Rule 424(b)5
Registration Statement No. 333-50780-01
BEFORE YOU DECIDE TO INVEST IN THE SERIES 2001-A CERTIFICATES, PLEASE READ THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS, ESPECIALLY THE RISK FACTORS BEGINNING
ON PAGE S-8 OF THIS PROSPECTUS SUPPLEMENT AND PAGE 9 OF THE PROSPECTUS.
The Series 2001-A certificates are interests in the trust only and do not
represent interests in or obligations of DaimlerChrysler AG, DaimlerChrysler
Wholesale Receivables LLC, DaimlerChrysler Services North America LLC or any of
their affiliates.
[DAIMLERCHRYSLER LOGO] Prospectus Supplement
To Prospectus dated December 3, 2001
$1,000,000,000
CARCO AUTO LOAN MASTER TRUST
Issuer
FLOATING RATE AUTO LOAN ASSET BACKED CERTIFICATES, SERIES 2001-A,
DUE NOVEMBER 15, 2006.
DAIMLERCHRYSLER WHOLESALE RECEIVABLES LLC, Seller
DAIMLERCHRYSLER SERVICES NORTH AMERICA LLC, Servicer
<Table>
Principal amount............ $1,000,000,000
Per annum interest rate..... one-month LIBOR
plus 0.065% or, if
lower, the assets
receivables rate
Expected principal payment
date...................... November 15, 2004
Legal final................. November 15, 2006
Proceeds to seller.......... $1,000,000,000 100.0%
</Table>
The underwriter will purchase the Series 2001-A
certificates and will offer them from time to time
to the public at varying prices determined at the
time of sale.
The seller must pay expenses estimated to be
$620,000.
The trust will pay interest on the Series 2001-A
certificates on the 15th day of each month. The
first distribution date will be January 15, 2002.
We will deliver the Series 2001-A certificates in book-entry form only on
or about December 7, 2001.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the Series 2001-A certificates or
determined that this prospectus supplement or the prospectus is accurate or
complete. Any representation to the contrary is a criminal offense.
------------------------------------------------------
SALOMON SMITH BARNEY
------------------------------------------------------
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS DECEMBER 3, 2001.
READING THE PROSPECTUS AND PROSPECTUS SUPPLEMENT
We provide information on the offered securities in two documents that
offer varying levels of detail:
-- Prospectus -- provides general information, some of which may not
apply to the offered securities.
-- Prospectus Supplement -- provides a summary of the specific terms
of the offered securities.
You should rely only on the information contained in this document. We have
not authorized anyone to provide you with different information.
We suggest you read this prospectus supplement and the prospectus. The
prospectus supplement pages begin with "S". If the terms of the offered
securities described in this prospectus supplement vary with the accompanying
prospectus, you should rely on the information in this prospectus supplement.
We include cross-references to sections in these documents where you can
find further related discussions. Refer to the table of contents on page S-3 in
this document and on page 4 in the prospectus to locate the referenced sections.
LIMITATIONS ON OFFERS OR SOLICITATIONS
We do not intend this document to be an offer or solicitation:
-- if used in a jurisdiction in which the offer or solicitation is
not authorized;
-- if the person making the offer or solicitation is not qualified to
do so; or
-- 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
<Table>
<Caption>
- --------------------------------------------
SECTION PAGE
- --------------------------------------------
READING THE PROSPECTUS AND PROSPECTUS
SUPPLEMENT S-2
- --------------------------------------------
SUMMARY OF SERIES TERMS S-4
- --------------------------------------------
-- Parties S-4
- --------------------------------------------
-- Title of Securities S-4
- --------------------------------------------
-- Invested Amount S-4
- --------------------------------------------
-- Series Issuance Date S-4
- --------------------------------------------
-- Series Cut-Off Date S-4
- --------------------------------------------
-- Terms of the Certificates S-4
- --------------------------------------------
-- Legal Final S-5
- --------------------------------------------
-- Revolving Period S-5
- --------------------------------------------
-- Accumulation Period S-5
- --------------------------------------------
-- Early Amortization Period S-5
- --------------------------------------------
-- Credit Enhancement S-5
- --------------------------------------------
-- Yield Supplement Account S-6
- --------------------------------------------
-- Excess Principal Collections S-6
- --------------------------------------------
-- Servicing Fee Rate S-6
- --------------------------------------------
-- Optional Repurchase S-6
- --------------------------------------------
-- Other Series of Certificates S-6
- --------------------------------------------
-- ERISA Considerations S-6
- --------------------------------------------
-- Tax Status S-6
- --------------------------------------------
-- Certificate Ratings S-6
- --------------------------------------------
-- Risk Factors S-7
- --------------------------------------------
-- Certificates Not Listed on any
Exchange S-7
- --------------------------------------------
RISK FACTORS S-8
- --------------------------------------------
-- The Timing of Principal
Payments May Not Be as Expected S-8
- --------------------------------------------
-- You May Receive Interest at a
Lower Rate Than You Expected S-9
- --------------------------------------------
-- 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 S-9
- --------------------------------------------
-- The Trust is Dependent on DCS
and DaimlerChrysler S-9
- --------------------------------------------
-- Your Ability to Resell
Certificates is Limited S-10
- --------------------------------------------
USE OF PROCEEDS S-10
- --------------------------------------------
</Table>
<Table>
<Caption>
- --------------------------------------------
SECTION PAGE
- --------------------------------------------
THE DEALER FLOORPLAN FINANCING
BUSINESS S-10
- --------------------------------------------
THE ACCOUNTS S-12
- --------------------------------------------
DCS'S PERFORMANCE HISTORY S-13
- --------------------------------------------
-- Loss Experience S-13
- --------------------------------------------
-- Aging Experience S-15
- --------------------------------------------
-- Geographic Distribution S-15
- --------------------------------------------
MATURITY AND PRINCIPAL PAYMENT
CONSIDERATIONS S-16
- --------------------------------------------
SERIES PROVISIONS S-17
- --------------------------------------------
-- General S-17
- --------------------------------------------
-- Interest S-17
- --------------------------------------------
-- Principal S-20
- --------------------------------------------
-- Excess Funding Account S-22
- --------------------------------------------
-- Allocation Percentages S-23
- --------------------------------------------
-- Principal Collections for All
Series S-25
- --------------------------------------------
-- Allocation of Collections;
Limited Subordination of
Seller's Interest S-25
- --------------------------------------------
-- Deficiency Amount S-26
- --------------------------------------------
-- Available Subordinated Amount S-27
- --------------------------------------------
-- Distributions from the
Collection Account; Reserve
Fund; Yield Supplement Account S-29
- --------------------------------------------
-- Principal Collections S-32
- --------------------------------------------
-- Required Participation
Percentage S-33
- --------------------------------------------
-- Principal Funding Account S-33
- --------------------------------------------
-- Distributions S-34
- --------------------------------------------
-- Optional Repurchase S-35
- --------------------------------------------
-- Investor Charge-Offs S-35
- --------------------------------------------
-- Early Amortization Events S-36
- --------------------------------------------
-- Termination S-37
- --------------------------------------------
-- Reports S-38
- --------------------------------------------
UNDERWRITING S-39
- --------------------------------------------
LEGAL MATTERS S-39
- --------------------------------------------
CERTIFICATE RATINGS S-40
- --------------------------------------------
GLOSSARY OF PRINCIPAL TERMS FOR THE
PROSPECTUS SUPPLEMENT S-41
- --------------------------------------------
ANNEX I -- OTHER SERIES OF INVESTOR
CERTIFICATES A-1
- --------------------------------------------
</Table>
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 2001-A certificates following this summary and in the prospectus.
PARTIES
<Table>
<Caption>
- ---------------------------------------------------------
PARTY DESCRIPTION
- ---------------------------------------------------------
Issuer - CARCO Auto Loan Master Trust (the "TRUST")
- ---------------------------------------------------------
Seller - DaimlerChrysler Wholesale Receivables LLC
("DCWR"), an indirectly owned Subsidiary
of DaimlerChrysler Services North America
LLC ("DCS")
- DCWR's executive offices are located at
27777 Franklin Road, Southfield, Michigan
48034-8286, and its telephone Number is
(248) 948-3031.
- ---------------------------------------------------------
Servicer - DCS, a wholly owned subsidiary of
DaimlerChrysler Corporation
("DAIMLERCHRYSLER").
- ---------------------------------------------------------
Trustee - The Bank of New York.
- ---------------------------------------------------------
</Table>
TITLE OF SECURITIES
Floating Rate Auto Loan Asset Backed
Certificates, Series 2001-A (the "SERIES
2001-A CERTIFICATES").
INVESTED AMOUNT
The total principal amount of the
Series 2001-A certificates invested in
receivables on the date they are issued is
expected to be $1,000,000,000. This invested
amount is subject to decreases and increases
as described in this prospectus supplement
under the caption "Series
Provisions -- Allocation Percentages".
SERIES ISSUANCE DATE
December 7, 2001.
SERIES CUT-OFF DATE
November 30, 2001.
TERMS OF THE CERTIFICATES
INTEREST PAYMENT DATES
-- 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 January 15,
2002.
PER ANNUM INTEREST RATES
-- 0.065% above LIBOR
or, if lower, the
assets receivables
rate described in
this prospectus
supplement. Interest
will be calculated
on the basis of the
actual number of
days in the
applicable interest
period divided by
360.
INTEREST PERIODS
-- Each period from and
including a
distribution date to
but excluding the
following
distribution date,
except that the
first interest
period will be 39
days.
S-4
PRINCIPAL PAYMENTS
-- We expect to pay the principal of the Series 2001-A certificates in
full on November 15, 2004.
-- 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 outstanding principal amount of the Series
2001-A certificates, to the extent not previously paid, by November 15, 2006.
REVOLVING PERIOD
During the revolving period, we will not pay principal on the Series 2001-A
certificates or accumulate principal for that purpose. Instead, we will use the
Series 2001-A share of principal collections to make principal distributions on
other series and/or pay them to the seller. The revolving period will begin at
the close of business on the Series Cut-Off Date and end when the accumulation
period begins. The revolving period will also end if an early amortization
period that is not terminated begins.
ACCUMULATION PERIOD
We will accumulate principal for the Series 2001-A certificates during an
accumulation period of between one and five months long unless an early
amortization period that is not terminated begins before the start of the
accumulation period. The latest date on which the accumulation period will
commence is October 1, 2004. During the accumulation period we will accumulate
the Series 2001-A share of principal collections for payment on November 15,
2004. See "Series Provisions -- Principal" in this prospectus supplement.
EARLY AMORTIZATION PERIOD
If an early amortization 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 amortization event as the early amortization period. Early amortization
events are events that might adversely affect the trust's ability to make
payments on the Series 2001-A certificates as originally expected. See
"Description of the Certificates -- Reinvestment Events and Early Amortization
Events" in the prospectus and "Series Provisions -- Early Amortization Events"
in this prospectus supplement for a description of the events that might cause
an early amortization period to start and, in some cases, terminate.
CREDIT ENHANCEMENT
SUBORDINATION OF THE SELLER'S INTEREST
-- The seller's interest in the trust will be subordinated to the rights
of the Series 2001-A certificateholders to the extent described in
this prospectus supplement. Collections on the receivables otherwise
allocable to the seller may be used to pay interest on the Series
2001-A certificates and other amounts, but only to the extent of the
available subordinated amount.
-- The "AVAILABLE SUBORDINATED AMOUNT" will initially be $111,111,111
but is subject to reduction from time to time. See "Series
Provisions -- Allocation of Collections; Limited Subordination of
Seller's Interest' in this prospectus supplement for more information
about the available subordinated amount.
RESERVE FUND
-- On the Series 2001-A issuance date, the seller will deposit
$3,500,000 into
S-5
the reserve fund for the Series 2001-A certificates. The reserve fund
required amount for any distribution date will equal 0.35% of the
outstanding principal balance of the Series 2001-A certificates for
that distribution date, after giving effect to any change in the
outstanding principal balance on that distribution date. Amounts on
deposit in the reserve fund will be available to pay monthly
interest, the monthly servicing fee and investor default amounts and,
on the final payment date, carry-over amounts.
YIELD SUPPLEMENT ACCOUNT
On the Series 2001-A issuance date, the seller will deposit $4,000,000 in
the yield supplement account for the Series 2001-A certificates. The yield
supplement account required amount for any distribution date will equal 0.40% of
the outstanding principal balance of the Series 2001-A certificates for that
distribution date, after giving effect to any change in the outstanding
principal balance on that distribution date.
Amounts on deposit in the yield supplement account will be available to pay
carry-over amounts.
EXCESS PRINCIPAL COLLECTIONS
Principal collections allocable to other series, to the extent not needed
to make payments in respect of the other series, will be applied to make
principal payments in respect of the Series 2001-A certificates and of other
series of certificates entitled to principal payments.
SERVICING FEE RATE
1/12 of 1.0% per month (on a 30/360 day basis), or less if the servicer waives
any portion of the monthly servicing fee on any date.
OPTIONAL REPURCHASE
The Series 2001-A certificateholders' interest in the trust is subject to
optional repurchase by the servicer on any distribution date after the invested
amount for the Series 2001-A certificates is reduced to $100,000,000 or less.
OTHER SERIES OF CERTIFICATES
The trust has previously issued and may issue additional series of
certificates. A summary of series currently outstanding is contained in "Annex
I -- Other Series of Investor Certificates" at the end of this prospectus
supplement.
ERISA CONSIDERATIONS
It is expected that the Series 2001-A certificates will be eligible for
purchase by employee benefit plans. However, plans contemplating the purchase of
Series 2001-A certificates should consult their counsel before making a
purchase. See "ERISA Considerations" in the prospectus.
TAX STATUS
Sidley Austin Brown & Wood LLP, federal tax counsel to the trust, is of the
opinion that at the time of initial issuance of the Series 2001-A certificates
for federal income tax purposes:
-- the Series 2001-A certificates will be characterized as debt and
-- the trust will not be characterized as an association, or a publicly
traded partnership, taxable as a corporation.
By your acceptance of a certificate, you will agree to treat your Series
2001-A certificates as indebtedness of the seller for federal, state and local
income and franchise tax purposes and Michigan single business tax purposes.
CERTIFICATE RATINGS
The trust will issue the Series 2001-A certificates only if they are rated
at the time
S-6
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 ultimately receive all of your required principal and interest
distributions. The rating agencies and their ratings do not address the
likelihood that any carry-over interest amounts will be paid, the likelihood you
will receive interest or principal payments on a scheduled date, or whether you
will receive any principal on the Series 2001-A certificates prior to or after
the expected distribution date.
RISK FACTORS
An investment in Series 2001-A certificates involves material risks. See
"Risk Factors" in this prospectus supplement and the prospectus.
CERTIFICATES NOT LISTED ON ANY EXCHANGE
The Series 2001-A certificates 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 Certificates 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 2001-A
certificates.
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
2001-A certificates. Some of those factors are described below.
YOU MAY NOT RECEIVE YOUR
PRINCIPAL ON THE EXPECTED
PAYMENT DATE BECAUSE OF THE
PERFORMANCE OF OTHER SERIES: -- The shorter the accumulation period the
greater the chance that payment in full of
the Series 2001-A certificates by their
expected distribution date will depend on
principal collections from other series. A
series from which principal collections
are expected to be available to make
payments on the Series 2001-A certificates
may enter an early amortization period
after the May 2004 distribution date.
Principal collections from that series
will not be available to pay principal of
the Series 2001-A certificates. As a
result, you may receive some of your
principal later than the Series 2001-A
expected distribution date. On written
request, the seller will give you
disclosure documents relating to the other
outstanding series. Those documents
describe the events which could result in
the start of an early amortization period
for those series.
IF AN EARLY AMORTIZATION EVENT
OCCURS, YOU MAY RECEIVE YOUR
PRINCIPAL SOONER OR LATER THAN
YOU
EXPECTED AND YOU MAY NOT
RECEIVE
ALL OF YOUR PRINCIPAL: -- If an early amortization event occurs, you
may receive your principal sooner or later
than you expected and you may not receive
all of your principal. In particular, a
significant decline in the amount of
receivables generated could cause an early
amortization of your certificates. If the
balance of the receivables is not
maintained at a specified level, DCS must
designate additional accounts, the
receivables of which will be sold to the
seller. The seller will be required to
transfer those receivables to the trust.
If additional accounts are not designated
by DCS when required, an early
amortization event will occur. In some
cases, however, the resulting early
amortization period may end and you will
stop receiving principal payments.
-- If a bankruptcy event relating to DCS, the
seller or DaimlerChrysler were to occur,
an early amortization event would occur.
In that case additional receivables would
not be transferred to the trust and
principal payments on the Series 2001-A
certificates would commence.
S-8
See "The Dealer Floorplan Financing Business" in the prospectus and "Maturity
and Principal Payment Considerations" and "Series Provisions -- Early
Amortization Events" in this prospectus supplement for more information about
the timing of payments on the Series 2001-A certificates.
YOU MAY RECEIVE INTEREST AT A LOWER RATE THAN YOU EXPECTED. The
receivables bear interest at the prime rates of banks plus a margin, while the
certificate rate is based on LIBOR. Several factors will have an effect on the
interest rates of the Series 2001-A certificates. Some of those factors are
described below.
YOU WILL RECEIVE THE LOWER OF
THE
CERTIFICATE RATE BASED ON LIBOR
AND THE ASSETS RECEIVABLES
RATE: -- The "ASSETS RECEIVABLES RATE" is based on
the interest rates on the receivables and
investment earnings on amounts on deposit
in trust bank accounts. If (a) the
certificate rate based on LIBOR exceeds
(b) the assets receivables rate, the
certificate rate will be the assets
receivables rate.
YOU WILL RECEIVE LESS INTEREST
IF
THE TRUST IS NOT ABLE TO MAKE
UP
A DEFICIENCY IN INTEREST
PAYMENTS
IF THE CERTIFICATE RATE IS
HIGHER
THAN THE ASSETS RECEIVABLES
RATE: -- The certificate rate based on LIBOR may
exceed the assets receivables rate as a
result of (i) LIBOR plus 0.065% exceeding
the interest rate on the receivables and
(ii) LIBOR plus 0.065% exceeding the
investment earnings on amounts, if any, in
trust accounts in which principal
collections are held. In this regard, DCS
may reduce the interest rates borne by the
receivables. Any deficiency in interest
payments resulting from the assets
receivables rate being lower than the
certificate rate based on LIBOR and
interest on the deficiency (a "CARRY-OVER
AMOUNT") will be paid with:
-- any amounts in the yield supplement
account;
-- any funds remaining after all required
distributions and deposits for the
Series 2001-A certificates have been
made; and
-- on the last distribution date for Series
2001-A, amounts in the reserve fund and
some of the seller's collections.
We cannot assure you that those amounts, if any, will be sufficient to pay any
of these unpaid interest amounts. If any of these unpaid interest amounts is
outstanding for six distribution dates in a row, an early amortization event
will occur.
CREDIT ENHANCEMENT IS LIMITED AND MAY BE REDUCED. AS THE CREDIT ENHANCEMENT
IS REDUCED, YOU ARE MORE LIKELY TO INCUR LOSSES AND TO RECEIVE YOUR PRINCIPAL
EARLIER OR LATER THAN YOU EXPECTED. Credit enhancement of the Series 2001-A
certificates will be provided by the subordination of the seller's interest to
the extent of the available subordinated amount as described in this prospectus
supplement and by amounts in the reserve fund. The amount of such credit
enhancement is limited and will be reduced from time to time. See "Series
Provisions -- Allocation of Collections; Limited Subordination of Seller's
Interest" for more information about credit enhancement for the Series 2001-A
certificates.
THE TRUST IS DEPENDENT ON DCS AND DAIMLERCHRYSLER. The trust is completely
dependent upon DCS for the generation of new receivables. The ability of DCS to
generate receivables is in
S-9
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 amortization event may occur.
YOUR ABILITY TO RESELL CERTIFICATES IS LIMITED. There may be no secondary
market for your certificates. The underwriter may participate in making a
secondary market in the certificates, but is 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 certificates. Also, your certificates 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.
You can find a "Glossary of Principal Terms for the Prospectus Supplement"
beginning on page S-41 in this prospectus supplement.
USE OF PROCEEDS
From the net proceeds of the Series 2001-A certificates, we will make the
deposits to the Reserve Fund and the Yield Supplement Account described in this
prospectus supplement, and we will pay the remaining $992,500,000 of the net
proceeds to DCWR. DCWR will use the proceeds to purchase receivables from DCS or
to repay amounts previously borrowed to purchase receivables. DCS will use the
portion of the proceeds paid to it for general corporate purposes.
THE DEALER FLOORPLAN FINANCING BUSINESS
You can read about the dealer floorplan financing business under "The
Dealer Floorplan Financing Business" in the prospectus. The receivables sold to
the trust were or will be selected from extensions of credit and advances made
by DaimlerChrysler and DCS to approximately 3,210 domestic motor vehicle
dealers.
-- DCS financed 57.7% of the total number of all
DaimlerChrysler-franchised dealers as of September 30, 2001.
-- DCS has extended credit lines to 1,188 DaimlerChrysler-franchised
dealers that also operate non-DaimlerChrysler franchises
(representing approximately 57% of the aggregate credit lines of
dealers in the U.S. Wholesale Portfolio as of September 30, 2001)
and 526 non-DaimlerChrysler dealers (representing approximately 9%
of those aggregate credit lines).
-- As of September 30, 2001, the balance of principal receivables in
the U.S. Wholesale Portfolio was approximately $10.0 billion.
-- DCS currently services the U.S. Wholesale Portfolio through its
home office and through a network of 23 zone offices located
throughout the United States.
-- As of September 30, 2001, the average credit lines per dealer in
the U.S. Wholesale Portfolio for new and used vehicles (which
includes Auction Vehicles) were $3.90 million and $0.54 million,
respectively, and the average balance of principal receivables per
dealer was $3.13 million.
-- As of September 30, 2001, the aggregate total receivables balance
as a percentage of the aggregate total credit lines was
approximately 70.4%.
S-10
The following table sets forth the percentages of dealer account balances
by year of credit line origination for the U.S. Wholesale Portfolio.
PORTFOLIO PERCENTAGES BY YEAR
OF CREDIT LINE ORIGINATION
AS OF SEPTEMBER 30, 2001
<Table>
- ---------------------------------------------------------------------------------------------------------------------
PRIOR TO
2001 2000 1999 1998 1997 1996 1995 1994 1994
- ---------------------------------------------------------------------------------------------------------------------
10.93% 7.27% 8.02% 5.91% 5.04% 2.77% 4.67% 2.75% 52.64%
- ---------------------------------------------------------------------------------------------------------------------
</Table>
As of September 30, 2001, the weighted average spread over the prime rate
charged to dealers in the U.S. Wholesale Portfolio was approximately 0.64%.
Used vehicles (which excludes Auction Vehicles) represented approximately
3.31% of the aggregate principal amount of receivables in the U.S. Wholesale
Portfolio as of September 30, 2001. As of September 30, 2001, used vehicles
represented approximately 3.29% of the aggregate principal amount of receivables
in the trust (including Excluded Receivables).
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
<Table>
AS OF
SEPTEMBER 30, AS OF DECEMBER 31,
-------------- --------------------------------------------------------------------------------
2001 2001 1999 1998 1997 1996 1995 1994 1993 1992
-------------- --------------------------------------------------------------------------------
Percentage of Dealers 0.8% 0.8% 0.4% 0.9% 2.1% 1.1% 1.8% 1.6% 3.2% 6.8%
- --------------------------------------------------------------------------------------------------------------------------
</Table>
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
<Table>
AS OF
SEPTEMBER 30, AS OF DECEMBER 31,
-------------- --------------------------------------------------------------------------------
2001 2000 1999 1998 1997 1996 1995 1994 1993 1992
-------------- --------------------------------------------------------------------------------
Number of
Dealers 25 27 27 21 24 20 6 12 21 56
- --------------------------------------------------------------------------------------------------------------------------
Percentage of
Dealers 0.8% 0.8% 0.9% 0.7% 0.7% 0.6% 0.2% 0.3% 0.6% 1.8%
- --------------------------------------------------------------------------------------------------------------------------
</Table>
S-11
THE ACCOUNTS
As of September 30, 2001, with respect to the Accounts in the trust:
-- there were approximately 2,950 Accounts and the principal
receivables balance was approximately $8.7 billion;
-- the average credit lines per dealer for new and used vehicles
(which include Auction Vehicles) were approximately $3.56 million
and $0.53 million, respectively, and the average balance of
principal receivables per dealer was approximately $2.94 million;
and
-- the aggregate total receivables balance as a percentage of the
aggregate total credit line was approximately 72.1%.
Unless otherwise indicated, the statistics included in this paragraph, in the
table below and under "The Accounts -- General" and "-- Geographic Distribution"
with respect to the Accounts and the receivables in the trust give effect to
approximately $35.6 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 trust. A portion of those principal receivables
was created after those dealers entered into that status or were designated by
the seller for removal from the trust and, as a result, are owned by DCS.
Principal receivables balances created prior to those dealers entering into that
status or being designated for removal from the trust are included in the
principal receivables balance. See "Description of the Certificates -- Removal
of Accounts" in the prospectus for a description of the manner in which an
Account can be removed from the trust.
The following table sets forth the percentages of dealer account balances
by year of credit line origination for the accounts in the trust.
PORTFOLIO PERCENTAGES BY YEAR
OF CREDIT LINE ORIGINATION
AS OF SEPTEMBER 30, 2001
<Table>
- ---------------------------------------------------------------------------------------------------------------------
PRIOR TO
2001 2000 1999 1998 1997 1996 1995 1994 1994
- ---------------------------------------------------------------------------------------------------------------------
0.02% 7.24% 9.14% 6.67% 5.62% 3.11% 4.51% 3.15% 60.54%
- ---------------------------------------------------------------------------------------------------------------------
</Table>
As of September 30, 2001, the weighted average spread over the Prime Rate
charged to Dealers within the trust was approximately 0.68%.
S-12
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 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 Chrysler or
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 -- The Ability of the Trust to Make
Payments on Your Certificates Depends in Part on the Ability of DaimlerChrysler
and DCS to Generate Receivables and the Ability of DCS to Perform its
Obligations under the Pooling and Servicing Agreement" in the prospectus and
"Risk Factors -- The Trust is Dependent on DaimlerChrysler and DCS" in this
prospectus supplement.
S-13
LOSS EXPERIENCE FOR THE U.S. WHOLESALE PORTFOLIO
($ MILLIONS)
<Table>
<Caption>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------ ---------------------------------------------------------------------------
2001 2000 2000 1999 1998 1997 1996 1995 1994
------------------ ---------------------------------------------------------------------------
Average Principal
Receivables
Balance(1) $ 9,904 $11,489 $11,336 $ 9,947 $9,236 $8,877 $8,825 $ 8,256 $ 6,754
- -------------------------------------------------------------------------------------------------------------------------------
Net Losses/(Net
Recoveries)(2) $ 1 $ 0 $ 1 $ 0 $ 11 $ 4 $ 0 $ (1) $ (1)
- -------------------------------------------------------------------------------------------------------------------------------
Net Losses/(Net
Recoveries) as a
Percent of
Liquidations 0.002% 0.001% 0.001% (0.001)% 0.020% 0.008% 0.000% (0.002)% (0.003)%
- -------------------------------------------------------------------------------------------------------------------------------
Net Losses/(Net
Recoveries) as a
Percent of Average
Principal
Receivables
Balance(3) 0.01% 0.00% 0.01% 0.00% 0.12% 0.04% 0.00% (0.01)% (0.01)%
- -------------------------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989 1988
-----------------------------------------------------------------------------------------------
Average Principal
Receivables Balance(1) $6,271 $5,344 $4,826 $4,726 $4,933 $4,129
- -------------------------------------------------------------------------------------------------------------------------
Net Losses/(Net
Recoveries)(2) $ 12 $ 26 $ 36 $ 23 $ 13 $ 3
- -------------------------------------------------------------------------------------------------------------------------
Net Losses/(Net
Recoveries) as a
Percent of Liquidations 0.035% 0.098% 0.163% 0.117% 0.060% 0.015%
- -------------------------------------------------------------------------------------------------------------------------
Net Losses/(Net
Recoveries) as a
Percent of Average
Principal Receivables
Balance(3) 0.19% 0.49% 0.75% 0.49% 0.26% 0.07%
- -------------------------------------------------------------------------------------------------------------------------
</Table>
(1) Average Principal Receivables Balance is the average of the month-end
principal balances for the thirteen months ending on the last day of the
period, except for the nine months ended September 30, 2001 and 2000,
which are based on a ten-month average.
(2) Net losses in any period are gross losses less recoveries for such period.
(3) Percentages for the nine months ended September 30, 2001 and 2000 are
expressed on an annualized basis and are not necessarily indicative of the
experience for the entire year.
S-14
AGING EXPERIENCE
The following table provides the age distribution of vehicle inventory for
all dealers in the U.S. Wholesale Portfolio, as a percentage of total principal
outstanding at the date indicated. Because the Eligible Accounts will only be a
portion of the entire U.S. Wholesale Portfolio, actual age distribution with
respect to the Eligible Accounts may be different.
AGE DISTRIBUTION FOR THE U.S. WHOLESALE PORTFOLIO
<Table>
<Caption>
AS OF SEPTEMBER 30, AS OF DECEMBER 31,
------------------- -----------------------------------------------------------
2001 2000 1999 1998 1997 1996 1995 1994
------------------- -----------------------------------------------------------
1-120................. 79.3% 77.8% 81.7% 81.7% 80.1% 80.4% 82.2% 82.5%
- -----------------------------------------------------------------------------------------------------------------
121-180............... 9.5 13.0 12.1 11.0 10.8 10.0 9.3 10.1
- -----------------------------------------------------------------------------------------------------------------
181-270............... 5.3 5.5 3.6 4.1 4.2 5.0 3.8 4.0
- -----------------------------------------------------------------------------------------------------------------
Over 270.............. 5.9 3.7 2.6 3.2 4.9 4.6 4.7 3.4
- -----------------------------------------------------------------------------------------------------------------
</Table>
GEOGRAPHIC DISTRIBUTION
The following table provides the geographic distribution of the vehicle
inventory for all dealers in the trust on the basis of receivables outstanding
and the number of dealers generating the portfolio. The percentages may not add
to 100.00% because of rounding.
GEOGRAPHIC DISTRIBUTION OF ACCOUNTS IN THE TRUST
AS OF SEPTEMBER 30, 2001
<Table>
<Caption>
PERCENTAGE OF PERCENTAGE OF
RECEIVABLES RECEIVABLES TOTAL NUMBER OF NUMBER OF
OUTSTANDING(2) OUTSTANDING(2) DEALERS(3) DEALERS(3)
----------------- -------------- --------------- -------------
Texas............................ $ 890,320,782.17 10.25% 200 6.77%
California....................... 706,040,672.99 8.13 180 6.10
Florida.......................... 514,450,701.79 5.92 125 4.23
Illinois......................... 489,446,753.09 5.63 153 5.18
New York......................... 482,776,109.96 5.56 178 6.03
New Jersey....................... 437,927,995.46 5.04 129 4.37
Other(1)......................... 5,165,878,846.67 59.47 1,988 67.32
----------------- ------- ----- -------
Total............................ $8,686,841,862.13 100.00% 2,953 100.00%
================= ======= ===== =======
(1) No other state includes more than 5% of the outstanding receivables.
(2) Includes Excluded Receivables.
(3) Includes Excluded Dealers.
</Table>
S-15
MATURITY AND PRINCIPAL PAYMENT CONSIDERATIONS
You will begin receiving principal on your certificates if an Early
Amortization Period that is not terminated has commenced. Full amortization of
the Series 2001-A certificates by the November 2004 distribution date (the
"SERIES 2001-A EXPECTED 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
2001-A certificates in full by the Series 2001-A Expected Payment Date will be
dependent on the reallocation of principal collections which are initially
allocated to other outstanding series. If one or more other series from which
principal collections are expected to be available to be reallocated to the
payment of the Series 2001-A certificates enters into an early amortization
period after the May 2004 distribution date, principal collections allocated to
those series will not be available to be reallocated to make payments of
principal of the Series 2001-A certificates and you may receive your final
payment of principal later than the Series 2001-A Expected Payment Date.
