal
Liquidation Amount.
The cumulative net amount of reductions of the nominal liquidation amount
of any series or class of notes due to reallocation of principal collections
to pay interest on notes and charge-offs of principal receivables cannot
exceed the initial outstanding dollar principal amount of that series or class
of notes.
Subordination of Principal
Credit enhancement for your series or class of notes may be provided
through the subordination of principal. If a series of notes has only one
class, this form of credit enhancement will be the overcollateralization
amount for that series unless otherwise specified in the prospectus
supplement. 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 multi-class series of notes may also have an
overcollateralization amount.
Overcollateralization Amount
The overcollateralization amount for a series of notes constitutes an
additional amount of principal receivables that is allocated to that series in
excess of the nominal liquidation amount of the related notes. Accordingly, if
a series of notes has an overcollateralization amount, its series nominal
liquidation amount will equal the sum of the nominal liquidation amount of its
notes and the overcollateralization amount, unless we
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otherwise specify in a prospectus supplement. We will describe the calculation
of the overcollateralization amount, if any, for a series of notes in the
prospectus supplement.
Subordination Between Classes
The following paragraphs under this subheading illustrate how the credit
enhancement provided by subordinate notes 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 are allocated first to the subordinated classes of a series. See
"-- Stated Principal Amount, Outstanding Dollar Principal Amount and Nominal
Liquidation Amount of Notes" and "-- Allocation of Collections."
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.
Other Enhancements
In addition or in lieu of the subordination of principal described
immediately above, we may provide other credit or cash flow enhancements with
respect to one or more classes of the series. These other enhancements may
include one or more of the following:
o letter of credit;
o surety bond;
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o cash collateral account;
o spread account;
o guaranteed rate agreement;
o swap, including without limitation a currency swap, or other interest
protection agreement;
o repurchase or liquidity arrangements;
o yield supplement arrangements;
o cash deposit; or
o another form of credit or cash flow enhancement described in the related
prospectus supplement.
If we so provide in the related prospectus supplement, any of these other
enhancements may be available to more than one class or series of notes. In
particular, 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. The issuer will generally 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
part of the interest collections allocated to that 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.
The issuer may use a currency swap to issue notes payable in a currency
other than United States dollars.
Limitations on Overcollateralization and Other Enhancements
We intend that the overcollateralization amount or other enhancement, if
any, with respect to a series or class of notes will enhance the likelihood of
receipt by noteholders of the series or class of the full amount of principal
and interest and will decrease the likelihood that the noteholders will
experience losses. However, neither overcollateralization nor the other
enhancement, if any, will provide protection against all risks of loss or will
guarantee repayment of the entire stated principal amount of the notes and
interest on the notes. If losses exceed the amount covered by the
overcollateralization or any other enhancement, noteholders will bear their
allocable share of deficiencies. In addition, if we provide specific
enhancement for the benefit of more than one class or series, noteholders of
that class or series will be subject to the risk that the enhancement will be
exhausted by the claims of noteholders of other classes or series.
Allocation of Collections
The primary source of funds for the payment of principal of and interest on
a series of notes will be collections on the receivables that are allocated to
that series. The servicer will deposit collections into the Collection Account
at the times and in the manner described in "Description of the Sale and
Servicing Agreement -- Allocation of Collections; Deposits in Collection
Account."
In this section, we describe how we allocate collections to each series of
notes. The balance of collections not allocated to any series will be
allocated to the Seller's Interest and generally will not be available to make
payments on any series of notes.
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Allocation of Interest Collections
The amount of interest collections on the receivables for any monthly
collection period, together with any net investment earnings on funds in the
Collection Account, will 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 as of the last day of the immediately preceding collection period
(or the issuance date of that series in the case of the first collection
period); and
o the denominator of which is the Pool Balance as of the last day of the
immediately preceding collection period (or the cut-off date of that
series in the case of the first collection period).
The amount of defaulted receivables for any collection period will be
allocated pro rata to each series of notes based on the same fraction. This
fraction for a series when expressed as a percentage will be the "Series
Floating Allocation Percentage" for that series unless we specify otherwise in
the related prospectus supplement.
The indenture trustee will apply the amount of interest collections
allocated to a series of notes in accordance with the indenture supplement for
that series to cover the monthly interest payments or deposits required for
that series. We will describe the application of these funds for a series in
the related prospectus supplement. In the case of a series of notes having
more than one class, we will also describe how interest collections allocated
to that series will be allocated and applied to each class.
If any series of notes has interest collections remaining after the
application of these funds in accordance with its indenture supplement, then
these excess interest collections will be shared with each other series of
notes whose own allocated interest collections are insufficient to cover its
monthly interest payments or its other applications of interest collections as
specified in the applicable indenture supplement. Any such excess interest
collections shared with other series will be applied to these other series pro
rata on the basis of their respective shortfalls.
Allocation of Principal Collections
The amount of principal collections on the receivables for any monthly
collection period will be allocated to each series of notes pro rata based on
a fraction:
o the numerator of which is the series nominal liquidation amount for 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 collection
period), except that if the accumulation period or an Early Redemption
Period for that series has commenced, the numerator will be the series
nominal liquidation amount for that series as of the last day of the
collection period ending prior to the commencement of the accumulation
period or Early Redemption Period, as applicable; and
o the denominator of which is the greater of (i) the Pool Balance as of
the last day of the immediately preceding collection period (or the
cut-off date of that series in the case of the first collection period)
and (ii) the sum of the numerators used to calculate the percentages for
allocating principal collections to all outstanding series of notes
(including the relevant series of notes) for that collection period.
This fraction for each series will adjust if that series or any other
series of notes has entered into an Early Redemption Period since the prior
collection period. This fraction for a series when expressed as a percentage
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will be the "Series Principal Allocation Percentage" for that series unless we
specify otherwise in the related prospectus supplement.
The indenture trustee will apply the amount of principal collections
allocated to a series of notes in accordance with the indenture supplement for
that series to cover the monthly principal payments or deposits required for
that series. We will describe the application of these funds for a series in
the related prospectus supplement. In the case of a series of notes having
more than one class, we will also describe how principal collections allocated
to that series will be allocated and applied to each class.
If any series of notes has principal collections remaining after the
application of these funds in accordance with its indenture supplement, then
these excess principal collections will be shared with each other series of
notes whose own allocated principal collections are insufficient to cover its
monthly principal payments or deposits as specified in the applicable
indenture supplement. Any such excess principal collections shared with other
series will be applied to these other series pro rata on the basis of their
respective shortfalls.
Trust Accounts of the Issuer
The issuer has established a Collection Account for the purpose of
receiving collections on the receivables. The Collection Account is maintained
in the name of the indenture trustee, for the benefit of all the noteholders.
Any earnings, net of losses and investment expenses, on funds in the
Collection Account will be credited to the Collection Account and treated as
part of interest collections.
The issuer has also established an Excess Funding Account in the name of
the indenture trustee, for the benefit of all the noteholders. As described in
"Description of the Sale and Servicing Agreement -- Excess Funding Account
Deposits and Withdrawals," if the Aggregate Series Nominal Liquidation Amount
and other available amounts securing the notes were to fall below a minimum
threshold, some of the principal collections to be released to the seller
will, instead, be deposited into the Excess Funding Account. All funds, if
any, in the Excess Funding Account, together with any related net investment
earnings on funds in this trust account, will be allocated to each series of
notes pro rata on the basis of the respective series nominal liquidation
amounts.
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 enhancement agreements, and for any other
purposes as specified in the related prospectus supplement. Each supplemental
account for a series may be a subaccount of one master trust account or other
trust account for that series.
The Collection Account, the Excess Funding Account and the supplemental
accounts described in this section are referred to as trust accounts. The
trust accounts will be Qualified Trust Accounts and amounts deposited into the
trust accounts may only be invested in Permitted Investments selected by the
issuer (or by its administrator on its behalf).
Sale of Receivables
In addition to a sale of receivables following an insolvency of the seller,
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 issuer may sell
receivables, or interests therein, if the conditions described in "The
Indenture -- Events of Default" and "-- Events of Default Remedies" are
satisfied.
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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 collections 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 caused
sales of receivables are no longer outstanding under the indenture once the
sale has occurred and the net sale proceeds have been applied.
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 for
that series 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 collections 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 trust accounts, any applicable enhancement
for that series or class and proceeds of sales of receivables for that series
or class provide the only sources of payment for principal of or interest on
that series or class of notes. Noteholders will have no recourse to any other
assets of the issuer or any other person or entity for the payment of
principal of or interest on the notes.
The notes of all series are secured by a security interest in the
receivables, but each series or class of notes is entitled to the benefits of
only that portion of the receivables, collections on the receivables and
proceeds of the receivables that is 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 enhancement.
Redemption and Early Redemption of Notes
Each class of notes will be subject to mandatory redemption on its expected
principal payment date.
If we so specify in the related prospectus supplement, the 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
servicer 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.
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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
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;
-- 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
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;
o the issuer obtains confirmation from each rating agency 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; and
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o any other conditions specified in the related prospectus supplement are
satisfied.
However, so long as each rating agency has confirmed 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, the conditions specified in the
first and second bullet points above may be waived by the issuer at its
option.
Payments on Notes; Paying Agent
The notes will be issued in book-entry form and payments of principal of
and interest on the notes will be made in U.S. dollars as described under "--
Book-Entry Notes" unless the stated principal amount of the notes is
denominated in a foreign currency.
The issuer and the indenture trustee, and any agent of the issuer or the
indenture trustee, will treat the registered holder of any note as the
absolute owner of that note, whether or not the note is overdue and
notwithstanding any notice to the contrary, for the purpose of making payment
and for all other purposes.
The issuer will make payments on a note to the registered holder of the
note at the close of business on the record date established for the related
payment date.
The issuer expects to designate the corporate trust office of The Bank of
New York, in New York City, as its paying agent for the notes of each series.
The issuer will identify any other entities appointed to serve as paying
agents on notes of a series or class in a prospectus supplement. The issuer
may at any time designate additional paying agents or rescind the designation
of any paying agent or approve a change in the office through which any paying
agent acts. However, the issuer will be required to maintain a paying agent in
each place of payment for a series or class of notes.
After notice by publication, all funds paid to a paying agent for the
payment of the principal of or interest on any note of any series which
remains unclaimed at the end of two years after the principal or interest
becomes due and payable will be repaid to the issuer. After funds are repaid
to the issuer, the holder of that note may look only to the issuer for payment
of that principal or interest.
Denominations
The notes offered by this prospectus will be issued in denominations of
$1,000 and multiples of $1,000 in excess of that amount.
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.
36
We refer to each beneficial interest in a global note as a "book-entry note."
For a description of the special provisions that apply to book-entry notes,
see "-- Book-Entry Notes."
A holder of notes may exchange those notes for other notes of the same
class of any authorized denominations and of the same aggregate stated
principal amount and tenor.
Any holder of a note may present that note for registration of transfer,
with the form of transfer properly executed, at the office of the note
registrar or at the office of any transfer agent that the issuer designates.
Holders of notes will not be charged any service charge for the exchange or
transfer of their notes. Holders of notes that are to be transferred or
exchanged will be liable for the payment of any taxes and other governmental
charges described in the indenture before the transfer or exchange will be
completed. The note registrar or transfer agent, as the case may be, will
effect a transfer or exchange when it is satisfied with the documents of title
and identity of the person making the request.
The issuer expects to appoint The Bank of New York as the note registrar
for the notes. The issuer also may at any time designate additional transfer
agents for any series or class of notes. The issuer may at any time rescind
the designation of any transfer agent or approve a change in the location
through which any transfer agent acts. However, the issuer will be required to
maintain a transfer agent in each place of payment for the notes.
Book-Entry Notes
The notes offered by this prospectus will be in book-entry form. This means
that, except under the limited circumstances described in this subheading
under "-- Definitive Notes," purchasers of notes will not be entitled to have
the notes registered in their names and will not be entitled to receive
physical delivery of the notes in definitive paper form. Instead, upon
issuance, all the notes of a class will be represented by one or more fully
registered permanent global notes, without interest coupons.
Each global note will be deposited with a securities depository named The
Depository Trust Company and will be registered in 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."
37
The issuer, the indenture trustee and their agents will not be liable for
the accuracy of, and are not responsible for maintaining, supervising or
reviewing DTC's records or any participant's or indirect participant's records
relating to book-entry notes. The issuer, the indenture trustee and their
agents also will not be responsible or liable for payments made on account of
the book-entry notes.
Until definitive notes are issued to the beneficial owners as described in
this subheading under "-- Definitive Notes," all references to "holders" of
notes means DTC. The issuer, the indenture trustee and any paying agent,
transfer agent or securities registrar may treat DTC as the absolute owner of
the notes for all purposes.
Beneficial owners of book-entry notes should realize that the issuer will
make all distributions of principal and interest on their notes to DTC and
will send all required reports and notices solely to DTC as long as DTC is the
registered holder of the notes. DTC and the participants are generally
required to receive and transmit all distributions, notices and directions
from the indenture trustee to the beneficial owners through the chain of
intermediaries.
Similarly, the indenture trustee will accept notices and directions solely
from DTC. Therefore, in order to exercise any rights of a holder of notes
under the indenture, each person owning a beneficial interest in the notes
must rely on the procedures of DTC and, in some cases, Clearstream or
Euroclear. If the beneficial owner is not a participant in that system, then
it must rely on the procedures of the participant and, if applicable, indirect
participant through which that person owns its interest. DTC has advised the
issuer that it will take actions under the indenture only at the direction of
its participants, which in turn will act only at the direction of the
beneficial owners. 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 SEC.