Because an Early Amortization Event with respect to the Series 2001-A
certificates may occur and would initiate an Early Amortization Period, you may
receive the final distribution of principal on your Series 2001-A certificates
prior to the scheduled termination of the Revolving Period or prior to the
Series 2001-A Expected Payment Date.
The amount of new receivables generated in any month and monthly payment
rates on the receivables may vary because of seasonal variations in vehicle
sales and inventory levels, retail incentive programs provided by vehicle
manufacturers and various economic factors affecting vehicle sales generally.
The following table sets forth the highest and lowest monthly payment rates for
the U.S. Wholesale Portfolio during any month in the periods shown and the
average of the monthly payment rates for all months during the periods shown.
The monthly payment rate is the percentage equivalent of a fraction, the
numerator of which is the aggregate of all collections of principal during the
period and the denominator of which is the average aggregate principal balance
for the period. These monthly payment rates include principal credit
adjustments. We cannot assure you that the rate of principal collections will be
similar to the historical experience set forth below. As the Eligible Accounts
will be only a portion of the entire U.S. Wholesale Portfolio, historical
monthly payment rates with respect to the Eligible Accounts may be different
than those shown below.
MONTHLY PAYMENT RATES FOR THE U.S. WHOLESALE PORTFOLIO
<Table>
<Caption>
NINE MONTHS ENDED,
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------- -----------------------------
2001 2000 2000 1999 1998
------------------- -----------------------------
Highest Month 57.4% 52.8% 52.8% 60.5% 60.8%
- -------------------------------------------------------------------------------
Lowest Month 42.5 39.0 36.3 44.7 42.5
- -------------------------------------------------------------------------------
Average of the Months
in the Period 51.6 46.2 45.6 52.0 50.0
- -------------------------------------------------------------------------------
<Caption>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
1997 1996 1995 1994 1993 1992
-----------------------------------------------------------
Highest Month 57.7% 58.3% 59.1% 59.7% 54.7% 50.6%
- -------------------------------------------------------------------------------
Lowest Month 41.1 43.2 36.5 34.2 35.9 34.4
- -------------------------------------------------------------------------------
Average of the Months
in the Period 48.2 49.0 45.6 50.3 46.6 41.3
- -------------------------------------------------------------------------------
</Table>
S-16
SERIES PROVISIONS
GENERAL
The trust will issue the Series 2001-A certificates under the Pooling and
Servicing Agreement and a Series Supplement relating to the Series 2001-A
certificates (the "SERIES SUPPLEMENT"). Beneficial interests in Series 2001-A
certificates will be offered in minimum denominations of $1,000 and integral
multiples of that amount. The trustee will make available for inspection a copy
of the Pooling and Servicing Agreement, without exhibits or schedules, on
request. You should refer to the prospectus for additional information
concerning the Series 2001-A certificates and the Pooling and Servicing
Agreement.
In general terms, we allocate collections on the receivables first among
each series. We then allocate the series collections between the investors in
that series and the seller. We apply the investor's share of interest
collections to pay the investors' share of the servicing fee and interest on the
Series 2001-A certificates and to cover the investors' share of losses on the
principal receivables. If the investors' share of interest collections is not
sufficient to cover those amounts, we will use the seller's share of collections
to cover the shortfall, but only up to the available subordinated amount. When
it is time to distribute principal to investors or accumulate principal
collections for that purpose, we will use the investors' share of principal
collections. Under some circumstances, we may use collections allocated to
another series, but which are not then needed by that series. For the most part,
the trustee applies the collections pursuant to directions from the servicer.
The preceding paragraph is a very simplified description of the primary
allocation and use of collections on the receivables. The following description
contains a more precise description of the calculations of those allocations and
the manner, timing and priorities of the application of the collections. Many of
the calculations are complex and are described in the definition of the terms
used. The complex defined terms are needed in order to tell you the precise
amount that will be available to make a specified payment. The Glossary of
Principal Terms for the Prospectus Supplement at the end of this prospectus
supplement contains many of these definitions. However, for convenience we often
include the definition where its subject is being discussed.
INTEREST
Interest on the principal balance of the Series 2001-A certificates will
accrue at the Certificate Rate and will be payable to the Series 2001-A
certificateholders on each distribution date, commencing January 15, 2002.
Interest payable on any distribution date will accrue from and including the
preceding distribution date to but excluding that distribution date, or, in the
case of the first distribution date, from and including the Series 2001-A
Issuance Date to but excluding the first distribution date. Each of those
periods is an "INTEREST PERIOD." Interest will be calculated on a basis of the
actual number of days in each Interest Period divided by 360. Interest due for
any distribution date but not paid on that distribution date will be due on the
next distribution date, together with interest on the amount at the Certificate
Rate calculated on the basis of LIBOR, to the extent permitted by applicable
law. We will make interest payments on the Series 2001-A certificates generally
out of Series 2001-A Certificateholder Interest Collections, any withdrawals
from the Reserve Fund, and Investment Proceeds and, under some circumstances,
Available Seller's Collections to the extent of the Available Subordinated
Amount and any withdrawals from the Yield Supplement Account.
S-17
The Certificate Rate for each Interest Period will be determined on the
LIBOR Determination Date preceding that Interest Period. The "CERTIFICATE RATE"
will be equal to the lesser of (a) LIBOR plus 0.065% and (b) the Assets
Receivables Rate for the related distribution date.
"MONTHLY INTEREST" for any distribution date means the amount of interest
accrued in respect of the Series 2001-A certificates in the Interest Period for
that distribution date.
"LIBOR" with respect to any Interest Period will be established by the
Calculation Agent and will equal the offered rate for United States dollar
deposits for one month that appears on Telerate Page 3750 as of 11:00 A.M.,
London time, on the second LIBOR Business Day prior to that Interest Period (a
"LIBOR DETERMINATION DATE"). "TELERATE PAGE 3750" means the display page so
designated on the Dow Jones Telerate Service, or any other page as may replace
that page on that service, or any other service as may be nominated as the
information vendor, for the purpose of displaying London interbank offered rates
of major banks). If that rate appears on Telerate Page 3750, LIBOR will be that
rate. "LIBOR BUSINESS DAY" as used in this prospectus supplement means a day
that is both a Business Day and a day on which banking institutions in the City
of London, England are not required or authorized by law to be closed. If on any
LIBOR Determination Date the offered rate does not appear on Telerate Page 3750,
the Calculation Agent will request each of the reference banks, which shall be
major banks that are engaged in transactions in the London interbank market
selected by the Calculation Agent, to provide the Calculation Agent with its
offered quotation for United States dollar deposits for one month to prime banks
in the London interbank market as of 11:00 A.M., London time, on that date. If
at least two reference banks provide the Calculation Agent with the offered
quotations, LIBOR on that date will be the arithmetic mean, rounded upwards, if
necessary, to the nearest 1/100,000 of 1% (.0000001), with five one-millionths
of a percentage point rounded upward, of all the quotations. If on that date
fewer than two of the reference banks provide the Calculation Agent with the
offered quotations, LIBOR on that date will be the arithmetic mean, rounded
upwards, if necessary, to the nearest 1/100,000 of 1% (.0000001), with five
one-millionths of a percentage point rounded upward, of the offered per annum
rates that one or more leading banks in The City of New York selected by the
Calculation Agent are quoting as of 11:00 A.M., New York City time, on that date
to leading European banks for United States dollar deposits for one month. If,
however, those banks are not quoting as described above, LIBOR for that date
will be LIBOR applicable to the Interest Period immediately preceding that
Interest Period. The "CALCULATION AGENT" will be the trustee.
If the Certificate Rate for a distribution date calculated on the basis of
LIBOR as described above is greater than the Assets Receivables Rate, then the
Certificate Rate for that distribution date will be the Assets Receivables Rate.
S-18
The "ASSETS RECEIVABLES RATE" for any Interest Period shall equal the
product of
(i) the quotient obtained by dividing
(a) 360 by
(b) the actual number of days elapsed in that period and
(ii) a percentage, expressed as a fraction,
-- the numerator of which is the sum of
(a) Certificateholder Interest Collections for the Collection
Period immediately preceding the last day of that period,
which for this purpose only is based on interest amounts
billed to the dealers which are due during that Collection
Period, less the Monthly Servicing Fee with respect to that
immediately preceding Collection Period, to the extent not
waived by the servicer, and
(b) the Investment Proceeds to be applied on the distribution date
related to that period and
-- the denominator of which is the sum of
(a) the product of
(x) the Floating Allocation Percentage,
(y) the Series Allocation Percentage and
(z) the average Pool Balance, after giving effect to any
charge-offs, for that immediately preceding Collection
Period,
(b) the principal balance on deposit in the Excess Funding Account
on the first day of that period, after giving effect to all
deposits to and withdrawals therefrom on that first day, and
(c) the principal balance on deposit in the Principal Funding
Account on the first day of that period, after giving effect
to all deposits to and withdrawals therefrom on that first
day.
If the Certificate Rate for any distribution date is based on the Assets
Receivables Rate, the Series 2001-A will be entitled to receive the Carry-over
Amount to the extent of available funds as described under "Distributions from
the Collection Account; Reserve Fund; Yield Supplement Account". The "Carry-over
Amount" for a distribution date will be the sum of
(i) the excess of
-- the amount of interest on the Series 2001-A certificates that
would have accrued in respect of the related Interest Period
had interest been calculated based on LIBOR, over
-- the amount of interest on the Series 2001-A certificates
actually accrued in respect of that Interest Period based on
the Assets Receivables Rate plus
(ii) the unpaid portion of any excess from prior distribution dates,
and interest accrued on that amount calculated on the basis of
the Certificate Rate based on LIBOR.
A Carry-over Amount will only be payable from amounts on deposit in the Yield
Supplement Account and, if those amounts are depleted, to the extent funds are
allocated and available for that purpose after making all required distributions
and deposits with respect to the
S-19
Series 2001-A certificates, including payments with respect to principal
(including payments to the Excess Funding Account), Monthly Interest, the
Monthly Servicing Fee, the Reserve Fund Deposit Amount and the Investor Default
Amount as described below under "Distributions from the Collection Account;
Reserve Fund; Yield Supplement Account". Also, any Carry-over Amount outstanding
on the final distribution date, after making the distributions described in the
preceding sentence, will be paid on the final distribution date from
-- amounts on deposit in the Reserve Fund that would otherwise be
payable to the seller, and
-- Available Seller's Collections on deposit in the Collection
Account that would otherwise be payable to the seller, as
described under "Distributions from the Collection Account;
Reserve Fund; Yield Supplement Account".
The rating of the Series 2001-A certificates does not address the likelihood of
payment of any Carry-over Amount.
PRINCIPAL
We will not make principal payments to the Series 2001-A certificateholders
until the Series 2001-A Expected Payment Date or, upon the commencement of an
Early Amortization Period that is not terminated as described in this prospectus
supplement, until the first Special Payment Date. On each distribution date with
respect to the Revolving Period, collections of principal receivables allocable
to the interest of the Series 2001-A certificateholders in the Trust Assets (the
"SERIES 2001-A CERTIFICATEHOLDERS' INTEREST") that are not required to be
deposited to the Excess Funding Account, subject to some limitations, will
either be
-- allocated to one or more series which are in amortization, early
amortization or accumulation periods to cover principal payments
due to the certificateholders of any of those series or which
provides for excess funding accounts or similar arrangements or
-- if no series is then amortizing or accumulating principal or
otherwise does not provide for excess funding accounts or similar
arrangements, paid to the seller to maintain the Series 2001-A
Certificateholders' Interest or held as Unallocated Principal
Collections.
See "-- Allocation Percentages," "-- Principal Collections for All Series" and
"-- Principal Collections".
The "REVOLVING PERIOD" will be the period beginning at the close of
business on the Series Cut-Off Date and terminating on the earlier of
-- the close of business on the day immediately preceding the
Accumulation Period Commencement Date and
-- the close of business on the day an Early Amortization Period
commences.
The Revolving Period, however, may recommence upon the termination of an Early
Amortization Period. See "Early Amortization Events". During the Revolving
Period, we will not use the Series 2001-A certificateholders' share of principal
collection to make principal payments on the Series 2001-A certificates.
Instead, we will use them to make principal distributions on other series or we
will pay them to the seller.
S-20
Unless an Early Amortization Period that is not terminated as described in
this prospectus supplement shall have commenced, the Series 2001-A certificates
will have an Accumulation Period of one, two, three, four or five month(s) long
as described in the following paragraph.
On the May 2004 distribution date and each subsequent distribution date
after that date that occurs prior to the Accumulation Period Commencement Date,
the servicer shall calculate the Accumulation Period Length. The "ACCUMULATION
PERIOD LENGTH" will be calculated on each of those dates as the lesser of
(i) the number of full Collection Periods between that distribution
date and the Series 2001-A Expected Payment Date and
(ii) the product, rounded upwards to the nearest integer not greater
than five, of
(a) one divided by the lowest Monthly Payment Rate on the
receivables during the last 12 months and
(b) a fraction,
-- the numerator of which is the sum of
(x) the Invested Amount as of that distribution date,
after giving effect to all changes in the Invested
Amount on that date, and
(y) the invested amounts of all other series, excluding
some series, currently in their amortization or
accumulation periods or expected to be in their
amortization or accumulation periods by the Series
2001-A Expected Payment Date and
-- the denominator of which is the sum of the Invested Amount
and the invested amounts as of that distribution date,
after giving effect to all changes in those amounts on
that date, of all other outstanding series, excluding some
series, which are expected to be outstanding on the Series
2001-A Expected Payment Date.
The "ACCUMULATION PERIOD COMMENCEMENT DATE" will be determined as follows:
<Table>
<Caption>
The Accumulation Period
Commencement Date
If the Accumulation will be the first day in the following
Period Length is Collection Period:
- ------------------------ --------------------------------------
One Collection Period October 2004
Two Collection Periods September 2004
Three Collection Periods August 2004
Four Collection Periods July 2004
Five Collection Periods June 2004
</Table>
However, if at any time after the May 2004 distribution date, any other
outstanding series, excluding some series, shall have entered into an early
amortization period, the Accumulation Period Commencement Date shall be the
earlier of
-- the date that outstanding series shall have entered into its early
amortization period and
-- the Accumulation Period Commencement Date as previously
determined.
S-21
See "Annex I -- Other Series of Investor Certificates".
The calculation of the Accumulation Period Length will allow us to reduce
the length of the Accumulation Period based on the invested amounts of other
series which are scheduled to be in their revolving periods during the
Accumulation Period and on increases in the principal payment rate.
Unless and until an Early Amortization Period that is not terminated as
described in this prospectus supplement shall have occurred and until the
outstanding principal balance of the Series 2001-A certificates is paid in full,
on each distribution date with respect to the Accumulation Period, collections
of principal receivables allocable to the Series 2001-A Certificateholders'
Interest plus other amounts comprising Monthly Principal will no longer be paid
for the benefit of another series or to the seller. Instead, those collections
up to the Controlled Deposit Amount for each of those distribution dates will be
deposited in the Principal Funding Account. We will use the funds deposited in
the Principal Funding Account and any amounts in the Excess Funding Account to
pay the outstanding principal balance of the Series 2001-A certificates on the
Series 2001-A Expected Payment Date. If on that date the total amount in the
Principal Funding Account and the Excess Funding Account is less than the
outstanding principal balance of the Series 2001-A certificates, the Early
Amortization Period will commence. On each subsequent distribution date the
Series 2001-A certificateholders will receive distributions of Monthly Principal
and Monthly Interest until the outstanding principal balance of the Series
2001-A certificates has been paid in full or the Termination Date has occurred.
Even if the total amount in the Principal Funding Account and the Excess Funding
Account on the Series 2001-A Expected Payment Date is insufficient to pay the
outstanding principal balance of the Series 2001-A certificates in full, we will
distribute that amount to the Series 2001-A certificateholders at that time.
EXCESS FUNDING ACCOUNT
Unless and until an Early Amortization Event shall have occurred, we will
keep the Excess Funded Amount in the Excess Funding Account established with the
trustee. The Excess Funded Amount will initially equal the excess, if any, of
the initial principal balance of the Series 2001-A certificates, over the
Initial Invested Amount. The trustee will generally invest funds on deposit in
the Excess Funding Account at the direction of the servicer in Eligible
Investments. Those investments must mature on or prior to the next distribution
date.
We will pay funds on deposit in the Excess Funding Account to the seller or
allocate them to one or more series which are in amortization, early
amortization or accumulation periods, but only to the extent of any increases in
the Invested Amount as a result of the addition of receivables to the trust, a
reduction in the Seller's Interest, or a reduction in the invested amount of any
other series. We will deposit additional amounts in the Excess Funding Account
on a distribution date to the extent that
(i) the sum of
-- the Series 2001-A Certificateholders' Interest in Principal
Receivables, determined for this purpose by reducing the
interest by the amount, if any, by which the Required
Participation Amount exceeds the Pool Balance due to an
increase in the Subordination Factor, and
S-22
-- the amount on deposit in the Excess Funding Account prior to
the deposit on that distribution date is less than
(ii) the outstanding principal balance of the Series 2001-A
certificates,
but only to the extent that funds are available as described in this prospectus
supplement.
If other series provide for excess funding accounts or other arrangements
similar to the Excess Funding Account involving fluctuating levels of investment
in the receivables, the allocation of additional receivables to increase the
Invested Amount will be based on the proportion that the amount on deposit in
the Excess Funding Account bears to the amounts on deposit in the excess funding
accounts of all series providing for excess funding accounts or similar
arrangements or to amounts otherwise similarly available. The deposit of amounts
in the Excess Funding Account will be based on the proportion that the Adjusted
Invested Amount bears to the adjusted invested amounts of all series providing
for excess funding accounts or similar arrangements.
On each distribution date, we will apply all investment income received on
amounts in the Excess Funding Account during the related Collection Period as
described in this prospectus supplement.
On the May 2004 distribution date we will transfer any funds on deposit in
the Excess Funding Account to the Principal Funding Account. No funds will be
deposited in the Excess Funding Account during any Early Amortization Period.
Also, we will not deposit any amounts into the Excess Funding Account with
respect to any Collection Period following the April 2004 Collection Period.
ALLOCATION PERCENTAGES
Allocation between the Series 2001-A Certificateholders and the Seller. We
will allocate funds to the Series 2001-A certificateholders on the basis of
various percentages. Which percentage we use depends on whether the collections
being allocated are interest collections, principal collections or other amounts
and whether or not the collections are received in the Revolving Period.
The servicer will allocate amounts initially allocated to Series 2001-A as
described under "Description of the Certificates -- Allocation Percentages --
Allocations among Series" in the prospectus between the Series 2001-A
Certificateholders' Interest and the Seller's Interest for each Collection
Period as follows:
-- Series Allocable Interest Collections and the Series Allocable
Defaulted Amount will be allocated to Series 2001-A
certificateholders based on the Floating Allocation Percentage;
-- during any period that is not the Accumulation Period or an Early
Amortization Period (a "NONPRINCIPAL PERIOD"), Series Allocable
Principal Collections will be allocated to Series 2001-A
certificateholders based on the Floating Allocation Percentage;
-- during the Accumulation Period and any Early Amortization Period,
Series Allocable Principal Collections will be allocated to Series
2001-A certificateholders based on the Principal Allocation
Percentage; and
-- Series Allocable Miscellaneous Payments will at all times be
allocated to Series 2001-A certificateholders.
S-23
We will allocate to the seller all amounts that are not allocated to the
Series 2001-A certificateholders as described above.
The Floating Allocation Percentage effects, in general, a pro rata
allocation based on the Invested Amount. The "FLOATING ALLOCATION PERCENTAGE"
for any Collection Period will be the percentage equivalent, which shall never
exceed 100%, of a fraction, the numerator of which is the Invested Amount as of
the last day of the immediately preceding Collection Period and the denominator
of which is the product of
-- the Pool Balance as of that last day and
-- the Series Allocation Percentage for the Collection Period in
respect of which the Floating Allocation Percentage is being
calculated.
With respect to the first Collection Period, however, the Floating Allocation
Percentage shall mean the percentage equivalent of a fraction, the numerator of
which is the Initial Invested Amount as of the Series Issuance Date and the
denominator of which is the Series Allocation Percentage of the Pool Balance as
of the Series Cut-Off Date.
The Principal Allocation Percentage is, in general, based on the Invested
Amount at the end of the Revolving Period. Consequently, even though we are
distributing or accumulating principal collections for Series 2001-A
certificateholders, the numerator used for the calculation will not decline. The
"PRINCIPAL ALLOCATION PERCENTAGE" for any Collection Period will be the
percentage equivalent, which shall never exceed 100%, of a fraction, the
numerator of which is the Invested Amount as of the last day of the Revolving
Period, if that last day has occurred or, if that last day has not occurred, as
of the last day of the immediately preceding Collection Period and the
denominator of which is the product of
-- the Pool Balance as of that last day and
-- the Series Allocation Percentage for the Collection Period in
respect of which the Principal Allocation Percentage is being
calculated.
The Invested Amount represents the amount of outstanding principal
receivables allocable to the Series 2001-A certificateholders. The Invested
Amount may increase or decrease depending on principal collections deposited
into or released from the Excess Funding Account, principal distributed to or
accumulated for Series 2001-A certificateholders and losses on the receivables
and any reimbursement of those losses. The "INVESTED AMOUNT" for any date will
be an amount equal to the Initial Invested Amount
-- minus the amount, without duplication, of principal payments,
except for principal payments made from the Excess Funding
Account, made to Series 2001-A certificateholders or deposited to
the Principal Funding Account in respect of the Series 2001-A
certificates prior to that date since the Series Issuance Date
-- minus the excess, if any, of
(i) the aggregate amount of Investor Charge-Offs for all
distribution dates preceding that date, over
(ii) the aggregate amount of any reimbursements of Investor
Charge-Offs for all distribution dates preceding that date.
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The "INITIAL INVESTED AMOUNT" means the portion of the initial principal amount
of the Series 2001-A certificates which is invested in principal receivables on
the Series Issuance Date, which is expected to equal $1,000,000,000, based on
information as of the Series Cut-Off Date,
-- plus the amount of any withdrawals from the Excess Funding Account
in connection with the purchase of an additional interest in
principal receivables since the Series Issuance Date,
-- minus the amount of any additions to the Excess Funding Account in
connection with a reduction in the principal receivables in the
trust or an increase in the Subordination Factor since the Series
Issuance Date.
The Floating Allocation Percentage and the Principal Allocation Percentage
will be adjusted for any Collection Period in which Additional Accounts are
designated to reflect the additional receivables added to the trust.
PRINCIPAL COLLECTIONS FOR ALL SERIES
We will allocate principal collections allocated to the Series 2001-A
Certificateholders' Interest for any Collection Period first to make required
deposits to the Excess Funding Account during the Revolving Period, to make
required payments of principal to the Principal Funding Account during the
Accumulation Period and to make payments to the Series 2001-A certificateholders
during any Early Amortization Period. See "Principal Collections". The servicer
will determine the amount of Available Series 2001-A Certificateholder Principal
Collections for any Collection Period remaining after required payments, if any,
and the amount of any similar excess for any other series ("EXCESS PRINCIPAL
COLLECTIONS"). The servicer will allocate Excess Principal Collections to cover
any principal distributions to certificateholders for any series entitled to
them which are either scheduled or permitted and which have not been covered out
of principal collections and other amounts allocated to those series ("PRINCIPAL
SHORTFALLS"). See "Maturity and Principal Payment Considerations". We will
generally not use Excess Principal Collections to cover investor charge-offs for
any series. If Principal Shortfalls exceed Excess Principal Collections for any
Collection Period, we will allocate Excess Principal Collections pro rata among
the applicable series based on the relative amounts of Principal Shortfalls.
ALLOCATION OF COLLECTIONS; LIMITED SUBORDINATION OF SELLER'S INTEREST
On any date on which collections are deposited in the Collection Account,
the servicer will distribute directly to the seller an amount equal to
-- the Excess Seller's Percentage for the related Collection Period
of Series Allocable Interest Collections for that date and
-- the Excess Seller's Percentage for the related Collection Period
of Series Allocable Principal Collections for that date.
However, the servicer will make this distribution only if the Seller's
Participation Amount, determined after giving effect to any Principal
Receivables transferred to the trust on that date, exceeds the Trust Available
Subordinated Amount for the immediately preceding Determination Date, after
giving effect to the allocations, distributions, withdrawals and deposits to be
made on the distribution date immediately following that Determination Date.
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The Excess Seller's Percentage is an allocation percentage that reflects
the seller's share of collections that will not be available as part of the
Available Seller's Collections to cover losses and shortfalls allocable to the
Series 2001-A certificates.
Also, during any Nonprincipal Period, subject to limitations, the servicer
will distribute directly to the seller on each date of deposit an amount equal
to the Available Seller's Principal Collections for that date. However, the
servicer will make this distribution only if the Seller's Participation Amount,
determined after giving effect to any principal receivables transferred to the
trust on that date, exceeds the Trust Available Subordinated Amount for the
immediately preceding Determination Date, after giving effect to the
allocations, distributions, withdrawals and deposits to be made on the
distribution date immediately following that Determination Date.
The Available Seller's Principal Collections is the seller's share of
principal collections that are part of the Available Seller's Collections, which
are generally available to cover losses and shortfalls allocable to the Series
2001-A certificates. The Available Seller's Collections will be zero for any
Collection Period with respect to which the Available Subordinated Amount is
zero on the Determination Date immediately following the end of that Collection
Period. The Available Seller's Interest Collections is also part of the
Available Seller's Collections. The allocation percentage used to determine the
Available Seller's Principal Collections and the Available Seller's Interest
Collections is the percentage equal to the Seller's Percentage minus the Excess
Seller's Percentage. The Seller's Percentage is the allocation percentage used
to determine the seller's entire share of collections. It will vary depending on
whether interest collections, principal collections or defaulted receivables are
being allocated and whether the allocation occurs during the Revolving Period.
The "SELLER'S PERCENTAGE" means 100% minus
-- the Floating Allocation Percentage, when used with respect to
interest collections, Defaulted Receivables and principal
collections during any Nonprincipal Period, and
-- the Principal Allocation Percentage, when used with respect to
principal collections during the Accumulation Period and any Early
Amortization Period.
The "SELLER'S PARTICIPATION AMOUNT" for any date means an amount equal to
the Pool Balance on that date minus the aggregate invested amounts for all
outstanding series on that date.
DEFICIENCY AMOUNT
On each Determination Date, the servicer will determine any shortfall in
amounts payable to or for the account of the Series 2001-A certificateholders
and losses on the receivables that are allocable to the Series 2001-A
certificates. This shortfall and loss amount is the "DEFICIENCY AMOUNT". It is
calculated as the amount, if any, by which
(i) the sum of
-- Monthly Interest for the following distribution date,
-- Monthly Interest accrued but not paid with respect to prior
distribution dates, and interest on that Monthly Interest,
-- the Monthly Servicing Fee for that distribution date,
-- the Investor Default Amount for that distribution date,
-- the amount of any Adjustment Payment allocated to the Series
2001-A certificates for that distribution date that has not
been deposited in the Collection Account as required under the
Pooling and Servicing Agreement and
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-- if that distribution date is the final distribution date, any
Carry-over Amount on that distribution date that will not be
satisfied on that date by the application of amounts on
deposit in the Yield Supplement Account as described under
"Distributions from the Collection Account; Reserve Fund;
Yield Supplement Account -- Yield Supplement Account", exceeds
(ii) the sum of
-- Series 2001-A Certificateholder Interest Collections and
Investment Proceeds for that distribution date, and
-- the amount of funds in the Reserve Fund on that Determination
Date available to fund any portion of the Deficiency Amount as
described under "Distributions from the Collection Account;
Reserve Fund; Yield Supplement Account -- Interest
Collections".
The lesser of the Deficiency Amount and the Available Subordinated Amount is the
"DRAW AMOUNT". We will use Available Seller's Collections, up to the Draw
Amount, to cover the shortfalls and losses represented by the Deficiency Amount.
AVAILABLE SUBORDINATED AMOUNT
The amount of seller's collections available to cover any Deficiency Amount
is limited to Available Seller's Collections, which is in turn determined by the
Available Subordinated Amount. Under certain circumstances, the seller may, but
is not obligated to, increase the Available Subordinated Amount by the
Incremental Subordinated Amount. The formulas for determining these amounts are
set forth below.
The "AVAILABLE SUBORDINATED AMOUNT" for a Determination Date is equal to
(i) the lesser of
(a) the Available Subordinated Amount for the preceding
Determination Date, minus, with some limitations, the Draw
Amount for that preceding Determination Date, minus funds from
the Reserve Fund applied to cover any portion of the Investor
Default Amount, plus the excess, if any, of the Required
Subordinated Amount for that Determination Date over the
Required Subordinated Amount for the immediately preceding
Determination Date due to an increase in the Subordination
Factor, plus the amount of Excess Servicing available to be
paid to the seller as described under "Distributions from the
Collection Account; Reserve Fund; Yield Supplement Account",
and
(b) the product of the fractional equivalent of the Subordinated
Percentage and the Invested Amount,
minus (ii) in the case of clause (i)(a), the Incremental Subordinated Amount
for that preceding Determination Date,
plus (iii) the Incremental Subordinated Amount for the current Determination
Date,
plus (iv) the Subordinated Percentage of funds to be withdrawn from the
Excess Funding Account on the succeeding distribution date and
paid to the seller or allocated to one or more series.
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However, from and after the commencement of the Accumulation Period until the
Series 2001-A certificates are paid in full and from and after the commencement
of any Early Amortization Period that is not terminated as described in this
prospectus supplement until the payment in full of the Series 2001-A
certificates, we will calculate the Available Subordinated Amount on the basis
of the Invested Amount as of the close of business on the day preceding the
Accumulation Period or Early Amortization Period, as applicable. The Available
Subordinated Amount for the first Determination Date is equal to the Required
Subordinated Amount.
The "REQUIRED SUBORDINATED AMOUNT" is, as of any date of determination, the
sum of
-- the product of the initial Subordinated Percentage, as adjusted
from time to time as described in this prospectus supplement other
than as a result of an increase in the Subordinated Percentage at
the option of the seller, and the Invested Amount and
-- the Incremental Subordinated Amount.
Assuming that the Initial Invested Amount of the Series 2001-A certificates is
equal to the initial principal amount of the Series 2001-A certificates, the
Required Subordinated Amount would initially be $111,111,111.
The "INCREMENTAL SUBORDINATED AMOUNT" on any Determination Date will equal
the result obtained by multiplying
(i) a fraction, the numerator of which is the sum of the Invested
Amount on the last day of the immediately preceding Collection
Period and the Available Subordinated Amount for that
Determination Date, calculated without adding the Incremental
Subordinated Amount for that Determination Date as described in
clause (iii) in the definition of "Available Subordinated Amount"
above, and the denominator of which is the Pool Balance on that
last day
by (ii) the excess, if any, of
(a) the sum of the Overconcentration Amount, the
Installment Balance Amount and the aggregate amount of
Ineligible Receivables on that Determination Date
over (b) the aggregate amount of Ineligible Receivables,
receivables in Accounts containing Dealer
Overconcentrations and receivables in Installment
Balances, in each case that became Defaulted Receivables
during the preceding Collection Period and are not
subject to reassignment from the trust, unless
insolvency events relating to the seller or DCS have
occurred, as further described in the Pooling and
Servicing Agreement.
The "SUBORDINATED PERCENTAGE" will initially equal the percentage
equivalent of a fraction, the numerator of which is the Subordination Factor and
the denominator of which will be the excess of 100% over the Subordination
Factor. The "SUBORDINATION FACTOR" will initially be 10%, but will be subject to
increase to 11% in the event that the rating of DCS's long-term unsecured debt
is lowered below BBB- by Standard & Poor's or withdrawn by Standard & Poor's,
unless the seller receives written confirmation from Standard & Poor's that the
failure to so increase the Subordination Factor would not result in Standard &
Poor's lowering or withdrawing its rating of the Series 2001-A certificates. The
seller may, in its sole discretion, at any time increase the Available
Subordinated Amount for so long as the cumulative amount of the increases does
not exceed the lesser of (i) $11,111,111 or (ii) 1.11% of the Invested Amount.
The seller is not under any obligation to increase the Available Subordinated
Amount at any time, except as
S-28
described in this prospectus supplement. If the Available Subordinated Amount
were reduced to less than the Required Subordinated Amount, an Early
Amortization Event would occur. The seller could elect to increase the Available
Subordinated Amount at the time the Early Amortization Event would otherwise
occur, thus preventing or delaying the occurrence of the Early Amortization
Event.
DISTRIBUTIONS FROM THE COLLECTION ACCOUNT; RESERVE FUND;
YIELD SUPPLEMENT ACCOUNT
Interest Collections. On each distribution date, the trustee will apply
Series 2001-A Certificateholder Interest Collections and Investment Proceeds, if
any, in respect of the related Collection Period to make the following
distributions in the following priority:
-- first, the trustee will distribute to the Series 2001-A
certificateholders an amount equal to Monthly Interest for that
distribution date, plus the amount of any Monthly Interest
previously due but not distributed on a prior distribution date,
plus, but only to the extent permitted under applicable law,
interest at the Certificate Rate on Monthly Interest previously
due but not distributed;
-- second, the trustee will distribute to the servicer an amount
equal to the Monthly Servicing Fee for that distribution date,
unless that amount has been netted against deposits to the
Collection Account as described in the prospectus under
"Description of the Certificates -- Allocation of Collections;
Deposits in Collection Account" or waived by the servicer;
-- third, the trustee will deposit into the Reserve Fund an amount
equal to the Reserve Fund Deposit Amount, if any, for that
distribution date;
-- fourth, an amount equal to the Investor Default Amount, if any,
for that distribution date shall be treated as a portion of
Available Series 2001-A Certificateholder Principal Collections
for that distribution date;
-- fifth, the trustee will distribute to the Series 2001-A
certificateholders an amount equal to any outstanding Carry-over
Amount, after giving effect to any withdrawals from the Yield
Supplement Account;
-- sixth, the trustee will deposit into the Yield Supplement Account
an amount equal to the Yield Supplement Account Deposit Amount, if
any, for that distribution date; and
-- seventh, the balance shall constitute Excess Servicing.
If Series 2001-A Certificateholder Interest Collections and Investment
Proceeds are not sufficient to make the entire distributions required by the
first, second and fourth clauses above and, in the case of the final payment
date only, the fifth clause above, the trustee shall withdraw funds from the
Reserve Fund and apply those funds to complete the distributions under those
clauses. In the case of the fifth clause above, the withdrawal will be limited
to amounts that would otherwise be distributable to the seller. During any Early
Amortization Period, however, the trustee will not apply funds in the Reserve
Fund to make distributions required by the fourth clause above to the extent
that, after giving effect to the application, the amount on deposit in the
Reserve Fund would be less than $1,000,000.
If there is a Draw Amount for the distribution date and the distribution
date is not the final payment date, the trustee shall apply the amount of
Available Seller's Collections for the related
S-29
Collection Period on deposit in the Collection Account on that distribution
date, but only up to the Draw Amount, to make the distributions required by the
first, second and fourth clauses above that have not been made through the
application of funds from the Reserve Fund as described in the preceding
paragraph. If there is a Draw Amount for that distribution date and that
distribution date is the final distribution date, the trustee shall apply the
amount of Available Seller's Collections for the related Collection Period on
deposit in the Collection Account on that distribution date, but only up to the
Draw Amount, to make the distributions required by the first, second and fourth
clauses above and, only for the final distribution date, the fifth clause above
that have not been made through the application of funds from the Reserve Fund
as described in the preceding paragraph. Additionally, the trustee will apply
Available Seller's Collections to any unpaid Adjustment Payments. The Available
Subordinated Amount will be reduced by the amount of Available Seller's
Collections so applied. If the Draw Amount exceeds the Available Seller's
Collections, the Available Subordinated Amount will be reduced by the amount of
the excess, but not by more than the sum of the Investor Default Amount and the
portion of Adjustment Payments not paid by the seller, in order to maintain the
Invested Amount.
"SERIES 2001-A CERTIFICATEHOLDER INTEREST COLLECTIONS" for any distribution
date will be the portion of Series Allocable Interest Collections for the
related Collection Period allocated to the Series 2001-A Certificateholders'
Interest as described under "Allocation Percentages -- Allocation Between the
Series 2001-A Certificateholders and the Seller".
"INVESTMENT PROCEEDS" for any distribution date will be an amount equal to
the sum of investment earnings for the preceding Collection Period from:
-- funds held in the Reserve Fund;
-- the Series Allocation Percentage of funds held in the Collection
Account;
-- funds held in the Excess Funding Account;
-- funds held in the Yield Supplement Account; and
-- funds held in the Principal Funding Account.
Reserve Fund. The "RESERVE FUND" will be an Eligible Deposit Account
established and maintained in the name of the trustee for the benefit of the
Series 2001-A certificateholders. On the Series Issuance Date, the seller will
deposit $3,500,000 (0.35% of the principal balance of the Series 2001-A
certificates) into the Reserve Fund. We will deposit certain collections into
the Reserve Fund in an effort to keep the Reserve Fund Required Amount in the
Reserve Fund. The "RESERVE FUND REQUIRED AMOUNT" for any distribution date will
equal 0.35% of the outstanding principal balance of the Series 2001-A
certificates for that distribution date, after giving effect to any change in
that balance on that distribution date. Funds in the Reserve Fund will be
invested in Eligible Investments that will mature on or prior to the next
distribution date. On each Determination Date, the servicer will apply any
investment earnings (net of losses and investment expenses) with respect to the
Reserve Fund as set forth under "Distributions from the Collection Account;
Reserve Fund; Yield Supplement Account". After the earlier of the payment in
full of the outstanding principal balance of the Series 2001-A certificates and
the Termination Date, any funds remaining on deposit in the Reserve Fund will be
paid to the seller.
If, after giving effect to the allocations, distributions and deposits in
the Reserve Fund described above under "Interest Collections", the amount in the
Reserve Fund is less than the Reserve Fund Required Amount for the next
distribution date, the trustee shall deposit any
S-30
remaining Available Seller's Collections for the related Collection Period into
the Reserve Fund until the amount in the Reserve Fund is equal to that Reserve
Fund Required Amount.
If, for any distribution date with respect to an Early Amortization Period,
after giving effect to the allocations, distributions and deposits described in
the preceding paragraph, the amount in the Reserve Fund is less than the Excess
Reserve Fund Required Amount for that distribution date, the trustee shall
deposit the remaining Available Seller's Collections for the related Collection
Period into the Reserve Fund until the amount in the Reserve Fund is equal to
that Excess Reserve Fund Required Amount.
Yield Supplement Account. The "YIELD SUPPLEMENT ACCOUNT" will be an
Eligible Deposit Account established and maintained in the name of the trustee
for the benefit of the Series 2001-A certificateholders. On the Series Issuance
Date, the seller will deposit $4,000,000 (0.40% of the principal balance of the
Series 2001-A certificates) into the Yield Supplement Account. We will apply
funds in the Yield Supplement Account toward the payment of the shortfalls in
interest distributions to Series 2001-A certificateholders described in the
following paragraph. After the Series Issuance Date, we will fund the Yield
Supplement Account as described under "-- Interest Collections" above.
On any distribution date on which there is a Carry-over Amount, the trustee
will apply the amount on deposit in the Yield Supplement Account on that
distribution date toward payment of that Carry-over Amount to satisfy that
Carry-over Amount. Funds in the Yield Supplement Account will be invested at the
direction of the servicer in any investments consisting of financial assets that
by their terms convert to cash within a finite period of time. On each
Determination Date, the servicer will apply any investment earnings, net of
losses and investment expenses, with respect to the Yield Supplement Account as
set forth under "-- Interest Collections". After the earlier of the payment in
full of the outstanding principal balance of the Series 2001-A certificates and
the Termination Date, any funds remaining on deposit in the Yield Supplement
Account will be paid to the seller.
Excess Servicing. On each distribution date, the servicer will allocate
Excess Servicing with respect to the Collection Period immediately preceding
that distribution date, in the following priority:
-- first, we will allocate an amount equal to the aggregate amount of
Investor Charge-Offs which have not been previously reimbursed,
after giving effect to the allocation on that distribution date of
Series Allocable Miscellaneous Payments with respect to that
distribution date, in the same manner as we allocate Available
2001-A Certificateholder Principal Collections for that
distribution date;
-- second, the trustee will pay to the servicer an amount equal to
the aggregate outstanding amounts of the Monthly Servicing Fee
which have been previously waived as described under "Description
of the Certificates -- Servicing Compensation and Payment of
Expenses" in the prospectus;
-- third, the balance, if any, shall increase the Available
Subordinated Amount as described in the definition of "Available
Subordinated Amount" and be distributed to the seller.
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PRINCIPAL COLLECTIONS
On each distribution date, the servicer will allocate Available Series
2001-A Certificateholder Principal Collections as follows:
-- for each distribution date with respect to any Nonprincipal
Period, the servicer will allocate all Available Series 2001-A
Certificateholder Principal Collections
(i) first, to make a deposit to the Excess Funding Account if the
sum of
(a) the 2001-A Certificateholders' Interest in Principal
Receivables, determined for this purpose by reducing that
interest by the amount, if any, by which the Required
Participation Amount exceeds the Pool Balance due to an
increase in the Subordination Factor, and
(b) the amount on deposit in the Excess Funding Account prior
to the allocation on that distribution date
is less than the outstanding principal balance of the 2001-A
certificates and
(ii) second, to Excess Principal Collections as described under
"Allocation Percentages -- Principal Collections for all
Series"; and
-- for each distribution date with respect to the Accumulation
Period, the servicer will allocate all Available Series 2001-A
Certificateholder Principal Collections:
(i) first, an amount equal to Monthly Principal for that
distribution date will be deposited to the Principal Funding
Account; and
(ii) second, the balance, if any, will be allocated to Excess
Principal Collections; and
-- for each distribution date with respect to any Early Amortization
Period, the trustee will distribute an amount equal to the Monthly
Principal to the Series 2001-A certificateholders.
If the Invested Amount is greater than zero on the Termination Date, any
funds remaining in the Reserve Fund, after the application of funds in the
Reserve Fund as described above under "-- Interest Collections", will be treated
as a portion of Available Series 2001-A Certificateholder Principal Collections
for the distribution date occurring on the Termination Date.
Monthly Principal is the amount of principal that we will distribute to or
accumulate for the Series 2001-A certificateholders. The "MONTHLY PRINCIPAL"
with respect to any distribution date relating to the Accumulation Period or any
Early Amortization Period will equal Available Series 2001-A Certificateholder
Principal Collections for that distribution date. However, for each distribution
date, with respect to the Accumulation Period, Monthly Principal will not exceed
the Controlled Deposit Amount. Also, Monthly Principal will not exceed the
Invested Amount.
During the Accumulation Period, we intend to accumulate each month a fixed
amount equal to the "CONTROLLED ACCUMULATION AMOUNT", which is equal to the
Invested Amount as of the May 2004 distribution date, after giving effect to any
changes in the Invested Account on that date, divided by the Accumulation Period
Length. Because there may be funds in the Excess Funding Account and the amount
of principal collections may fluctuate, we intend to accumulate
S-32
the Controlled Deposit Amount on each distribution date in the Accumulation
Period. The "CONTROLLED DEPOSIT AMOUNT" for a distribution date will be the
excess, if any, of
(i) the sum of
(a) the product of the Controlled Accumulation Amount and the
number of distribution dates from and including the first
distribution date with respect to the Accumulation Period
through and including that distribution date, but not in excess
of the Accumulation Period Length, and
(b) the amount on deposit in the Excess Funding Account as of the
May 2004 distribution date, after giving effect to any
withdrawals from or deposits to that account on that date,
other than the transfer to the Principal Funding Account of
certain amounts on deposit in the Excess Funding Account on
that date,
over (ii) the sum of amounts on deposit in the Excess Funding Account
and the Principal Funding Account, in each case before
giving effect to any withdrawals from or deposits to those
accounts on that distribution date.
REQUIRED PARTICIPATION PERCENTAGE
As described under "Description of the Certificates -- Addition of
Accounts" in the prospectus, the seller will be required to add 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 distribution date.
The calculation of the Required Participation Amount is a function of the
Required Participation Percentage. The "REQUIRED PARTICIPATION PERCENTAGE" for
Series 2001-A is 103%. However, if the aggregate amount of principal receivables
due from any dealer or group of affiliated dealers at the close of business on
the last day of any Collection Period with respect to which that determination
is being made is greater than 1.5% of the Pool Balance on that last day, 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 trustee
and the Rating Agencies, reduce the Required Participation Percentage to not
less than 100%, so long as the Rating Agencies shall not have notified the
seller or the servicer that any reduction will result in a reduction or
withdrawal of the rating of the Series 2001-A certificates or any other
outstanding series or class of certificates.
PRINCIPAL FUNDING ACCOUNT
The servicer will establish and maintain in the name of the trustee an
Eligible Deposit Account for the benefit of the Series 2001-A certificateholders
(the "PRINCIPAL FUNDING ACCOUNT"). On each distribution date with respect to the
Accumulation Period, we will deposit Monthly Principal in the Principal Funding
Account as provided above under "Principal Collections". If an Early
Amortization Period that is not terminated as described in this prospectus
supplement commences during the Accumulation Period, we will distribute the
Principal Funding Account Balance to the Series 2001-A certificateholders on the
first distribution date after the Collection Period in which the Early
Amortization Period begins.
The trustee will invest all amounts on deposit in the Principal Funding
Account on any distribution date, after giving effect to distributions to be
made on that distribution date (the "PRINCIPAL FUNDING ACCOUNT BALANCE"), from
the date of their deposit to on or prior to the Series 2001-A Expected Payment
Date at the direction of the servicer in Eligible Investments
S-33
that will mature on or prior to the following distribution date. The servicer
may select an appropriate agent as representative of the servicer for the
purpose of designating those investments. On each distribution date, the trustee
will apply the interest and other investment income on the Principal Funding
Account Balance as provided above under "Distributions from the Collection
Account; Reserve Fund; Yield Supplement Account".
DISTRIBUTIONS
The trust will make payments to Series 2001-A certificateholders from the
Collection Account, the Reserve Fund, the Principal Funding Account, the Yield
Supplement Account and the Excess Funding Account.
-- The trustee will apply funds on deposit in the Collection Account
and the Reserve Fund, to make the following distributions at the
following times:
-- on each distribution date all amounts on deposit in the
Collection Account and the Reserve Fund as are payable to the
Series 2001-A certificateholders with respect to accrued
interest will be distributed to the Series 2001-A
certificateholders.
-- The trustee will apply the funds on deposit in the Collection
Account, the Principal Funding Account, and the Excess Funding
Account, to make, without duplication, the following distributions
at the following times:
-- on the Series 2001-A Expected Payment Date, the trustee will
distribute to the Series 2001-A certificateholders the
Principal Funding Account Balance, the amount on deposit in
the Excess Funding Account and all amounts on deposit in the
Collection Account as are payable to Series 2001-A
certificateholders with respect to principal up to a maximum
amount on that date equal to the excess of the outstanding
principal amount of the Series 2001-A certificates over
unreimbursed Investor Charge-Offs, each on that date;
-- on each Special Payment Date, the trustee will distribute to
the Series 2001-A certificateholders the amounts on deposit in
the Principal Funding Account and the Excess Funding Account
and all amounts on deposit in the Collection Account as are
payable to Series 2001-A certificateholders with respect to
principal up to a maximum amount on that date equal to the
excess of the outstanding principal amount of the Series
2001-A certificates over unreimbursed Investor Charge-Offs,
each on that date.
-- On each distribution date on which there is an unpaid Carry-over
Amount, the trustee will distribute to the Series 2001-A
certificateholders that Carry-over Amount to the extent funds are
available therefor first from amounts on deposit in the Yield
Supplement Account and second to the extent funds are available
for that purpose after making all required distributions and
deposits with respect to the Series 2001-A certificates as
provided above under "Distributions from the Collection Account;
Reserve Fund; Yield Supplement Account -- Interest Collections".
S-34
-- If, on the final distribution date, there is any Carry-over
Amount, after giving effect to any distributions on that date
under the first through third clauses above, the trustee shall
distribute to the Series 2001-A certificateholders
-- amounts on deposit in the Reserve Fund, to the extent those
amounts would otherwise be distributed to the seller, and
-- Available Seller's Collections on deposit in the Collection
Account, to the extent those amounts would otherwise be
distributed to the seller, which are available to satisfy the
Carry-over Amount on the final distribution date, as described
above under "Distributions from the Collection Account;
Reserve Fund; Yield Supplement Account -- Interest
Collections".
We will make the distributions to the Series 2001-A certificateholders of
record at the close of business on the day immediately preceding the related
distribution date (each of those days a "RECORD DATE"), except that the final
distribution with respect to any Series 2001-A Certificate will be made only
upon surrender of that Series 2001-A Certificate.
OPTIONAL REPURCHASE
The Series 2001-A Certificateholders' Interest will be subject to optional
repurchase by the servicer on any distribution date after the Invested Amount
becomes less than or equal to $100,000,000, which is 10% of the initial
outstanding principal amount of the Series 2001-A certificates. The purchase
price will equal the sum of
-- the Invested Amount of the Series 2001-A certificates on the
Determination Date preceding the distribution date on which the
purchase is scheduled to be made,
-- accrued and unpaid interest on the Series 2001-A certificates at
the Certificate Rate, together with interest on overdue interest,
and
-- any outstanding Carry-over Amount with respect to the Series
2001-A certificates.
INVESTOR CHARGE-OFFS
Investor Default Amounts are losses incurred on the receivables during a
Collection Period that are allocable to the Series 2001-A certificateholders. We
intend to cover Investor Default Amounts as described under "Interest
Collections" under "Distributions from the Collection Account; Reserve Fund;
Yield Supplement Account". If we are unable to do so, Investor Charge-Offs may
occur.
If the Available Subordinated Amount is reduced to zero and on any
distribution date the Deficiency Amount is greater than zero, the outstanding
principal balance of the Series 2001-A certificates will be reduced by the
Deficiency Amount, but not by more than the Investor Default Amount for that
distribution date. Such reduction is an "INVESTOR CHARGE-OFF". Any reduction in
the outstanding principal balance of the Series 2001-A certificates will have
the effect of slowing or reducing the return of principal to the holders of
Series 2001-A certificates. If the outstanding principal balance of the Series
2001-A certificates has been reduced by any Investor Charge-Offs, it will be
increased on any distribution date, but not by an amount in excess of the
aggregate unreimbursed Investor Charge-Offs, by the sum of
-- Series Allocable Miscellaneous Payments for that distribution date
and
-- the amount of Excess Servicing allocated and available for that
purpose as described above.
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EARLY AMORTIZATION EVENTS
The Early Amortization Events with respect to the Series 2001-A
certificates will include each of the events so defined in the prospectus, plus
the following:
1. failure on the part of DCWR, the servicer or DCS, as applicable,
-- to make any payment or deposit required by the Pooling and
Servicing Agreement or the Receivables Purchase Agreement,
including but not limited to any Transfer Deposit Amount or
Adjustment Payment, on or before the date occurring two
business days after the date that payment or deposit is
required to be made; or
-- to deliver a Distribution Date Statement on the date required
under the Pooling and Servicing Agreement, or within the
applicable grace period which will not exceed five business
days; or
-- to comply with its covenant not to create any lien on a
Receivable; or
-- to observe or perform in any material respect any other
covenants or agreements set forth in the Pooling and Servicing
Agreement or the Receivables Purchase Agreement, which failure
continues unremedied for a period of 45 days after written
notice of that failure;
2. any representation or warranty made by the RPA seller in the
Receivables Purchase Agreement or by DCWR in the Pooling and
Servicing Agreement or any information required to be given by
DCWR to the trustee to identify the Accounts proves to have been
incorrect in any material respect when made and continues to be
incorrect in any material respect for a period of 60 days after
written notice and as a result the interests of the
certificateholders are materially and adversely affected. An
Early Amortization Event, however, shall not be deemed to occur
if DCWR has repurchased the related receivables or all of the
receivables, if applicable, during that period in accordance with
the provisions of the Pooling and Servicing Agreement;
3. the occurrence of events of bankruptcy, insolvency or
receivership relating to the Trust, DCS or DaimlerChrysler;
4. a failure by DCWR to convey receivables in Additional Accounts to
the trust within five business days after the day on which it is
required to convey those receivables under the Pooling and
Servicing Agreement;
5. on any Determination Date, the Available Subordinated Amount for
the next distribution date will be reduced to an amount less than
the Required Subordinated Amount on that Determination Date after
giving effect to the distributions to be made on the next
distribution date;
6. any Service Default with respect to the Series 2001-A
certificates occurs;
7. on any Determination Date, as of the last day of the preceding
Collection Period, the aggregate amount of Principal Receivables
relating to Used Vehicles exceeds 20% of the Pool Balance on 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%;
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9. any Carry-over Amount is outstanding on six consecutive
distribution dates; and
10. the outstanding principal amount of the Series 2001-A
certificates is not repaid by the Series 2001-A Expected Payment
Date.
In the case of any event described in clauses 1, 2 or 6 above, an Early
Amortization Event with respect to Series 2001-A will be deemed to have occurred
only if, after the applicable grace period described in those clauses, if any,
either the trustee or Series 2001-A certificateholders holding Series 2001-A
certificates evidencing more than 50% of the aggregate unpaid principal amount
of the Series 2001-A certificates by written notice to the seller and the
servicer, and the trustee, if given by certificateholders, declare that an Early
Amortization Event has occurred as of the date of that notice. In the case of
any Early Amortization Event described in the prospectus or any event described
in 3, 4, 5, 7, 8, 9 or 10 above, an Early Amortization Event with respect to
Series 2001-A will be deemed to have occurred without any notice or other action
on the part of the trustee or the Series 2001-A certificateholders immediately
upon the occurrence of that event.
Under limited circumstances, an Early Amortization Period which commences
prior to the scheduled end of the Revolving Period may terminate and the
Revolving Period recommence. If an Early Amortization Period results from the
failure by DCWR to convey receivables in Additional Accounts to the trust, as
described in clause 4 above, during the Revolving Period and no Early
Amortization Event that has not been cured or waived as described in this
prospectus supplement has occurred, the Early Amortization Period resulting from
that failure will terminate and the Revolving Period will recommence as of the
end of the first Collection Period during which the seller would no longer be
required to convey receivables to the trust. However, it will not recommence if
the scheduled termination date of the Revolving Period has occurred. The seller
may no longer be required to convey receivables as described above as a result
of a reduction in the Invested Amount occurring due to principal payments made
in respect of the Series 2001-A certificates and the certificates of other
outstanding series during the Early Amortization Period or as a result of the
subsequent addition of receivables to the trust. However, if any Early
Amortization Event, other than an Early Amortization Event described in the
third clause above or in the prospectus, occurs, the Revolving Period will
recommence following receipt of
-- written confirmation by each Rating Agency, other than Moody's,
that its rating of the Series 2001-A certificates will not be
withdrawn or lowered as a result of the recommencement and
-- the consent of Series 2001-A certificateholders holding Series
2001-A certificates evidencing more than 50% of the aggregate
unpaid principal amount of the Series 2001-A certificates to the
recommencement, provided that no other Early Amortization 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.
TERMINATION
The last payment of principal and interest on the Series 2001-A
certificates will be due and payable no later than the November 2006
distribution date (the "TERMINATION DATE"). In the event that the Invested
Amount is greater than zero on the Termination Date, after giving effect to
deposits and distributions otherwise to be made on the Termination Date, the
trustee will sell
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or cause to be sold an interest in the receivables, as specified in the Pooling
and Servicing Agreement, in an amount equal to the sum of
-- 110% of the Invested Amount on the Termination Date, after giving
effect to the deposits and distributions, and
-- the Available Subordinated Amount on the preceding Determination
Date, after giving effect to the allocations, distributions,
withdrawals and deposits to be made on the distribution date
following that Determination Date.
In no event, however, shall the amount exceed the product of the Series
Allocation Percentage, for the Collection Period in which the Termination Date
occurs, of receivables on the Termination Date. The trustee will distribute the
net proceeds of the sale and any collections on the receivables to Series 2001-A
certificateholders on the Termination Date to the extent necessary to pay the
remaining amounts due to the Series 2001-A certificateholders.
REPORTS
On each distribution date, including each distribution date that
corresponds to the Series 2001-A Expected Payment Date or any Special Payment
Date, commencing with the initial distribution date, the trustee will forward to
each Series 2001-A certificateholder of record a statement (the "DISTRIBUTION
DATE STATEMENT") prepared by the servicer setting forth the following
information. In the case of the third, fourth and fifth clauses below, the
information will be presented on the basis of an original principal amount of
$1,000 per Series 2001-A certificate if the Accumulation Period or an Early
Amortization Period has commenced. The information includes:
-- the aggregate amount of collections, the aggregate amount of
Interest Collections and the aggregate amount of Principal
Collections processed during the immediately preceding Collection
Period;
-- the Series Allocation Percentage, the Floating Allocation
Percentage, the Principal Allocation Percentage and the Series
2001-A Certificate Principal Percentage for that Collection
Period;
-- the total amount, if any, distributed on the Series 2001-A
certificates;
-- the amount of the distribution allocable to principal on the
Series 2001-A certificates;
-- the amount of the distribution allocable to interest on the Series
2001-A certificates;
-- the Investor Default Amount for that distribution date;
-- the Draw Amount, if any, for that Collection Period;
-- the amount of the Investor Charge-Offs and the amounts of
reimbursements of the Investor Charge-Offs for that Collection
Period;
-- the amount of the Monthly Servicing Fee for that Collection
Period;
-- the Controlled Deposit Amount for the following distribution date;
-- the Invested Amount, the Excess Funded Amount and the outstanding
principal balance of the Series 2001-A certificates for that
distribution date, after giving effect to all distributions which
will occur on that distribution date;
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-- the "pool factor" for the Series 2001-A certificates as of the
Determination Date with respect to that distribution date,
consisting of an eleven-digit decimal expressing the Invested
Amount as of that Determination Date, determined after taking into
account any reduction in that Invested Amount which will occur on
that distribution date, as a proportion of the Initial Invested
Amount;
-- the Available Subordinated Amount for that Determination Date;
-- the Reserve Fund balance for that date; and
-- the Principal Funding Account Balance and the Yield Supplement
Account balance with respect to that date.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
(the "UNDERWRITING AGREEMENT"), the seller has agreed to sell to Salomon Smith
Barney Inc.(the "UNDERWRITER"), and the underwriter has agreed to purchase from
the seller, all of the Series 2001-A certificates.
Distribution of the Series 2001-A certificates 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 100.0% of the aggregate
principal amount of the Series 2001-A certificates plus accrued interest from
December 7, 2001, before deducting expenses estimated to be $620,000. The
underwriter has agreed to reimburse the seller for a portion of those expenses.
In connection with the purchase and sale of the Series 2001-A certificates, the
underwriter may be deemed to have received compensation from the seller in the
form of underwriting discount.
In the ordinary course of its business, the underwriter and its affiliates
have engaged and may engage in investment banking transactions with the seller
and its affiliates.
The underwriter intends to make a secondary market in the Series 2001-A
certificates, but has no obligation to do so. We cannot assure you that a
secondary market for the Series 2001-A certificates will develop or, if it does
develop, that it will continue or that it will provide holders of the Series
2001-A certificates with a sufficient level of liquidity of, or trading markets
for, the Series 2001-A certificates.
LEGAL MATTERS
Certain legal matters relating to the Series 2001-A certificates will be
passed upon for DCWR by Sidley Austin Brown & Wood LLP, New York, New York, and
for the underwriter by Sidley Austin Brown & Wood LLP. Federal income tax and
ERISA matters will be passed upon for DCWR and the trust by Sidley Austin Brown
& Wood LLP. In addition to representing the underwriter, 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.
S-39
CERTIFICATE RATINGS
The trust will issue the Series 2001-A certificates 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 ultimately receive all of your required principal and interest
distributions. The rating agencies and their ratings do not address the
likelihood that any Carry-over Amounts will be paid, the likelihood you will
receive interest or principal payments on a scheduled date, or whether you will
receive any principal on your Series 2001-A certificates prior to or after the
expected distribution date.
The ratings assigned to the Series 2001-A certificates 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 agencies.
S-40
GLOSSARY OF PRINCIPAL TERMS FOR PROSPECTUS SUPPLEMENT
"ACCUMULATION PERIOD COMMENCEMENT DATE" means the date on which the
Accumulation Period will begin, which is determined as follows:
<Table>
<Caption>
The Accumulation Period
Commencement Date
If the Accumulation will be the first day in the following
Period Length is Collection Period:
- ------------------------ --------------------------------------
One Collection Period October 2004
Two Collection Periods September 2004
Three Collection Periods August 2004
Four Collection Periods July 2004
Five Collection Periods June 2004
</Table>
However, if at any time after the May 2004 payment date, any other outstanding
series, excluding some series, shall have entered into an early amortization
period, the Accumulation Period Commencement Date shall be the earlier of
-- the date that outstanding series shall have entered into its early
amortization period and
-- the Accumulation Period Commencement Date as previously
determined.
"ACCUMULATION PERIOD LENGTH" means the length of the Accumulation Period,
which will be lesser of
(i) the number of full Collection Periods between that distribution
date and the Series 2001-A Expected Payment Date and
(ii) the product, rounded upwards to the nearest integer not greater
than five, of
(a) one divided by the lowest Monthly Payment Rate on the
receivables during the last 12 months and
(b) a fraction,
-- the numerator of which is the sum of
(x) the Invested Amount as of that distribution date,
after giving effect to all changes in the Invested
Amount on that date, and
(y) the invested amounts of all other series, excluding
some series, currently in their amortization or
accumulation periods or expected to be in their
amortization or accumulation periods by the Series
2001-A Expected Payment Date and
-- the denominator of which is the sum of the Invested
Amount and the invested amounts as of that distribution
date, after giving effect to all changes in those amounts
on that date, of all other outstanding series, excluding
some series, which are expected to be outstanding on the
Series 2001-A Expected Payment Date.
S-41
"ASSETS RECEIVABLES RATE" means, for any interest period, the product of
(i) the quotient obtained by dividing
(a) 360 by
(b) the actual number of days elapsed in that period and
(ii) a percentage, expressed as a fraction,
-- the numerator of which is the sum of
(a) Certificateholder Interest Collections for the Collection
Period immediately preceding the last day of that period,
which for this purpose only is based on interest amounts
billed to the dealers which are due during that Collection
Period, less the Monthly Servicing Fee with respect to that
immediately preceding Collection Period to the extent not
waived by the servicer and
(b) the Investment Proceeds to be applied on the distribution
date related to that period and
-- the denominator of which is the sum of
(a) the product of
(x) the Floating Allocation Percentage,
(y) the Series Allocation Percentage and
(z) the average Pool Balance, after giving effect to any
charge-offs, for that immediately preceding Collection
Period,
(b) the principal balance on deposit in the Excess Funding
Account on the first day of that period, after giving
effect to all deposits to and withdrawals therefrom on that
first day, and
(c) the principal balance on deposit in the Principal Funding
Account on the first day of that period, after giving
effect to all deposits to and withdrawals therefrom on that
first day.