This information about DTC has been provided by DTC for informational
purposes only and is not intended to serve as a representation, warranty or
contract modification of any kind.
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
38
transfers between their accounts. Clearstream provides various services,
including safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending and borrowing.
Clearstream also deals with domestic securities markets in over 30 countries
through established depository and custodial relationships. Clearstream has
established an electronic bridge with Euroclear in Brussels to facilitate
settlement of trades between Clearstream and Euroclear.
Clearstream's customers are worldwide financial institutions including
underwriters, securities brokers and dealers, banks, trust companies and
clearing corporations. Clearstream's U.S. customers are limited to securities
brokers and dealers, and banks. Indirect access to Clearstream is available to
other institutions that clear through or maintain a custodial relationship
with an account holder of Clearstream.
This information about Clearstream has been provided by Clearstream for
informational purposes only and is not intended to serve as a representation,
warranty or contract modification of any kind.
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 Euroclear has been provided by Euroclear for
informational purposes only and is not intended to serve as a representation,
warranty or contract modification of any kind.
Distributions on Book-Entry Notes
The issuer will make distributions of principal of and interest on
book-entry notes to DTC. These payments will be made in immediately available
funds by the issuer's paying agent, The Bank of New York, at the office of the
paying agent in New York City that the issuer designates for that purpose.
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
39
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 Governing Use of Euroclear and the related Operating
Procedures of the Euroclear System, to the extent received by its U.S.
depository.
In the event definitive notes are issued, distributions of principal and
interest on definitive notes will be made directly to the holders of the
definitive notes in whose names the definitive notes were registered at the
close of business on the related record date.
Global Clearance and Settlement Procedures
Initial settlement for the notes will be made in immediately available
funds. Secondary market trading between DTC participants will occur in the
ordinary way in accordance with DTC's rules and will be settled in immediately
available funds using DTC's Same-Day Funds Settlement System. Secondary market
trading between Clearstream participants and/or Euroclear participants will
occur in the ordinary way in accordance with the applicable rules and
operating procedures of Clearstream and Euroclear and will be settled using
the procedures applicable to conventional eurobonds in immediately available
funds.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Clearstream
or Euroclear participants, on the other, will be effected in DTC in accordance
with DTC's rules on behalf of the relevant European international clearing
system by the U.S. depositories. However, cross-market transactions of this
type will require delivery of instructions to the relevant European
international clearing system by the counterparty in that system in accordance
with its rules and procedures and within its established deadlines, European
time. The relevant European international clearing system will, if the
transaction meets its settlement requirements, deliver instructions to its
U.S. depository to take action to effect final settlement on its behalf by
delivering or receiving notes in DTC, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to
DTC. Clearstream participants and Euroclear participants may not deliver
instructions directly to DTC.
Because of time-zone differences, credits to notes received in Clearstream
or Euroclear as a result of a transaction with a DTC participant will be made
during subsequent securities settlement processing and will be credited the
business day following a DTC settlement date. The credits to or any
transactions in the notes settled during processing will be reported to the
relevant Euroclear or Clearstream participants on that business day. Cash
received in Clearstream or Euroclear as a result of sales of notes by or
through a Clearstream participant or a Euroclear participant to a DTC
participant will be received with value on the DTC settlement date, but will
be available in the relevant Clearstream or Euroclear cash account only as of
the business day following settlement in DTC.
Although DTC, Clearstream and Euroclear have agreed to these procedures in
order to facilitate transfers of notes among participants of DTC, Clearstream
and Euroclear, they are under no obligation to perform or continue to perform
these procedures and these procedures may be discontinued at any time.
40
Definitive Notes
Beneficial owners of book-entry notes may exchange those notes for
definitive notes registered in their name only if:
o DTC is unwilling or unable to continue as depository for the global
notes or ceases to be a registered "clearing agency" and the issuer is
unable to find a qualified replacement for DTC;
o the issuer, in its sole discretion, elects to terminate the book-entry
system through DTC; or
o any event of default has occurred with respect to those book-entry
notes, and beneficial owners evidencing not less than 50% of the unpaid
outstanding dollar principal amount of the notes of that class advise
the indenture trustee and DTC that the continuation of a book entry
system is no longer in the best interests of those beneficial owners.
If any of these three events occurs, DTC is required to notify the
beneficial owners through the chain of intermediaries that the definitive
notes are available. The appropriate global note will then be exchangeable in
whole for definitive notes in registered form of like tenor and of an equal
aggregate stated principal amount, in specified denominations. Definitive
notes will be registered in the name or names of the person or persons
specified by DTC in a written instruction to the registrar of the notes. DTC
may base its written instruction upon directions it receives from its
participants. Thereafter, the holders of the definitive notes will be
recognized as the "holders" of the notes under the indenture.
Replacement of Notes
The issuer will replace at the expense of the holder any mutilated note,
upon surrender of that note to the indenture trustee. The issuer will replace
at the expense of the holder any notes that are destroyed, lost or stolen upon
delivery to the indenture trustee of evidence of the destruction, loss or
theft of those notes satisfactory to the issuer and the indenture trustee. In
the case of a destroyed, lost or stolen note, the issuer and the indenture
trustee may require the holder of the note to provide an indemnity
satisfactory to the indenture trustee and the issuer before a replacement note
will be issued.
Acquisition and Cancellation of Notes by the Issuer and the Seller
The issuer, the seller and their affiliates may acquire notes in the open
market or otherwise.
The issuer, the seller and their affiliates may cause the notes acquired by
them to be canceled and notes so canceled will no longer be outstanding.
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The Indenture
- -------------------------------------------------------------------------------
The notes of a series will be issued pursuant to the terms of the indenture
and the related indenture supplement. The discussion under this heading, the
discussions under "The Notes" in this prospectus and certain sections in the
related prospectus supplement summarize the material terms of the notes, the
indenture and the related indenture supplement. These summaries do not purport
to be complete and are qualified in their entirety by reference to the
provisions of the notes, the indenture and the related indenture supplement.
41
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.
DCS, DCWR, the issuer or their respective affiliates may maintain accounts
and other banking or trustee relationships with the indenture trustee and its
affiliates.
Issuer Covenants
The issuer will not, among other things:
o claim any credit on or make any deduction from the principal and
interest payable on the notes, other than amounts withheld in good faith
from such payments under the Internal Revenue Code or other applicable
tax law;
o voluntarily dissolve or liquidate; or
o permit (A) the validity or effectiveness of the indenture to be
impaired, or permit the lien created by the indenture to be amended,
hypothecated, subordinated, terminated or discharged, or permit any
person to be released from any covenants or obligations with respect to
the notes under the indenture except as may be expressly permitted by
the indenture, (B) any lien, charge, excise, claim, security interest,
mortgage or other encumbrance (other than the lien created by the
indenture) to be created on or extend to or otherwise arise upon or
burden the collateral for the notes or proceeds thereof or (C) the lien
of the indenture not to constitute a valid first priority security
interest in the assets of the issuer.
The issuer may not engage in any activity other than the activities
described in "The Issuer" in this prospectus. The issuer will not incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the notes.
The issuer also covenants that if:
o the issuer defaults in the payment of interest on any series or class of
notes when such interest becomes due and payable and such default
continues for a period of five business days following the date on which
such interest became due and payable; or
o the issuer defaults in the payment of the principal of any series or
class of notes on its legal final maturity date; and
any such default continues beyond any specified period of grace for such
series or class of notes, then 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
42
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 (or such longer
period as may be specified in the prospectus supplement), 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 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 have provided written notice requesting
remedy of that default or breach, and, as a result of that default or
breach, the interests of the related noteholders are materially and
adversely affected and continue to be materially and adversely affected
during the 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:
o 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;
43
o 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
o both:
-- the indenture trustee determines that the funds to be allocated to
the notes of that series or class, including (1) the Series
Available Interest Amount and Series Available Principal Amount for
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
-- holders of at least 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 issuer to sell principal
receivables and 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 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 indenture trustee will automatically sell receivables on the date,
as described in "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 receivables, and distributions on
the receivables will continue to be applied in accordance with the
allocation and application 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 on the receivables and allocated 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 sell receivables
as provided in the applicable indenture supplement.
The holders of a majority in aggregate outstanding dollar principal amount
of any accelerated series or class of notes have the right to direct the time,
method and place of conducting 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
44
indenture trustee in personal liability. The holder of any note will have the
right to institute suit for the enforcement of payment of principal of and
interest on such note on its legal final maturity date.
Generally, if an event of default occurs and any notes are accelerated, the
indenture trustee is not obligated to exercise any of its rights or powers
under the indenture unless the holders of affected notes offer the indenture
trustee reasonable indemnity. Upon acceleration of the maturity of a series or
class of notes following an event of default, the indenture trustee will have
a lien on the collateral for those notes ranking senior to the lien of those
notes for its unpaid fees and expenses.
The indenture trustee has agreed, and the noteholders will agree, that they
will not at any time institute against the issuer or DCWR, 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 the issuer becoming an "investment company" within the meaning of the
Investment Company Act of 1940, as amended;
o the occurrence of certain events of bankruptcy, insolvency or
receivership relating to the seller, DCS or DaimlerChrysler;
o a failure by the seller to convey receivables in Additional Accounts to
the issuer within five business days after the day on which it is
required to convey those receivables under the sale and servicing
agreement; and
o any additional early redemption events 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 Series
Available Interest Amount and Series Available Principal Amount for 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 enhancement 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 those notes, 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 principal collections on the receivables 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 any
applicable enhancements will still be available to pay principal of and
interest on that series or class of notes. In addition, if any Series
Available Interest Amount remains after required interest payments and
deposits, the remaining Series Available Interest Amount can be applied to
45
reimburse reductions in the nominal liquidation amount of that series or class
resulting from reallocations of any Series Available Principal Amounts to pay
interest on classes of notes or from charge-offs of defaulted principal
receivables in the issuer.
Payments on redeemed notes will be made in the same priority as described
in the related prospectus supplement. The issuer will give notice to holders
of the affected notes before an early redemption date.
Meetings
The indenture trustee may call a meeting of the holders of notes of a
series or class at any time. The indenture trustee will call a meeting upon
request of the issuer or the holders of at least 10% in aggregate outstanding
dollar principal amount of the outstanding notes of the series or class.
The quorum for a meeting is a majority of the holders of the outstanding
dollar principal amount of the related series or class of notes, as the case
may be, unless a higher percentage is specified for approving action taken at
the meeting, in which case the quorum is the higher percentage.
Voting
Any action or vote to be taken by the holders of a majority, or other
specified percentage, of any series or class of notes may be adopted by the
affirmative vote of the holders of a majority, or the applicable other
specified percentage, of the aggregate outstanding dollar principal amount of
the outstanding notes of that series or class, as the case may be.
Any action or vote taken at any meeting of holders of notes duly held in
accordance with the indenture will be binding on all holders of the affected
notes or the affected series or class of notes, as the case may be.
Notes held by the issuer, DaimlerChrysler, DCS or their affiliates will not
be deemed outstanding for purposes of voting or calculating quorum at any
meeting of noteholders.
Amendments to the Indenture and Indenture Supplements
Upon delivery of an 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 the 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 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 of 1939, as amended;
o cure any ambiguity, to correct or supplement any provision that may be
inconsistent with any other provision, or with the descriptions of these
provisions or of the notes contained in this prospectus and
46
the prospectus supplements, or to make any other provisions with respect
to matters or questions arising under the indenture;
o 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 to
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 if one or more additional sellers are added to, or replaced under, the
sale 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 amend all relevant documents to reflect or facilitate 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 an 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 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
rated by that rating agency.
Upon delivery of an 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 outstanding 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;
47
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 of any note in a manner that is adverse
to any noteholder;
o a reduction of the amount of a discount note payable upon the occurrence
of an early redemption event or other optional or mandatory redemption
or upon the acceleration of its legal final maturity date;
o an impairment of the right to institute suit for the enforcement of any
payment on any note;
o a reduction of the percentage in outstanding dollar principal amount of
notes of any series or class, the consent of whose holders is required
for modification or amendment of the indenture or any indenture
supplement or for waiver of compliance with provisions of the indenture
or indenture supplement or for waiver of defaults and their
consequences;
o a modification of any of the provisions governing the amendment of the
indenture, any indenture supplement or the issuer's agreements not to
claim rights under any law which would affect the covenants or the
performance of the indenture or any indenture supplement, except to
increase any percentage or to provide that certain other provisions of
the indenture cannot be modified or waived without the consent of the
holder of each outstanding note affected by such modification;
o permission being given to create any lien or other encumbrance on the
collateral ranking senior to the lien of the indenture;
o a change in the city or political subdivision so designated with respect
to any series or class of notes where any principal of, or interest on,
any note is payable; or
o a change in the method of computing the amount of principal of, or
interest on, any note on any date.
The holders of a majority in aggregate outstanding dollar principal amount
of the notes of a series or class may waive, on behalf of the holders of all
the notes of that series or class, compliance by the issuer with specified
restrictive provisions of the indenture or the indenture supplement.
The holders of a majority in aggregate outstanding dollar principal amount
of the notes of an affected series or class may, on behalf of all holders of
notes of that series or class, waive any 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.
No amendment may be made to the indenture or any indenture supplement that
would adversely affect in any material respect the interests of the servicer
without its consent. Likewise, any amendment to the indenture or any indenture
supplement that would adversely affect in any material respect the interests
of any holder of the Seller's Certificate or of any Supplemental Certificates
will require the prior consent of the holders of a majority of the interests
evidenced by these certificates.