"AVAILABLE SELLER'S COLLECTIONS" means, for any date, the sum of
-- the Available Seller's Interest Collections for that date and
-- the Available Seller's Principal Collections for that date.
The Available Seller's Collections, however, will be zero for any Collection
Period with respect to which the Available Subordinated Amount is zero on the
Determination Date immediately following the end of that Collection Period.
S-42
"AVAILABLE SELLER'S INTEREST COLLECTIONS" means, for any date, an amount
equal to the result obtained by multiplying
(i) the excess of
(a) the Seller's Percentage for the related Collection Period over
(b) the Excess Seller's Percentage for that Collection Period
by (ii) Series Allocable Interest Collections for that date.
"AVAILABLE SELLER'S PRINCIPAL COLLECTIONS" means, for any date, an amount
equal to the product of
(i) the excess of
(a) the Seller's Percentage for the related Collection Period over
(b) the Excess Seller's Percentage for that Collection Period and
(ii) Series Allocable Principal Collections for that date.
"AVAILABLE SERIES 2001-A CERTIFICATEHOLDER PRINCIPAL COLLECTIONS" means,
for any distribution date, the sum of
(i) the product of
(a) the Floating Allocation Percentage, with respect to any
Nonprincipal Period, or the Principal Allocation Percentage,
with respect to the Accumulation Period or any Early
Amortization Period, for the related Collection Period and
(b) Series Allocable Principal Collections deposited in the
Collection Account for the related Collection Period,
(ii) the amount, if any, of Interest Collections, Investment Proceeds,
funds in the Reserve Fund, Available Seller's Collections and
Excess Servicing allocated to cover the Investor Default Amount
or reimburse Investor Charge-Offs,
(iii) Series Allocable Miscellaneous Payments on deposit in the
Collection Account for that distribution date and
(iv) Excess Principal Collections, if any, from other series allocated
to Series 2001-A.
"AVAILABLE SUBORDINATED AMOUNT" means, for a Determination Date, an amount
equal to
(i) the lesser of
(a) the Available Subordinated Amount for the preceding
Determination Date, minus, with limitations, the Draw Amount
for that preceding Determination Date, minus funds from the
Reserve Fund applied to cover any portion of the Investor
Default Amount, plus the excess, if any, of the Required
Subordinated Amount for that Determination Date over the
Required Subordinated Amount for the immediately preceding
Determination Date due to an increase in the Subordination
Factor, plus the amount of Excess Servicing available to be
paid to the seller as described under "Distributions from the
Collection Account; Reserve Fund; Yield Supplement Account --
Excess Servicing", and
(b) the product of the fractional equivalent of the Subordinated
Percentage and the Invested Amount,
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minus (ii) in the case of clause (i)(a), the Incremental Subordinated
Amount for that preceding Determination Date,
plus (iii) the Incremental Subordinated Amount for the current
Determination Date,
plus (iv) the Subordinated Percentage of funds to be withdrawn from the
Excess Funding Account on the succeeding distribution date and
paid to the seller or allocated to one or more series.
However, from and after the commencement of the Accumulation Period until the
Series 2001-A certificates are paid in full and from and after the commencement
of any Early Amortization Period that is not terminated as described in this
prospectus supplement until the payment in full of the Series 2001-A
certificates, we will calculate the Available Subordinated Amount on the basis
of the Invested Amount as of the close of business on the day preceding the
Accumulation Period or Early Amortization Period, as applicable. The Available
Subordinated Amount for the first Determination Date is equal to the Required
Subordinated Amount.
"CALCULATION AGENT" means the trustee.
"CERTIFICATE RATE" means the per annum rate equal to the lesser of (a)
LIBOR plus 0.065% and (b) the Assets Receivables Rate for the related
distribution date.
"CARRY-OVER AMOUNT" means
(i) the excess of
(a) the amount of interest on the Series 2001-A certificates that
would have accrued in respect of the related Interest Period
had interest been calculated based on LIBOR, over
(b) the amount of interest on the Series 2001-A certificates
actually accrued in respect of that Interest Period based on
the Assets Receivables Rate
plus (ii) the unpaid portion of any excess from prior distribution dates,
and interest accrued on that amount calculated on the basis of
LIBOR.
"COLLECTION PERIOD" means, for any distribution date, the calendar month
preceding the month in which that distribution date occurs.
"CONTROLLED ACCUMULATION AMOUNT" means an amount equal to the Invested
Amount as of the May 2004 distribution date, after giving effect to any changes
in the Invested Amount on that date, divided by the Accumulation Period Length.
"CONTROLLED DEPOSIT AMOUNT" means, for a distribution date, the excess, if
any, of
(i) the sum of
(a) the product of the Controlled Accumulation Amount and the
number of distribution dates from and including the first
distribution date with respect to the Accumulation Period
through and including that distribution date, but not in
excess of the Accumulation Period Length, and
(b) the amount on deposit in the Excess Funding Account as of the
May 2004 distribution date, after giving effect to any
withdrawals from or deposits to that account on that date,
other than the transfer to the Principal Funding Account of
certain amounts on deposit in the Excess Funding Account on
that date,
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over (ii) the sum of amounts on deposit in the Excess Funding Account and
the Principal Funding Account, in each case before giving effect
to any withdrawals from or deposits to those accounts on that
distribution date.
"DAIMLERCHRYSLER" means DaimlerChrysler Corporation.
"DCS" means DaimlerChrysler Services North America LLC.
"DCWR" means DaimlerChrysler Wholesale Receivables LLC.
"DEFICIENCY AMOUNT" means the amount, if any, by which
(i) the sum of
-- Monthly Interest for the following distribution date,
-- Monthly Interest accrued but not paid with respect to prior
distribution dates, and interest on that Monthly Interest,
-- the Monthly Servicing Fee for that distribution date,
-- the Investor Default Amount for that distribution date,
-- the amount of any Adjustment Payment allocated to the Series
2001-A certificates for that distribution date that has not
been deposited in the Collection Account as required under the
Pooling and Servicing Agreement and
-- if that distribution date is the final distribution date, any
Carry-over Amount on that distribution date that will not be
satisfied on that date by the application of amounts on
deposit in the Yield Supplement Account as described under
"Distributions from the Collection Account; Reserve Fund;
Yield Supplement Account -- Yield Supplement Account",
exceeds (ii) the sum of
-- Series 2001-A Certificateholder Interest Collections and
Investment Proceeds for that distribution date, and
-- the amount of funds in the Reserve Fund on that Determination
Date available to fund any portion of the Deficiency Amount as
described under "Distributions from the Collection Account;
Reserve Fund; Yield Supplement Account -- Interest
Collections".
"DISTRIBUTION DATE STATEMENT" means a statement prepared by the servicer
setting forth the following information (which, in the case of the third, fourth
and fifth clauses below, will be stated on the basis of an original principal
amount of $1,000 per Series 2001-A certificate if the Accumulation Period or an
Early Amortization Period has commenced):
-- the aggregate amount of collections, the aggregate amount of
Interest Collections and the aggregate amount of Principal
Collections processed during the immediately preceding Collection
Period;
-- the Series Allocation Percentage, the Floating Allocation
Percentage, the Principal Allocation Percentage and the Series
2001-A Certificate Principal Percentage for that Collection
Period;
-- the total amount, if any, distributed on the Series 2001-A
certificates;
-- the amount of the distribution allocable to principal on the
Series 2001-A certificates;
S-45
-- the amount of the distribution allocable to interest on the Series
2001-A certificates;
-- the Investor Default Amount for that distribution date;
-- the Draw Amount, if any, for that Collection Period;
-- the amount of the Investor Charge-Offs and the amounts of
reimbursements of the Investor Charge-Offs for that Collection
Period;
-- the amount of the Monthly Servicing Fee for that Collection
Period;
-- the Controlled Deposit Amount for the following distribution date;
-- the Invested Amount, the Excess Funded Amount and the outstanding
principal balance of the Series 2001-A certificates for that
distribution date, after giving effect to all distributions which
will occur on that distribution date;
-- the "pool factor" for the Series 2001-A certificates as of the
Determination Date with respect to that distribution date,
consisting of an eleven-digit decimal expressing the Invested
Amount as of that Determination Date, determined after taking into
account any reduction in that Invested Amount which will occur on
that distribution date, as a proportion of the Initial Invested
Amount;
-- the Available Subordinated Amount for that Determination Date;
-- the Reserve Fund balance for that date; and
-- the Principal Funding Account Balance and the Yield Supplement
Account balance with respect to that date.
"DRAW AMOUNT" means the lesser of (i) the Deficiency Amount and (ii) the
Available Subordinated Amount.
"EXCESS PRINCIPAL COLLECTIONS" means the amount of available Series 2001-A
certificateholder principal collections for any Collection Period remaining
after their application to required payments or deposits for Series 2001-A, if
any, and the amount of any similar excess for any other series.
"EXCESS RESERVE FUND REQUIRED AMOUNT" for any distribution date with
respect to an Early Amortization Period means an amount equal to the greater of
(i) 5% of the initial principal balance of the Series 2001-A
certificates and
(ii) the excess of
(a) the sum of
(x) the Available Subordinated Amount on the preceding
Determination Date, after giving effect to the
allocations, distributions, withdrawals and deposits to be
made on that distribution date, and
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(y) an amount equal to
(1) the excess of the Required Participation Percentage
over 100% multiplied by
(2) the outstanding principal balance of the Series 2001-A
certificates on that distribution date, after giving
effect to any changes in that balance on that
distribution date,
over (b) the excess of
(x) the Series Allocation Percentage of the Pool Balance on
the last day of the immediately preceding Collection
Period over
(y) the Invested Amount on that distribution date, after
giving effect to changes in that amount on that
distribution date;
provided that the Excess Reserve Fund Required Amount shall not exceed that
Available Subordinated Amount.
"EXCESS SELLER'S PERCENTAGE" means, for any Collection Period, a
percentage, which percentage shall never be less than 0% nor more than 100%,
equal to
(i) 100% minus, when used with respect to interest collections and
principal collections during any Nonprincipal Period, the sum of
(a) the Floating Allocation Percentage with respect to that
Collection Period and
(b) the percentage equivalent of a fraction, the numerator of
which is the Available Subordinated Amount as of the
Determination Date occurring in that Collection Period, after
giving effect to the allocations, distributions, withdrawals
and deposits to be made on the distribution date immediately
following that Determination Date, and the denominator of
which is the product of
(x) the Pool Balance as of the last day of that immediately
preceding Collection Period and
(y) the Series Allocation Percentage for the Collection Period
in respect of which the Excess Seller's Percentage is
being calculated or
(ii) 100% minus, when used with respect to principal collections
during the Accumulation Period and any Early Amortization
Period, the sum of
(a) the Principal Allocation Percentage with respect to that
Collection Period and
(b) the percentage described in the clause (i)(b) above for that
Collection Period.
"EXCLUDED DEALERS" means the dealers that are in voluntary or involuntary
bankruptcy proceedings or voluntary or involuntary liquidation or that, subject
to limitations, are being voluntarily removed by the seller from the trust.
"EXCLUDED RECEIVABLES" means principal receivables with respect to Excluded
Dealers.
"FINAL DISTRIBUTION DATE" means the distribution date on which, after
giving effect to all payments to be made on that distribution date, the
outstanding principal balance of the Series 2001-A certificates will be paid in
full.
S-47
"FLOATING ALLOCATION PERCENTAGE" means, for any Collection Period, the
percentage equivalent, which shall never exceed 100%, of a fraction, the
numerator of which is the Invested Amount as of the last day of the immediately
preceding Collection Period and the denominator of which is the product of
-- the Pool Balance as of that last day and
-- the Series Allocation Percentage for the Collection Period in
respect of which the Floating Allocation Percentage is being
calculated.
With respect to the first Collection Period, however, the Floating Allocation
Percentage shall mean the percentage equivalent of a fraction, the numerator of
which is the Initial Invested Amount as of the Series Issuance Date and the
denominator of which is the Series Allocation Percentage of the Pool Balance as
of the Series Cut-Off Date.
"INCREMENTAL SUBORDINATED AMOUNT" means on any Determination Date the
result obtained by multiplying
(i) a fraction, the numerator of which is the sum of the Invested
Amount on the last day of the immediately preceding Collection
Period and the Available Subordinated Amount for such
Determination Date, calculated without adding the Incremental
Subordinated Amount for such Determination Date, as described in
clause (iii) of the definition of "Available Subordinated Amount"
and the denominator of which is the Pool Balance on such last day
by
(ii) the excess, if any, of
(a) the sum of the Overconcentration Amount, the Installment
Balance Amount and the aggregate amount of Ineligible
Receivables on such Determination Date over
(b) the aggregate amount of Ineligible Receivables, receivables in
Accounts containing Dealer Overconcentrations and receivables
in Installment Balances, in each case that became Defaulted
Receivables during the preceding Collection Period and are not
subject to reassignment from the trust, unless certain
insolvency events relating to the seller or DCS have occurred,
as further described in the Pooling and Servicing Agreement.
"INITIAL INVESTED AMOUNT" means the portion of the initial principal amount
of the Series 2001-A certificates which is invested in principal receivables on
the Series Issuance Date, which is expected to equal $1,000,000,000, based on
information as of the Series Cut-off Date,
-- plus the amount of any withdrawals from the Excess Funding Account
in connection with the purchase of an additional interest in
principal receivables since the Series Issuance Date,
-- minus the amount of any additions to the Excess Funding Account in
connection with a reduction in the principal receivables in the
trust or an increase in the Subordination Factor since the Series
Issuance Date.
"INTEREST PERIOD" means, with respect to any distribution date, the period
from and including the preceding distribution date to but excluding that
distribution date, or, in the case of the first distribution date, from and
including the Series 2001-A issuance date to but excluding the first
distribution date.
S-48
"INVESTED AMOUNT" means for any date an amount equal to the Initial
Invested Amount,
-- minus the amount, without duplication, of principal payments,
except for principal payments made from the Excess Funding
Account, made to Series 2001-A certificateholders or deposited to
the Principal Funding Account in respect of the Series 2001-A
certificates prior to that date since the Series Issuance Date
-- minus the excess, if any, of
(i) the aggregate amount of Investor Charge-Offs for all
distribution dates preceding that date, over
(ii) the aggregate amount of any reimbursements of Investor
Charge-Offs for all distribution dates preceding that date.
"INVESTMENT PROCEEDS" means, for any distribution date, an amount equal to
the sum of investment earnings for the preceding Collection Period from:
-- funds held in the Reserve Fund;
-- the Series Allocation Percentage of funds held in the Collection
Account;
-- funds held in the Excess Funding Account;
-- funds held in the Yield Supplement Account; and
-- funds held in the Principal Funding Account.
"INVESTOR CHARGE-OFF" means a reduction in the outstanding principal
balance of the Series 2001-A certificates, calculated as described on page S-35.
"LIBOR" means, with respect to any Interest Period, the rate established by
the Calculation Agent, which will equal the offered rate for United States
dollar deposits for one month that appears on Telerate Page 3750 as of 11:00
A.M., London time, on the LIBOR Determination Date. However, if on any LIBOR
Determination Date the offered rate does not appear on Telerate Page 3750, the
Calculation Agent will request each of the reference banks, which shall be major
banks that are engaged in transactions in the London interbank market selected
by the Calculation Agent, to provide the Calculation Agent with its offered
quotation for United States dollar deposits for one month to prime banks in the
London interbank market as of 11:00 A.M., London time, on that date. If at least
two reference banks provide the Calculation Agent with the offered quotations,
LIBOR on that date will be the arithmetic mean, rounded upwards, if necessary,
to the nearest 1/100,000 of 1% (.0000001), with five one-millionths of a
percentage point rounded upward, of all the quotations. If on that date fewer
than two of the reference banks provide the Calculation Agent with the offered
quotations, LIBOR on that date will be the arithmetic mean, rounded upwards, if
necessary, to the nearest 1/100,000 of 1% (.0000001), with five one-millionths
of a percentage point rounded upward, of the offered per annum rates that one or
more leading banks in The City of New York selected by the Calculation Agent are
quoting as of 11:00 A.M., New York City time, on that date to leading European
banks for United States dollar deposits for one month. If, however, those banks
are not quoting 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.
S-49
"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 distribution date, the amount of interest
accrued in respect of the Series 2001-A certificates in the Interest Period for
that distribution date.
"MONTHLY PRINCIPAL" means, with respect to any distribution date relating
to the Accumulation Period or any Early Amortization Period, the Available
Series 2001-A Certificateholder Principal Collections for that distribution
date. For each distribution date, however, with respect to the Accumulation
Period, Monthly Principal may not exceed the Controlled Deposit Amount. Also,
Monthly Principal will not exceed the Invested Amount.
"NONPRINCIPAL PERIOD" means any period that is not the Accumulation Period
or an Early Amortization Period.
"POOL FACTOR" means, for a distribution date, an eleven-digit decimal
expressing the Invested Amount as of the Determination Date, determined after
taking into account any reduction in the Invested Amount which will occur on the
distribution date, as a proportion of the Initial Invested Amount.
"PRINCIPAL ALLOCATION PERCENTAGE" means, for any Collection Period, the
percentage equivalent, which shall never exceed 100%, of a fraction, the
numerator of which is the Invested Amount as of the last day of the Revolving
Period, if that last day has occurred or, if that last day has not occurred, as
of the last day of the immediately preceding Collection Period and the
denominator of which is the product of
-- the Pool Balance as of that last day and
-- the Series Allocation Percentage for the Collection Period in
respect of which the Principal Allocation Percentage is being
calculated.
"PRINCIPAL FUNDING ACCOUNT" means an Eligible Deposit Account established
and maintained by the servicer in the name of the trustee, on behalf of the
trust, for the benefit of the Series 2001-A certificateholders and in which
principal is accumulated for payment to the Series 2001-A certificateholders.
"PRINCIPAL FUNDING ACCOUNT BALANCE" means all amounts on deposit in the
Principal Funding Account on any distribution date, after giving effect to
distributions to be made on that distribution date.
"PRINCIPAL SHORTFALLS" means any principal distributions to
certificateholders for any series entitled to those principal distributions
which are either scheduled or permitted and which have not been covered out of
principal collections and other amounts allocated to the series.
"RECORD DATE" means, for any distribution date, the day immediately
preceding that date.
"REQUIRED PARTICIPATION PERCENTAGE" means, for Series 2001-A, 103%. If,
however, the aggregate amount of Principal Receivables due from any Dealer or
group of affiliated Dealers at the close of business on the last day of any
Collection Period with respect to which the determination is being made is
greater than 1.5% of the Pool Balance on that last day, the Required
Participation Percentage shall mean, as of that last day and with respect to
that Collection Period and the immediately following Collection Period only,
104%. Furthermore, the seller may, upon ten days' prior notice to the trustee,
the Rating Agencies and any Enhancement provider, reduce the Required
Participation Percentage to not less than 100%, so long as the Rating Agencies
shall not have notified the seller or the servicer that any reduction will
result in
S-50
a reduction or withdrawal of the rating of the Series 2001-A certificates or any
other outstanding series or class of certificates.
"REQUIRED SUBORDINATED AMOUNT" means, as of any date of determination, the
sum of
-- the product of the initial Subordinated Percentage, as adjusted
from time to time as described in this prospectus supplement other
than as a result of an increase in the Subordinated Percentage at
the option of the seller, and the Invested Amount and
-- the Incremental Subordinated Amount.
"RESERVE FUND" means an Eligible Deposit Account established and maintained
in the name of the trustee for the benefit of the Series 2001-A
certificateholders to hold the Reserve Fund Required Amount.
"RESERVE FUND DEPOSIT AMOUNT" means the amount, if any, by which the
Reserve Fund Required Amount exceeds the amount on deposit in the Reserve Fund.
"RESERVE FUND REQUIRED AMOUNT" means, for any distribution date, 0.35% of
the outstanding principal balance of the Series 2001-A certificates for that
distribution date, after giving effect to any change in that balance on that
distribution date.
"REVOLVING PERIOD" means the period beginning at the close of business on
the Series Cut-Off Date and terminating on the earlier of
-- the close of business on the day immediately preceding the day on
which the Accumulation Period commences and
-- the close of business on the day an Early Amortization Period
commences.
The Revolving Period, however, may recommence upon the termination of an Early
Amortization Period.
"SELLER'S PARTICIPATION AMOUNT" means, for any date, an amount equal to the
Pool Balance on that date minus the aggregate invested amounts for all
outstanding series on that date.
"SELLER'S PERCENTAGE" means 100% minus
-- the Floating Allocation Percentage, when used with respect to
interest collections, Defaulted Receivables and principal
collections during any Nonprincipal Period, and
-- the Principal Allocation Percentage, when used with respect to
principal collections during the Accumulation Period and any Early
Amortization Period.
"SERIES 2001-A CERTIFICATEHOLDER INTEREST COLLECTIONS" means, for any
distribution date, the portion of Series Allocable Interest Collections for the
related Collection Period allocated to the Series 2001-A Certificateholders'
Interest as described under "Series Provisions -- Allocation
Percentages -- Allocation Between the Series 2001-A Certificateholders and the
Seller" in this prospectus supplement.
"SERIES 2001-A CERTIFICATEHOLDERS' INTEREST" means the interest of the
Series 2001-A certificateholders in the Trust Assets.
"SERIES 2001-A CERTIFICATES" means the Floating Rate Auto Loan Asset Backed
Certificates, Series 2001-A.
"SERIES 2001-A EXPECTED PAYMENT DATE" means the November 2004 distribution
date.
"SERIES SUPPLEMENT" means the series supplement to the Pooling and
Servicing Agreement relating to the Series 2001-A certificates.
S-51
"SUBORDINATED PERCENTAGE" means, initially, the percentage equivalent of a
fraction, the numerator of which is the Subordination Factor and the denominator
of which will be the excess of 100% over the Subordination Factor.
"SUBORDINATION FACTOR" means, initially 10%, but will be subject to
increase to 11% in the event that the rating of DCS's long-term unsecured debt
is lowered below BBB- by Standard & Poor's or withdrawn by Standard & Poor's,
unless the seller receives written confirmation from Standard & Poor's that the
failure to so increase the Subordination Factor would not result in Standard &
Poor's lowering or withdrawing its rating of the Series 2001-A certificates.
"TELERATE PAGE 3750" means the display page so designated on the Dow Jones
Telerate Service, or any other page as may replace that page on that service, or
any other service as may be nominated as the information vendor, for the purpose
of displaying London interbank offered rates of major banks.
"TERMINATION DATE" means the November 2006 distribution date, on which the
last payment of principal and interest on the Series 2001-A certificates will be
due and payable.
"TRUST" means the CARCO Auto Loan Master Trust.
"UNDERWRITER" means Salomon Smith Barney Inc.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement among Salomon
Smith Barney Inc., DaimlerChrysler Wholesale Receivables LLC and DaimlerChrysler
Services North America LLC dated as of December 3, 2001.
"YIELD SUPPLEMENT ACCOUNT" means an Eligible Deposit Account established
and maintained in the name of the trustee for the benefit of the Series 2001-A
certificateholders to hold the Yield Supplement Required Amount.
"YIELD SUPPLEMENT ACCOUNT DEPOSIT AMOUNT" means the amount, if any, by
which the Yield Supplement Account Required Amount exceeds the amount on deposit
in the Yield Supplement Account.
"YIELD SUPPLEMENT ACCOUNT REQUIRED AMOUNT" means for any distribution date
0.40% of the outstanding principal balance of the Series 2001-A certificates for
that distribution date, after giving effect to any change in that balance on
that distribution date.
S-52
ANNEX I
OTHER SERIES OF INVESTOR CERTIFICATES
This Annex I sets forth the principal characteristics of
-- the Floating Rate Auto Loan Asset Backed Certificates, Series
1996-1,
-- the Floating Rate Auto Loan Asset Backed Certificates, Series
1996-2,
-- the Floating Rate Auto Loan Asset Backed Certificates, Series
1998-1,
-- the Fixed Rate Auto Loan Asset Backed Certificates, Series 1999-1,
-- the Floating Rate Auto Loan Asset Backed Certificates, Series
1999-2,
-- the Floating Rate Auto Loan Asset Backed Certificates, Series
1999-3,
-- the 6.43% Auto Loan Asset Backed Certificates, Series 1999-4,
-- the Floating Rate Auto Loan Asset Backed Certificates, Series
2000-A,
-- the Floating Rate Auto Loan Asset Backed Certificates, Series
2000-B, and
-- the Floating Rate Auto Loan Asset Backed Certificates, Series
2000-C ("Series 1996-1", "Series 1996-2", "Series 1998-1", "Series
1999-1", "Series 1999-2", "Series 1999-3", "Series 1999-4",
"Series 2000-A", "Series 2000-B" and "Series 2000-C"
respectively).
For more specific information with respect to any Series, any prospective
investor should contact DCWR at (248) 948-3067. DCWR will provide, without
charge, to any prospective purchaser, a copy of the disclosure document with
respect to that series.
1. SERIES 1996-1
Initial Principal Amount....... $500,000,000
Scheduled Interest Payment
Date........................... Monthly, on or about the fifteenth day of each
month
Current Principal Amount....... $500,000,000
Required Participation
Percentage..................... 103%
Initial Subordinated Amount.... Approximately 11.1% of the Invested Amount
Revolving Period............... October 31, 1996 to the earlier of the
commencement of an Accumulation Period or an
Early Amortization Period
Expected Payment Date.......... November 2003 Distribution Date
Termination Date............... October 2005 Distribution Date
2. SERIES 1996-2
Initial Principal Amount....... $500,000,000
Scheduled Interest Payment
Date........................... Monthly, on or about the fifteenth day of each
month
Current Principal Amount....... $500,000,000
A-1
Required Participation
Percentage..................... 103%
Initial Subordinated Amount.... Approximately 11.1% of the Invested Amount
Revolving Period............... November 30, 1996 to the earlier of the
commencement of an Accumulation Period or an
Early Amortization Period
Expected Payment Date.......... December 2001 Distribution Date
Termination Date............... November 2003 Distribution Date
3. SERIES 1998-1
Initial Principal Amount
Class A-1 Certificates....... $500,000,000
Class A-2 Certificates....... $500,000,000
Scheduled Interest Payment
Date........................... Monthly, on or about the fifteenth day of each
month
Current Principal Amount
Class A-1 Certificates.......$500,000,000
Class A-2 Certificates.......$500,000,000
Required Participation
Percentage..................... 103%
Initial Subordinated Amount.... Approximately 11.1% of the Invested Amount
Revolving Period
Class A-1 Certificates....... July 1, 1998 to the earlier of the commencement
of an Accumulation Period or an Early
Amortization Period
Class A-2 Certificates....... July 1, 1998 to the earlier of the commencement
of an Accumulation Period or an Early
Amortization Period
Expected Payment Date
Class A-1 Certificates....... June 2001 Distribution Date
Class A-2 Certificates....... June 2003 Distribution Date
Termination Date
Class A-1 Certificates....... June 2003 Distribution Date
Class A-2 Certificates....... June 2005 Distribution Date
4. SERIES 1999-1
Initial Principal Amount
Class A-1 Certificates....... $400,000,000
Class A-2 Certificates....... $600,000,000
Scheduled Interest Payment
Date........................... Monthly, on or about the fifteenth day of each
month
A-2
Current Principal Amount
Class A-1 Certificates.......$400,000,000
Class A-2 Certificates....... $600,000,000
Required Participation
Percentage..................... 103%
Initial Subordinated Amount.... Approximately 11.7% of the Invested Amount
Revolving Period
Class A-1 Certificates....... March 1, 1999 to the earlier of the commencement
of an Accumulation Period or an Early
Amortization Period
Class A-2 Certificates....... March 1, 1999 to the earlier of the commencement
of an Accumulation Period or an Early
Amortization Period
Expected Payment Date
Class A-1 Certificates....... March 2001 Distribution Date
Class A-2 Certificates....... March 2002 Distribution Date
Termination Date
Class A-1 Certificates....... March 2003 Distribution Date
Class A-2 Certificates....... March 2004 Distribution Date
5. SERIES 1999-2
Initial Principal Amount
Class A-1 Certificates....... $750,000,000
Class A-2 Certificates....... $600,000,000
Scheduled Interest Payment
Date........................... Monthly, on or about the fifteenth day of each
month
Current Principal Amount
Class A-1 Certificates....... $750,000,000
Class A-2 Certificates....... $600,000,000
Required Participation
Percentage..................... 103%
Initial Subordinated Amount.... Approximately 11.1% of the Invested Amount
Revolving Period Class A-1
Certificates................... May 1, 1999 to the earlier of the commencement
of an Accumulation Period or an Early
Amortization Period
Class A-2 Certificates......... May 1, 1999 to the earlier of the commencement
of an Accumulation Period or an Early
Amortization Period
Expected Payment Date
Class A-1 Certificates....... May 2002 Distribution Date
Class A-2 Certificates....... May 2004 Distribution Date
A-3
Termination Date
Class A-1 Certificates....... May 2004 Distribution Date
Class A-2 Certificates....... May 2006 Distribution Date
6. SERIES 1999-3
Initial Principal Amount....... $1,000,000,000
Scheduled Interest Payment
Date........................... Monthly, on or about the fifteenth day of each
month
Current Principal Amount....... $1,000,000,000
Required Participation
Percentage..................... 103%
Initial Subordinated Amount.... Approximately 11.1% of the Invested Amount
Revolving Period............... June 30, 1999 to the earlier of the commencement
of an Accumulation Period or an Early
Amortization Period
Expected Payment Date.......... July 15, 2002
Termination Date............... July 15, 2004
7. SERIES 1999-4
Initial Principal Amount....... $500,000,000
Scheduled Interest Payment
Date........................... Monthly, on or about the fifteenth day of each
month
Current Principal Amount....... $500,000,000
Required Participation
Percentage..................... 103%
Initial Subordinated Amount.... Approximately 12% of the Invested Amount
Revolving Period............... October 31, 1999 to the earlier of the
commencement of an Accumulation Period or an
Early Amortization Period
Expected Payment Date.......... November 15, 2002
Termination Date............... November 15, 2004
8. 2000-A
Initial Principal Amount....... $750,000,000
Scheduled Interest Payment
Date........................... Monthly, on or about the fifteenth day of each
month
Current Principal Amount....... $750,000,000
Required Participation
Percentage..................... 103%
Initial Subordinated Amount.... Approximately 11.1% of the Invested
Revolving Period............... Amount March 31, 2000 to earlier of the
commencement of an Accumulation Period or an
Early Amortization Period
A-4
Expected Payment Date.......... March 17, 2003
Termination Date............... March 15, 2005
9. 2000-B
Initial Principal Amount....... $501,000,000
Scheduled Interest Payment
Date........................... Monthly, on or about the fifteenth day of each
month
Current Principal Amount....... $501,000,000
Required Participation
Percentage..................... 103%
Initial Subordinated Amount.... Approximately 11.1% of the Invested Amount
Revolving Period............... October 24, 2000 to earlier of the commencement
of an Accumulation Period or an Early
Amortization Period
Expected Payment Date.......... October 15, 2003
Termination Date............... October 17, 2005
10. 2000-C
Initial Principal Amount....... $500,000,000
Scheduled Interest Payment
Date........................... Monthly, on or about the fifteenth day of each
month
Current Principal Amount....... $500,000,000
Required Participation
Percentage..................... 103%
Initial Subordinated Amount.... Approximately 11.1% of the Invested Amount
Revolving Period............... December 8, 2000 to earlier of the commencement
of an Accumulation Period or an Early
Amortization Period
Expected Payment Date.......... November 17, 2003
Termination Date............... November 15, 2005
A-5
PROSPECTUS
[DAIMLERCHRYSLER LOGO]
CARCO AUTO LOAN MASTER TRUST
Issuer
AUTO LOAN ASSET BACKED CERTIFICATES
DAIMLERCHRYSLER WHOLESALE RECEIVABLES LLC,
Seller
DAIMLERCHRYSLER SERVICES NORTH AMERICA LLC,
Servicer
THE TRUST--
-- may periodically issue asset backed certificates in one or more
series with one or more classes; and
-- will own
-- receivables arising from a portfolio of automobile dealer
revolving floorplan financing agreements;
-- payments due on those receivables; and
-- other property described in this prospectus and in the
prospectus supplement.