Tax Opinions for Amendments
No amendment to the indenture or the 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 for federal income tax
purposes (1) the amendment will not adversely affect the characterization of
the notes of any outstanding series
48
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 a publicly traded partnership, taxable as a corporation.
Addresses for Notices
Notices to holders of notes will be given by mail sent to the addresses of
the holders as they appear in the note register.
Issuer's Annual Compliance Statement
The issuer is required to furnish annually to the indenture trustee a
statement concerning its performance or fulfillment of covenants, agreements
or conditions in the indenture as well as the presence or absence of defaults
under the indenture.
Indenture Trustee's Annual Report
The indenture trustee is required to mail each year to all registered
noteholders a report concerning:
o its eligibility and qualifications to continue as trustee under the
indenture;
o any amounts advanced by it under the indenture;
o the amount, interest rate and maturity date or indebtedness owing by the
issuer to it in the indenture trustee's individual capacity;
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 SEC 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.
49
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Description of the Sale and Servicing Agreement
- -------------------------------------------------------------------------------
DCWR, as seller, DCS, as servicer, and the issuer, as purchaser, will have
entered into a sale and servicing agreement (the "sale and servicing
agreement") under which DCWR will sell receivables to the issuer and DCS will
service those receivables on behalf of the issuer. In the following summary we
describe terms of the sale and servicing agreement. This summary is qualified
in its entirety by reference to the sale and servicing agreement. We have
filed a form of the sale and servicing agreement as an exhibit to the
registration statement of which this prospectus is a part.
Conveyance of Receivables and Collateral Security
DCWR has sold and assigned or will sell and assign to the issuer:
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,
including any Additional Accounts;
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, in many cases, parts inventory, equipment, fixtures,
service accounts, chattel paper, instruments, franchise rights 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
issuer. In addition, the seller must provide to the issuer and the indenture
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 issuer or the indenture 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 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 issuer or the
indenture trustee. The seller will file one or more financing statements in
accordance with applicable state law to perfect the issuer'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
50
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 issuer. Each Additional Account
must be an Eligible Account. In respect of any conveyance of receivables in
Additional Accounts, the seller will follow the procedures set forth in the
two preceding paragraphs, except the list of Accounts 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 issuer, 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 on which the related
receivables are transferred to the issuer (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 issuer as described below
under "-- Ineligible Receivables and the Overconcentration Amount";
o each receivable and all Collateral Security conveyed to the issuer 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 issuer
free and clear of any liens, except for liens permitted under the
Receivables Purchase Agreement; 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 issuer will reassign the related receivables to the
seller in the manner described in the following paragraph. However, the issuer
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 indenture 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 noteholders' interest
in the receivable or, in the case of a breach relating to an Account,
all receivables in the related Account ("Ineligible Receivables").
The issuer 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 to be less than the sum of the
series nominal liquidation amounts for all outstanding series of notes (the
"Aggregate Series Nominal Liquidation Amount") for all outstanding series on
the second business day preceding the payment date (each second business day
preceding a payment date, a "Determination Date"), after giving effect to the
allocations, distributions, withdrawals and deposits to be made on the payment
date. If the Pool Balance is less than the Aggregate Series Nominal
Liquidation Amount as a result of this deduction, the seller must make a
deposit into the Collection Account in immediately available funds in an
amount (a "Transfer Deposit Amount") equal to the amount by which the
51
Pool Balance would be less than the Aggregate Series Nominal Liquidation
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 Pool Balance is not reduced below the Aggregate
Series Nominal Liquidation Amount. Any principal balance not so deducted will
not be reassigned and will remain part of the issuer's assets. 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 issuer 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
sale and servicing agreement, and the sale and servicing agreement
constitutes a valid, binding and enforceable agreement of the seller;
and
o the sale and servicing agreement constitutes a valid sale, transfer and
assignment to the issuer 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, subject to the rights of certain purchasers
with respect to some of the Collateral Security.
If a breach of any of the representations and warranties described in the
preceding paragraph has a materially adverse effect on the noteholders'
interest in the receivables, either the indenture trustee or the holders of a
majority in aggregate outstanding principal dollar amount of all outstanding
notes, by written notice to the seller and the servicer, and to the indenture
trustee and the provider of any enhancement if given by noteholders, may
direct the seller to accept the reassignment of the noteholders' interest in
the receivables within 60 days of the notice, or within a longer period
specified in the notice. The seller must accept the reassignment of the
noteholders' interest on a payment date occurring within the 60-day period.
However, the reassignment need not be made if at the end of the applicable
period, the representations and warranties shall then be true and correct in
all material respects and any materially adverse effect caused by the breach
shall have been cured. The price for the reassignment will typically be equal
to the sum of:
o the Aggregate Series Nominal Liquidation Amount on the Determination
Date preceding the payment date on which the purchase is scheduled to be
made; and
o accrued and unpaid interest on the unpaid principal amount of all notes
at the applicable note rate, together with interest on overdue interest,
to the extent permitted by law.
The payment of the reassignment price for all outstanding series will be
considered a payment in full of the notes. The indenture trustee will
distribute those funds to the applicable noteholders upon presentation and
surrender of the notes. If the indenture trustee or the noteholders 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 noteholders or the indenture
trustee on behalf of the noteholders.
DCWR will be deemed to have made all the representations and warranties of
the seller in the sale and servicing agreement and in any indenture supplement
with respect to any series or class of notes.
52
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 to a dealer, which, as of its date of determination:
o is established by DCS 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; and
o in respect of which no amounts have been charged off as uncollectible or
are classified as past due or delinquent.
An "Eligible Dealer" is a dealer:
o which is located in the United States of America, including its
territories and possessions;
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 in the ordinary course of
business, except that if the receivable was acquired by DCS from a
person or entity that is not DaimlerChrysler or any of its Affiliates,
the applicable rating agencies shall have notified the seller or the
servicer that the inclusion of the receivable in the issuer will not
result in a reduction or withdrawal of the rating of any outstanding
series or class of notes;
o which has arisen under an Eligible Account and is payable in United
States dollars;
o which is owned by DCS 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 issuer
(or if it was initially transferred to the CARCO receivables trust, at
the time of transfer to that trust) is secured by a perfected first
priority security interest in the related vehicle;
53
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, DCS or the seller in
connection with the creation of the receivable or the transfer of the
receivable to the issuer (or to the CARCO receivables trust if it was
initially transferred to that trust) or the performance by DCS of the
floorplan financing agreement under which the receivable was created,
have been duly obtained and are in full force and effect;
o as to which at all times following the transfer of the receivable to the
issuer (or to the CARCO receivables trust if it was initially
transferred to that trust), the issuer or the CARCO receivables trust,
as applicable, 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 sale and servicing
agreement;
o which (1) if originally transferred to the CARCO receivables trust, has
been the subject of a valid transfer and assignment from the seller to
the CARCO receivables trust and from that trust to the issuer of all the
seller's interest in the receivable, including any proceeds of the
receivable and (2) if directly sold by the seller to the issuer, has
been the subject of a valid transfer and assignment from the seller to
the issuer of 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 issuer (or to the CARCO receivables
trust if it was initially transferred to that 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 issuer (or
to the CARCO receivables trust if it was initially transferred to that
trust), DaimlerChrysler, 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 issuer (or
to the CARCO receivables trust if it was initially transferred to that
trust), neither DaimlerChrysler, DCS nor the seller has taken or failed
to take any action which would impair the rights of the issuer or the
noteholders;
o which constitutes "tangible chattel paper" or an "account" or "payment
intangible," each as defined in Article 9 of the UCC as then in effect
in the State of Michigan; and
o which was transferred to the issuer (or to the CARCO receivables trust
if it was initially transferred to that trust) with all applicable
governmental authorization.
The CARCO receivables trust trustee did not make, and the indenture 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 indenture 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 sale and servicing agreement or for
54
any other purpose. The servicer, however, will deliver to the indenture
trustee on or before March 31 of each calendar year, an opinion of counsel
with respect to the validity of the interest of the indenture trustee in and
to the receivables.
Ineligible Receivables and the Overconcentration Amount
For the purpose of facilitating the administration and reporting
requirements of the servicer under the sale and servicing agreement, the
seller will transfer all Ineligible Receivables arising in an Eligible Account
to the issuer. 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.
Unless we otherwise specify in the related prospectus supplement, the
overcollateralization amount for a series of notes may also be increased to
reflect any Overconcentration Amount, which is the aggregate amount of all
Dealer Overconcentrations.
A "Dealer Overconcentration" with respect to any dealer or group of
affiliated dealers on any Determination Date is 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 immediately preceding
collection period over
o 2% of the Pool Balance on that last day, except that the percentage
specified in this bullet point will be 4% in the case of either
AutoNation, Inc. and its affiliates or United Auto Group, Inc. and its
affiliates.
However, the seller may, upon ten days' prior notice to the indenture trustee
and the rating agencies and without any notice to or consent of any
noteholder, increase the applicable percentage specified in the second bullet
point, so long as the applicable rating agencies have notified the seller or
the servicer that the reduction will not result in a reduction or withdrawal
of the rating of any outstanding series or class of notes.
Addition of Accounts
Subject to the conditions described in the following 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:
o 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; or
o the Seller's Interest in the Pool Balance is less than 2% of the Pool
Balance on the last day of any collection period.
In either 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 sale and servicing
agreement must transfer and assign to the issuer, 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. The failure to transfer receivables arising in the
Additional Accounts to the issuer solely as a result of the unavailability of
a sufficient amount of Eligible Receivables will not be a breach of the sale
and servicing agreement. However, any such failure will result in an early
redemption event for the notes.
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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 Redemption Event to occur with respect to any series of
notes;
o the seller shall not select the Additional Accounts in a manner that it
believes is adverse to the interests of the noteholders or any
enhancement provider;
o if the addition is not required, the seller shall deliver a Tax Opinion
and other opinions of counsel with respect to the addition of the
Additional Accounts to the indenture 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 notes 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 applicable 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; 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 applicable 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 indenture trustee shall have received confirmation from
each applicable 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 notes. If the indenture 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 issuer.
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 DCS, they may
not be of the same credit quality as the initial Accounts. Additional Accounts
may have been originated by DCS at a later date using credit criteria
different from those which were applied to the initial Accounts or may have
been acquired by DCS from another wholesale lender that had different credit
criteria. In addition, the seller will be permitted to designate Additional
Accounts that contain receivables that have been sold or pledged to third
parties. However, following the applicable Additional Cut-Off Date, no
receivables arising after that date in any of those Accounts will be sold or
pledged to any third parties.
56
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 notes obtained by multiplying
the Required Participation Percentage for that series of notes by the
nominal liquidation amount of the notes of that series at that time;
plus
o the sum of the overcollateralization amounts for each series of notes on
the preceding payment date, after giving effect to the allocations,
deposits and payments made on that payment date.
The "Required Participation Percentage" for a series of notes will be
specified in the related prospectus 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 issuer of Eligible Accounts. To
remove any Eligible Account, the seller, or the servicer on its behalf, shall,
among other things:
o furnish to the issuer, the indenture 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 issuer (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
issuer 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:
-- to the issuer, to be further allocated under the sale and servicing
agreement, interest collections in respect of each Designated
Account with respect to receivables in all Designated Accounts sold
to the issuer and
-- 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 Redemption Event to occur with respect to any series of notes or
cause the Pool Balance to be less than the Required Participation
Amount;
57
o represent and warrant that no selection procedures believed by the
seller to be adverse to the interests of the noteholders 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 notes to be reduced or withdrawn; and
o on or before the related Removal Date, deliver to the issuer, the
indenture trustee and any enhancement provider an officers' certificate
confirming the items set forth in the sixth, seventh and eighth clauses
of this paragraph 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 notes to be reduced or withdrawn.
The seller shall also have the right, but shall not be obligated, to remove
from the issuer 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 clauses two through five of the second
preceding paragraph, and will deliver a Tax Opinion with respect to the
removal and will represent and warrant that the seller reasonably believes
that the removal will not result in an Early Redemption Event.
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 issuer by taking each of the actions
specified in the first five clauses of the third 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
issuer for all purposes (a "Removed Account").
In addition to the removal rights described in the five paragraphs above,
the seller shall have the right at any time to remove Accounts from the issuer
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,
must, among other things:
o furnish to the issuer, the indenture trustee, each enhancement provider
and the rating agencies a Removal Notice stating the Designated Accounts
which are to be removed, and the then existing receivables in the
Designated Accounts (the "Designated Receivables") which are to be
repurchased from the issuer 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 issuer and the indenture 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 Redemption Event to occur with respect to any
series or class of notes or cause the Pool Balance to be less than the
Required Participation Amount;
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o represent and warrant that no selection procedures believed by the
seller to be adverse to the interests of the noteholders of any series
or class of notes 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 indenture 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 notes to be reduced or
withdrawn by the applicable rating agency;
o deliver to the indenture 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 indenture trustee and any enhancement providers an
officers' certificate 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 applicable rating agency shall have notified the seller, the servicer,
the issuer and the indenture trustee in writing that the removal and
repurchase will not cause that rating agency's rating of any outstanding
series or class of notes 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
(the "Repurchased Receivables") shall be deemed repurchased, from the issuer
for all purposes. The seller need not make any deposit in the Collection
Account in respect of the repurchase price of any Designated Receivables
repurchased from the issuer.