THE CERTIFICATES--
-- will represent interests in the trust;
-- will be paid only from the assets of the trust;
-- will represent the right to payments in the amounts and at the
times described in the prospectus supplement for those
certificates;
-- offered by this prospectus will be rated in the highest long-term
rating category, unless otherwise specified, at the time of
issuance by at least one nationally recognized rating agency; and
-- may benefit from one or more forms of credit enhancement.
BEFORE YOU DECIDE TO INVEST IN ANY OF THE CERTIFICATES, PLEASE READ THIS
PROSPECTUS AND THE RELATED PROSPECTUS SUPPLEMENT, ESPECIALLY THE RISK FACTORS
BEGINNING ON PAGE 9 OF THE PROSPECTUS. The certificates will be interests in the
trust only and neither the certificates nor the assets of the trust will
represent interests in or obligations of DaimlerChrysler Wholesale Receivables
LLC, DaimlerChrysler AG, DaimlerChrysler Corporation, DaimlerChrysler Services
North America LLC or any of their affiliates. Neither the Securities and
Exchange Commission nor any state securities commission has approved or
disapproved the securities or determined that this prospectus or any prospectus
supplement is accurate or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is December 3, 2001.
READING THIS PROSPECTUS AND THE
ACCOMPANYING PROSPECTUS SUPPLEMENT
We provide information on your certificates in two separate documents that
offer varying levels of detail:
-- this prospectus provides general information, some of which may
not apply to a particular series of certificates, including your
certificates, and
-- the accompanying prospectus supplement provides a summary of the
specific terms of your certificates.
If the terms of the certificates 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
"COMMISSION") with respect to the certificates 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:
-- the public reference facilities maintained by the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549 (telephone 1-800-732-0330),
and
-- the SEC's regional office at Citicorp Center, 500 West Madison
Street, Chicago, Illinois 60661.
Also, the Commission maintains a Web site at http://www.sec.gov containing
reports, proxy and information statements and other information regarding
registrants, including DaimlerChrysler Services North America LLC, that file
electronically with the SEC.
INCORPORATION OF DOCUMENTS BY REFERENCE
The Commission allows information filed with it to be incorporated by
reference into this prospectus. The following documents filed with the
Commission by the servicer, on behalf of the trust, are incorporated in this
prospectus by reference: the trust's Annual Report on Form 10-K for the year
ended December 31, 2000 and the trust's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 2001, June 30, 2001 and September 30, 2001. All reports
and other documents filed by the seller, as originator of any trust, in
accordance with Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent
to the date of this prospectus and prior to the
2
termination of the offering of the certificates shall be deemed to be
incorporated by reference in this prospectus.
For purposes of this prospectus, any statement in this prospectus or in a
document incorporated or deemed to be incorporated by reference may be modified
or superseded. Those statements may be modified or superseded by any other
statement in this prospectus, an incorporated document or a document
incorporated by reference. The statement may only be modified or superseded to a
limited extent. The original form of the statement will no longer be a part of
this prospectus. Only the modified form of the statement will constitute a part
of this prospectus.
COPIES OF THE DOCUMENTS
You will receive a free copy of any or all of the documents incorporated in
this prospectus or incorporated by reference into the accompanying prospectus
supplement if:
-- you received this prospectus and
-- you requested the copies from Assistant Secretary, DaimlerChrysler
Services North America LLC, 1000 Chrysler Drive, CIMS 485-14-78,
Auburn Hills, Michigan 48236-2766 (Telephone: 248-512-3990).
This offer only includes the exhibits to the documents, if the exhibits are
specifically incorporated by reference in the documents. You may also read and
copy these materials at the public reference facilities of the Commission in
Washington D.C., referred to previously.
3
TABLE OF CONTENTS
<Table>
<Caption>
- --------------------------------------------
SECTION PAGE
- --------------------------------------------
READING THE PROSPECTUS AND THE
ACCOMPANYING PROSPECTUS SUPPLEMENT 2
- --------------------------------------------
WHERE YOU CAN FIND MORE INFORMATION 2
- --------------------------------------------
INCORPORATION OF DOCUMENTS BY
REFERENCE 2
- --------------------------------------------
SUMMARY 6
- --------------------------------------------
RISK FACTORS 9
- --------------------------------------------
-- Limited Ability to Resell
Certificates 9
- --------------------------------------------
-- Legal Aspects 9
- --------------------------------------------
-- Payments 9
- --------------------------------------------
-- Social, Economic and Other
Factors 10
- --------------------------------------------
-- Trust's Relationship to
DaimlerChrysler and DCS 10
- --------------------------------------------
-- Credit Enhancement is Limited 11
- --------------------------------------------
-- Other Certificateholders May
Control the Trust 11
- --------------------------------------------
-- Additional Series 11
- --------------------------------------------
-- Credit Ratings of the
Certificates 12
- --------------------------------------------
-- Book-Entry Registration 12
- --------------------------------------------
DAIMLERCHRYSLER WHOLESALE RECEIVABLES
LLC AND THE TRUST 13
- --------------------------------------------
-- DaimlerChrysler Wholesale
Receivables LLC 13
- --------------------------------------------
-- The Trust 14
- --------------------------------------------
USE OF PROCEEDS 15
- --------------------------------------------
THE DEALER FLOORPLAN FINANCING
BUSINESS 15
- --------------------------------------------
-- General 15
- --------------------------------------------
-- Creation of Receivables 16
- --------------------------------------------
-- Credit Underwriting Process 16
- --------------------------------------------
-- Billing, Collection Procedures
and Payment Terms 17
- --------------------------------------------
-- Revenue Experience 18
- --------------------------------------------
-- Relationship with
DaimlerChrysler 18
- --------------------------------------------
-- Dealer Monitoring 19
- --------------------------------------------
-- "Dealer Trouble" Status and
DCS's Write-Off Policy 19
- --------------------------------------------
-- Additional Information 20
- --------------------------------------------
</Table>
<Table>
<Caption>
- --------------------------------------------
SECTION PAGE
- --------------------------------------------
THE ACCOUNTS 20
- --------------------------------------------
-- General 20
- --------------------------------------------
DAIMLERCHRYSLER SERVICES NORTH
AMERICA LLC, CHRYSLER FINANCIAL
COMPANY L.L.C., CHRYSLER FINANCIAL
CORPORATION, AND CHRYSLER CREDIT
CORPORATION 21
- --------------------------------------------
DESCRIPTION OF THE CERTIFICATES 22
- --------------------------------------------
-- General 22
- --------------------------------------------
-- Interest 22
- --------------------------------------------
-- Principal 23
- --------------------------------------------
-- Book-Entry Registration 25
- --------------------------------------------
-- Definitive Certificates 29
- --------------------------------------------
-- The Seller's Certificate 30
- --------------------------------------------
-- New Issuances 30
- --------------------------------------------
-- Conveyance of Receivables and
Collateral Security 32
- --------------------------------------------
-- Representations and Warranties 33
- --------------------------------------------
-- Eligible Accounts and Eligible
Receivables 35
- --------------------------------------------
-- Ineligible Receivables, the
Installment Balance Amount and
the Overconcentration Amount 37
- --------------------------------------------
-- Addition of Accounts 38
- --------------------------------------------
-- Removal of Accounts 40
- --------------------------------------------
-- Excluded Series 43
- --------------------------------------------
-- Collection Account 43
- --------------------------------------------
-- Excess Funding Account 45
- --------------------------------------------
-- Allocation Percentages 46
- --------------------------------------------
-- Allocation of Collections;
Deposits in Collection Account 48
- --------------------------------------------
-- Limited Subordination of
Seller's Interest; Enhancements 49
- --------------------------------------------
-- Distributions 50
- --------------------------------------------
-- Defaulted Receivables and
Recoveries 51
- --------------------------------------------
-- Optional Repurchase 52
- --------------------------------------------
-- Reinvestment Events and Early
Amortization Events 52
- --------------------------------------------
-- Termination; Fully Reinvested
Date 54
- --------------------------------------------
-- Indemnification 55
- --------------------------------------------
</Table>
4
TABLE OF CONTENTS (CONTINUED)
<Table>
<Caption>
- --------------------------------------------
SECTION PAGE
- --------------------------------------------
-- Collection and Other Servicing
Procedures 55
- --------------------------------------------
-- Servicer Covenants 56
- --------------------------------------------
-- Servicing Compensation and
Payment of Expenses 57
- --------------------------------------------
-- Matters Regarding the Servicer 58
- --------------------------------------------
-- Service Default 58
- --------------------------------------------
-- Reports 59
- --------------------------------------------
-- Evidence as to Compliance 59
- --------------------------------------------
-- Amendments 60
- --------------------------------------------
-- List of Certificateholders 61
- --------------------------------------------
-- The Trustee 61
- --------------------------------------------
DESCRIPTION OF THE RECEIVABLES
PURCHASE AGREEMENT 62
- --------------------------------------------
-- Sale or Transfer of Receivables 62
- --------------------------------------------
-- Representations and Warranties 62
- --------------------------------------------
-- Covenants 63
- --------------------------------------------
</Table>
<Table>
<Caption>
- --------------------------------------------
SECTION PAGE
- --------------------------------------------
-- Termination 64
- --------------------------------------------
LEGAL ASPECTS OF THE RECEIVABLES 64
- --------------------------------------------
-- Transfer of Receivables 64
- --------------------------------------------
-- Matters Relating to Bankruptcy 65
- --------------------------------------------
TAX MATTERS 67
- --------------------------------------------
-- Federal Income Tax Consequences 67
- --------------------------------------------
-- State and Local Tax
Consequences 72
- --------------------------------------------
ERISA CONSIDERATIONS 73
- --------------------------------------------
-- General 73
- --------------------------------------------
EXPERTS 75
- --------------------------------------------
PLAN OF DISTRIBUTION 75
- --------------------------------------------
LEGAL MATTERS 77
- --------------------------------------------
GLOSSARY OF PRINCIPAL TERMS FOR
PROSPECTUS 78
- --------------------------------------------
GLOBAL CLEARANCE, SETTLEMENT AND TAX
DOCUMENTATION PROCEDURES A-1
- --------------------------------------------
</Table>
5
SUMMARY
The following summary is a short, concise description of the main
structural features that a series or class of certificates 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 certificate. You will find a
detailed description of the possible terms of a certificate 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
<Table>
<Caption>
- ---------------------------------------------------------
PARTY DESCRIPTION
- ---------------------------------------------------------
Issuer - CARCO Auto Loan Master Trust (the
"trust").
- ---------------------------------------------------------
Seller - DaimlerChrysler Wholesale Receivables LLC
("DCWR"), a special-purpose Indirectly
owned subsidiary of DaimlerChrysler
Services North America LLC ("DCS").
- ---------------------------------------------------------
Servicer - DCS, the successor by merger to Chrysler
Financial Company L.L.C., a wholly owned
subsidiary of DaimlerChrysler Corporation
("DaimlerChrysler"), the successor to
Chrysler Corporation.
- ---------------------------------------------------------
Trustee - The Bank of New York.
- ---------------------------------------------------------
</Table>
TITLE OF SECURITIES
Auto Loan Asset Backed Certificates
(the "certificates").
THE TRUST
The trust will be governed by an
Amended and Restated Pooling and Servicing
Agreement dated as of December 5, 2001,
among DCWR, as seller, DCS, as servicer, and
The Bank of New York, as trustee. The assets
of the trust include
-- receivables existing under the
accounts at the close of business
on May 31, 1991, receivables
generated under the accounts from
time to time after that date
during the term of the trust as
well as receivables generated
under any accounts added to the
trust from time to time,
-- all funds collected
or to be collected
in respect of the
receivables,
-- all funds on deposit
in the accounts of
the trust,
-- any other
enhancement issued
with respect to any
particular series or
class and
-- a security interest
in motor vehicles
and parts inventory,
equipment, fixtures,
service accounts
and, in some cases,
realty and/or a
personal guarantee
securing the
receivables.
THE ACCOUNTS
The accounts by 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 inventory. Accounts may be
added to, or removed from, the trust.
See "The Accounts", "Description of the
Certificates -- Eligible Accounts and
Eligible Receivables", "-- Addition of
Accounts" and "-- Removal of Accounts".
6
THE RECEIVABLES
The receivables consist of advances made by DCS to domestic motor vehicle
dealers to purchase the vehicles. The vehicles consist primarily of new
automobiles, light duty trucks and other vehicles. The principal amount of an
advance in respect of a vehicle typically is equal to the wholesale purchase
price of the vehicle plus destination charges and, subject to exceptions, is due
upon the retail sale of the vehicle. See "The Dealer Floorplan Financing
Business -- Creation of Receivables" and "-- Payment Terms". The receivables
bear interest at a floating rate. See "The Dealer Floorplan Financing
Business -- Revenue Experience".
THE CERTIFICATES
The trust will issue the certificates in series, each of which will consist
of one or more classes. The prospectus supplement will set forth the specific
terms of a series of certificates.
We will allocate the trust's assets in part to the certificateholders of
each series, and will allocate the remainder to the seller. We will subordinate
a portion of the seller's interest to the certificateholders' interest of each
series. The certificates of each series will evidence an undivided beneficial
interest in the trust and will represent the right to receive from the assets
funds required to make payments of interest on and principal of the series.
The principal amount of the seller's interest may fluctuate as the
aggregate amount of the receivables balance changes from time to time, as we
issue new series and as outstanding series amortize.
FORM AND DENOMINATION
OF CERTIFICATES
You may purchase certificates in book-entry form only and in $1,000
increments.
INTEREST
The trust will pay interest on the certificates in a series with the
frequency specified in the prospectus supplement. Each series or class of
certificates 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 trust's sources of funds for
the payment of interest on a series of certificates will include:
-- interest collections on the receivables allocable to that series and
-- any available credit enhancement for that series
PRINCIPAL
The trust will make principal payments on a series of certificates on one
or more dates specified in the prospectus supplement. We will specify in the
prospectus supplement the sources of funds that the trust will use to pay
principal. Typically, these sources will include:
-- all or a portion of the principal collections on the receivables
allocable to that series,
-- all or a portion of the interest collections allocable to that series
remaining after the trust has made interest payments on that series
and
-- any available credit enhancement for that series.
We will set forth in the prospectus supplement for a series the manner in
which the trust will accumulate or apply available funds toward principal
payments on that series of certificates.
Each series of certificates will have a revolving period during which we
will make no principal payments on that series of certificates. We may structure
principal
7
payments for a class of certificates in the following ways, among others:
-- a single expected final payment date, on which we will repay all
principal at once or
-- an amortization period, during which we will repay principal on each
specified distribution date until we have repaid all principal.
If a series has more than one class of certificates, we may repay principal
differently for the various classes.
However, it is possible that principal payments on a class or series of
certificates will begin earlier than the date we specify in the prospectus
supplement. If an early amortization event occurs for a series of certificates,
the trust will apply all principal collections allocated to that series to the
repayment of the outstanding principal of certificates in that series, unless we
provide in the prospectus supplement that those funds will be set aside for
payment on a later date. An early amortization event will likely cause us to
repay principal on the certificates earlier than the expected date we specified
in the prospectus supplement for that series. Also, an early amortization event
may result in delays or reductions in the payments on your certificates.
Also, the servicer or other designated person may have the option to
purchase the outstanding certificates of a series when its invested amount is
reduced to a specified level.
LIMITED SUBORDINATION OF
THE SELLER'S INTEREST;
ENHANCEMENTS
The seller's interest will be subordinated to the rights of the
certificateholders of each series to the extent described in the related
prospectus supplement. Also, we may provide other enhancements. See "Limited
Subordination of Seller's Interest; Enhancements".
TAX MATTERS
In the opinion of Sidley Austin Brown & Wood LLP, special federal income
tax counsel for the seller and the trust, the certificates of each series will
be characterized as debt of the seller for federal income tax purposes and the
trust will not be characterized as an association, or a publicly traded
partnership, taxable as a corporation under federal income tax law. In the
opinion of Michigan counsel for the seller and the trust, the certificates will
be characterized as debt of the seller for Michigan income and single business
tax purposes. By your acceptance of a certificate, you will agree to treat your
certificates as indebtedness of the seller for federal, state and local income
and single business tax purposes. We might issue the certificates 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 certificates.
CERTIFICATE RATINGS
Unless we specify otherwise in the related prospectus supplement, we will
issue the certificates of a series only if they are rated in the highest
long-term 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 certificates prior to or after the expected
distribution date. See "Risk Factors -- Ratings of the certificates".
RISK FACTORS
An investment in any series of certificates involves material risks. See
"Risk Factors" in this prospectus.
8
RISK FACTORS
In this section and in the related prospectus supplement under the heading
"Risk Factors," we discuss the principal risk factors of an investment in the
certificates.
YOUR ABILITY TO RESELL CERTIFICATES IS LIMITED.
There may be no secondary market for your certificates. Underwriters may
participate in making a secondary market in the certificates, but are under no
obligation to do so. We cannot assure you that a secondary market will develop.
If a secondary market does develop, we cannot assure you that it will continue
or that you will be able to resell your certificates. Also, your certificates
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.
VARIOUS LEGAL ASPECTS MAY CAUSE DELAYS IN YOUR RECEIVING
PAYMENTS OR MAY RESULT IN REDUCED PAYMENTS OR LOSSES
ON YOUR CERTIFICATES.
This risk factor discusses various ways in which a third party may become
entitled to receive collections on the receivables instead of the trust. If that
happens, you will experience delays in distributions on your certificates and
may experience reductions in distributions on your certificates. Ultimately, you
may incur a loss on your certificates.
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 trust's
interest. See "Legal Aspects of the Receivables -- Transfer of Receivables".
DCS and the seller have and will treat the transactions described in this
prospectus as a sale of the receivables to the seller and then to the trust.
However, DCS and/or the seller may become a debtor in a bankruptcy case and a
creditor or trustee-in-bankruptcy of the debtor or the debtor itself may take
the position that the sale of receivables to the seller or to the trust should
be recharacterized as a pledge of the receivables to secure a borrowing of the
debtor. In that case, the trust could experience delays in payments of
collections of receivables to it or, should the court rule in favor of any
trustee, debtor or creditor, reductions in the amount of the payments could
result. Also, if the transfer of receivables to the seller is recharacterized as
a pledge, a tax or government lien on the property of DCS arising before any
receivables come into existence may have priority over the seller's interest in
the receivables. See "Legal Aspects of the Receivables -- Matters Relating to
Bankruptcy".
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.
THE TIMING OF PAYMENTS ON THE RECEIVABLES WILL DETERMINE
WHETHER WE WILL PAY PRINCIPAL ON THE CERTIFICATES 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
9
under the Accounts or that any particular pattern of dealer repayments will
occur. The payment of principal on the certificates depends on dealer
repayments. As a result, you may not receive your principal when you expected
because:
-- the certificates of your series or class may not be fully
amortized by its expected payment date, if any, or
-- the payment of principal to certificateholders or the deposit of
principal in a principal funding account during the controlled
amortization period or accumulation period, if any, with respect
to your series or class of certificates may not equal the
controlled amortization amount or controlled deposit amount, if
any, with respect to the series or class.
SOCIAL, ECONOMIC AND OTHER FACTORS
WILL AFFECT THE LEVEL OF THE COLLECTIONS
ON THE RECEIVABLES AND MAY AFFECT THE AMOUNT
OF THE DISTRIBUTIONS OF THE CERTIFICATES.
Payment of the receivables is largely dependent upon the retail sale of the
related vehicles. The level of retail sales of cars and light duty trucks may
change as the result of a variety of social and economic factors. Economic
factors include
-- interest rates,
-- unemployment levels,
-- the rate of inflation and
-- consumer perception of economic conditions generally.
The use of incentive programs, e.g., manufacturers' rebate programs, may affect
retail sales. However, we cannot predict whether or to what extent economic or
social factors will affect the level of vehicle sales.
THE ABILITY OF THE TRUST TO MAKE PAYMENTS ON YOUR CERTIFICATES DEPENDS IN PART
ON THE
ABILITY OF DAIMLERCHRYSLER AND DCS TO GENERATE RECEIVABLES AND THE ABILITY OF
DCS
TO PERFORM ITS OBLIGATIONS UNDER THE POOLING AND SERVICING AGREEMENT.
Neither DCS nor DaimlerChrysler is obligated to make any payments in
respect of any certificates or the receivables. However, the trust 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 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. Also, if DCS were to cease acting as
servicer, delays in processing payments on the receivables and information in
respect of the receivables could occur and result in delays in payments to you.
DCS makes representations and warranties with respect to the
characteristics of the receivables. In some cases, DCS would be required to
purchase receivables with respect to which the representations and warranties
have been breached. If DCS fails to make a required repurchase, the trust may
have less funds. In addition, subject to limitations, DCS has the ability to
change the terms of the Accounts, including the rate and the credit line, as
well as change its
10
underwriting procedures. These changes could reduce the amount of collections
received on the receivables.
Under agreements between DaimlerChrysler and DaimlerChrysler-franchised
dealers, DaimlerChrysler is committed to purchase unmiled vehicles from the
dealers upon dealership termination. If DaimlerChrysler is not able to
repurchase the new vehicles under the repurchase provision of new vehicles in
the dealer agreements, losses with respect to the receivables may be adversely
affected. See "The Dealer Floorplan Financing Business -- Relationship with
DaimlerChrysler". Also, because a substantial number of the vehicles to be sold
by the Dealers are manufactured or distributed by DaimlerChrysler, if
DaimlerChrysler were temporarily or permanently no longer manufacturing or
distributing vehicles, the rate of sales of DaimlerChrysler-manufactured
vehicles owned by the Dealers would decrease. In that case, payment rates and
the loss experience with respect to the receivables will be adversely affected.
See "The Dealer Floorplan Financing Business".
CREDIT ENHANCEMENT IS LIMITED.
IF THE CREDIT ENHANCEMENT IS EXHAUSTED, YOU MAY INCUR A LOSS.
We will provide credit enhancement of each series of certificates by
subordinating the seller's interest to the extent of the available subordinated
amount for the series as described in the related prospectus supplement. The
amount of the credit enhancement is limited and will be reduced from time to
time as described in the related prospectus supplement. If the credit
enhancement is exhausted, you are much more likely to incur a loss. See "Limited
Subordination of Seller's Interest; Enhancements".
OTHER CERTIFICATEHOLDERS MAY
CONTROL THE ACTIONS OF THE TRUST. THEIR ACTIONS MAY
BE ADVERSE TO YOUR INTEREST.
In some cases, the consent or approval of the holders of a specified
percentage of the aggregate unpaid principal amount of all outstanding
certificates of all outstanding series will be required to direct some actions.
These actions include amending the pooling and servicing agreement in some cases
and directing a reassignment of the entire portfolio of receivables. Also,
following the occurrence of an insolvency event with respect to the seller, the
holders of certificates evidencing more than 50% of the aggregate unpaid
principal amount of each series or each class of each series, and any holder of
a supplemental certificate, will be required to direct the trustee not to sell
or otherwise liquidate the receivables.
THE ISSUANCE OF ADDITIONAL SERIES OF
CERTIFICATES MAY ADVERSELY AFFECT YOUR INTEREST.
The trust, as a master trust, has previously issued series and is expected
to issue additional series, which may be represented by different classes within
a series. A series supplement delivered under the pooling and servicing
agreement in connection with the issuance of other series will specify principal
terms applicable to the series. No series supplement may change the terms of the
certificates of another series or the terms of the pooling and servicing
agreement as applied to the certificates of another series. See "Description of
the Certificates -- New
11
Issuances". However, we cannot assure you that the terms of any one series might
not have an impact on the timing or amount of payments received by a
certificateholder of any other series.
CREDIT RATINGS OF THE CERTIFICATES 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 certificates of each series offered by
this prospectus that they be rated in the highest long-term rating category by
at least one nationally recognized rating agency. Any rating assigned to the
certificates of a series or a class by a rating agency
-- will reflect the rating agency's assessment of the likelihood that
certificateholders of the series or class will receive the
payments of interest and principal required to be made under the
pooling and servicing agreement and
-- will be based primarily on the value of the receivables in the
trust, the level of subordination of the seller's interest in the
trust and the availability of any enhancement with respect to the
series or class.
However, any rating will not, unless we otherwise specify in the related
prospectus supplement, address the likelihood that the principal of, or interest
on, any certificates of the series or class will be paid on a scheduled date.
The rating will not be a recommendation to buy, hold or sell certificates of the
series or class, and the rating will not comment as to the market price or
suitability for a particular investor. We cannot assure you that a rating will
remain for any given period of time or that a rating agency will not reduce or
withdraw a rating in the future if in its judgment circumstances in the future
so warrant.
BOOK-ENTRY REGISTRATION MAY LIMIT YOUR
ABILITY TO RESELL OR PLEDGE YOUR CERTIFICATES.
Unless we otherwise specify in the prospectus supplement relating to a
series of certificates, the certificates of each series will initially be
book-entry certificates and will not be registered in your name or your
nominee's name. Accordingly, you will not be recognized by the trustee as the
"certificateholder". You will only be able to exercise the rights of a
certificateholder indirectly through DTC and its participating organizations,
and, if applicable, through Euroclear or Clearstream Banking and their
respective participating organizations. See "Description of the
Certificates -- General", " -- Book-Entry Registration" and " -- Definitive
Certificates".
You can find a "Glossary of Principal Terms for the Prospectus" beginning
on page 78 in this prospectus.
12
DAIMLERCHRYSLER WHOLESALE RECEIVABLES LLC AND THE TRUST
DAIMLERCHRYSLER WHOLESALE RECEIVABLES LLC
DCWR is a limited liability company formed under the laws of the State of
Delaware on February 4, 2000 as a wholly owned subsidiary of DCS, for the
limited purpose of purchasing wholesale, retail and other receivables from DCS
and transferring the receivables to third parties or issuing indebtedness
secured by receivables to third parties. DCWR acquired the Seller's Interest
from U.S. Auto Receivables Company ("USA") on May 31, 2000. At that time DCWR
assumed the obligations of the seller under the Pooling and Servicing Agreement
and the obligations of the purchaser under the Receivables Purchase Agreement.
On August 8, 1991, USA had acquired the Seller's Interest from Chrysler Auto
Receivables Company ("CARCO") and assumed those obligations. As of May 31, 2000,
USA was merged into a member of DCWR and no longer exists. CARCO is a
wholly-owned subsidiary of DCS.
DCWR is deemed to have made all representations and warranties of the
seller in the Pooling and Servicing Agreement and any Series Supplement with
respect to any series of certificates outstanding as of May 31, 2000. In
addition, DCWR has assumed the obligations of USA under the certificates with
respect to any outstanding series, the Pooling and Servicing Agreement and the
Receivables Purchase Agreement and has agreed to hold USA harmless from any
liability related to those obligations. Obligations transferred to and assumed
by DCWR include USA's obligation with respect to the subordinated notes held by
DCS, the proceeds of which note were used to fund a portion of the purchase
price of receivables from CCC on the Initial Closing Date and a portion of the
purchase prices of the receivables arising in the Additional Accounts added to
the trust on Addition Dates subsequent to the Initial Closing Date. DCS may make
additional subordinated loans to DCWR in the future.
The seller has taken steps in structuring the transactions contemplated by
this prospectus that are intended to insure that the voluntary or involuntary
application for relief by DCS under the United States Bankruptcy Code or similar
applicable state laws ("INSOLVENCY LAWS") will not result in the consolidation
of the assets and liabilities of the seller with those of DCS. These steps
include the creation of the seller as a separate, limited-purpose subsidiary
under a limited liability company agreement containing limitations on the nature
of the seller's business, as described above, and on the seller's ability to
commence a voluntary case or proceeding under any Insolvency Law without the
unanimous affirmative vote of all its officers. However, we cannot assure you
that the activities of the seller would not result in a court concluding that
the assets and liabilities of the seller should be consolidated with those of
DCS in a proceeding under any Insolvency Law. See "Risk Factors -- Legal Aspects
May Result in Delays in or Reductions or Loss of Payments to Certificateholders"
and "Legal Aspects of the Receivables -- Matters Relating to Bankruptcy".
Also, tax and other statutory liabilities, including liabilities to the
Pension Benefit Guaranty Corporation relating to the underfunding of pension
plans, of DaimlerChrysler or DCS can be asserted against the seller. To the
extent that any of those liabilities arise after the transfer of receivables to
the trust, the trust'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 -- Legal Aspects May Result in Delays in or
13
Reductions or Loss of Payments to Certificateholders" and "Legal Aspects of the
Receivables -- Matters Relating to Bankruptcy" and "Risk Factors -- Trust's
Relationship to DaimlerChrysler and DCS".
DCWR's executive offices are located at 27777 Franklin Road, Southfield,
Michigan 48034-8286, and its telephone number is (248) 948-3031.
THE TRUST
The trust was formed in accordance with the laws of the State of New York
under the Pooling and Servicing Agreement. The property of the trust consists of
-- the receivables existing in the Accounts on May 31, 1991 (the
"INITIAL CUT-OFF DATE").
-- all receivables generated in the Accounts from time to time after
the Initial Cut-Off Date during the term of the trust as well as
receivables generated in any Accounts added to the trust from time
to time, but excluding receivables in any Accounts that are
removed from the trust from time to time after the Initial Cut-Off
Date,
-- an assignment of all the seller's rights and remedies under the
Receivables Purchase Agreement,
-- all funds collected or to be collected in respect of the
receivables,
-- all funds on deposit in accounts of the trust,
-- any Enhancement issued with respect to any particular series or
class of certificates and
-- a security interest in the vehicles and any other collateral
security.
See "Description of the Certificates -- Addition of Accounts". See "Description
of the Receivables Purchase Agreement" for a summary of terms of the Receivables
Purchase Agreement.
DCS will not convey to the trust receivables ("FLEET RECEIVABLES")
originated in connection with multiple new vehicle orders of at least five
vehicles by specified Dealers. The terms "receivables" and "principal
receivables" as used in this prospectus will not refer to Fleet Receivables.
The property of the Trust may also include Enhancements for the benefit of
certificateholders of a particular series or class. The certificateholders of a
particular series or class will not have any interest in any Enhancements
provided for the benefit of the certificateholders of another series or class,
unless we so provide in the related Series Supplement or Series Supplements.
Under the Pooling and Servicing Agreement, the seller will be allowed, subject
to limitations and conditions, and in some circumstances will be obligated,
-- to designate from time to time Additional Accounts to be included
as Accounts and to convey to the trust the receivables of the
Additional Accounts, and
-- to designate from time to time Accounts to be removed and to
require the trustee to convey receivables in the Removed Accounts
to the seller.
14
The trust was formed for this and like transactions under the Pooling and
Servicing Agreement and prior to formation had no assets or obligations. The
trust will not engage in any business activity other than
-- acquiring and holding the receivables and the other assets of the
trust and proceeds from the receivables and those assets,
-- issuing the certificates and the seller's certificate, and any
Supplemental certificates, and making payments on those
certificates
-- and related activities.
As a consequence, we do not expect the trust to have any need for, or source of,
capital resources other than the assets of the trust.
USE OF PROCEEDS
Unless we otherwise provide in the related prospectus supplement:
-- from the net proceeds from the sale of the certificates of a
series offered by this prospectus we will make the deposit of the
Excess Funded Amount, if any, for the series, to the Excess
Funding Account for the series, and we will pay the remaining
portion of the net proceeds to DCWR;
-- DCWR will use the portion of the proceeds paid to it, together
with the subordinated loan from DCS described under
"DaimlerChrysler Wholesale Receivables LLC and the
Trust -- DaimlerChrysler Wholesale Receivables LLC", to purchase
receivables from DCS or to repay amounts previously borrowed to
purchase receivables; and
-- DCS will use the portion of the proceeds paid to it for general
corporate purposes.