The seller, however, shall have the right to require the reassignment to it
of all the issuer's right, title and interest in the receivables then existing
and created after that time in Accounts ("Automatic Removed Accounts")
designated by the seller, together with existing and future collections and
proceeds from those receivables, upon satisfaction of the following
conditions:
o on or before the fifth business day immediately preceding the date upon
which the Accounts are to be removed, the seller shall have given the
issuer, the indenture 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 issuer, the
indenture 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 issuer and the indenture 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;
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o the issuer shall have received confirmation from each applicable rating
agency that the removal will not cause that rating agency's rating of
any outstanding series or class of notes to be reduced or withdrawn;
o the seller shall have delivered to the issuer, the indenture 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
Redemption Event to occur with respect to any series of notes; and
o the seller shall have delivered to the issuer, the indenture trustee,
each rating agency and any enhancement providers a Tax Opinion, dated
the Automatic Removal Date, with respect to the removal.
However, 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 issuer'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 issuer for all purposes.
Seller's Interest
The "Seller's Interest" is the seller's interest in the assets of the
issuer to extent the assets are not allocated for the payment or security of
the notes as described in this prospectus and the prospectus supplements. The
Seller's Interest is evidenced by a certificate (the "Seller's Certificate")
issued under the trust agreement by the issuer.
Without any notice to or consent of any noteholder, the seller may from
time to time exchange a portion of the Seller's Certificate for another
certificate (a "Supplemental Certificate") that the seller may then transfer
or assign to a person or entity chosen by the seller. The terms of any
Supplemental Certificate will be set forth in a supplement to the trust
agreement. A Supplemental Certificate may be issued only 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 indenture 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 indenture 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 notes.
Any later transfer or assignment of a Supplemental Certificate is also
subject to the second and third conditions described in the immediately
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.
In addition, DCWR may, without any notice to or consent of any noteholder,
transfer and assign all, but not less than all, of its rights and obligations
in respect of the issuer, the Seller's Interest, the Seller's Certificate, the
sale and servicing agreement, the Receivables Purchase Agreement and all other
related agreements and instruments to a limited purpose, direct or indirect
wholly-owned subsidiary of DCS (a "Designated Affiliate")
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so long as the Designated Affiliate assumes DCWR's obligations under these
assigned agreements and instruments and certain conditions are satisfied.
Among these conditions are:
o DCWR, the Designated Affiliate and the issuer shall have executed and
delivered an assignment and assumption agreement, which shall be
acknowledged and agreed to by the indenture trustee, and the Designated
Affiliate shall have delivered to the issuer and the indenture trustee
the opinion of counsel required under the assignment and assumption
agreement;
o DCWR shall have delivered to the issuer and the indenture trustee a
certificate and an opinion of counsel that each condition precedent set
forth in the sale and servicing agreement for a transfer to a Designated
Affiliate have been complied with;
o DCWR shall have delivered to the indenture trustee written confirmation
from the applicable rating agencies that the transfer to the Designated
Affiliate will not result in a reduction or withdrawal of the rating of
any outstanding series or class of notes;
o DCWR shall have delivered to the issuer and the indenture trustee a Tax
Opinion with respect to the transfer to the Designated Affiliate; and
o all filings required to continue the perfected interests of the issuer
and the indenture trustee in the receivables and the Collateral Security
shall have been made.
Miscellaneous Payments
"Miscellaneous Payments" means, for any monthly collection period, the sum
of:
o Adjustment Payments and Transfer Deposit Amounts received with respect
to the collection period; and
o Unallocated Principal Collections consisting of any Excess Available
Principal Amounts and any principal collections allocated to the seller
based on the Seller's Percentage that are not released to the seller
because the Pool Balance (after giving effect to any receivables
transferred to the issuer) does not equal or exceed the Aggregate Series
Nominal Liquidation Amount for all series (after giving effect to the
allocations, distributions, withdrawals and deposits).
The amount of any Miscellaneous Payments for any collection period will be
allocated to each series of notes pro rata based on a fraction:
o the numerator of which is the series nominal liquidation amount for that
series as of the last day of the immediately preceding collection
period; and
o the denominator of which is the Aggregate Series Nominal Liquidation
Amount as of that last day.
This fraction for a series when expressed as a percentage will be the
"Series Miscellaneous Allocation Percentage" for that series unless we specify
otherwise in the related prospectus supplement.
The Miscellaneous Payments allocated to a series will be added to the
principal collections allocated to that series. Unless we specify otherwise in
a prospectus supplement, the sum of the principal collections and
Miscellaneous Payments allocated to a series will make up the "Series
Available Principal Amount" for that series. The amount of any Series
Available Principal Amount for a series that is not needed to make payments
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or deposits for that series on a payment date will be available for allocation
to other series of notes whose own Series Available Principal Amount for that
payment date is insufficient to fully cover its required payments or deposits.
After giving effect to this sharing of excess Series Available Principal
Amounts amongst series, the excess Series Available Principal Amounts that
remain are collectively referred to as the "Excess Available Principal
Amounts."
Excess Funding Account Deposits and Withdrawals
On each payment date, unless otherwise specified in the prospectus
supplement, Excess Available Principal Amounts will be deposited by the
indenture trustee into the Excess Funding Account in an amount equal to the
excess, if any, of:
o the sum of (1) the aggregate outstanding dollar principal amount of all
series of notes and (2) the sum of the overcollateralization amounts for
all series of notes over
o the sum of (1) the Aggregate Series Nominal Liquidation Amount, as
adjusted for the purpose of this calculation in the manner set forth in
the sale and servicing agreement, (2) the aggregate amount (other than
investment earnings) on deposit in the principal funding accounts for
all series and (3) the amount (other than investment earnings) already
on deposit in the Excess Funding Account.
Any remaining Excess Available Principal Amounts not required to be
deposited into the Excess Funding Account will be paid to the issuer for
distribution to the seller so long as the Pool Balance (after giving effect to
any receivables transferred to the issuer on that payment date) equals or
exceeds the Aggregate Series Nominal Liquidation Amount for all series (after
giving effect to the allocations, distributions, withdrawals and deposits on
that payment date). Any Excess Available Principal Amounts that are not
released to the seller as a result of the condition specified in this
paragraph will be transferred to the Collection Account and included as part
of the Unallocated Principal Collections.
If, on any Determination Date, the amount specified in the second bullet
point of the first paragraph in this section exceeds the amount specified in
the first bullet point of the same paragraph because of an increase in the
amount of principal receivables in the issuer, the indenture trustee will
withdraw the amount of such excess from the Excess Funding Account and pay
such amount to the seller in payment of the purchase price for such principal
receivables. Upon any such release of funds from the Excess Funding Account to
the seller, the Aggregate Series Nominal Liquidation Amount will be increased
by the amount released, with the increase being allocated pro rata to each
series of notes (other than any series that is not in its revolving period) on
the basis of their respective series nominal liquidation amounts. If the
Aggregate Series Nominal Liquidation Amount is increased in this manner, the
Seller's Interest will be correspondingly reduced by the amount of the funds
released from the Excess Funding Account to the seller. Additionally, any
release of funds from the Excess Funding Account to the seller is subject to
the condition that, after giving effect to the release, the Pool Balance
equals or exceeds the Required Participation Amount.
Amounts (other than investment earnings) that have been deposited into the
Excess Funding Account will be allocated to each series of notes pro rata on
the basis of the respective series nominal liquidation amounts. On the payment
date following the end of a revolving period for a series of notes, the
indenture trustee will apply any funds (other than investment earnings) in the
Excess Funding Account that are allocable to that series as we describe in the
related prospectus supplement.
On each payment date, we will allocate all net investment income earned on
amounts in the Excess Funding Account since the preceding payment date to each
series of notes pro rata on the basis of the respective series nominal
liquidation amounts. We will apply the amount of net investment income so
allocated to a series in the manner described in the related prospectus
supplement.
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Allocation of Collections; Deposits in Collection Account
On each Determination Date, the servicer will calculate the amounts to be
allocated in respect of collections received on receivables with respect to
the related collection period to the noteholders of each outstanding series or
class or the seller in accordance with the indenture 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 sale and servicing agreement;
o no Service Default has occurred and is continuing; and
o either:
-- DCS or DaimlerChrysler North America Holding Corporation has and
maintains a short-term debt rating of at least A-1 by Standard &
Poor's and P-1 by Moody's,
-- 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
-- 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 indenture 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 the rating of any
outstanding series or class of notes.
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 payments and distributions that the issuer must make;
o the amounts the issuer must deposit into any trust account maintained
for the benefit of the noteholders of any series and other parties; and
o the amounts the issuer 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 into the Collection
Account, the servicer will distribute directly to the seller its share of the
interest collections described in this prospectus in an amount equal to the
Seller's Percentage for the related collection period of interest collections
deposited into the Collection
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Account for such date. On any date on which the servicer deposits collections
into the Collection Account, the servicer will also distribute directly to the
seller its share of the principal collections described in this prospectus in
an amount equal to the Seller's Percentage for the related collection period
of principal collections deposited into the Collection Account for such date
so long as the Pool Balance (determined after giving effect to any principal
receivables transferred to the issuer on the date) equals or exceeds the
Aggregate Series Nominal Liquidation Amount for the immediately preceding
Determination Date, after giving effect to the allocations, distributions,
withdrawals and deposits to be made on the payment date immediately following
the Determination Date. Any principal collections allocated to the seller
based on the Seller's Percentage that are not released to the seller as a
result of the condition specified in the immediately preceding sentence will
be kept in the Collection Account and included as part of the Unallocated
Principal Collections.
Defaulted Receivables and Recoveries
The "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
issuer (or to the CARCO receivables trust if the receivables were
initially transferred to the CARCO receivables trust), which arose in an
Account which became an Ineligible Account after the date of such
transfer of the receivables and which were not Eligible Receivables for
any six consecutive Determination Dates after the Account became an
Ineligible Account.
The "Defaulted Amount" for any Determination Date 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:
-- 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
-- the excess, if any, for the immediately preceding Determination
Date of the amount determined pursuant to this second bullet point
for that Determination Date over the amount determined pursuant to
the first bullet point above for that 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 (i) to the seller to the Seller's Percentage of the Defaulted Amount
for each collection period and (ii) to each series, the applicable Series
Floating Allocation Percentage of the Defaulted Amount.
If the servicer adjusts the amount of any receivable because of a rebate,
refund, credit adjustment or 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, and, following such adjustment downward,
the Pool Balance would be less than the Aggregate Series Nominal Liquidation
Amount on the immediately preceding Determination Date
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(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 be required to deposit a cash amount
equal to the deficiency (up to the amount of the adjustment) into the
Collection Account in immediately available funds (an "Adjustment Payment") on
the day on which the servicer makes the adjustment.
Termination
The issuer and the sale and servicing agreement will terminate upon the
final distribution by the indenture trustee and the owner trustee of all
property of the issuer in accordance with the indenture and the Delaware
Statutory Trust Act.
When the issuer is terminated, it will transfer to DCWR all right, title
and interest in the remaining receivables and other funds of the issuer, other
than amounts in the issuer's trust accounts for the final payment of principal
and interest to noteholders.
In any event, the last payment of principal and interest on any series of
notes will be due and payable no later than the date we specify to be the
legal final maturity date for that series in the related prospectus
supplement.
Indemnification
The sale and servicing agreement states that the servicer will indemnify
the issuer and the indenture 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
issuer, the indenture trustee or the servicer under the sale and servicing
agreement. The servicer will not so indemnify the issuer or the indenture
trustee, however, if the acts, omissions or alleged acts or omissions
constitute fraud, gross negligence, breach of fiduciary duty or willful
misconduct by the issuer or the indenture trustee. Also, the servicer will not
indemnify the issuer, the indenture trustee or the noteholders for any act
taken by the indenture trustee at the request of the noteholders or for any
tax which the issuer or the noteholders is required to pay.
The sale 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
issuer, the indenture trustee, the noteholders or any other person for taking
any action, or for refraining from taking any action, under the sale 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 sale and servicing agreement.
Also, the sale 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 sale 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
noteholders with respect to the sale and servicing agreement and the rights
and duties of the parties to that agreement and the interest of the
noteholders under that agreement.
Collection and Other Servicing Procedures
Under the sale 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 issuer.
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The sale and servicing agreement permits the servicer to change the terms
relating to the Accounts if:
o in the servicer's reasonable judgment, the change will not cause any
Early Redemption Event to occur with respect to any series and none of
the enhancement providers or the noteholders will be adversely affected;
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 issuer include:
o providing assistance in any inspections of the documents and records
relating to the Accounts and receivables by the indenture trustee under
the sale and servicing agreement;
o maintaining the agreements, documents and files relating to the Accounts
and receivables as custodian for the issuer; and
o providing related data processing and reporting services for noteholders
and on behalf of the issuer.
Servicer Covenants
In the sale 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 noteholders 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 issuer or the indenture
trustee in the receivables or the Accounts; and
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o it will not reschedule, revise or defer payments due on any receivable
except in accordance with its guidelines for servicing revolving credit
line dealer wholesale loans.
Under the terms of the sale 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 indenture trustee may agree to, and has a materially adverse effect on the
interests of all noteholders 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 will deem the amount of the deposit a Transfer
Deposit Amount. The purchase by the servicer constitutes the sole remedy
available to the noteholders if the covenant or warranty of the servicer is
not satisfied and the issuer'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 indenture supplement or prospectus
supplement, the servicer's compensation for its servicing activities and
reimbursement for its expenses in respect of a series will be a monthly
servicing fee (the "Monthly Servicing Fee"). The Monthly Servicing Fee in
respect of a series is an amount payable in arrears on each payment date on or
before the legal final maturity date for that series equal to one-twelfth of
the product of:
o the annual "Servicing Fee Rate" specified in the prospectus supplement;
and
o the series nominal liquidation amount for that series.
The servicer will 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 sale and servicing agreement, the
indenture and the applicable indenture supplement.
The servicer may waive its right to receive the Monthly 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
waived Monthly Servicing Fee. If the servicer waives its right to receive the
Monthly Servicing Fee on any payment date, we will deem the Monthly Servicing
Fee for that payment date to be zero.
The seller will pay the portion of the aggregate Servicing Fee allocable
solely to the Seller's Interest in the receivables held by the issuer.
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 indenture trustee and independent
accountants and all other fees and expenses which are not expressly stated in
the sale and servicing agreement to be payable by the issuer or the
noteholders other than federal, state and local income and franchise taxes, if
any, of the issuer or the noteholders.
Matters Regarding the Servicer
The servicer may not resign from its obligations and duties under the sale
and servicing agreement, except upon determination that those duties are no
longer permissible under applicable law and there is no reasonable action
which the servicer could take to make the performance of its duties
permissible under applicable law. No resignation will become effective until
the indenture trustee or a successor to the servicer has assumed the
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servicer's responsibilities and obligations under the sale and servicing
agreement (DCS or any successor servicer, the "servicer"). The servicer may
delegate any of its duties as servicer to any person who agrees to conduct
these duties in accordance with DCS's floorplan financing guidelines and the
sale and servicing agreement. However, any delegation will not relieve the
servicer of its obligations under the sale and servicing agreement.
Any person into which, in accordance with the sale 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 sale and servicing agreement.
Service Default
In the event of any Service Default, the indenture trustee, by written
notice to the servicer, may terminate all of the rights and obligations of the
servicer, as servicer, under the sale 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 in the Seller's
Interest under the sale and servicing agreement will not be affected by any
Service Transfer. The indenture trustee shall as promptly as possible appoint
a successor servicer and if no successor servicer has been appointed by the
indenture 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 sale and servicing agreement shall pass to and be vested in
the indenture trustee. Before any Service Transfer, the indenture trustee will
review any bids obtained from potential servicers meeting eligibility
requirements set forth in the sale 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 indenture trustee to make any payment, transfer
or deposit, on the date the sale and servicing agreement, the indenture
or any indenture supplement requires the servicer to do so, which
failure is not cured within a five day grace period;
o failure by the servicer duly to observe or perform any other covenants
or agreements of the servicer in the sale and servicing agreement, the
indenture or any indenture supplement, 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
indenture trustee shall have given written notice of the failure to the
servicer;
o the servicer delegates its duties under the sale and servicing
agreement, except as specifically permitted under that agreement;
o any representation, warranty or certification made by the servicer in
the sale and servicing agreement or in any certificate delivered under
the sale and servicing agreement proves to have been incorrect when
made, has a materially adverse effect on the rights of the noteholders
of any outstanding series, and which materially adverse effect continues
for a period of 60 days after the indenture trustee shall have given
written notice of that fact to the servicer; or
o certain events of bankruptcy, insolvency or receivership occur with
respect to the servicer.
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However, a delay in or failure of performance referred to under the first
bullet point for a period of ten business days or referred to under the
second, third or fourth bullet points for a period of 60 business days, will
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 will not be relieved from using its best efforts to perform its
obligations in a timely manner in accordance with the terms of the sale and
servicing agreement and the servicer will provide the indenture trustee, any
enhancement providers, the seller and the noteholders prompt notice of the
failure or delay by it, together with a description of its efforts to so
perform its obligations. The servicer will immediately notify the indenture
trustee in writing of any Service Default.
Reports
On each payment date, the indenture trustee will forward to each noteholder
of record of any series a statement (the "Monthly Noteholders' Statement")
prepared by the servicer. The Monthly Noteholders' Statement will set forth
information with respect to the issuer and the notes of the series, as we
state in the related indenture supplement and describe in the related
prospectus supplement.
With respect to each payment date, the Monthly Noteholders' Statement for
any series will include the following information on the notes of that series:
o the total amount paid on the notes of the series;
o the amount of the payment allocable to principal; and
o the amount of the payment allocable to interest.
On or before January 31 of each calendar year, the indenture trustee will
furnish, or cause to be furnished, to each person who at any time during the
preceding calendar year was a noteholder of record a statement containing the
information required to be provided by an issuer of indebtedness under the
Internal Revenue Code for the preceding calendar year or the applicable
portion of that year during which the person was a noteholder, together with
other customary information which the Internal Revenue Code requires issuers
of indebtedness to provide and other customary information which noteholders
need to prepare their tax returns. See "Tax Matters."
Evidence as to Compliance
The sale 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 or an
attestation in respect of the servicer's assessment as to its compliance with
certain servicing criteria.
The sale and servicing agreement states that on or before March 31 of each
calendar year, the servicer will deliver to the indenture 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 sale 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. In lieu of (or in
addition to) such statement, the servicer, in its sole discretion, may deliver
an assessment as to its compliance with certain servicing criteria.
You may obtain copies of all statements, certificates and reports furnished
to the indenture trustee by delivering a written request to the indenture
trustee.
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Amendments
The seller, the servicer, the issuer and the indenture trustee may amend
the sale and servicing agreement, without noteholder 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 noteholders and the indenture
trustee shall have received written confirmation from each rating agency that
the amendment will not result in the reduction or withdrawal of the ratings of
any outstanding notes rated by that rating agency.
The seller, the servicer and indenture trustee may amend the sale and
servicing agreement with the consent of the holders of not less than 66 2/3%
of the aggregate outstanding dollar principal amount of the notes 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 sale and
servicing agreement or of modifying in any manner the rights of noteholders.
No amendment, however, may:
o reduce in any manner the amount of or delay the timing of payments
required to be made to noteholders or deposits of amounts to be so paid
without the consent of each affected noteholder;
o change the definition or the manner of calculating any noteholders'
interest in the receivables without the consent of each affected
noteholder;
o reduce the amount available under any enhancement without the consent of
each affected noteholder, except as we may otherwise describe in the
related prospectus supplement;
o adversely affect the rating of any series or class by any rating agency
without the consent of the holders of notes evidencing not less than
66 2/3% of the aggregate outstanding dollar principal amount of the notes
of that series or class; or
o reduce that percentage of the outstanding dollar principal amount of
notes the holders of which are required to consent to any amendment
without the consent of each noteholder.
Promptly following the execution of any amendment to the sale and servicing
agreement, other than an amendment described in the preceding paragraph, the
indenture trustee will notify each noteholder in writing of the substance of
the amendment.
However, we will deem each holder of a note, by its acceptance of the note,
to have consented to an amendment to the sale and servicing agreement and any
other related document or agreement for the purpose of providing for the
transfer of receivables from DCWR (or an additional seller under the sale and
servicing agreement) to a bankruptcy remote special purpose entity, and from
that entity to the issuer and the substitution of a bankruptcy remote special
purpose entity as the beneficiary of the issuer.
The sale and servicing agreement may not be amended in any manner which
materially adversely affects the interests of any enhancement provider without
its prior consent. Likewise, any amendment to the sale and servicing agreement
that materially adversely affects the interests of any holder of the Seller's
Certificate or of any Supplemental Certificates will require the prior consent
of the holders of a majority of the interests evidenced by these certificates.
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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 U.S. Auto Receivables Company ("USA"), which was
in turn an assignee of Chrysler Auto Receivables Company ("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 then existing and the related Collateral Security as of the
Initial Cut-Off Date and will sell or transfer all of the receivables created
after that date and the related Collateral Security. In addition, the RPA
seller has previously designated and may designate in the future Additional
Accounts, and has previously conveyed and will convey to the seller the
principal receivables in the Additional Accounts, together with the related
Collateral Security, as of the applicable Additional Cut-Off Date and all
receivables, and related Collateral Security, created after that date.
Prior to December 16, 2004, the seller sold or transferred the related
Collateral Security to the CARCO receivables trust. On that date, the CARCO
receivables trust transferred to the issuer all of the receivables and
Collateral Security owned by the CARCO receivables trust as of the Initial
Cut-Off Date. Also, on December 16, 2004, the seller has been selling or
transferring to the issuer the receivables and Collateral Security purchased
by the seller from the RPA Seller on or after that date.
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 issuer. 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 receivables -- 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 made 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
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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 sale 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 sale and servicing agreement in respect of the retransfer of
the Ineligible Receivable shall be paid in cash.
The RPA seller has made or will make representations and warranties to the
seller to the effect, among other things, that as of the Initial Closing Date
and each Series Issuance Date:
o the Receivables Purchase Agreement is a legal, valid and binding
obligation of the RPA seller; and
o the Receivables Purchase Agreement is a valid sale or transfer to the
seller of all right, title and interest of the RPA seller in and to the
receivables, whether then existing or created after that time in the
Accounts, the Collateral Security and the proceeds of those items which
is effective as to each receivable upon the creation of that receivable.
If any of the representations and warranties described in this paragraph are
breached and the breach results in the obligation of the seller under the sale
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 sale 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 agreed 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 agreed further that, except for the sale and conveyances
under the Receivables Purchase Agreement and the interests created under the
sale 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 agreed 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.
The RPA seller has agreed that, to the extent it has a security interest in
any Collateral Security resulting from any capital loans, equipment loans or
other non-vehicle advances made in connection with the Accounts, such security
interest is junior and subordinate to the issuer's security interest in the
Collateral Security and that the RPA seller will not realize upon the
Collateral Security until all required payments on the receivables held by the
issuer have been paid in full.
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 issuer.
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Amendments
The RPA seller and the seller may amend the Receivables Purchase Agreement,
without noteholder consent, so long as the RPA seller delivers an opinion of
counsel to the effect that the amendment will not adversely affect in any
material respect the interests of any noteholder.
The receivable purchase agreement may also be amended with the consent of
the holders of not less than 66 2/3% of the aggregate outstanding dollar
principal amount of the notes of all affected series or classes for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Receivables Purchase Agreement or of modifying in
any manner the rights of noteholders. No amendment, however, may:
o reduce in any manner the amount of or delay the timing of payments
required to be made to noteholders or deposits of amounts to be so paid
without the consent of each affected noteholder;
o change the definition or the manner of calculating any noteholders'
interest in the receivables without the consent of each affected
noteholder;
o adversely affect the rating of any series or class by any rating agency
without the consent of the holders of notes evidencing not less than
66 2/3% of the aggregate outstanding dollar principal amount of the notes
of that series or class; or
o reduce that percentage of the outstanding dollar principal amount of
notes the holders of which are required to consent to any amendment
without the consent of each noteholder.
The Receivables Purchase Agreement may not be amended in any manner which
materially adversely affects the interests of any enhancement provider without
its prior consent. Likewise, any amendment to the Receivables Purchase
Agreement that materially adversely affects the interests of any holder of the
Seller's Certificate or of any Supplemental Certificates will require the
prior consent of the holders of a majority of the interests evidenced by these
certificates.
Termination
The Receivables Purchase Agreement will terminate immediately after the
issuer 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 issuer.
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Legal Aspects of the Receivables
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Transfer of Receivables
The RPA seller sells or transfers the receivables to the seller. The seller
immediately sells or transfers the receivables to the issuer. Also, on
December 16, 2004, the CARCO receivables trust transferred all of the
receivables owned by it as of the Initial Cut-Off Date to the issuer. The
seller has represented and warranted and will represent and warrant on the
Series Issuance Date with respect to each series that:
o the transfer to the issuer constituted a valid transfer to the issuer of
all right, title and interest of the seller in and to the receivables;
and
o under the UCC, as in effect in Delaware, there exists a valid,
subsisting and enforceable first-priority perfected ownership interest
in the receivables, in existence on the Initial Cut-Off Date or at the
date of addition of any Additional Accounts, in favor of the issuer and
a valid, subsisting and enforceable first-priority perfected ownership
interest in the receivables created after that time in favor of the
issuer on and after their creation.
However, the transfer of receivables by the seller to the issuer could be
deemed to create a security interest under the UCC. For a discussion of the
issuer's rights arising from these representations and warranties not being
satisfied, see "Description of the Sale and Servicing Agreement --
Representations and Warranties."
Each of the RPA seller and the seller has represented that the receivables
are "tangible chattel paper", accounts" or "payment intangibles" for purposes
of the UCC as in effect in Michigan. If the receivables are deemed to be
tangible chattel paper, accounts or payment intangibles, and the transfer of
the receivables by either the RPA seller to the seller or by the seller to the
issuer is deemed either to be a sale or to create a security interest, the UCC
as in effect in Michigan or Delaware, respectively, applies. In that case,
except for the sale of payment intangibles, the transferee must file an
appropriate financing statement or statements in order to perfect its interest
in the receivables. If the receivables are tangible chattel paper, the
transferee may alternatively perfect its interest in the receivables by taking
possession of the chattel paper. Both the seller and the issuer have filed
financing statements covering the receivables under the UCC as in effect in
Michigan and Delaware, respectively, to perfect their respective interests in
the receivables, and continuation statements are required to be filed to the
extent necessary to continue the perfection of those interests. Similarly, the
issuer has filed a financing statement covering the receivables in order to
perfect under the UCC as in effect in Delaware the indenture trustee's
security interest in the receivables, and continuation statements are required
to be filed to the extent necessary to continue the perfection of the
indenture trustee's security interest. The receivables have not and will not
be stamped to indicate the interest of the seller, the issuer or the indenture
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 issuer's interest. A purchaser of the
receivables who gives new value and takes possession of the instruments which
evidence the receivables, i.e., the tangible chattel paper, in the ordinary
course of the purchaser's business may, under some circumstances, have
priority over the interest of the issuer 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 issuer may also have priority over
the interest of the issuer in the receivable. Under the Receivables Purchase
Agreement, the RPA seller has warranted to the seller, and under the sale and
servicing agreement the seller has warranted to the issuer, that the
receivables transferred under the sale and servicing agreement 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 other than to the issuer.