THE DEALER FLOORPLAN FINANCING BUSINESS
GENERAL
The receivables transferred to the trust under to the Pooling and Servicing
Agreement were or will be selected from extensions of credit and advances, known
as "wholesale" or "floorplan" financing, made by DaimlerChrysler, directly or as
successor to Chrysler Corporation, and DCS, directly or as a successor to
affiliates, to domestic motor vehicle dealers. These funds are used by dealers
to purchase new and used vehicles manufactured or distributed by DaimlerChrysler
and other manufacturers pending sale to retail buyers. As described in this
prospectus, receivables transferred to the trust are secured by the vehicles
and, in many cases parts inventory, equipment, fixtures and service accounts of
the vehicle dealers. In some cases, the receivables are also secured by realty
owned by, and/or a personal guarantee of, a vehicle dealer.
DCS, as successor by merger to Chrysler Financial Company L.L.C. ("CFC"),
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
15
manufactured under the CHRYSLER, DODGE and JEEP trademarks. DCS, directly or as
successor to CFC, CFC Corp. or CCC, has extended credit lines to
DaimlerChrysler-franchised dealers that also operate non-DaimlerChrysler
franchises and non-DaimlerChrysler dealers. DCS services the accounts of
domestic dealers financed by it (the "U.S. WHOLESALE PORTFOLIO") through its
Southfield Support office located in Southfield, Michigan and through a network
of zone offices located throughout the United States.
Vehicles financed by any dealer under the floorplan program are categorized
by DCS, under its policies and procedures, as New Vehicles or Used Vehicles
based on whether the vehicles qualify for the new or used wholesale and retail
interest rate chargeable to the dealer in connection with the vehicles financed.
Currently, "NEW VEHICLES" consist of
-- current and prior model year unmiled vehicles,
-- current model year miled vehicles purchased at a closed auction
conducted by DaimlerChrysler and
-- prior model year and two year old miled vehicles.
Currently, "USED VEHICLES" consist of previously owned vehicles, other than
current model year miled vehicles purchased at a closed auction conducted by
DaimlerChrysler and prior model year and two year old miled vehicles. Vehicles
purchased by a dealer at a closed auction conducted by DaimlerChrysler are
referred to, collectively, as "AUCTION VEHICLES". New Vehicles and Used Vehicles
may be categorized differently in the future based on DCS's practices and
policies.
CREATION OF RECEIVABLES
DCS finances 100% of the wholesale invoice price of new vehicles, including
destination charges. DaimlerChrysler originates receivables in respect of
DaimlerChrysler-manufactured or distributed vehicles concurrently with the
shipment of the vehicles to the financed dealer.
Once a dealer has commenced the floorplanning of a manufacturer's vehicles
through DCS, DCS will finance all purchases of vehicles by the dealer from the
manufacturer. DCS will cancel this arrangement, however, if a dealer's inventory
is considered by DCS to be seriously overstocked, if a dealer is experiencing
financial difficulties or if a dealer requests controlled vehicle releases. In
those circumstances, known as "finance hold", the applicable local zone office
of DCS assumes control of vehicle releases to the dealer. DCS makes special
arrangements to finance inter-dealer sales of vehicles.
CREDIT UNDERWRITING PROCESS
DCS extends credit to dealers from time to time based upon established
credit lines. Dealers may establish lines of credit to finance purchases of new,
used and auction vehicles. All DaimlerChrysler-franchised dealers that have a
new vehicle line of credit are also eligible for a used vehicle and an auction
vehicle credit line. A new vehicle credit line relates to New Vehicles, other
than current model year miled vehicles purchased at a closed auction conducted
by DaimlerChrysler, and a used vehicle credit line relates to Used Vehicles. An
auction vehicle credit line relates to Auction Vehicles.
A newly franchised dealer requesting the establishment of a new vehicle
credit line must submit an application to a DCS zone office. After receipt of
the application, the local zone office
16
investigates the prospective dealer. The office reviews the prospective dealer's
credit reports and bank references and evaluates the dealer's marketing
capabilities and start-up financial resources and credit requirements. When an
existing dealer requests the establishment of a wholesale new vehicle credit
line, the office reviews the dealer's credit reports, including the experience
of the dealer's current financing source, and bank references. Further, the
office investigates the dealer's current state of operations and management,
including evaluating a factory reference, and marketing capabilities. For credit
lines within an office's approval limits, the office either approves or
disapproves the dealer's request. For credit lines in excess of an office's
approval limits, the office transmits the requisite documentation to the
Southfield Support Dealer Credit Department for approval or disapproval. DCS
applies the same underwriting standards for dealers franchised by other
manufacturers.
Upon approval, dealers execute a series of financing agreements with DCS
and, in the case of DaimlerChrysler-franchised dealers, DaimlerChrysler. These
agreements provide DCS a first priority security interest in the vehicles and
other collateral and a demand master promissory note in favor of DCS. Under
these agreements, DCS requires all dealers to maintain insurance coverage for
each vehicle for which it provided floorplan financing, with DCS designated as
loss payee.
The size of a credit line initially offered to a dealer is based upon the
dealer's sales record, or, in the case of a prospective dealer, expected annual
sales, and the dealer's effective net worth. The amount of a dealer's credit
line for new vehicles is adjusted quarterly by DCS. The adjustment is based upon
the dealer's average new vehicle sales during the prior 180 days and is,
typically, in an amount sufficient to finance a 75-day supply of vehicles. The
amount of a dealer's credit line for used vehicles is also adjusted
periodically. This adjustment is based upon the dealer's average used vehicle
sales for the prior 180 days and is, typically, in an amount sufficient to
finance 50% of a 30 to 45-day supply of vehicles. DCS determines the size of a
dealer's auction vehicle credit line on a case by case basis and makes
adjustments periodically based on DCS's practices and procedures.
The aggregate amount advanced for each Used Vehicle is equal to the
National Automotive Dealers Association's Official Wholesale Used Car Trade-in
Guide wholesale book value for the vehicle. However, the aggregate amount of the
credit line for the used vehicles may not exceed 50% of the value of the
dealer's total inventory of used vehicles. The amount advanced for New Vehicles
and all Auction Vehicles is equal to the amount invoiced with respect to the
vehicles and the auction purchase price, including auction fees, of the Auction
Vehicles, respectively.
BILLING, COLLECTION PROCEDURES AND PAYMENT TERMS
DCS prepares and distributes each month to each dealer a statement setting
forth billing and related account information. DCS generates and mails each
dealer's bills on the sixth and seventh calendar day of the month. Interest and
other nonprincipal charges must be paid by the end of the month in which they
are billed. DCS bills interest and handling fees in arrears, but bills insurance
costs in advance. Upon the sale of a vehicle for which it has provided floorplan
financing, DCS is entitled to receive payment in full of the related advance.
Dealers remit payments by check directly to DCS's local zone offices or
electronically via an electronic funds transfer system maintained by the
Southfield Support office.
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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 0.25% 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 "Payment Terms" for a discussion of an installment payment plan made
available to dealers. See also "Risk Factors -- The Ability of the Trust to Make
Payments on Your Certificates Depends in Part on the Ability of DaimlerChrysler
and DCS to Generate Receivables and the Ability of DCS to Perform its
Obligations under the Pooling and Servicing Agreement".
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DEALER MONITORING
DCS's local zone offices monitor the level of each dealer's wholesale
credit line on a periodic basis. Dealers are permitted to exceed those lines on
a temporary basis. For example, a dealer may, immediately prior to a seasonal
sales peak, purchase more vehicles than it is otherwise permitted to finance
under its existing credit lines. As another example, because of slow inventory
turnover, a dealer's credit lines may be reduced prior to its liquidating a
sufficient portion of its vehicle inventory. If at any time DCS learns that a
dealer's balance exceeds its approved credit lines, DCS will evaluate the
dealer's financial position and may temporarily increase the dealer's credit
lines or place the dealer in a disciplinary category known as "finance hold".
See "Creation of Receivables".
Zone office personnel conduct audits of dealer vehicle inventories on a
regular basis. The timing of each visit is varied and no advance notice is given
to the audited dealer. Auditors review dealers' financial records and conduct a
physical inventory of the vehicles on the dealers' premises. Through the audit
process, DCS reconciles each dealer's physical inventory with its records of
financed vehicles. Audits are intended to identify instances where a dealer sold
vehicles but did not immediately repay the related advances. The audit process
also aids DCS in determining in those instances whether a dealer received sale
proceeds but diverted the proceeds to uses other than the repayment of the
obligations to DCS.
"DEALER TROUBLE" STATUS AND DCS'S WRITE-OFF POLICY
Under some circumstances, DCS will classify a dealer under "DEALER TROUBLE"
status. The circumstances include
-- failure to remit any principal or interest payment when due,
-- any notifications of liens, levies or attachments and
-- a general deterioration of its financial condition.
Once a dealer is assigned to Dealer Trouble status, 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:
-- an orderly liquidation in which the dealer voluntarily liquidates
its inventory through normal sales to retail customers,
-- a forced liquidation in which DCS repossesses the dealer's
inventory and, in the case of DaimlerChrysler-franchised dealers,
closes the franchise,
-- a voluntary surrender of the dealer's inventory and, in the case
of DaimlerChrysler-franchised dealers, franchise closure, or
-- 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
19
uncollectible and attempts to liquidate all possible collateral remaining.
During the course of a liquidation, DCS may recognize additional losses or
recoveries.
ADDITIONAL INFORMATION
We will set forth in the prospectus supplement for each series additional
information with respect to the Dealer Floorplan Financing Business.
THE ACCOUNTS
GENERAL
The receivables arise in the revolving financing arrangements (the
"ACCOUNTS") with domestic automobile 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, CFC Corp. or CCC, in the ordinary course of business and meet other
criteria provided in the Pooling and Servicing Agreement. See "Description of
the Certificates -- Representations and Warranties". DCS and the seller have
represented that each believes that the Accounts will be representative of the
accounts in the Eligible Portfolio and that the inclusion of the Accounts, as a
whole, will not represent an adverse selection from the Eligible Portfolio.
From time to time, dealers deposit funds with DCS in cash management
accounts, limited in amount to the amount of the wholesale accounts. DCS applies
funds deposited by a dealer in its cash management account to reduce the
dealer's outstanding Principal Receivables balance. Under some circumstances, a
dealer may reborrow the funds.
Under the Pooling and Servicing Agreement, the seller, and under the
Receivables Purchase Agreement, DCS has the right, subject to limitations and
conditions, and in some circumstances is obligated, to choose from time to time
additional qualifying wholesale accounts to be included as Accounts and to
convey to the trust some of the receivables of the Additional Accounts,
including receivables created after the conveyance. These accounts must meet the
eligibility criteria set forth above as of the date the accounts are designated
as Additional Accounts. DCS will convey the receivables then existing, with
exceptions, or later created under the Additional Accounts to the seller. The
seller will then convey them to the trust. See "Description of the
Certificates -- Addition of Accounts". In addition, as of any Additional Cut-off
Date in respect of Additional Accounts and the date any new receivables are
generated, DCS will represent and warrant to the seller, and the seller will
represent and warrant to the trust, that the receivables meet the eligibility
requirements set forth in the Pooling and Servicing Agreement. See "Description
of the Certificates -- Conveyance of Receivables". Under some circumstances
specified in the Pooling and Servicing Agreement, the seller has the right to
remove Accounts, and the receivables arising from the Accounts, from the trust.
See "Description of the Certificates -- Removal of Accounts". During the term of
the trust, the Accounts from which the receivables arise will be the same
Accounts designated by the seller on the Initial Cut-Off Date plus any
Additional Accounts, minus any Accounts removed from the trust.
We will provide information about the Accounts in each prospectus
supplement.
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DAIMLERCHRYSLER SERVICES NORTH AMERICA LLC,
CHRYSLER FINANCIAL COMPANY L.L.C.,
CHRYSLER FINANCIAL CORPORATION, AND
CHRYSLER CREDIT CORPORATION
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 into DCS. DCS has
substantially the same assets and liabilities that CFC had. CFC, a Michigan
limited liability company, was the continuing corporation resulting from a
merger on October 25, 1998, of CFC Corp. into CFC. 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:
-- automotive retail, wholesale and fleet financing,
-- servicing commercial leases and loans,
-- property, casualty and other insurance and
-- 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 -- Trust's Relationship to DaimlerChrysler and DCS". DCS's
executive offices are located at 27777 Franklin Road, Southfield, Michigan
48034-8286 and its telephone number is (248) 512-3990.
CCC, a wholly owned subsidiary of CFC Corp., provided retail, wholesale and
lease financing services to automobile dealers and their customers throughout
the United States. On December 31, 1995, CCC merged into CFC Corp. CFC Corp., in
accordance with the terms of the Pooling and Servicing Agreement and the
Receivables Purchase Agreement, assumed all the rights and obligations of CCC
under (a) the Pooling and Servicing Agreement, including rights and obligations
of the servicer, and (b) the Receivables Purchase Agreement, Agreement including
rights and obligations of the seller. After that merger, CFC Corp. provided
retail, wholesale and lease financing services to automobile dealers and their
customers throughout the United States. On October 25, 1998, CFC Corp. merged
into CFC. CFC, under the terms of the Pooling and Servicing Agreement, assumed
all the rights and obligations of CFC Corp. under (a) the Pooling and Servicing
Agreement, including rights and obligations of the servicer, and (b) the
Receivables Purchase Agreement, including rights and obligations of the seller.
After that merger, CFC provided retail, wholesale and lease financing services
to automobile dealers and their customers throughout the United States.
On November 30, 2001, CFC merged into DCS. DCS, under the terms of the
Pooling and Servicing Agreement, assumed all the rights and obligations of CFC
under (a) the Pooling and Servicing Agreement, including rights and obligations
of the servicer, and (b) the Receivables Purchase Agreement, including rights
and obligations of CFC as seller.
We will provide additional information about DCS in the prospectus
supplement for each series.
21
DESCRIPTION OF THE CERTIFICATES
GENERAL
The trust will issue the certificates of a series under an Amended and
Restated Pooling and Servicing Agreement (as amended and supplemented from time
to time, the "POOLING AND SERVICING AGREEMENT"), among DCWR, as seller of the
receivables, DCS, as servicer of the receivables, and the trustee. The Pooling
and Servicing Agreement will be substantially in the form filed as an exhibit to
the Registration Statement of which this prospectus is a part. The trustee will
make available for inspection a copy of the Pooling and Servicing Agreement,
without exhibits or schedules, to certificateholders of a Series on written
request. The following summary describes terms that may be applicable to the
certificates of each series, is not complete and is qualified in its entirety by
reference to the Pooling and Servicing Agreement and the applicable Series
Supplement.
The certificates of each series will evidence undivided beneficial
interests in assets of the trust allocated to the certificateholders of the
series (the "CERTIFICATEHOLDERS' INTEREST"). These interests will represent the
right to receive from the trust assets funds up to, but not in excess of, the
amounts required to make payments of interest on and principal of the
certificates of the series under the Pooling and Servicing Agreement as
described in the related prospectus supplement.
The certificates of each series will initially be represented by
certificates registered in the name of the nominee of DTC (together with any
successor depository selected by the seller, the "DEPOSITORY"), except as set
forth below. Unless the related prospectus supplement states otherwise, the
certificates of each series will be available for purchase in minimum
denominations of $1,000 and integral multiples of $1,000 in book-entry form
only. DTC has informed the seller that DTC's nominee will be Cede. Accordingly,
Cede is expected to be the holder of record of the certificates. Unless and
until Definitive Certificates are issued, no certificateholder will be entitled
to receive a physical certificate representing a certificate. All references in
this prospectus to actions by certificateholders shall refer to actions taken by
DTC upon instructions from Participants. Also, all references in this prospectus
to distributions, notices, reports and statements to certificateholders shall
refer to distributions, notices, reports and statements to DTC or Cede, as the
registered holder of the certificates, as the case may be. See "Book-Entry
Registration" and "Definitive Certificates".
INTEREST
The certificates of a series or class will accrue interest on their
principal balance at the per annum rate set forth in or determined as described
in the prospectus supplement. Interest will be payable to the certificateholders
of a series or class on the interest payment dates specified in the prospectus
supplement. If the prospectus supplement for a series or class of certificates
so provides, the interest rate and the interest payment dates for each
certificate of that series or class may be adjusted from time to time, including
as a result of a decline in the interest rate of the receivables.
Except as otherwise stated in this prospectus or in the related prospectus
supplement, interest collections and other amounts allocable to the
Certificateholders' Interest of a Series will be used to make interest payments
to certificateholders of the Series on each interest payment date with
22
respect to those certificateholders. During any Early Amortization Period,
however, with respect to a series, we will distribute interest to the
certificateholders monthly on each Special Payment Date.
If the interest payment dates for a series or class occur less than
monthly, we will deposit the collections or other amounts, or the portion
allocable to the class, in one or more trust accounts (each an "INTEREST FUNDING
ACCOUNT"). The trustee will apply the amounts in the Interest Funding Account to
make interest payments to certificateholders of the series or class on the
following interest payment date for that series. If a series has more than one
class of certificates, each class may have a separate Interest Funding Account.
PRINCIPAL
The certificates of each series and class will have a revolving period (the
"REVOLVING PERIOD"). During the Revolving Period, principal collections and
other amounts otherwise allocable to the Certificateholders' Interest of the
series or class will not be paid to those certificateholders. Instead, they will
be
-- paid to the seller,
-- deposited to the Excess Funding Account, if any, for the series or
-- distributed to, or for the benefit of, the certificateholders of
other classes or series.
A Revolving Period for a series will begin on the date stated in the related
prospectus supplement (the "SERIES CUT-OFF DATE") and end on the earlier of:
-- the day immediately before the Accumulation Period commencement
date or the Controlled Amortization Period commencement date for
the series and
-- the day immediately before the day on which an Early Amortization
Event or a Reinvestment Event occurs with respect to the series.
If a series has more than one class of certificates, each class may have a
different Revolving Period.
The trust may use any of the following structures for paying principal on a
series or class of certificates. We will describe the actual structure for a
series or class in the related prospectus supplement.
A series may have an accumulation period (the "ACCUMULATION PERIOD"). The
Accumulation Period will begin at the close of business on the date specified in
or determined in the manner specified in the prospectus supplement and end on
the earliest of:
-- the beginning of a Reinvestment Period with respect to the series,
-- the beginning of an Early Amortization Period with respect to the
series and
-- payment in full of the outstanding principal amount of the series
certificates.
During the Accumulation Period for a series, we will deposit principal
collections and other amounts allocable to the Certificateholders' Interest of
the series, which may include some Excess Principal Collections, on each
distribution date in a trust account established for the benefit of the
certificateholders of the series (a "PRINCIPAL FUNDING ACCOUNT"). The trustee
will apply the amounts in the Principal Funding Account, together with any
amounts in the Excess Funding Account allocable to the series, to make principal
distributions to the certificateholders of the
23
series when due. The amount to be deposited in a Principal Funding Account for
any series on any distribution date may, but will not necessarily, be limited to
the Controlled Deposit Amount. The "CONTROLLED DEPOSIT AMOUNT" is an amount
stated in the related prospectus supplement plus, in the case of some
distribution dates, any amounts in the Excess Funding Account allocable to the
series. If a series has more than one class of certificates, each class may have
a different Accumulation Period and a separate Principal Funding Account and
Controlled Deposit Amount. Also, there may be priorities among the classes with
respect to deposits of principal into the Principal Funding Accounts.
A series may have a controlled amortization period (the "CONTROLLED
AMORTIZATION PERIOD"). The Controlled Amortization Period will begin at the
close of business on the date stated in or determined in the manner stated in
the related prospectus supplement and will end on the earliest of:
-- the beginning of a Reinvestment Period with respect to the series,
-- the beginning of an Early Amortization Period with respect to the
series and
-- payment in full of the outstanding principal amount of the
certificates of that series.
During the Controlled Amortization Period for a series, the trustee will
apply principal collections and other amounts allocable to the
Certificateholders' Interest of the series, which may include Excess Principal
Collections and amounts in the Excess Funding Account, on each distribution date
to make principal distributions to any class of certificateholders of the series
then scheduled to receive distributions. The amount to be distributed to those
certificateholders may be limited to the Controlled Amortization Amount for the
series. If a series has more than one class of certificates, each class may have
a different Controlled Amortization Period and a separate Controlled
Amortization Amount. In addition, the related prospectus supplement may describe
priorities among the classes with respect to the distributions.
A series may have a reinvestment period (the "REINVESTMENT PERIOD"). The
Reinvestment Period will begin on the day on which a Reinvestment Event has
occurred and end on the earliest of:
-- the beginning of an Early Amortization Period with respect to the
series,
-- the recommencement of the Revolving Period in accordance with the
related Series Supplement and
-- payment in full of the outstanding principal amount of the
certificates of that series.
During the Reinvestment Period for a series, we will deposit principal
collections and other amounts allocable to the Certificateholders' Interest of
the series, which may include some Excess Principal Collections, on each
distribution date in a Principal Funding Account. The trustee will apply the
funds in the Principal Funding Account, together with any amounts in the Excess
Funding Account allocable to the series, to make principal distributions to the
certificateholders of the series when due. The amount to be deposited in a
Principal Funding Account for any series on any distribution date will not be
limited to any Controlled Deposit Amount or Controlled Amortization Amount. If a
series has more than one class of certificates, each class may have a separate
Principal Funding Account and there may be priorities among the classes with
respect to deposits of principal into the Principal Funding Accounts.
24
The "EARLY AMORTIZATION PERIOD" for a series is the period beginning on the
day on which an Early Amortization Event has occurred with respect to the series
and ending on the earliest of:
-- payment in full of the outstanding principal amount of the
certificates of that series,
-- the recommencement of the Revolving Period in accordance with the
related Series Supplement and
-- the Termination Date for the series.
The start of an Early Amortization Period for a series will terminate its
Revolving Period, Reinvestment Period, Controlled Amortization Period or
Accumulation Period, as applicable. Further, we will no longer pay principal
collections and some other amounts allocable to the Certificateholders' Interest
of that series to the seller or the holders of any other outstanding series or
deposited in a Principal Funding Account. Instead, the trustee will distribute
them as principal payments to the applicable certificateholders of that series
monthly on each distribution date beginning with the distribution date following
the Collection Period in which that Early Amortization Period begins (each of
those distribution dates, a "SPECIAL PAYMENT DATE"). During an Early
Amortization Period for a series, distributions of principal to
certificateholders of the series will not be limited to any Controlled Deposit
Amount or Controlled Amortization Amount. In addition, on the first Special
Payment Date for any series, to the extent stated in the related Series
Supplement, the trustee will distribute any funds on deposit in its Excess
Funding Account, if any, and any funds on deposit in its Principal Funding
Account with respect to that series to the certificateholders of the relevant
class or series up to the outstanding principal balance of their certificates.
See "Reinvestment Events and Early Amortization Events" for a discussion of the
events which might lead to the beginning of an Early Amortization Period with
respect to a Series.
The trust may use any combination of the above described structures for a
series or class and may use any other principal payment structure set forth in a
prospectus supplement.
We will invest funds on deposit in any Principal Funding Account in
Eligible Investments. The Eligible Investments in the related prospectus
supplement intended to assure a minimum rate of return on the investment of the
funds. To make it more likely that the principal amount of a series or class of
certificates will be paid in full at the end of its Accumulation Period, the
series or class may be subject to a maturity liquidity facility or other similar
mechanism stated in the relevant prospectus supplement. A maturity liquidity
facility is a financial contract that typically provides that enough principal
will be available to retire the certificates at a specified date.
Certificates of a series or class may also be purchased from time to time,
typically at their respective principal amounts, in connection with a
remarketing of the certificates if we so provide in the related prospectus
supplement. A purchase of certificates of a series or class may cause the
outstanding principal amount of series or class to decrease prior to the start
of any Controlled Amortization Period or Early Amortization Period. The
prospectus supplement for any series subject to purchase will describe the
conditions to and procedures for any purchase. The proceeds of any purchase
would be paid to the holders of the certificates so purchased.
BOOK-ENTRY REGISTRATION
Unless in the related prospectus supplement states otherwise,
certificateholders may hold certificates of a Series through DTC, in the United
States, or Clearstream Banking, societe
25
anonyme ("CLEARSTREAM") or Euroclear, in Europe, if they are participants of
those systems, or indirectly through organizations which are participants in
those systems.
Cede, as nominee for DTC, will be the registered holder of the global
certificates. Except as described in this prospectus, no certificateholder will
be entitled to receive a certificate representing that person's interest in the
certificates. Unless and until Definitive Certificates are issued, all
references in this prospectus to actions by certificateholders shall refer to
actions taken by DTC upon instructions from its Participants. Also, all
references in this prospectus to distributions, notices, reports and statements
to certificateholders shall refer to distributions, notices, reports and
statements to Cede, as the registered holder of the certificates, for
distribution to the certificateholders in accordance with DTC procedures.
Clearstream and Euroclear will hold omnibus positions on behalf of their
participants through customers' securities accounts in Clearstream's and
Euroclear's names on the books of their respective depositaries. Those
depositaries will hold those positions in customers' securities accounts in the
depositaries' names on the books of DTC. Citibank, N.A. ("CITIBANK") will act as
depositary for Clearstream and Morgan Guaranty Trust Company of New York
("MORGAN") will act as depositary for Euroclear (in those capacities, the
"FOREIGN AGENCY DEPOSITARIES").
Transfers between DTC participants will occur in the ordinary way in
accordance with DTC rules. Transfers between Clearstream Participants and
Euroclear Participants will occur in the ordinary way in accordance with their
applicable rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Clearstream or
Euroclear participants, on the other, will be effected in DTC in accordance with
DTC rules on behalf of the relevant European international clearing system by
its Foreign Agency Depositary. Those cross-market transactions, however, will
require the counterparty in the relevant European international clearing system
to deliver instructions to the system in accordance with its rules and
procedures and within its European time deadlines. The relevant European
international clearing system will, if the transaction meets its settlement
requirements, deliver instructions to its Foreign Agency Depositary to take
action to effect final settlement on its behalf. The Foreign Action Depositary
will then deliver or receive securities in DTC, and make or receive payment in
accordance with normal procedures for same-day funds settlement applicable to
DTC. Clearstream Participants and Euroclear Participants may not deliver
instructions directly to the Foreign Agency Depositaries.
Because of time-zone differences, credits of securities received in
Clearstream or Euroclear as a result of a transaction with a DTC participant
will be made during subsequent securities settlement processing and dated the
business day following the DTC settlement date. Those credits or any
transactions in the securities settled during the processing will be reported to
the relevant Euroclear or Clearstream participant on that business day. Cash
received in Clearstream or Euroclear as a result of sales of securities by or
through a Clearstream Participant or a Euroclear Participant to a 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. For additional information regarding
clearance and settlement procedures for the certificates, see Annex I. Also, for
information with respect to tax documentation procedures relating to the
certificates, see Annex I and "Tax Matters -- Federal Income Tax Consequences --
Foreign Investors".
26
DTC is
-- a limited-purpose trust company organized under the laws of the
State of New York,
-- a member of the Federal Reserve System,
-- a "clearing corporation" within the meaning of the UCC and
-- a "clearing agency" registered under the provisions of Section 17A
of the Exchange Act.
DTC was created to hold securities for its participating organizations
("PARTICIPANTS") and facilitate the clearance and settlement of securities
transactions between Participants through electronic book-entry changes in their
accounts, eliminating the need for physical movement of certificates.
Participants include securities brokers and dealers, banks, trust companies and
clearing corporations and may include other organizations. Indirect access to
the DTC system also is available to others including banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly ("INDIRECT PARTICIPANTS").
Certificateholders that are not Participants or Indirect Participants but
desire to purchase, sell or otherwise transfer ownership of, or other interests
in, certificates may do so only through Participants and Indirect Participants.
In addition, certificateholders will receive all distributions of principal of
and interest on the certificates from the trustee through DTC and its
Participants. Under a book-entry format, certificateholders will receive
payments after the related distribution date because, while payments are
required to be forwarded to Cede, as nominee for DTC, on each distribution date,
DTC will forward the payments to its Participants which then will be required to
forward them to Indirect Participants or certificateholders. It is anticipated
that the only "Certificateholder", as that term is used in the Pooling and
Servicing Agreement, will be Cede, as nominee of DTC, and that the trustee will
not recognize certificateholders as certificateholders under the Pooling and
Servicing Agreement. Certificateholders will only be permitted to exercise the
rights of certificateholders under the Pooling and Servicing Agreement
indirectly through DTC and its Participants who in turn will exercise their
rights through DTC.
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC must make book-entry transfers among Participants on whose
behalf it acts with respect to the certificates and must receive and transmit
distributions of principal of and interest on the certificates. Participants and
Indirect Participants with which certificateholders have accounts with respect
to the certificates also must make book-entry transfers and receive and transmit
those payments on behalf of their respective certificateholders.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and banks, a certificateholder will have a
limited ability to pledge certificates to persons or entities that do not
participate in the DTC system, or otherwise take actions in respect of the
certificates.
DTC has told the seller that it will take any action permitted to be taken
by a certificateholder under the Pooling and Servicing Agreement only at the
direction of one or more Participants to whose account with DTC the certificates
are credited.
Clearstream is incorporated under the laws of Luxembourg as a professional
depository. Clearstream holds securities for Clearstream participants and
facilitates the clearance and
27
settlement of securities transactions between Clearstream participants through
electronic book-entry changes in accounts of Clearstream participants,
eliminating the need for physical movement of certificates. Transactions may be
settled in Clearstream in any of 28 currencies, including United States dollars.
Clearstream provides to Clearstream participants, among other things, services
for safekeeping, administration, clearance and settlement of internationally
traded securities and securities lending and borrowing. Clearstream interfaces
with domestic markets in several countries. As a professional depository,
Clearstream is subject to regulation by the Luxembourg Monetary Institute.
Clearstream participants are recognized financial institutions around the world,
including underwriters, securities brokers and dealers, banks, trust companies,
checkering corporations and other organizations. Indirect access to Clearstream
is also available to others, including banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Clearstream participant, either directly or indirectly.
The Euroclear System was created in 1968 to hold securities for
Participants of the Euroclear System ("EUROCLEAR PARTICIPANTS") and to clear and
settle transactions between Euroclear Participants through simultaneous
electronic book-entry delivery against payment, thereby eliminating the need for
physical movement of certificated securities and any risk from lack of
simultaneous transfers of securities and cash. Transactions may now be settled
in Euroclear in any of 32 currencies, including United States dollars. The
Euroclear System includes various other services, including securities lending
and borrowing, and interfaces with domestic markets in several countries
generally similar to the arrangements for cross-market transfers with DTC. The
Euroclear System is operated by Euroclear Bank S.A./N.V. (the "EUROCLEAR
OPERATOR" or "EUROCLEAR"). All operations are conducted by the Euroclear
Operator, and all Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear Operator. Euroclear Participants
include banks (including central banks), securities brokers and dealers and
other professional financial intermediaries and may include the underwriters.
Indirect access to the Euroclear System is also available to other firms that
clear through or maintain a custodial relationship with a Euroclear Participant,
either directly or indirectly.
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 Operative Procedures of the Euroclear System, and applicable Belgian law
(collectively, the "TERMS AND CONDITIONS"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawals of
securities and cash from the Euroclear System, and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific certificates
to specific securities clearance accounts. The Euroclear Operator acts under the
Terms and Conditions only on behalf of Euroclear Participants, and has no record
of or relationship with persons holding through Euroclear Participants.
28
Distributions with respect to certificates held through Clearstream or
Euroclear will be credited to the cash accounts of Clearstream Participants or
Euroclear Participants in accordance with the relevant system's rules and
procedures, to the extent received by its Foreign Agency Depositary. The
distributions will be subject to tax reporting in accordance with relevant
United States tax laws and regulations. See "Tax Matters". Clearstream or the
Euroclear Operator, as the case may be, will take any other action permitted to
be taken by a certificateholder under the Pooling and Servicing Agreement or the
applicable Series Supplement on behalf of a Clearstream Participant or Euroclear
Participant only in accordance with its relevant rules and procedures and
subject to its Foreign Agency Depositary's ability to effect those actions on
its behalf through DTC.