Also, while DCS is the servicer, cash collections on the receivables may, in
some cases, be commingled with the funds of DCS prior to
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each payment date and, in the event of the bankruptcy of DCS, the indenture
trustee may not have a perfected security interest in those collections.
Matters Relating to Bankruptcy
The RPA seller has warranted to the seller in the Receivables Purchase
Agreement that the sale of the receivables by it to the seller is a valid sale
of the receivables to the seller. Also, the RPA seller and the seller have
agreed to treat the transactions described in this prospectus as a sale of the
receivables to the seller, and the RPA seller has or will take all actions
that are required under Michigan law to perfect the seller's ownership
interest in the receivables. However, the RPA seller could become a debtor in
a bankruptcy case and a creditor or trustee-in-bankruptcy of the debtor or the
debtor itself could take the position that the sale of receivables from the
debtor to the seller should be recharacterized as a pledge of the receivables
to secure a borrowing by the debtor. In that event, payments of collections in
respect of the receivables to the seller, the issuer and the indenture trustee
could be delayed, or, if the court should rule in favor of any
trustee-in-bankruptcy, debtor in possession or creditor, reduced in amount.
See "Risk Factors -- Risk factors relating to the receivables -- 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 receivables 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 issuer that the transfer of the receivables
to the issuer is a sale of the receivables to the issuer. The seller has or
will take all actions that are required under Michigan and Delaware law to
perfect the issuer's ownership interest in the receivables and the seller has
warranted to the issuer that the issuer 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 issuer may have priority over the interest of the issuer in
the receivable and the security interest of the indenture trustee 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 one of its members. The issuer under the sale and servicing
agreement, and the noteholders under the respective indenture supplements,
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
issuer should be recharacterized as a pledge of the receivables. In that
event, payments on the receivables could be delayed or, should the court rule
in favor of any bankruptcy 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.
Notwithstanding the treatment by the RPA seller and the seller of their
transfers of receivables as a legal sale, accounting principles that are
expected to apply to the RPA seller and/or the seller at some point in the
future may require that these transfers of receivables, including the sale of
the collateral certificate to the issuer, be treated as a financing for
accounting purposes.
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If the RPA seller or the seller were to become a debtor in a bankruptcy
case, an Early Redemption Event would occur with respect to the notes of each
series. In that event, under the Receivables Purchase Agreement, new
receivables would no longer be transferred to the seller and, under the sale
and servicing agreement, only collections on receivables already sold to the
seller and transferred to the issuer would be available to be applied to pay
interest and principal owed on the notes. 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 notes might be adversely affected. In addition,
distributions in respect of principal on each note would not be subject to any
applicable controlled accumulation amount specified in the related indenture
supplement.
The occurrence of events of bankruptcy, insolvency or receivership with
respect to the servicer will result in a Service Default. A Service Default,
in turn, may result in an Early Redemption 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 the indenture trustee and the noteholders from appointing a
successor servicer.
Payments made in respect of repurchases of receivables by DCS or the seller
under the sale 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 or the seller, as the case may be.
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Tax Matters
- ------------------------------------------------------------------------------
Federal Income Tax Consequences
General
The following summary describes the anticipated material United States
federal income tax consequences of the purchase, ownership and disposition of
the notes 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.
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, 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. Additionally, this summary does not address the tax
consequences of the purchase, ownership or disposition of the notes issued by
the issuer by any holder treated as a partnership for federal income tax
purposes. If a partnership (including for
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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. 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 or
partnership for United States federal income tax purposes) created or
organized in or under the laws of the United States, any state thereof
or the District of Columbia;
o an estate whose income is subject to United States federal income tax
regardless of its source; or
o a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United
States persons have the authority to control all substantial decisions
of the trust.
Notwithstanding the preceding sentence, to the extent provided in Treasury
regulations, a trust in existence on August 20, 1996 and treated as a United
States person under the Internal Revenue Code and the applicable Treasury
regulations thereunder before such date, that elects to continue to be treated
as a United States person under the Internal Revenue Code or applicable
Treasury regulations thereunder also will be a U.S. noteholder. As used in
this discussion, the term "non-U.S. noteholder" means a beneficial owner of a
note that is not a U.S. noteholder. If a partnership (including for this
purpose any entity treated as a partnership for United States federal income
tax purposes) is a beneficial owner of the notes, the treatment of a partner
in the partnership will generally depend upon the status of the partner and
upon the activities of the partnership. A holder of the notes that is a
partnership and partners in such partnership should consult their tax advisors
about the United States federal income tax consequences of holding and
disposing of the notes.
Prospective investors should consult with their tax advisors as to the
United States federal, state, local, foreign and any other tax consequences to
them relating to their 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 and the issuer ("Tax Counsel"), is of the opinion that, assuming that
the terms of the trust agreement, the indenture, the sale and servicing
agreement and related documents are complied with, the issuer will not be
characterized as an association or a publicly traded partnership taxable as a
corporation for United States federal income tax purposes.
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The seller will agree, and the noteholders will agree by their purchase of
notes, to treat the notes as debt for United States federal, state and local
income, franchise and single business tax purposes. Assuming such
characterization of the notes is correct, 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, and in the opinion of Tax Counsel, the more likely
view is that 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 the person that holds the Seller's Certificate, the beneficial
owner of the Seller's Certificate will not comply with the tax reporting
requirements that would apply under any alternative characterization of the
issuer 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 United States 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 certain potential 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 ("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.
78
Although it is not anticipated, except to the extent indicated in the
related prospectus supplement, that any series of notes will be issued at a
greater than de minimis discount, a series of notes may nonetheless be deemed
to have been issued with greater than de minimis OID. First, interest payments
on a series of notes may not be deemed "qualified stated interest" under
applicable Treasury regulations if (i) reasonable legal remedies do not exist
to compel timely payment or (ii) the notes do not otherwise provide terms and
conditions that make the likelihood of late payment (other than a late payment
that occurs within a reasonable grace period) or nonpayment a remote
contingency. If a series of notes does not pay qualified stated interest, all
of the taxable income thereon would be includible in income as OID. Second,
the IRS could take the position (under regulations that have not yet been
issued pursuant to Section 1272(a)(6) of the Internal Revenue Code) that a
series of notes has OID.
If a note were treated as being issued with greater than de minimis OID, a
noteholder would be required to include such OID in its income as interest
over the term of the note under a constant yield method. In general, OID must
be included in income in advance of the receipt of cash representing that
income. Thus, each cash distribution would be treated as an amount already
included in income (to the extent OID has accrued as of the date of the
interest distribution and is not allocated to prior distributions) or as a
repayment of principal. This treatment would have no significant effect on
noteholders using the accrual method of accounting. However, cash method
noteholders may be required to report income with respect to the notes in
advance of the receipt of cash attributable to such income. In this situation,
a cash method noteholder would have to rely on other income sources to pay the
taxes on its OID income. Even if a note has OID falling within the de minimis
exception, the noteholder must include such de minimis OID in income
proportionately as principal payments are made on such note.
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;
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
79
holder in that taxable year or thereafter, in which case the deferral rule of
the preceding sentence will not apply. For purposes of this paragraph, OID
accrues on a Short-Term Note on a straight-line basis, unless the holder
irrevocably elects, under regulations to be issued by the Treasury Department,
to apply a constant interest method, using the holder's yield to maturity and
daily compounding.
Market Discount and Premium. A holder who purchases a note after its
initial distribution at a discount that exceeds a statutorily defined de
minimis amount will be subject to the "market discount" rules of the Internal
Revenue Code. These rules provide, in part, that gain on the sale or other
disposition of a note and partial principal payments on a note are treated as
ordinary income to the extent of accrued market discount which has not been
previously included in income. The market discount rules also provide for
deferral of interest deductions with respect to debt incurred to purchase or
carry a note that has market discount. Market discount will be considered to
accrue ratably during the period from the date of acquisition to the maturity
date of the note, unless the U.S. noteholder elects to accrue market discount
on the basis of semiannual compounding. A U.S. noteholder may elect to include
market discount in income currently as it accrues (on either a ratable or
semiannual compounding basis), in which case the rules described above
regarding the treatment as ordinary income or 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.
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.
80
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 beneficial owner's name, address, correct
federal taxpayer identification number and a statement that the beneficial
owner 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. Non-U.S. noteholders characterized as partnerships or
trusts for U.S. federal income tax purposes may be subject to additional
reporting requirements and should consult their tax advisers. Should a
noteholder who is not otherwise exempt from backup withholding fail to provide
the required certification, the indenture 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 seller or a bank extending credit pursuant to a loan
agreement entered into in the ordinary course of its trade or business. To
qualify for the exemption from taxation, the Withholding Agent, as defined
below, must have received a statement (generally made on IRS Form W-8BEN) from
the individual or corporation that:
o is signed under penalties of perjury by the beneficial owner of the
note;
o certifies that such owner is not a U.S. noteholder; and
o provides the beneficial owner's name and address.
A "Withholding Agent" is the last U.S. payor (or a non-U.S. payor who is a
qualified intermediary, U.S. branch of a foreign person or withholding foreign
partnership) in the chain of payment prior to payment to a non-U.S. holder
(which itself is not a Withholding Agent). Generally, an IRS Form W-8BEN is
effective for the remainder of the year of 2 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.
81
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, 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 the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and Section 4975 of the Internal Revenue Code of 1986, as
amended (the "Internal Revenue 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 Internal Revenue Code from
82
engaging in certain transactions involving "plan assets" with persons that are
"parties in interest" under ERISA or "disqualified persons" under the Internal
Revenue Code with respect to the plan. Certain governmental plans, although
not subject to ERISA or the Internal Revenue Code, are subject to federal,
state or local laws ("Similar Law") that impose similar requirements. Such
plans subject to ERISA, Section 4975 Internal Revenue Code, or Similar Law are
referred to 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
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 Internal Revenue
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 96-23, which exempts certain
transactions effected on behalf of a Plan by an "in-house asset
manager";
o Prohibited Transaction Class Exemption 95-60, which exempts certain
transactions between insurance company general accounts and parties in
interest;
o Prohibited Transaction Class Exemption 91-38, which exempts certain
transactions between bank collective investment funds and parties in
interest;
o Prohibited Transaction Class Exemption 90-1, which exempts certain
transactions between insurance company pooled separate accounts and
parties in interest; and
o Prohibited Transaction Class Exemption 84-14, which exempts certain
transactions effected on behalf of a Plan by a "qualified professional
asset manager."
There can be no assurance that any of these exemptions will apply with respect
to any Plan's investment in the notes, or that such an exemption, if it did
apply, would apply to all prohibited transactions that may occur in connection
with such investment. Furthermore, these exemptions would not apply to
transactions involved in operation of the issuer if, as described below, the
assets of the issuer were considered to include Plan assets.
ERISA also imposes certain duties on persons who are fiduciaries of Plans
subject to ERISA, including the requirements of investment prudence and
diversification, and the requirement that such a Plan's investments be made in
accordance with the documents governing the Plan. Under ERISA, any person who
exercises any authority or control respecting the management or disposition of
the assets of a Plan is considered to be a fiduciary of such Plan. Plan
fiduciaries must determine whether the acquisition and holding of 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
83
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 non-exempt prohibited transaction as defined in Section
406 of ERISA or Section 4975 of the Internal Revenue 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 for a fee and pursuant to an
agreement or understanding that such advice
-- will serve as a primary basis for investment decisions with respect
to such Plan assets and
-- will be based on the particular investment needs for such Plan; or
o is an employer maintaining or contributing to such Plan.
Employee benefit plans that are governmental plans (as defined in Section
3(32) of ERISA) and certain church plans (as defined in Section 3(33) of
ERISA) are not subject to ERISA requirements. However, any such governmental
or church plan which is qualified under Section 401(a) of the Internal Revenue
Code and exempt from taxation under Section 501(a) of the Internal Revenue
Code is subject to the prohibited transaction rules in Section 503 of the
Internal Revenue Code.
A fiduciary of a Plan considering the purchase of notes of a series should
consult its tax and/or legal advisors regarding whether the assets of the
issuer would be considered plan assets, the availability of exemptive relief
from the prohibited transaction rules and other issues and their potential
consequences.
The sale of notes to a Plan is in no respect a representation by the issuer
or any underwriter of the notes that this investment meets all relevant legal
requirements with respect to investments by Plans generally or any particular
Plan, or that this investment is appropriate for Plans generally or any
particular Plan.
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Experts
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The statements of assets, liabilities and equity arising from cash
transactions of the issuer as of December 31, 2003 and 2002 and the related
statements of cash receipts and disbursements for the year ended December 31,
2003 and the period from June 1, 2002 (inception) through December 31, 2002,
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 reports contain 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 underwriters'
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 one or more underwriters without a
syndicate. Unless we specify otherwise in the related prospectus supplement,
the obligations of the underwriters to purchase the notes will be subject to
conditions precedent, and the underwriters will be obligated to purchase all
of the notes if any of the notes are purchased. Any initial public offering
price and any discounts or concessions allowed or reallowed or paid to dealers
may be changed from time to time.
Notes of a series may also be offered and sold, if we so state in the
related prospectus supplement, in connection with a remarketing upon their
purchase, in accordance with a redemption or repayment under their terms, by
one or more firms ("remarketing firms") acting as principals for their own
accounts or as agents for the seller or the issuer. 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
or the issuer 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.
85
The issuer may, from time to time, invest the funds in its accounts in
Permitted 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
SEC 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 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.
86
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Legal Matters
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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 DCS and its affiliates on other matters.
87
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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 a series, the period specified in the
related prospectus supplement during which principal will be accumulated for
payment to the noteholders of that series.
"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
issuer.
"Additional Accounts" means the additional accounts which the seller has,
subject to conditions, designated from time to time to be included as
Accounts.
"Additional Cut-Off Date" means, for any Additional Accounts, the date
those Additional Accounts are identified and selected.
"Adjustment Payment" means, if the servicer adjusts downward the amount of
a receivable because of a rebate, refund, credit adjustment or 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, and following
such downward adjustment, the Pool Balance would be less than the Aggregate
Series Nominal Liquidation 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 such Determination Date),
the cash payment required to be made by the seller to the Collection Account
equal to the deficiency (up to the amount of the adjustment).
"Aggregate Series Nominal Liquidation Amount" means, for any collection
period, an amount equal to the sum of the series nominal liquidation amounts
for all Series of Notes determined on the Determination Date occurring in such
collection period (in each case, after giving effect to the allocations,
distributions, withdrawals and deposits to be made on the payment date
following the Determination Date during the collection period in which such
Determination Date occurs).
"Auction Vehicles" means, collectively, the vehicles purchased by a dealer
at a closed auction conducted by DaimlerChrysler.
"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 issuer'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 applicable conditions specified in the sale
and servicing agreement, as described under "Description of the Sale and
Servicing Agreement -- Removal of Accounts."
"Bankruptcy Code" means Title 11 of the United States Code.
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"Benefit Plans" means, collectively, employee benefit plans subject to
ERISA or the Internal Revenue Code or individual retirement accounts.
"CARCO" means Chrysler Auto Receivables Company.
"CARCO receivables trust" means CARCO Auto Loan Master Trust.
"CCC" means Chrysler Credit Corporation.
"CFC Corp." means Chrysler Financial Corporation.
"CFC LLC" means Chrysler Financial Company L.L.C.
"Clearstream" means Clearstream Banking, societe anonyme.
"Collateral Security" means, in respect of the receivables, a security
interest in vehicles and parts inventory, equipment, fixtures, service
accounts, chattel paper, instruments, franchise rights and, in some cases,
realty and a personal guarantee.
"Collection Account" means a Qualified Trust Account that the issuer has
established and will maintain in the name of the indenture trustee for the
benefit of the noteholders of all series.
"collection period" means, for any payment date, the calendar month
preceding the month in which that payment date occurs.
"DaimlerChrysler" means DaimlerChrysler Corporation, the successor to
Chrysler Corporation.
"DCS" means DaimlerChrysler Services North America LLC.
"DCWR" means DaimlerChrysler Wholesale Receivables LLC.
"Dealer Overconcentration" means, on any Determination 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 immediately preceding
collection period over
o 2% of the Pool Balance on that last day, except that the percentage
specified in this bullet point will be 4% in the case of either
AutoNation, Inc. and its affiliates or United Auto Group, Inc. and its
affiliates.
However, the seller may, upon ten days' prior notice to the indenture trustee
and the rating agencies and without any notice to or consent of any
noteholder, increase the applicable percentage specified in the second bullet
point, so long as the applicable rating agencies have notified the seller or
the servicer that the reduction will not result in a reduction or withdrawal
of the rating of any outstanding series or class of notes.
"Dealer Trouble status" is described in this prospectus under "The Dealer
Floorplan Financing Business -- `Dealer Trouble Status' and DCS's Write-Off
Policy."
"dealers" means domestic automobile dealers franchised by DaimlerChrysler
and/or other automobile manufacturers.
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"Defaulted Amount" means, for any Determination Date, 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:
-- 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
-- the excess, if any, for the immediately preceding Determination
Date of the amount determined pursuant to this second bullet point
for that Determination Date over the amount determined pursuant to
the first bullet point above 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
issuer (or to the CARCO receivables trust if the receivables were
initially transferred to the CARCO receivables trust), which arose in an
Account which became an Ineligible Account after the date of such
transfer of the receivables and which were not Eligible Receivables for
any six consecutive Determination Dates after the Account became an
Ineligible Account.
"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 issuer.
"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.
"DTC" means The Depository Trust Company.
"Early Redemption Events" are described under "The Indenture -- Early
Redemption Events." The prospectus supplement will describe additional Early
Redemption Events for the related series.
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"Eligible Account" means a wholesale financing line of credit extended by
DCS to a dealer, which, as of its date of determination:
o is established by DCS 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; 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 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 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 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 issuer
(or if it was initially transferred to the CARCO receivables trust, at
the time of transfer to that 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, DCS or the seller in
connection with the creation of the receivable or the transfer of the
receivable to the issuer (or to the CARCO receivables trust if it was
initially transferred to that trust)
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or the performance by DCS of the floorplan financing agreement under
which the receivable was created, have been duly obtained and are in
full force and effect;
o as to which at all times following the transfer of the receivable to the
issuer (or to the CARCO receivables trust if it was initially
transferred to that trust), the issuer or the CARCO receivables trust,
as applicable, 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 sale and servicing
agreement;
o which (1) if originally transferred to the CARCO receivables trust, has
been the subject of a valid transfer and assignment from the seller to
the CARCO receivables trust and from that trust to the issuer of all the
seller's interest in the receivable, including any proceeds of the
receivable and (2) if directly sold by the seller to the issuer, has
been the subject of a valid transfer and assignment from the seller to
the issuer of 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 issuer (or to the CARCO receivables
trust if it was initially transferred to that 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 issuer (or
to the CARCO receivables trust if it was initially transferred to that
trust), DaimlerChrysler, 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 issuer (or
to the CARCO receivables trust if it was initially transferred to that
trust), neither DaimlerChrysler, DCS nor the seller has taken or failed
to take any action which would impair the rights of the issuer or the
noteholders;
o which constitutes "tangible chattel paper" or an "account" or "payment
intangible," each as defined in Article 9 of the UCC as then in effect
in the State of Michigan; and
o which was transferred to the issuer (or to the CARCO receivables trust
if it was initially transferred to that trust) with all applicable
governmental authorization.
"enhancements" means enhancements which may be provided for one or more
classes of notes, 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;
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o swap, including without limitation currency swaps, or other interest
protection agreement;
o repurchase obligation;
o cash deposit; or
o another form of credit or cash flow enhancement described in the related
prospectus supplement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Euroclear" means the Euroclear System.
"Euroclear Operator" means Euroclear Bank, S.A./N.V.
"Euroclear Participants" means participants of Euroclear.
"Excess Available Principal Amounts" means, for any payment date, the sum
of the excess Series Available Principal Amounts that remain after giving
effect to the sharing of excess Series Available Principal Amounts on that
payment date, as described under "Description of the Sale and Servicing
Agreement -- Miscellaneous Payments."
"Excess Funding Account" means a Qualified Trust Account that the issuer
has established and will maintain in the name of the indenture trustee for the
benefit of the noteholders, in which excess funding amounts will be maintained
to the extent provided in the sale and servicing agreement, the indenture and
the applicable indenture supplements.
"Finance Hold" is described under "The Dealer Floorplan Financing Business
- -- Creation of Receivables."
"Fleet Receivables" means receivables originated in connection with
multiple new vehicle orders of at least five vehicles by specified dealers.
"Global Securities" means the globally offered notes.
"indenture" means the Amended and Restated Indenture dated as of December
16, 2004, as amended and supplemented from time to time, between the issuer
and the indenture trustee, which provides for the issuance of series of notes
from time to time.
"indenture supplement" means, for a series of notes, the supplement to the
indenture that provides for the issuance of that series of notes.
"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 noteholders'
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 Sale and Servicing 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 indenture
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
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or the servicer, and which breach has a materially adverse effect on the
noteholders' interest in any receivable or Account.
"Initial Cut-Off Date" means November 30, 2004.
"Insolvency Laws" means the United States Bankruptcy Code or similar
applicable state laws.
"interest collections" means (i) collections on the receivables that
consist of interest and other non-principal charges, including insurance fees,
amounts recovered with respect to Defaulted Receivables and insurance proceeds
and (ii) any net investment earnings on funds in the Collection Account.
"interest funding account" means, for a series, the trust account
maintained for that series in which interest is deposited for payment to the
noteholders of that series.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended.
"IRS" means the Internal Revenue Service.
"issuer" means DaimlerChrysler Master Owner Trust.
"legal final" means, for a series of notes, the payment date on which those
notes are required to be paid in full. The legal final for a series of notes
is the legal final maturity date of those notes. We will specify the legal
final for each series of notes in the related prospectus supplement.
"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 consisting of any Excess Available
Principal Amounts and any principal collections allocated to the seller
based on the Seller's Percentage that are not released to the seller
because the Pool Balance (after giving effect to any receivables
transferred to the issuer) does not equal or exceed the Aggregate Series
Nominal Liquidation Amount for all series (after giving effect to the
allocations, distributions, withdrawals and deposits).
"Monthly Noteholders' Statement" means a statement prepared by the servicer
and forwarded by the indenture trustee to each noteholder of record of any
series on each payment date, that sets forth information with respect to the
issuer and the notes of the series, as stated in the related indenture
supplement.
"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 indenture supplement or
prospectus supplement states otherwise, the share of the Servicing Fee
allocable to noteholders 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 series nominal liquidation amount of that series as of the last day
of the second preceding collection period.
"Moody's" means Moody's Investors Service, Inc. or its successors.
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"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.
"nominal liquidation amount" of the notes of a series is described in
general in this prospectus under "The Notes -- Stated Principal Amount,
Outstanding Dollar Principal Amount and Nominal Liquidation Amount of Notes --
Nominal Liquidation Amount of Notes." The nominal liquidation amount of the
notes of a specific series will be described in the related prospectus
supplement.
"OID" means original issue discount.
"OID regulations" means the United States Treasury regulations relating to
OID.
"outstanding dollar principal amount" of the notes of a series is described
in this prospectus under "The Notes -- Stated Principal Amount, Outstanding
Dollar Principal Amount and Nominal Liquidation Amount of Notes -- Outstanding
Dollar Principal Amount."
"overcollateralization amount," if any, for a series will be calculated as
described in the related prospectus supplement.
"Overconcentration Amount" means, on any Determination Date, the sum of the
Dealer Overconcentrations on that date.
"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.
"Permitted Investments" means, except as otherwise provided in the related
indenture supplement for any series of notes:
o instruments, investment property or other property consisting of:
-- obligations of or fully guaranteed by the United States of America,
-- time deposits or certificates of deposit of any depository
institution or trust company incorporated under the laws of the
United States of America or any state thereof (or domestic branches
of foreign depository institutions or trust companies) and subject
to supervision and examination by federal or state banking or
depository institution authorities; provided, however, that at the
time of the indenture trustee's investment or contractual
commitment to invest therein, the certificates of deposit or
short-term deposits of such depository institution or trust company
shall have a credit rating from Moody's and Standard & Poor's of
P-1 and A-1+, respectively, and, if rated by Fitch, F1+ from Fitch;
-- commercial paper (including but not limited to asset backed
commercial paper) having, at the time of the Indenture Trustee's
investment or contractual commitment to invest therein, a rating
from Moody's and Standard & Poor's of P-1 and A-1+, respectively,
and, if rated by Fitch, F1+
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from Fitch;
-- bankers' acceptances issued by any depository institution or trust
company incorporated under the laws of the United States of America
or any state thereof (or domestic branches of foreign depository
institutions or trust companies) and subject to supervision and
examination by federal or state banking or depository institution
authorities; and
-- investments in money market funds rated AAA-m or AAA-mg by Standard
& Poor's and Aaa by Moody's or otherwise approved in writing by
each rating agency;
o demand deposits in the name of the indenture trustee in any depository
institution or trust company incorporated under the laws of the United
States of America or any state thereof (or domestic branches of foreign
depository institutions or trust companies) and subject to supervision
and examination by federal or state banking or depository institution
authorities;
o uncertificated securities that are registered in the name of the
indenture trustee upon books maintained for that purpose by the issuer
of these uncertificated securities and identified on books maintained
for that purpose by the indenture trustee as held for the benefit of the
noteholders, and consisting of shares of an open end diversified
investment company which is registered under the Investment Company Act
of 1940, as amended, and which (i) invests its assets exclusively in
obligations of or guaranteed by the United States of America or any
instrumentality or agency thereof having in each instance a final
maturity date of less than one year from their date of purchase or other
Permitted Investments, (ii) seeks to maintain a constant net asset value
per share, (iii) has aggregate net assets of not less than $100,000,000
on the date of purchase of such shares and (iv) as to which each rating
agency confirms in writing that the investment will not cause a
reduction, qualification or withdrawal of the rating of any outstanding
notes which it has rated; and
o any other investment if each rating agency confirms in writing that the
investment will not cause a reduction, qualification or withdrawal of
the rating of any outstanding notes which it has rated.
"Plan Assets Regulation" means the final regulation issued by the
Department of Labor 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. Prior to December 16, 2004, the CARCO
receivables trust used to acquire the receivables pursuant to the pooling and
servicing agreement. On December 16, 2004, the receivables were transferred
from the CARCO receivables trust to the issuer and the pooling and servicing
agreement was terminated.
"prime rate" means the rate designated as the "prime rate" from time to
time by certain financial institutions selected by DCS.
"principal collections" means collections of principal on the receivables.
"principal funding account" means, for a series, the trust account
maintained for that series in which principal is accumulated for payment to
the noteholders of that series.
"principal receivables" means the portion of the receivables that
represents principal.
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"Qualified Institution" means either:
o a depository institution, which may include the indenture trustee (so
long as it is a paying agent under the indenture), or the owner trustee
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 as to which each rating agency confirms in
writing that the depository institution as a Qualified Institution will
not cause a reduction, qualification or withdrawal of the rating of any
outstanding notes which it has rated.