Although DTC, Clearstream and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of certificates among participants
of DTC, Clearstream and Euroclear, they are under no obligation to perform or
continue to perform the procedures and the procedures may be discontinued at any
time.
DEFINITIVE CERTIFICATES
Unless the related prospectus supplement states otherwise, the trust will
issue the certificates of a series or class in fully registered, certificated
form to certificateholders or their nominees ("DEFINITIVE CERTIFICATES"), rather
than to DTC or its nominee only if
-- the seller advises the trustee in writing that DTC is no longer
willing or able to properly discharge its responsibilities as
Depository with respect to the certificates of the series or class
and the seller is unable to locate a qualified successor,
-- the seller, at its option, chooses to end the book-entry system
through DTC with respect to the series or class or
-- after a Service Default occurs, certificateholders representing
not less than 50% of the aggregate unpaid principal amount of the
certificates of the series or class advise the trustee and DTC
through Participants in writing that the continuation of a book-
entry system through DTC, or a successor to DTC, is no longer in
the best interests of the certificateholders.
If any of the events described in the immediately preceding paragraph
occurs, DTC must notify all Participants of the availability of Definitive
Certificates. When DTC surrenders the certificate or certificates representing
those certificates and gives instructions for re-registration, the trustee will
issue the certificates in the form of Definitive Certificates. After doing so,
the trustee will recognize the holders of the Definitive Certificates as
certificateholders under the Pooling and Servicing Agreement ("HOLDERS"). If the
trust issues Definitive Certificates or DTC ceases to be the clearing agency for
any series or class of certificates, the Pooling and Servicing Agreement
provides that the applicable certificateholders will be notified of that event.
The trustee will make distributions of principal of, and interest on, the
certificates directly to Holders in accordance with the procedures set forth in
this prospectus and in the Pooling and Servicing Agreement. On each distribution
date the trustee will make distributions to Holders in whose names the
Definitive Certificates were registered at the close of business on the related
29
record date. The trustee will make distributions by check mailed to the address
of the Holder as it appears on the register maintained by the trustee. The
trustee will make the final distribution on any Certificate, whether Definitive
Certificates or the certificate or certificates registered in the name of Cede
representing the certificates, however, only when the certificate is presented
and surrendered on the final payment date at the office or agency that is
specified in the notice of final distribution to certificateholders. The trustee
will provide that notice to registered certificateholders not later than the
fifth day of the month of the final distribution.
Definitive Certificates will be transferable and exchangeable at the
offices of the trustee, which shall initially be 101 Barclay Street, New York,
New York 10286. The trustee will not impose any service charge for any
registration of transfer or exchange, but the trustee may require payment of a
sum sufficient to cover any tax or other governmental charge imposed in
connection with a transfer exchange.
THE SELLER'S CERTIFICATE
The Pooling and Servicing Agreement provides that the seller may, from time
to time, exchange a portion of the certificate evidencing the Seller's Interest
(the "SELLER'S CERTIFICATE") for another certificate (a "SUPPLEMENTAL
CERTIFICATE") for transfer or assignment to a person or entity chosen by the
seller upon the execution and delivery of a supplement to the Pooling and
Servicing Agreement, if
-- the seller shall at the time of that exchange and after giving
effect to the exchange have an interest in the Pool Balance of not
less than 2% of the aggregate amount of the principal balances of
the receivables (the "POOL BALANCE"),
-- the seller shall have delivered to the trustee, the Rating
Agencies and any Enhancement provider a Tax Opinion with respect
to the exchange and
-- the seller shall have delivered to the trustee written
confirmation from the applicable Rating Agencies that the exchange
will not result in a reduction or withdrawal of the rating of any
outstanding series or class of certificates.
Any later transfer or assignment of a Supplemental Certificate is also subject
to the second and third conditions described in the preceding sentence. The
seller may transfer a Supplemental Certificate to a securitization vehicle that
in turn issues asset-backed securities based on that Supplemental Certificate.
NEW ISSUANCES
The Pooling and Servicing Agreement states that under one or more Series
Supplements, the trustee may issue two types of certificates:
-- one or more series of certificates which are transferable and have
the characteristics described below and
-- the Seller's Certificate, and any Supplemental Certificate, which
will evidence the Seller's Interest and will be transferable only
upon the satisfaction of conditions described under "The Seller's
Certificate".
The Pooling and Servicing Agreement also provides that, under one or more
Series Supplements, the seller may cause the trustee to issue one or more new
series. Under the
30
Pooling and Servicing Agreement, the seller may specify, among other things,
with respect to any series:
-- its name or designation,
-- its initial principal amount, or method for calculating that
amount,
-- its certificate rate, or the method for determining its
certificate rate,
-- a date on which it will begin its Accumulation Period or
Controlled Amortization Period, if any,
-- the method for allocating principal and interest to
certificateholders of the series,
-- the percentage used to calculate monthly servicing fees,
-- the issuer and terms of any Enhancement or the level of
subordination provided by the Seller's Interest,
-- the terms on which the certificates of the series may be exchanged
for certificates of another series, be subject to repurchase,
optional redemption or mandatory redemption by the seller or be
remarketed by any remarketing agent,
-- the Series Termination Date and
-- any other terms permitted by the Pooling and Servicing Agreement
(all of those terms, the "PRINCIPAL TERMS" of the series).
The seller may offer any series to the public under a prospectus or other
disclosure document in transactions either registered under the Securities Act
or exempt from registration under the Securities Act, directly or through one or
more underwriters or placement agents. There is no limit to the number of series
that may be issued under the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement provides that the seller may specify
Principal Terms of a new series so that each series has a Controlled
Amortization Period or Accumulation Period which may have a different length and
begin on a different date than the Controlled Amortization Period or
Accumulation Period for any other series. Further, one or more series may be in
their Reinvestment Periods, Early Amortization Periods, Controlled Amortization
Periods or Accumulation Periods while other series are not. Thus, some series
may be amortizing or accumulating principal, while other series are not.
Moreover, different series may have the benefits of different forms of
Enhancement issued by different entities. Under the Pooling and Servicing
Agreement, the trustee will hold each form of Enhancement only on behalf of a
specified series or a particular class within that series. The seller may
specify different certificate rates and Monthly Servicing Fees with respect to
each series, or a particular class. In addition, the seller has the option to
vary among series, or classes within a series, the terms upon which the seller
may repurchase a series, or classes within a series.
Under the Pooling and Servicing Agreement and a Series Supplement, a new
series may be issued only if specified conditions are satisfied. The seller may
cause the issuance of a new series by notifying the trustee at least five
business days in advance of the applicable Series Issuance Date. The notice
shall state the designation of any series, and classes within a series, if any.
The
31
Pooling and Servicing Agreement states that the trustee will issue a new series
only when it is delivered the following:
-- a Series Supplement in form satisfactory to the trustee signed by
the seller and the servicer and specifying the Principal Terms of
the series
-- the form of any Enhancement and any related agreement,
-- an opinion of counsel to the effect that, for federal income and
Michigan income and single business tax purposes,
-- the issuance will not adversely affect the characterization of
the certificates of any outstanding series or class as debt of
the seller,
-- such issuance will not cause a taxable event to any
certificateholders (an opinion of counsel to the effect
referred to in the first subclause above and this subclause
with respect to any action is referred to in this prospectus
as a "TAX OPINION"), and
-- the new series will be characterized as debt of the seller,
and
-- written confirmation from each applicable Rating Agency that the
issuance will not cause it to reduce or withdraw the rating of any
outstanding series or class of certificates.
The issuance is also subject to the conditions that
-- the seller shall have represented and warranted that the issuance
shall not, in the reasonable belief of the seller, cause an Early
Amortization Event or Reinvestment Event to occur with respect to
any outstanding series, and
-- after giving effect to the issuance, the seller's interest in the
Pool Balance shall not be less than 2% of the Pool Balance.
When all of these conditions are satisfied, the trustee will issue the series.
CONVEYANCE OF RECEIVABLES AND COLLATERAL SECURITY
CARCO, USA and/or DCWR, as applicable, has sold and assigned or will sell
and assign to the trust
-- all of its right, title and interest in and to the receivables and
the related Collateral Security as of the Initial Cut-Off Date,
-- all receivables created in the Accounts after the Initial Cut-Off
Date,
-- its interests in the related Collateral Security and the
Receivables Purchase Agreement and
-- the proceeds of all of the foregoing.
The "COLLATERAL SECURITY" in respect of the receivables is a security interest
in vehicles and parts inventory, equipment, fixtures, service accounts and, in
some cases, realty and a personal guarantee.
DCWR and DCS must indicate in their computer records that the receivables
in the Accounts and the related Collateral Security have been conveyed to the
trust. In addition, the seller must provide to the trustee a computer file or
microfiche or written list containing a true
32
and complete list showing for each Account, as of the Initial Cut-Off Date and
the applicable Additional Cut-Off Date,
-- its account number,
-- the outstanding balance of the receivables in the Account and
-- the outstanding balance of principal receivables in the Account.
DCS will retain and will not deliver to the trustee any other records or
agreements relating to the receivables. Except as set forth above, DCS has not
and will not segregate the records and agreements relating to the trust's
receivables from those relating to other accounts of DCS. DCS has not and will
not stamp or mark the physical documentation relating to the receivables to
reflect the transfer of the receivables to the trust. The seller will file one
or more financing statements in accordance with applicable state law to perfect
the trust's interest in the receivables, the Collateral Security, the
Receivables Purchase Agreement and the proceeds of those items. See "Risk
Factors" and "Legal Aspects of the Receivables".
As contemplated above and as described below under "Addition of Accounts",
the seller has the right, subject to limitations and conditions, and in some
circumstances is obligated, to designate from time to time additional accounts
to be included as Additional Accounts, to purchase from DCS the receivables then
existing or created after that time in the Additional Accounts and to convey the
receivables to the trust. Each Additional Account must be an Eligible Account.
In respect of any conveyance of receivables in Additional Accounts, the seller
will follow the procedures set forth in the preceding paragraph, except the list
will show information for the Additional Accounts as of the date the Additional
Accounts are identified and selected (the "ADDITIONAL CUT-OFF DATE").
REPRESENTATIONS AND WARRANTIES
The seller will represent and warrant to the trust, among other things,
that
-- as of each Series Cut-Off Date, and the date of issuance of any
series (a "SERIES ISSUANCE DATE"), or, in the case of the
Additional Accounts, as of the Additional Cut-Off Date and the
date the related receivables are transferred to the trust (an
"ADDITION DATE"), each Account or Additional Account was an
Eligible Account,
-- as of the Series Cut-Off Date, or as of the Additional Cut-Off
Date, in the case of any Additional Accounts, or as of the date
any future receivable is generated (a "TRANSFER DATE"), each
receivable is an Eligible Receivable or, if the receivable is not
an Eligible Receivable, the receivable is conveyed to the trust as
described below under "Ineligible Receivables, the Installment
Balance Amount and the Overconcentration Amount",
-- each receivable and all Collateral Security conveyed to the trust
on the Transfer Date or, in the case of Additional Accounts, on
the Addition Date, and all of the seller's right, title and
interest in the Receivables Purchase Agreement, have been conveyed
to the trust free and clear of any liens and
33
-- 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 trust will reassign the related receivables to the
seller in the manner described in the following paragraph. However, the trust
will be entitled to make that reassignment only if
-- the breach remains uncured for 30 days or a longer period as may
be agreed to by the 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
-- the breach has a materially adverse effect on the
Certificateholders' Interest in the receivable or, in the case of
a breach relating to an Account, all receivables in the related
Account ("INELIGIBLE RECEIVABLES").
The trust will reassign each Ineligible Receivable to the seller on or
before the end of the Collection Period in which the reassignment obligation
arises by deducting the principal balance of the receivable from the Pool
Balance. A deduction may cause the Pool Balance minus the aggregate Invested
Amounts for all outstanding series (the "SELLER'S PARTICIPATION AMOUNT") to be
less than the aggregate Available Subordinated Amounts for all outstanding
series (the "TRUST AVAILABLE SUBORDINATED AMOUNT") on the second business day
preceding the distribution date (each second business day preceding a
Distribution Day, a "DETERMINATION DATE"), after giving effect to the
allocations, distributions, withdrawals and deposits to be made on the
distribution date. If this happens, the seller must make a deposit into the
Collection Account in immediately available funds in an amount equal to the
amount by which the Seller's Participation Amount would be less than the Trust
Available Subordinated Amount (that amount, a "TRANSFER DEPOSIT AMOUNT"). If the
Transfer Deposit Amount is not so deposited, the principal balance of the
related Ineligible Receivables will be deducted from the Pool Balance only to
the extent the Seller's Participation Amount is not reduced below the Trust
Available Subordinated Amount. Any principal balance not so deducted will not be
reassigned and will remain part of the trust. The reassignment of any receivable
to the seller and the payment of any related Transfer Deposit Amount will be the
sole remedy available against the seller for any breach of the representations
and warranties described above in this section with respect to the receivables.
The seller will also represent and warrant to the trust that, among other
things, as of each Series Issuance Date
-- it is duly formed as a limited liability company and in good
standing, it has the authority to consummate the transactions
contemplated by the Pooling and Servicing Agreement and the
Pooling and Servicing Agreement constitutes a valid, binding and
enforceable agreement of the seller, and
-- the Pooling and Servicing Agreement constitutes a valid sale,
transfer and assignment to the trust of all right, title and
interest of the seller in the receivables and the Collateral
Security, whether then existing or created after that time, the
Receivables Purchase Agreement, and the proceeds of those items,
including proceeds in any of the accounts established for the
benefit of the certificateholders of any series, subject to the
rights of the Purchasers with respect to some of the
34
Collateral Security, under the UCC as then in effect in the State
of Michigan, which is effective as to each receivable existing on
the Initial Closing Date, or as of the Addition Date, if
applicable, or, as to each receivable arising after those dates,
upon the creation of that receivable and until termination of the
trust.
If a breach of any of the representations and warranties described in the
preceding paragraph has a materially adverse effect on the Certificateholders'
Interest in the receivables, either the trustee or the holders of certificates
of all outstanding series evidencing not less than a majority of the aggregate
unpaid principal amount of all outstanding series, by written notice to the
seller and the servicer, and to the trustee and the provider of any Enhancement
if given by certificateholders, may direct the seller to accept the reassignment
of the Certificateholders' Interest of all series within 60 days of the notice,
or within a longer period specified in the notice. The seller must accept the
reassignment of the Certificateholders' Interest on a distribution 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:
-- the aggregate "Invested Amounts", as specified in the related
Series Supplements, of all series on the Determination Date
preceding the distribution date on which the purchase is scheduled
to be made,
-- accrued and unpaid interest on the unpaid principal amount of the
certificates at the applicable certificate rate, together with
interest on overdue interest, and
-- with respect to any particular series, any other amounts stated in
its Series Supplement.
The payment of the reassignment price for all outstanding series will be
considered a payment in full of the Certificateholders' Interest. The trustee
will distribute those funds to the applicable certificateholders upon
presentation and surrender of the certificates. If the trustee or the
certificateholders give a notice as provided in the preceding paragraph, the
obligation of the seller to make any deposit will constitute the sole remedy
respecting a breach of the representations and warranties available to
certificateholders or the trustee on behalf of the certificateholders.
DCWR will be deemed to have made all the representations and warranties of
the seller in the Pooling and Servicing Agreement and in any Series Supplement
with respect to any series or class of certificates.
ELIGIBLE ACCOUNTS AND ELIGIBLE RECEIVABLES
As discussed under "Representations and Warranties" above, the seller
represents that, as of specified times, the Accounts are Eligible Accounts and
the receivables are Eligible Receivables.
An "ELIGIBLE ACCOUNT" is a wholesale financing line of credit extended by
DCS, directly or as successor to CFC, CFC Corp. or CCC, to a dealer, which, as
of its date of determination:
-- is established by DCS, directly or as successor to CFC, CFC Corp.
or CCC, in the ordinary course of business under a floorplan
financing agreement,
-- is in favor of an Eligible Dealer,
35
-- is in existence and maintained and serviced by DCS, directly or as
successor to CFC, CFC Corp. or CCC, and
-- 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:
-- which is located in the United States of America, including its
territories and possessions,
-- 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,
-- in which DaimlerChrysler or any affiliate of DaimlerChrysler does
not have an equity investment and
-- which has not been classified by the servicer as being under
Dealer Trouble status.
An "ELIGIBLE RECEIVABLE" is a receivable:
-- which was originated or acquired by DCS, directly or as successor
to CFC, CFC Corp. or CCC, in the ordinary course of business,
-- which has arisen under an Eligible Account and is payable in
United States dollars,
-- which is owned by DCS, CFC, CFC Corp. or CCC at the time of sale
to the seller,
-- which represents the obligation of a dealer to repay an advance
made to the dealer to finance the acquisition of vehicles,
-- which at the time of creation and at the time of transfer to the
trust is secured by a perfected first priority security interest
in the related vehicle,
-- 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,
-- with respect to which all consents and governmental authorizations
required to be obtained by DaimlerChrysler, CCC, CFC Corp., CFC,
or DCS or the seller in connection with the creation of the
receivable or the transfer of the receivable to the trust or the
performance by CCC, CFC Corp., CFC, or DCS of the floorplan
financing agreement under which the receivable was created, have
been duly obtained,
-- as to which at all times following the transfer of the receivable
to the trust, the trust will have good and marketable title to the
receivable free and clear of all liens arising prior to the
transfer or arising at any time, other than liens permitted under
the Pooling and Servicing Agreement,
-- which has been the subject of a valid transfer and assignment from
the seller to the trust of all the seller's interest in the
receivable, including any proceeds of the receivable,
36
-- 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,
-- which at the time of transfer to the trust is not subject to any
right of rescission, setoff, or any other defense, including
defenses arising out of violations of usury laws, of the dealer,
-- as to which, at the time of transfer of the receivable to the
trust, DaimlerChrysler, CCC, CFC Corp., CFC, DCS and the seller
have satisfied all their respective obligations with respect to
the receivable required to be satisfied at that time,
-- as to which, at the time of transfer of the receivable to the
trust, neither DaimlerChrysler, CCC, CFC Corp., CFC or DCS nor the
seller has taken or failed to take any action which would impair
the rights of the trust or the certificateholders,
-- which constitutes "chattel paper" as defined in Article 9 of the
UCC as then in effect in the State of Michigan and
-- which was transferred to the trust with all applicable
governmental authorization.
The 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
trustee will not make any initial or periodic general examination of the
servicer for the purpose of establishing the compliance by the servicer with its
representations or warranties, the observation of its obligations under the
Pooling and Servicing Agreement or for any other purpose. The servicer, however,
will deliver to the trustee on or before March 31 of each calendar year, an
opinion of counsel with respect to the validity of the interest of the trust in
and to the receivables and other components of the trust.
INELIGIBLE RECEIVABLES, THE INSTALLMENT BALANCE AMOUNT
AND THE OVERCONCENTRATION AMOUNT
For the purpose of facilitating the administration and reporting
requirements of the servicer under the Pooling and Servicing Agreement, the
seller will transfer all Ineligible Receivables arising in an Eligible Account
to the trust. If, however, the Series Supplement for a series so states, the
Incremental Subordinated Amount for the series will be adjusted by the portion
of the aggregate principal amount of Ineligible Receivables included in the
series allocable to the Certificateholders' Interest of the series. Also, if the
Series Supplement for a series so states, the Incremental Subordinated Amount
for the series shall be adjusted to reflect, on each distribution date,
-- the aggregate principal amount of receivables in the trust on the
distribution date which are Dealer Overconcentrations (the
"OVERCONCENTRATION AMOUNT") allocable to the Certificateholders'
Interest of the series and
-- the portion of the aggregate amount of Installment Balances in
respect of which DCS has not received an offsetting payment from
the related dealer on the distribution date (the "INSTALLMENT
BALANCE AMOUNT") allocable to the Certificateholders' Interest of
the series.
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"DEALER OVERCONCENTRATIONS" on any distribution date means, with respect to
any dealer or group of affiliated dealers, the excess of
-- the aggregate principal amount of receivables due from the dealer
or group of affiliated dealers on the last day of the Collection
Period immediately preceding such distribution date over
-- 2% of the Pool Balance on the last day of the immediately
preceding Collection Period.
ADDITION OF ACCOUNTS
Subject to the conditions described in this paragraph, the seller has the
right to designate from time to time additional accounts to be included as
Accounts (the "ADDITIONAL ACCOUNTS"). Also, the seller must add the receivables
of Additional Accounts if the Pool Balance on the last day of any Collection
Period is less than the Required Participation Amount as of the following
distribution date, after giving effect to the allocations, distributions,
withdrawals and deposits to be made on the distribution date. In that case,
unless insolvency events have occurred with respect to the seller, DCS or
DaimlerChrysler, then DCS under the Receivables Purchase Agreement must sell to
the seller, and the seller under the Pooling and Servicing Agreement must
transfer and assign to the trust, within 10 business days after the end of the
Collection Period, interests in all receivables arising in the Additional
Accounts, whether the receivables are then existing or created after that time.
Any designation of Additional Accounts is subject to the following conditions,
among others:
-- each Additional Account must be an Eligible Account;
-- the seller shall represent and warrant that the addition of the
Additional Accounts shall not, in the reasonable belief of the
seller, cause an Early Amortization Event or Reinvestment Event to
occur with respect to any series;
-- the seller shall not select the Additional Accounts in a manner
that it believes is adverse to the interests of the
certificateholders or any Enhancement provider;
-- 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 trustee, the Rating Agencies and
any Enhancement provider; and
-- the applicable Rating Agencies shall have provided written
confirmation that the addition will not cause the rating of any
outstanding series or class of certificates to be reduced or
withdrawn.
The seller may, however, from time to time, at its discretion, and subject
only to the limitations specified in this paragraph, designate Additional
Accounts. Additional Accounts designated in accordance with the provisions
described in this paragraph are referred to in this prospectus as "AUTOMATIC
ADDITIONAL ACCOUNTS". Unless each Rating Agency otherwise consents,
-- 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
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-- the number of Automatic Additional Accounts designated during any
calendar year shall not exceed 20% of the number of Accounts as of
the first day of the calendar year.
On or before the first business day of each Collection Period beginning in
January, April, July and October of each calendar year, the seller shall have
requested and obtained notification from each Rating Agency of any limitations
to the right of the seller to designate Eligible Accounts as Automatic
Additional Accounts during any period which includes the Collection Period. On
or before January 31, April 30, July 31 and October 31 of each calendar year,
the trustee shall have received confirmation from each Rating Agency that the
addition of all Automatic Additional Accounts included as Accounts during the
three consecutive Collection Periods ending in the calendar month prior to that
date shall not have resulted in any applicable Rating Agency reducing or
withdrawing its rating of any outstanding series or class of certificates. On or
before January 31 and July 31 of each calendar year, or on or before the last
day of each month in some circumstances, the seller shall have delivered to the
trustee, each Rating Agency and any Enhancement provider an opinion of counsel
with respect to the Automatic Additional Accounts included as Accounts during
the preceding calendar year confirming the validity and perfection of each
transfer of that Automatic Additional Accounts. If the 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 trust.
Each Additional Account, including each Automatic Additional Account, must
be an Eligible Account at the time of its addition. However, since Additional
Accounts may not have been a part of the initial portfolio of CCC, CFC Corp.,
CFC or DCS, they may not be of the same credit quality as the initial Accounts.
Additional Accounts may have been originated by CCC, CFC Corp., CFC or DCS at a
later date using credit criteria different from those which were applied to the
initial Accounts or may have been acquired by CCC, CFC Corp., CFC or DCS from
another wholesale lender that had different credit criteria. In addition, the
seller will be permitted to designate Additional Accounts that contain
receivables that have been sold or pledged to third parties. However, following
the applicable Additional Cut-Off Date, no receivables arising after the
Additional Cut-Off Date in any of those accounts shall be sold or pledged to any
third parties.
The "REQUIRED PARTICIPATION AMOUNT" for any date is an amount equal to the
sum of:
-- the sum of the amounts for each series obtained by multiplying the
Required Participation Percentage for the series by the Initial
Invested Amount for the series at that time. However, each
Excluded Series will be excluded from this calculation until the
Invested Amount of the related Paired Series is reduced to zero;
and
-- the Trust Available Subordinated Amount on the immediately
preceding Determination Date, after giving effect to the
allocations, distributions, withdrawals and deposits to be made on
the distribution date following the Determination Date.
The "REQUIRED PARTICIPATION PERCENTAGE" for a series will be specified in
the related Series Supplement.
39
REMOVAL OF ACCOUNTS
The seller shall have the right at any time to require the removal from the
trust of Eligible Accounts. This removal right may be exercised only once a
month. To remove any Eligible Account, the seller, or the servicer on its
behalf, shall, among other things,
-- furnish to the 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 trust (the "DESIGNATED ACCOUNTS"),
-- determine on the Removal Commencement Date the aggregate principal
balance of receivables in respect of each Designated Account (the
"DESIGNATED BALANCE"),
-- from and after the Removal Commencement Date, cease to transfer to
the trust all receivables arising in the Designated Accounts,
-- 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"),
-- on each business day from and after the Removal Commencement Date
to and until the related Removal Date, allocate
-- to the trust, to be further allocated under the Pooling and
Servicing Agreement, interest collections in respect of each
Designated Account with respect to receivables in all Designated
Accounts sold to the trust, and
-- to the seller the remainder of the interest collections in all of
those Designated Accounts,
-- represent and warrant that the removal of any Eligible Account on
any Removal Date shall not, in the reasonable belief of the
seller, cause an Early Amortization Event or Reinvestment Event to
occur with respect to any series or cause the Pool Balance to be
less than the Required Participation Amount,
-- represent and warrant that no selection procedures believed by the
seller to be adverse to the interests of the certificateholders
were utilized in selecting the Designated Accounts and that the
selection procedures were applied so as to randomly select the
Designated Accounts,
-- represent and warrant that the removal will not cause the rating
of any outstanding series or class of certificates to be reduced
or withdrawn, and
-- on or before the related Removal Date, deliver to the trustee and
any Enhancement provider an officers' certificate confirming the
items set forth in the sixth, seventh and eighth clauses above and
a Tax Opinion with respect to the removal.
No Designated Accounts shall be removed if the removal will cause the rating of
any outstanding series or class of certificates to be reduced or withdrawn.
The seller shall also have the right, but shall not be obligated, to remove
from the Trust any Account with respect to which the related Dealer has gone
into "Dealer Trouble Status" as
40
described under "The Dealer Floorplan Business -- 'Dealer Trouble Status' and
DCS's Write-off Policy." To do so, the seller will take the actions specified in
the first five clauses of the preceding paragraph.
On any date on which an Account becomes an Ineligible Account, which date
will be deemed the Removal Commencement Date for the Account, the seller will
start the removal of the Account from the trust by taking each of the actions
specified in the first five clauses of the second 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
trust for all purposes (a "REMOVED ACCOUNT").
In addition to the removal rights described in the five paragraphs above,
the seller, at its option, shall have the right at any time to remove Accounts
from the trust and, in connection with the removal, repurchase the then existing
receivables in the Accounts. To remove Accounts and repurchase the then existing
receivables in those Accounts, the seller, or the servicer on its behalf, shall,
among other things:
-- furnish to the trust, each Enhancement provider and the Rating
Agencies a Removal Notice stating the Designated Accounts which
are to be removed, and the then existing receivables in the
Designated Accounts (the "DESIGNATED RECEIVABLES") which are to be
repurchased from the trust and the Determination Date on which the
removal of the Designated Accounts and the purchase of the
Designated Receivables will occur (the "REMOVAL AND REPURCHASE
DATE"),
-- deliver to the trustee on the Removal and Repurchase Date a
computer file or microfiche or written list containing a true and
complete list of the Removed Accounts stating for each Account its
account number and the aggregate amount of receivables outstanding
in the Account,
-- represent and warrant that the removal of any Eligible Account and
the repurchase of the receivables then existing in the Account on
any Removal and Repurchase Date shall not, in the reasonable
belief of the seller, cause an Early Amortization Event or
Reinvestment Event to occur with respect to any Series or cause
the Pool Balance to be less than the Required Participation
Amount,
-- represent and warrant that no selection procedures believed by the
seller to be adverse to the interests of the certificateholders
were used in selecting the Designated Accounts,
-- represent and warrant as of the Removal and Repurchase Date that
the list of Removed Accounts delivered to the trustee as of the
Removal and Repurchase Date, is true and complete in all material
respects,
-- represent and warrant that the removal and repurchase will not
cause the rating of any outstanding series or class of
certificates to be reduced or withdrawn by the applicable Rating
Agency,
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-- deliver to the 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
-- deliver to the 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
Rating Agency shall have notified the seller, the servicer and the trustee in
writing that the removal and repurchase will not cause the Rating Agency's
rating of any outstanding series or class of certificates to be reduced or
withdrawn.
Upon satisfaction of the above conditions, on the Removal and Repurchase
Date with respect to any Designated Account and Designated Receivables, the
Designated Account shall be deemed removed, and the Designated Receivables
("REPURCHASED RECEIVABLES") shall be deemed repurchased, from the trust for all
purposes.
The seller, however, shall have the right to require the reassignment to it
of all the trust's right, title and interest in the receivables then existing
and created after that time in Accounts ("AUTOMATIC REMOVED ACCOUNTS")
designated by the seller, together with existing and future collections and
proceeds from those receivables, upon satisfaction of the following conditions:
-- 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 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");
-- on or prior to the date that is five business days after the
Automatic Removal Date, the seller shall have delivered to the
trustee a computer file or microfiche or written list containing a
true and complete list of the Automatic Removed Accounts stating
for each Account, as of the removal notice date, its account
number and the aggregate amount of receivables outstanding in the
Account;
-- the seller shall have represented and warranted as of each
Automatic Removal Date that the list of Automatic Removed Accounts
delivered to the trustee, as of the Automatic Removal Date, is
true and complete in all material respects;
-- the trustee shall have received confirmation from each Rating
Agency that the removal will not cause the Ratings Agency's rating
of any outstanding series or class of certificates to be reduced
or withdrawn;
-- the seller shall have delivered to the trustee, each Rating Agency
and any Enhancement providers an officers' certificate, dated the
Automatic Removal Date, to the effect that the seller reasonably
believes the removal will not cause an Early Amortization Event or
Reinvestment Event to occur with respect to any series; and
-- the seller shall have delivered to the trustee, each Rating Agency
and any Enhancement providers a Tax Opinion, dated the Automatic
Removal Date, with respect to the removal.
42
However, from and after the date on which no series issued prior to March
10, 1999, is outstanding, the conditions specified in the first clause above
that relate to Enhancement providers and Rating Agencies and the conditions
specified in the fourth, fifth and sixth clauses above will not be required if
all of the Accounts to be removed have liquidated and have zero balances.
Upon satisfaction of the above conditions, on the Automatic Removal Date
the trust's interest in the receivables arising in the Automatic Removed
Accounts, all monies due and to become due and all amounts received with respect
to the receivables and all proceeds of the receivables shall be deemed removed
from the trust for all purposes.
EXCLUDED SERIES
A series of certificates may be designated as an excluded series (an
"EXCLUDED SERIES") with respect to a series of certificates previously issued by
the trust as to which the Accumulation Period or Controlled Amortization Period
has commenced (a "PAIRED SERIES"). This allows a seller, in effect, to replace
an amortizing series with a new series without waiting for the amortizing series
to be paid in full.