"Qualified Trust 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; or
o any other account in respect of which each rating agency confirms in
writing that the use of the account will not cause a reduction,
qualification or withdrawal of the rating of any outstanding notes which
it has rated.
"rating agency" means each rating agency designated by the seller in
respect of any outstanding series or class of notes.
"Receivables Purchase Agreement" means the Second Amended and Restated
Receivables Purchase Agreement, dated as of December 16, 2004, as amended and
supplemented from time to time, between DCS, as RPA seller, and DCWR, as
buyer.
"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 SEC with respect to the notes.
"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.
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"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 indenture 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 issuer for all purposes.
"Repurchased Receivables" means Designated Receivables which have been
deemed repurchased from the issuer 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 notes obtained by multiplying
the Required Participation Percentage for that series of notes by the
nominal liquidation amount of the notes of that series at that time;
plus
o the sum of the overcollateralization amounts for each series of notes on
the preceding payment date, after giving effect to the allocations,
deposits and payments made on that payment date.
"Required Participation Percentage" means, for a series, the required
participation percentage specified in the related indenture supplement.
"RPA seller" means DCS, as seller, together with its predecessors as
appropriate, under the Receivables Purchase Agreement.
"sale and servicing agreement" means the Sale and Servicing Agreement dated
as of December 16, 2004, as amended and supplemented from time to time, among
DCWR, as seller of the receivables, DCS, as servicer of the receivables, and
the issuer.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"seller" means DCWR and its successors.
"Seller's Certificate" means the certificate issued by the issuer that
evidences the Seller's Interest.
"Seller's Interest" means the seller's interest in the assets of the issuer
to extent the assets are not allocated for the payment or security of the
notes as described in this prospectus and the prospectus supplements.
"Seller's Participation Amount" means, at any time of determination, an
amount equal to (i) the Pool Balance at that time minus (ii) the Aggregate
Series Nominal Liquidation Amount at that time.
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"Seller's Percentage" means, for any collection period, the percentage (not
less than 0%) equal to 100% minus either:
o the sum of the "Series Floating Allocation Percentages" for all series
of notes (as defined in the related indenture supplements) for such
collection period, when used with respect to allocations of interest
collections and Defaulted Amounts; or
o the sum of the "Series Principal Allocation Percentages" for all series
of notes (as defined in the related indenture supplements) for such
collection period, when used with respect to allocations of principal
collections.
The Seller's Percentage for allocations of Miscellaneous Payments will be
zero.
"Series Available Interest Amount" means, for any series of notes, the
interest collections allocated to that series, together with any other
available funds described in the related prospectus supplement that are to be
treated as part of the Series Available Interest Amount for that series.
"Series Available Principal Amount" means, for any series of notes, the sum
of the principal collections and Miscellaneous Payments allocated to that
series, together with any other available funds described in the related
prospectus supplement that are to be treated as part of the Series Available
Principal Amount for that series.
"Series Cut-Off Date" means, for a series, the date stated in the related
indenture supplement on which a revolving period for the series of notes will
begin.
"Series Issuance Date" means the date of issuance of any series.
"series nominal liquidation amount" means, for a series, the sum of (i) the
nominal liquidation amount of the notes of that series plus (ii) the
overcollateralization amount for that series. A prospectus supplement may
provide a different definition.
"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 indenture trustee to make any payment, transfer
or deposit, on the date the sale and servicing agreement, the indenture
or any indenture supplement requires the servicer to do so, which
failure is not cured within a five day grace period;
o failure by the servicer duly to observe or perform any other covenants
or agreements of the servicer in the sale and servicing agreement, the
indenture or any indenture supplement, 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
indenture trustee shall have given written notice of the failure to the
servicer;
o the servicer delegates its duties under the sale and servicing
agreement, except as specifically permitted under that agreement;
o any representation, warranty or certification made by the servicer in
the sale and servicing agreement or in any certificate delivered under
the sale and servicing agreement proves to have been incorrect when
made, has a materially adverse effect on the rights of the noteholders
of any outstanding series, and
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which materially adverse effect continues for a period of 60 days after
the indenture trustee shall have given written notice of that fact to
the servicer; or
o certain 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
bullet point for a period of ten business days or referred to under the
second, third or fourth bullet points for a period of 60 business days, will
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 indenture trustee, by written notice to the servicer, terminating all of
the rights and obligations of the servicer, as servicer, under the sale 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 for its servicing activities and reimbursement for its
expenses with respect to all of the receivables in the issuer.
"Servicing Fee Rate" means, for a series, the servicing fee rate set forth
in the related indenture supplement.
"Standard & Poor's" means Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc. or its successors.
"Supplemental Certificate" means a certificate received by the seller in
exchange for a portion of the Seller's Interest that the seller then transfers
or assigns to a person or entity chosen by the seller. The terms of any
Supplemental Certificate will be set forth in a supplement to the trust
agreement. A Supplemental Certificate may be issued only 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 indenture 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 indenture 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 notes.
Any later transfer or assignment of a Supplemental Certificate is also subject
to certain conditions.
"Tax Counsel" means Sidley Austin Brown & Wood LLP, special U.S. federal
income tax counsel to the seller 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 in respect of
a specified action:
o such action, other than some specified actions, will not adversely
affect the characterization of the notes of any outstanding series or
class as debt; and
100
o such action will not cause a taxable event to any noteholders or the
issuer.
"Transfer Deposit Amount" means, for any Determination Date, the amount by
which the Pool Balance would be less than the Aggregate Series Nominal
Liquidation 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.
"UCC" means the Uniform Commercial Code.
"Unallocated Principal Collections" means any amount of any principal
collections which are held unallocated in the Collection Account.
"USA" means U.S. Auto Receivables Company.
"U.S. Wholesale Portfolio" means the accounts of domestic dealers financed
and serviced by DCS.
"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.
101
Annex A
- ------------------------------------------------------------------------------
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, 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
issuer. 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.
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.
A-1
Trading between DTC participants. DTC participants will settle secondary
market trades between each other using the procedures applicable to securities
previously issued by the issuer 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.
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
A-2
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 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 of a note and are individuals or entities treated as
corporations for federal income tax purposes can obtain a complete
exemption from the withholding tax by filing a signed Form W-8BEN
(Certificate of Foreign Status). A non-U.S. person not described in the
foregoing sentence that beneficially owns a note may be subject to more
complex rules.
o Exemption for non-U.S. persons with effectively connected income (Form
W-8ECI). A non-U.S. person that for federal income tax purposes is an
individual or entity treated as a corporation, including a non-U.S.
corporation or bank with a U.S. branch, for which the interest income
from a note 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). A non-U.S. person not described in the foregoing
sentence that beneficially owns a note may be subject to more complex
rules.
A-3
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 of
a note and that for federal income tax purposes are individuals or
entities treated as corporations 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. A non-U.S.
person not described in the foregoing sentence that beneficially owns a
note may be subject to more complex rules.
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).
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 generally 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 DAIMLERCHRYSLER
information or to make any
representations, other than those DAIMLERCHRYSLER
contained in the prospectus or
prospectus supplement. Any information MASTER OWNER TRUST
or representations, other than those
contained in the prospectus or $[o]
prospectus supplement, are not Auto Dealer Loan
authorized by the seller or by the Asset Backed Notes,
underwriters. Do not rely on any Series [o],
information or representations other due [o]
than those contained in the prospectus
or prospectus supplement.
DAIMLERCHRYSLER WHOLESALE
We only intend the prospectus RECEIVABLES LLC
supplement to be an offer to sell or a Seller
solicitation of any offer to buy the
offered securities if: DAIMLERCHRYSLER SERVICES
NORTH AMERICA LLC
o used in jurisdictions in which Servicer
the offer or solicitation is
authorized, PROSPECTUS SUPPLEMENT
o the person making the offer or [underwriter[s]]
solicitation is qualified to do
so, and
o the offer or solicitation is made
to anyone to whom it is lawful to
make the offer or solicitation.
The information in the prospectus or
prospectus supplement is only accurate
as of the date of this prospectus
supplement.
All dealers effecting transactions in
the offered securities within 90 days
after the date of this prospectus
supplement may be required to deliver the
prospectus and prospectus supplement,
regardless of their participation in this
distribution. This is in addition to the
obligation of dealers to deliver the
prospectus supplement when acting as
underwriters or when selling their
unsold allotments or subscriptions.
========================================= ==========================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.*
Set forth below is an estimate of the amount of fees and expenses (other
than underwriting discounts and commissions) to be incurred in connection with
the issuance and distribution of the securities.
SEC Registration Fee........................................... $ 470,800 **
Trustee's Fees and Expenses (including counsel fees)........... $ 27,495
Accounting Fees and Expenses................................... $ 38,500
Legal Fees and Expenses........................................ $ 150,000 **
Printing and Engraving Expenses................................ $ 38,350
Rating Agency Fees............................................. $ 403,000
Miscellaneous.................................................. $ 9,605
--------------------
Total..................................................... $ 1,137,750
====================
- -------------------------
* All amounts except the SEC Registration Fee and the Legal Fees and Expenses
are estimates of expenses incurred in connection with the issuance and
distribution of a series of securities in an aggregate principal amount
assumed for these purposes to be equal to $1,000,000,000 of securities
registered hereby.
** This amount relates to the $4,000,000,000 of securities registered hereby.
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 4.3).
4.1 -- Amended and Restated Indenture, dated as of December 16, 2004,
between the Issuer and The Bank of New York, as indenture trustee
(the "Indenture Trustee").
4.2 -- Form of Series Indenture Supplement between the Issuer and the
Indenture Trustee (including form of notes).
4.3 -- Amended and Restated Trust Agreement, dated as of December 16, 2004,
between the Registrant and Chase Manhattan Bank USA, National
Association (the "Owner Trustee") (including form of the Issuer's
certificate of trust).
4.4 -- Form of notes (included in Exhibit 4.1).
5.1 -- Opinion of Sidley Austin Brown & Wood LLP with respect to certain
matters involving the notes.
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.
25.1 -- Form of T-1 Statement of Eligibility under the Trust Indenture Act of
1939 of The Bank of New York.
99.1 -- Sale and Servicing Agreement, dated as of December 16, 2004, among
the Issuer, the Registrant and DaimlerChrysler Services North America
LLC (the "Servicer").
99.2 -- Amended and Restated Administration Agreement, dated as of
December 16, 2004, among the Issuer, DaimlerChrysler Services North
America LLC (the "Administrator") and the Indenture Trustee.
99.3 -- Second Amended and Restated Receivables Purchase Agreement, dated as
of December 16, 2004, between the Registrant and DaimlerChrysler
Services North America LLC.
99.4 -- Program Amendment Agreement, dated as of December 16, 2004, among the
Registrant, the Issuer, DaimlerChrysler Services North America LLC,
The Bank of New York, as the Indenture Trustee and as the trustee of
CARCO Auto Loan Master Trust, and the Owner Trustee.
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 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 the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in 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 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
II-3
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.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Farmington Hills, State
of Michigan, on the 23rd day of December, 2004.
DAIMLERCHRYSLER WHOLESALE RECEIVABLES LLC, as
beneficiary of DaimlerChrysler Master Owner Trust
By Chrysler Financial Receivables Corporation, a Member
By /s/ Byron C. Babbish
---------------------------------------------
Byron C. Babbish
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, as amended,
this amendment to the 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:
* President December 23, 2004
- -----------------------------------------------
Juergen Walker
Principal financial officer and sole director
of Chrysler Financial Receivables Corporation:
Vice President, Sole
Director and Chief
* Financial Officer December 23, 2004
- -----------------------------------------------
Paul Knauss
Principal accounting officer of Chrysler
Financial Receivables Corporation:
Vice President and
* Controller December 23, 2004
- -----------------------------------------------
Norbert Meder
BOARD OF DIRECTORS OF CHRYSLER FINANCIAL RECEIVABLES CORPORATION:
Director of Chrysler Financial Receivables Corporation:
* Director December 23, 2004
- -----------------------------------------------
Paul Knauss
* by Byron C. Babbish, attorney-in-fact
II-5
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 4.3).
4.1 -- Amended and Restated Indenture between the Issuer and The Bank of
New York, as indenture trustee (the "Indenture Trustee").
4.2 -- Form of Series Indenture Supplement between the Issuer and the
Indenture Trustee (including form of notes).
4.3 -- Amended and Restated Trust Agreement between the Registrant and Chase
Manhattan Bank USA, National Association (the "Owner Trustee")
(including form of the Issuer's certificate of trust).
4.4 -- Form of notes (included in Exhibit 4.2).
5.1 -- Opinion of Sidley Austin Brown & Wood LLP with respect to certain
matters involving the notes.
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.
25.1 -- Form of T-1 Statement of Eligibility under the Trust Indenture Act
of 1939 of The Bank of New York.
99.1 -- Sale and Servicing Agreement among the Issuer, the Registrant and
DaimlerChrysler Services North America LLC (the "Servicer").
99.2 -- Amended and Restated Administration Agreement among the Issuer,
DaimlerChrysler Services North America LLC (the "Administrator") and
the Indenture Trustee.
99.3 -- Second Amended and Restated Receivables Purchase Agreement between
the Registrant and DaimlerChrysler Services North America LLC.
99.4 -- Program Amendment Agreement among the Registrant, the Issuer,
DaimlerChrysler Services North America LLC, The Bank of New York, as
the Indenture Trustee and as the trustee of CARCO Auto Loan Master
Trust, and the Owner Trustee.
II-6