Each Excluded Series will be prefunded with an initial deposit to a
prefunding account in an amount equal to the initial principal balance of the
Excluded Series. The source of funds will primarily be the proceeds of the
offering of the Excluded Series. Any prefunding account will be held for the
benefit of the Excluded Series and not for the benefit of the Paired Series. As
funds are accumulated in the Principal Funding Account for the Paired Series or
distributed to holders of certificates of the Paired Series, the trustee will
distribute to the seller an equal amount of funds from any prefunding account
for the Excluded Series. Until payment in full of the Paired Series, no interest
collections, principal collections, Defaulted Amounts or Miscellaneous Payments
will be allocated to the related Excluded Series. Also, it is expected that any
Excluded Series will be excluded from the calculation of the Required
Participation Amount as described under " -- Addition of Accounts".
COLLECTION ACCOUNT
In general, either the servicer, subject to limitations, will hold the
trust's funds or the trustee will keep those funds in accounts that must be
Eligible Deposit Accounts.
The servicer has established and will maintain an Eligible Deposit Account
for the benefit of the certificateholders in the name of the trustee, on behalf
of the trust (the "COLLECTION ACCOUNT"). "ELIGIBLE DEPOSIT ACCOUNT" means either
-- a segregated account with an Eligible Institution or
-- a segregated trust account with the corporate trust department of
a depository institution organized under the laws of the United
States or any one of the states of the United States, or any
domestic branch of a foreign bank, having corporate trust powers
and acting as trustee for funds deposited in the account, so long
as any of the securities of the depository institution has a
credit rating from each Rating Agency in one of its generic rating
categories which signifies investment grade.
43
"ELIGIBLE INSTITUTION" means
-- the corporate trust department of the trustee or
-- a depository institution organized under the laws of the United
States or any one of the states of the United States, or the
District of Columbia, or a domestic branch of a foreign bank,
which at all times
-- has either
-- a long-term unsecured debt rating of A2 or better by
Moody's Investors Service, Inc. ("MOODY'S") and of AAA or
better by Standard & Poor's Ratings Services, a division
of The McGraw-Hill Companies ("STANDARD & POOR'S") and
Fitch, Inc. ("FITCH") or
-- a certificate of deposit rating of P-1 by Moody's or A-1+
by Standard & Poor's, and
-- is a member of the FDIC.
Funds in the Collection Account generally will be invested in Eligible
Investments. "ELIGIBLE INVESTMENTS" are book-entry securities, negotiable
instruments or physical securities having original or remaining maturities in no
event occurring later than the distribution date next succeeding the collection
period to which the invested funds relate, except as otherwise provided in the
related Series Supplement. Eligible Investments are limited to:
-- direct obligations of, and obligations fully guaranteed as to
timely payment by, the United States of America;
-- demand deposits, time deposits or certificates of deposit of any
depositary institution or trust company incorporated under the
laws of the United States of America or any state of the United
States, or any domestic branch of a foreign bank, and subject to
supervision and examination by Federal or state banking or
depository institution authorities. However, at the time of the
trust's investment or contractual commitment to invest in the
demand deposits, the deposits or certificates of deposit, the
commercial paper or other short-term unsecured debt obligations,
other than obligations the rating of which is based on the credit
of a person or entity other than the depository institution or
trust company of the depositary institution or trust company, must
have a credit rating from each of the Rating Agencies in its
highest investment category;
-- commercial paper having, at the time of the trust's investment or
contractual commitment to invest in the commercial paper, a rating
from each of the Rating Agencies in its highest investment
category;
-- except during a Reinvestment Period with respect to any series,
investments in money market funds having a rating from each of the
Rating Agencies in its highest investment category or otherwise
approved in writing thereby;
-- bankers' acceptances issued by any depository institution or trust
company referred to in the second clause of this sentence;
44
-- repurchase obligations, including those of appropriately rated
broker-dealers and financial institutions; and
-- any other investment consisting of a financial asset that by its
terms converts to cash within a finite period of time. However,
each Rating Agency shall have notified the seller, the servicer
and the trustee that the trust's investment in the financial asset
will not cause the Rating Agency to reduce or withdraw its then
rating of any outstanding class or series.
Any earnings, net of losses and investment expenses, on funds in the
Collection Account will be credited to the Collection Account. The servicer will
have the revocable power to instruct the trustee to make withdrawals and
payments from the Collection Account for the purpose of making payments under
the Pooling and Servicing Agreement. The servicer may select an appropriate
agent as representative of the servicer for the purpose of choosing the
investments.
EXCESS FUNDING ACCOUNT
Except, to the extent provided in the related Series Supplement, during an
Early Amortization Period or Reinvestment Period for a series, we will keep the
Excess Funded Amount, if any, for that series in an Eligible Account (the
"EXCESS FUNDING ACCOUNT") established with the trustee for the series. The
"EXCESS FUNDED AMOUNT" for a series will initially equal the excess, if any, of
the initial principal balance of the certificates of the series over the Initial
Invested Amount of the series. The trustee will invest funds on deposit in the
Excess Funding Account for a series will be invested by the trustee at the
direction of the servicer in Eligible Investments. The investments must mature
on or prior to the next distribution date. The servicer may select an agent for
the purpose of designating the investments.
The trustee will distribute funds on deposit in the Excess Funding Account
for a series to the seller or allocate them to one or more other series which
are in Controlled Amortization, Early Amortization, Reinvestment or Accumulation
Periods to the extent of any increases in the Invested Amount of that series as
a result of the addition of receivables to the trust, a reduction in the
Seller's Interest, or a reduction in the Initial Invested Amount of any other
series. The trustee will deposit additional amounts in the Excess Funding
Account for a series on a distribution date to the extent that the sum of the
Certificateholders' Interest of the series in principal receivables and the
amount on deposit in the Excess Funding Account, if any, for the series prior to
that date is less than the outstanding principal balance of the certificates of
the series, but only to the extent that funds are available as provided in the
related Series Supplement. The allocation of additional receivables to increase
the Invested Amount of each series that provides for an Excess Funding Account
or similar arrangement involving fluctuating levels of investment in the
receivables will generally be made pro rata on the basis of the amounts in the
excess Funding Accounts or similar basis. The deposit of amounts in the Excess
Funding Accounts for each of those series will generally be made pro rata on the
basis of their respective Adjusted Invested Amounts.
On each distribution date, we will apply all investment income earned on
amounts in the Excess Funding Account for any series since the preceding
distribution date as described in this prospectus and in the related prospectus
supplement.
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The trustee will distribute funds on deposit in the Excess Funding Account
for a series on the earliest of
-- the commencement of a Reinvestment Period with respect to the
series,
-- the commencement of an Early Amortization Period with respect to
the series and
-- the distribution date or distribution dates specified in or
determined in the manner provided in the Series Supplement for the
series
to the certificateholders of the series or a class of the series or deposit
those amounts in the Principal Funding Account for the series or a class of the
series, in each case if and to the extent the related Series Supplement so
states. Also, except as otherwise provided in the related Series Supplement, we
will not deposit funds in the Excess Funding Account for a series during any
Early Amortization Period or Reinvestment Period with respect to the series or
with respect to any Collection Period following the Collection Period stated in
or determined in the manner provided in the Series Supplement for the series.
ALLOCATION PERCENTAGES
We will allocate collections to each series and then between the seller and
the certificateholders of that series on the basis of various percentages. Which
percentage we use depends on whether the collections being allocated are
interest collections or principal collections or other amounts and whether or
not the collections are received in the Revolving Period for a series.
ALLOCATIONS AMONG SERIES. Under the Pooling and Servicing Agreement,
during each Collection Period the servicer will allocate to each outstanding
Series its share of interest collections, principal collections, Defaulted
Receivables and Miscellaneous Payments based on the applicable Series Allocable
Interest Collections, Series Allocable Principal Collections, Series Allocable
Defaulted Amount and Series Allocable Miscellaneous Payments.
"SERIES ALLOCABLE INTEREST COLLECTIONS", "SERIES ALLOCABLE PRINCIPAL
COLLECTIONS", "SERIES ALLOCABLE DEFAULTED AMOUNT" and "SERIES ALLOCABLE
MISCELLANEOUS PAYMENTS" are, with respect to any series of certificates for any
Collection Period, the product of the Series Allocation Percentage for the
series and the amount of interest collections, principal collections, the
Defaulted Amount and Miscellaneous Payments, respectively, with respect to the
Collection Period.
"MISCELLANEOUS PAYMENTS" for any Collection Period are the sum of
-- Adjustment Payments and Transfer Deposit Amounts received with
respect to the Collection Period and
-- Unallocated Principal Collections on the distribution date
available to be treated as Miscellaneous Payments as described
below under "Principal Collections for all Series".
"SERIES ALLOCATION PERCENTAGE" is, with respect to a series for any
Collection Period, the percentage equivalent of a fraction, the numerator of
which is the Adjusted Invested Amount of the series as of the last day of the
immediately preceding Collection Period and the denominator of which is the
Trust Adjusted Invested Amount as of that last day.
46
"ADJUSTED INVESTED AMOUNT" is, with respect to a series for any date, an
amount equal to the sum of
-- the Initial Invested Amount of the series, minus unreimbursed
Investor Charge-Offs for the series and
-- the Available Subordinated Amount with respect to the series,
after giving effect to the allocations, distributions, withdrawals
and deposits to be made on the distribution date during the
Collection Period in which the date occurs.
"TRUST ADJUSTED INVESTED AMOUNT" is, with respect to any Collection Period,
the sum of the Adjusted Invested Amounts for all outstanding series.
"INITIAL INVESTED AMOUNT" is, with respect to any series and for any date,
the amount stated in the related Series Supplement. The Initial Invested Amount
for any series may be increased or decreased from time to time as stated in the
related Series Supplement, including as a result of deposits to or withdrawals
from the Excess Funding Account, if any, for the series.
ALLOCATION BETWEEN THE CERTIFICATEHOLDERS AND THE SELLER. The servicer
will allocate amounts initially allocated to each series between the
Certificateholders' Interest and the Seller's Interest for each Collection
Period as stated in the related Series Supplement and described in the related
prospectus supplement. If a series consists of more than one class, the amounts
allocated to the Certificateholders' Interest of the series will be further
allocated between those classes as stated in the related Series Supplement and
described in the related prospectus supplement.
PRINCIPAL COLLECTIONS FOR ALL SERIES. We will allocate principal
collections allocated to the Certificateholders' Interest of any series, for any
Collection Period with respect to any Accumulation Period, Controlled
Amortization Period, Reinvestment Period or Early Amortization Period with
respect to the series or a class of the series, first to make required payments
of principal to the Principal Funding Account or to the Certificateholders of
the series or class, in each case if and to the extent stated in the Series
Supplement for the series. The servicer will determine the amount of available
certificateholder principal collections for each series and any Collection
Period remaining after the required payments, if any ("EXCESS PRINCIPAL
COLLECTIONS"). The servicer will allocate Excess Principal Collections to cover
any principal distributions to certificateholders of any series which are either
scheduled or permitted and which have not been covered out of principal
collections and other amounts allocated to the series ("PRINCIPAL SHORTFALLS").
Excess Principal Collections will not be used to cover Investor Charge-Offs for
any series. If Principal Shortfalls exceed Excess Principal Collections for any
Collection Period, Excess Principal Collections will be allocated pro rata among
the applicable series based on the relative amounts of Principal Shortfalls,
unless otherwise provided in the applicable Series Supplements. To the extent
that Excess Principal Collections exceed Principal Shortfalls, the trustee will
pay the balance to the seller if the Seller's Participation Amount, determined
after giving effect to any principal receivables transferred to the trust on
that date, exceeds the Trust Available Subordinated Amount for the immediately
preceding Determination Date, after giving effect to the allocations,
distributions, withdrawals and deposits to be made on the distribution date
immediately following the Determination Date. Any amount not allocated to the
seller because the Seller's Participation Amount does not exceed the Trust
Available Subordinated Amount will be held unallocated ("UNALLOCATED PRINCIPAL
COLLECTIONS") until the Seller's Participation Amount exceeds the Trust
Available Subordinated Amount, at which time
47
we will allocate the amount to the seller. However, if an Early Amortization
Period, Accumulation Period, Controlled Amortization Period or Reinvestment
Period commences for any series, the amount will be treated as a Series
Allocable Miscellaneous Payment.
ALLOCATION OF COLLECTIONS; DEPOSITS IN COLLECTION ACCOUNT
On each Determination Date, the servicer will calculate the amounts to be
allocated in respect of collections on receivables received with respect to the
related Collection Period to the certificateholders of each outstanding series
or class or the seller in accordance with the Series Supplements.
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
-- DCS remains the servicer under the Pooling and Servicing
Agreement,
-- no Service Default has occurred and is continuing and
-- DCS has and maintains a short-term debt rating of at least A-1 by
Standard & Poor's and P-1 by Moody's, or
-- 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 distribution date. At that
time DCS will make the deposits in an amount equal to the net amount of the
deposits and withdrawals which would have been made if deposits were made on a
daily basis. However, before ceasing daily deposits as described above, the
seller must deliver to the trustee written confirmation from the applicable
Rating Agencies that the failure by DCS to make daily deposits will not cause
the Rating Agencies to reduce or withdraw rating of any outstanding series or
class of certificates.
In addition, during any Collection Period the servicer will be required to
deposit interest collections and principal collections into the Collection
Account only to the extent of
-- the distributions the trust must make to certificateholders,
-- the amounts the trust must deposit into any account maintained for
the benefit of certificateholders of any series and other parties
and
-- the amounts the trust must pay to any Enhancement provider on the
distribution date relating to the Collection Period.
Also, if, at any time prior to that distribution 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.
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On any date on which the servicer deposits collections in the Collection
Account, the servicer will distribute directly to the seller the amount of the
interest collections allocable to each series specified in the related Series
Supplement and described in the related prospectus supplement. However, the
trustee will make that distribution only if the Seller's Participation Amount,
determined after giving effect to any Principal Receivables transferred to the
trust on the date, exceeds the Trust Available Subordinated Amount for the
immediately preceding Determination Date, after giving effect to the
allocations, distributions, withdrawals and deposits required to be made on the
distribution date immediately following the Determination Date. Also, during the
Revolving Period for any series, subject to limitations, the servicer will
distribute directly to the seller on each date of deposit the amount of
principal collections allocable to each series stated in the related Series
Supplement and described in the related prospectus supplement if the Seller's
Participation Amount, determined after giving effect to any principal
receivables transferred to the trust on that date, exceeds the Trust Available
Subordinated Amount for the immediately preceding Determination Date, after
giving effect to the allocations, distributions, withdrawals and deposits the
servicer is to make on the distribution date immediately following the
Determination Date.
LIMITED SUBORDINATION OF SELLER'S INTEREST; ENHANCEMENTS
SUBORDINATION OF SELLER'S INTEREST. With respect to any series of
certificates, we will subordinate the Seller's Interest to the rights of
certificateholders of the series to the extent described in the related
prospectus supplement. This will provide credit enhancement to the series. The
amount of the subordination with respect to any series is the "AVAILABLE
SUBORDINATED AMOUNT" for the series. We will decrease and increase the Available
Subordinated Amount for any series from time to time if and to the extent
described in the related prospectus supplement. We will describe in the
prospectus supplement for each series the manner in which the servicer may draw
upon collections attributable to the Available Subordinated Amount for the
series to make payments to or for the benefit of the holders of certificates of
the series. If we so state in the related Series Supplements, the Available
Subordinated Amount for a series may be available to more than one series of
certificates.
ENHANCEMENTS. In addition to the subordination described above, for any
series, we may provide enhancements ("ENHANCEMENTS") with respect to one or more
classes of the series, including one or more of the following:
-- letter of credit,
-- surety bond,
-- cash collateral account,
-- spread account,
-- guaranteed rate agreement,
-- swap, including without limitation currency swaps, or other
interest protection agreement,
-- repurchase obligation,
-- cash deposit or
-- another form of credit enhancement described in the related
prospectus supplement.
49
We may also provide enhancements to a series or class or classes of a series by
subordination provisions which require that distributions of principal and/or
interest be made with respect to the certificates of the series or the class or
classes before distributions are made to one or more series or one or more
classes of the series. If we so provide in the related prospectus supplement,
any form of Enhancement may be available to more than one class or series. The
trust may use a currency swap to issue certificates payable in a currency other
than United States dollars.
If we provide Enhancement with respect to a series, we will include in the
related prospectus supplement a description of
-- the amount payable under the Enhancement,
-- any conditions to payment we do not otherwise describe in this
prospectus,
-- the conditions, if any, under which we may reduce the amount
payable under the Enhancement and under which we may terminate or
replace the Enhancement and
-- any material provisions of any agreement relating to the
Enhancement.
Additionally, we may set forth in the related prospectus supplement the
information with respect to the applicable Enhancement provider, including
-- a brief description of its principal business activities,
-- its principal place of business, place of incorporation and the
jurisdiction under which it is chartered or licensed to do
business,
-- if applicable, the identity of regulatory agencies which exercise
primary jurisdiction over the conduct of its business and
-- its total assets, and its stockholders' equity or policyholders'
surplus, if applicable, as of a date we state in the prospectus
supplement.
LIMITATIONS ON SUBORDINATION AND ENHANCEMENTS. We intend the presence of
an Available Subordinated Amount or Enhancement with respect to a series or
class to enhance the likelihood of receipt by certificateholders of the series
or class of the full amount of principal and interest and to decrease the
likelihood that the certificateholders will experience losses. However, unless
we otherwise state in the prospectus supplement for a series, neither
subordination of the Seller's Interest nor the Enhancement, if any, will provide
protection against all risks of loss or will guarantee repayment of the entire
principal balance of the certificates and interest on the certificates. If
losses exceed the amount covered by the subordination or Enhancement or are not
covered by the subordination or Enhancement, certificateholders will bear their
allocable share of deficiencies. In addition, if we provide specific Enhancement
for the benefit of more than one class or series, certificateholders of that
class or series will be subject to the risk that the Enhancement will be
exhausted by the claims of certificateholders of other classes or series.
DISTRIBUTIONS
The servicer will make payments to certificateholders of a series or a
class from the Collection Account and any accounts established for the benefit
of the certificateholders as we describe in the related prospectus supplement.
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DEFAULTED RECEIVABLES AND RECOVERIES
"DEFAULTED RECEIVABLES" on any Determination Date are
-- all receivables which the servicer charged off as uncollectible in
respect of the immediately preceding Collection Period and
-- all receivables which were Eligible Receivables when transferred
to the trust, which arose in an Account which became an Ineligible
Account after the date of transfer of the receivables to the trust
and which were not Eligible Receivables for any six consecutive
Determination Dates after the date of transfer of the receivables
to the trust.
The "DEFAULTED AMOUNT" for any Collection Period will be an amount, which shall
not be less than zero, equal to
(a) the principal amount of receivables that became Defaulted
Receivables during the preceding Collection Period minus
(b) 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 under this clause
(b) for the Determination Date over the amount determined
under clause (a) for the Determination Date.
The servicer will charge off receivables as uncollectible in accordance with the
servicer's customary and usual policies and procedures for servicing its own
comparable revolving dealer wholesale loan accounts. The servicer will allocate
a portion of the Series Allocable Defaulted Amount for each series and
Collection Period between the certificateholders of the series and the seller as
we state in the related Series Supplement. The portion of the Defaulted Amount
allocated to the certificateholders of a series will be the "INVESTOR DEFAULT
AMOUNT" for the series. The servicer will further allocate the Investor Default
Amount for any series that consists of more than one class between those classes
as we state in the related Series Supplement.
If the servicer adjusts the amount of any receivable because of a rebate,
billing error or other non-cash items to a dealer, or because the receivable was
created in respect of inventory which was refused or returned by a dealer, we
will reduce the principal amount of each of the Seller's Interest and the Pool
Balance by the amount of the adjustment or charge-off. Further, to the extent
that the reduction in the Seller's Interest would reduce the Seller's
Participation Amount below the Trust Available Subordinated Amount for the
immediately preceding Determination Date, after giving effect to the
allocations, distributions, withdrawals and deposits to be made on the
distribution date immediately following that Determination Date, the seller will
deposit a cash amount equal to the deficiency into the Collection Account in
immediately available funds (an "ADJUSTMENT PAYMENT") on the day on which the
servicer makes the adjustment.
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OPTIONAL REPURCHASE
If we so state in the prospectus supplement relating to a series of
certificates, on any distribution date occurring after the Invested Amount of
the certificates of the series is reduced to the percentage of the initial
outstanding principal amount of the certificates of the series we state in the
prospectus supplement, the servicer will have the option, subject to conditions,
to repurchase the Certificateholders' Interest of the series. The purchase price
will be equal to the Invested Amount of the series on the Determination Date
preceding the distribution date on which the servicer will make the repurchase
plus accrued and unpaid interest on the unpaid principal amount of the
certificates of the series at the applicable certificate rate, together with
interest on overdue interest, to the extent lawful, plus any other amounts we
state in the related Series Supplement. The servicer will deposit the purchase
price in the Collection Account in immediately available funds on the
distribution date on which DCS exercises that option. Following any purchase,
the certificateholders of the series will have no further rights with respect to
the Certificateholders' Interest of the series, other than the right to receive
the final distribution on the certificates of that series. If DCS fails for any
reason to deposit the purchase price, the servicer will continue to make
payments to the certificateholders of the series as we describe in the related
prospectus supplement.
REINVESTMENT EVENTS AND EARLY AMORTIZATION EVENTS
Beginning on the first distribution date following the Collection Period in
which a Reinvestment Event has occurred with respect to any series,
-- the servicer will no longer pay to DCWR principal collections
allocable to the Certificateholders' Interest of the series or
allocate those collections to any other series but instead will
deposit those collections to the Principal Funding Account for the
series monthly on each distribution date, and
-- the Controlled Deposit Amount or Controlled Amortization Amount,
if any, will no longer apply to distributions of principal in
respect of the certificates of the series,
in each case except as we describe below under "Reinvestment Events and Early
Amortization Events" or as we state in the related Series Supplement. A
"REINVESTMENT EVENT" is, for any series, any of the events we so describe in the
related Series Supplement and describe in the related prospectus supplement.
If any event we so define occurs, we will deem a Reinvestment Event to have
occurred with respect to the series without any notice or other action on the
part of any other party immediately upon the occurrence of the event. The
Reinvestment Period with respect to the series will begin as of the close of
business on the business day immediately preceding the day on which we deem the
Reinvestment Event to have occurred. Monthly deposits of principal to the
Principal Funding Account for the series will, except as we describe below under
"Reinvestment Events and Early Amortization Events" or state in the related
Series Supplement, begin on the first distribution date following the Collection
Period in which a Reinvestment Period has begun with respect to the series.
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Beginning on the first distribution date following the Collection Period in
which an Early Amortization Event has occurred with respect to any series,
-- the servicer will no longer pay to DCWR Principal Collections
allocable to the Certificateholders' Interest of the series,
allocate those collections to any other series or retain those
collections in the Principal Funding Account for the series but
instead will distribute those collections to certificateholders of
the series monthly on each distribution date and
-- the Controlled Deposit Amount or Controlled Amortization Amount,
if any, will no longer apply to distributions of principal on the
certificates of the series,
in each case except as we describe below under "Reinvestment Events and Early
Amortization Events" or state in the related Series Supplement. An "EARLY
AMORTIZATION EVENT" is, for any series, any of the events we so define in the
related Series Supplement and describe in the related prospectus supplement, as
well as each of the following events:
-- the occurrence of events of bankruptcy, insolvency or receivership
relating to the trust or the seller; and
-- the trust or DCWR becomes an investment company within the meaning
of the Investment Company Act of 1940.
If any event we describe above or in the prospectus supplement for a series
occurs, we will deem an Early Amortization Event to have occurred with respect
to the series without any notice or other action on the part of any other party
immediately upon the occurrence of the event. The Early Amortization Period with
respect to the series will begin as of the close of business on the business day
immediately preceding the day on which we deem the Early Amortization Event to
have occurred. Monthly distributions of principal to the certificateholders of
the series will begin on the first distribution date following the Collection
Period in which an Early Amortization Period has begun with respect to the
series, except as we describe below under "Reinvestment Events and Early
Amortization Events". The failure of the trust to pay the outstanding principal
amount of the certificates of any series or class by their Expected Payment Date
will have the same consequences as the occurrence of an Early Amortization Event
with respect to the series or class. We shall deem all references in this
prospectus to Early Amortization Events to include that type of failure.
Even if a Reinvestment Period or an Early Amortization Period begins with
respect to a series, that period may terminate and the Revolving Period with
respect to the series and any class may recommence when the event giving rise to
the beginning of the Reinvestment Period or Early Amortization Period no longer
exists, whether as a result of the distribution of principal to
certificateholders of the series or otherwise, in each case if and to the extent
we state in the Series Supplement for the series.
In addition, if an insolvency event occurs with respect to DCWR, or DCWR
violates its covenant not to create any lien on any receivable, in each case as
provided in the Pooling and Servicing Agreement, on the day of the insolvency
event or violation, as applicable, DCWR will, subject to the actions of the
certificateholders, immediately cease to transfer receivables to the trust and
promptly give notice to the trustee of the insolvency event or violation, as
applicable. Under the terms of the Pooling and Servicing Agreement, within 15
days the trustee will publish a notice of the insolvency event or violation
stating that the trustee intends to sell, liquidate or
53
otherwise dispose of the receivables in a commercially reasonable manner and on
commercially reasonable terms, unless within a stated period of time holders of
certificates of each outstanding series representing more than 50% of the
aggregate unpaid principal amount of the certificates of each outstanding
series, or, with respect to any series with two or more classes, the
certificates of each class, and each person holding a Supplemental Certificate,
instruct the trustee not to sell, dispose of or otherwise liquidate the
receivables and to continue transferring receivables as before the insolvency
event or violation, as applicable. If the portion of the proceeds allocated to
the Certificateholders' Interest and the proceeds of any collections on the
receivables in the Collection Account allocable to the Certificateholders'
Interest are not enough to pay the aggregate unpaid principal balance of the
certificates in full plus accrued and unpaid interest on the certificates,
certificateholders will incur a loss.
TERMINATION; FULLY REINVESTED DATE
TERMINATION. The trust will terminate on the earliest to occur of
-- the day following the distribution date on which the aggregate
Invested Amounts for all series is zero,
-- May 31, 2012 and
-- the date on which the Servicer distributes to the
certificateholders proceeds from the sale, disposal or other
liquidation of the receivables following an insolvency event with
respect to DCWR or any violation by DCWR of its covenant not to
create any lien on any receivable, in each case as stated in the
Pooling and Servicing Agreement and as we describe above under
"Reinvestment Events and Early Amortization Events".
When the trust is terminated, the trust will transfer to DCWR all right, title
and interest in the receivables and other funds of the trust, other than amounts
in the trust's accounts for the final distribution of principal and interest to
certificateholders.
In any event, the last payment of principal and interest on any series of
certificates will be due and payable no later than the date we state in the
related prospectus supplement (the "SERIES TERMINATION DATE").
FULLY REINVESTED DATE. The "FULLY REINVESTED DATE" is the date on which
the amount on deposit in the Principal Funding Account with respect to a series
equals the outstanding principal amount of the certificates of the series. After
the Fully Reinvested Date occurs with respect to any series, certificateholders
of that series will no longer have any interest in the receivables. Further, all
the representations and covenants of the seller and the servicer relating to the
receivables, as well as other provisions of the Pooling and Servicing Agreement
and all remedies for breaches of those representations, covenants and other
provisions, will no longer accrue to the benefit of the certificateholders of
that series, in each case unless the Revolving Period with respect to the series
recommences as we state in the related Series Supplement. Those representations,
covenants and other provisions include
-- the conditions to the exchange of the Seller's Certificate we
describe under "The Seller's Certificate",
-- the conditions to the issuance of a new series we describe under
"New Issuances",
54
-- the representations we describe under "Representations and
Warranties" to the extent they relate to the receivables and the
Collateral Security,
-- the limitations on additions and removals of Accounts we describe
under "Addition of Accounts" and "Removal of Accounts",
respectively, and
-- the obligations of the servicer with respect to servicing the
receivables we describe under "Collection and Other Servicing
Procedures" and "Servicer Covenants".
Also, if the Fully Reinvested Date occurs with respect to any series, the
servicer will allocate to that series no interest collections, principal
collections, Defaulted Receivables or Miscellaneous Payments, unless the series'
Revolving Period begins again as we describe above. However, when the servicer
has made the final distribution with respect to each series of certificates or
the series' Fully Reinvested Date has occurred, the trustee will convey and
transfer to DCWR, all right, title and interest in the receivables.
INDEMNIFICATION
The Pooling and Servicing Agreement states that the servicer will indemnify
the trust and the trustee from and against any loss, liability, expense, damage
or injury suffered or sustained arising out of any acts, omissions or alleged
acts or omissions arising out of activities of the trust, the trustee or the
servicer under the Pooling and Servicing Agreement. The servicer will not so
indemnify the trust or the trustee, however, if the acts, omissions or alleged
acts or omissions constitute fraud, gross negligence, breach of fiduciary duty
or willful misconduct by the trustee. Also, the servicer will not indemnify the
trust, the trustee or the certificateholders for any act taken by the trustee at
the request of the certificateholders or for any tax which the trust or the
certificateholders is required to pay.
The Pooling and Servicing Agreement states that, except as we describe
above and with other exceptions, neither the seller, the servicer nor any of
their directors, officers, employees or agents will be under any liability to
the trust, the trustee, the certificateholders or any other person for taking
any action, or for refraining from taking any action, under the Pooling and
Servicing Agreement. However, neither the seller, the servicer nor any of their
directors, officers, employees or agents will be protected against any liability
which would otherwise be imposed by reason of willful misfeasance, bad faith or
gross negligence of any of those persons in the performance of their duties or
by reason of reckless disregard of their obligations and duties under the
Pooling and Servicing Agreement.
Also, the Pooling and Servicing Agreement states that the servicer is not
under any obligation to appear in, prosecute or defend any legal action which is
not incidental to its servicing responsibilities under the Pooling and Servicing
Agreement. The servicer may, in its sole discretion, undertake any legal action
which it may deem necessary or desirable for the benefit of the
certificateholders with respect to the Pooling and Servicing Agreement and the
rights and duties of the parties to that agreement and the interest of the
certificateholders under that agreement.
COLLECTION AND OTHER SERVICING PROCEDURES
Under the Pooling and Servicing Agreement, the servicer is responsible for
servicing, collecting, enforcing and administering the receivables. The servicer
must do so in accordance
55
with customary and usual procedures for servicing its own revolving credit line
dealer wholesale loans, except where the failure to so act would not materially
and adversely affect the rights of the trust.
DCS covenants that it may only change the terms relating to the Accounts if
-- in the servicer's reasonable judgment, the change will not cause
any Early Amortization Event or Reinvestment Event to occur with
respect to any series and
-- 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
-- collect and record payments,
-- communicate with dealers,
-- investigate payment delinquencies,
-- evaluate the increase of credit limits, and
-- maintain internal records with respect to each Account.
Managerial and custodial services performed by the servicer on behalf of
the trust include
-- providing assistance in any inspections of the documents and
records relating to the Accounts and receivables by the trustee
under the Pooling and Servicing Agreement,
-- maintaining the agreements, documents and files relating to the
Accounts and receivables as custodian for the trust and
-- providing related data processing and reporting services for
certificateholders and on behalf of the trustee.
SERVICER COVENANTS
In the Pooling and Servicing Agreement the servicer covenants that:
-- it will duly satisfy all obligations on its part to be fulfilled
under or in connection with the receivables and the Accounts, will
maintain in effect all qualifications required in order to service
the receivables and the Accounts and will comply in all material
respects with all requirements of law in connection with servicing
the receivables and the Accounts, the failure to comply with which
would have a materially adverse effect on the certificateholders
of any outstanding series;
-- it will not permit any rescission or cancellation of a receivable
except as ordered by a court of competent jurisdiction or other
government authority;
-- it will do nothing to impair the rights of the certificateholders
in the receivables or the Accounts; and
-- it will not reschedule, revise or defer payments due on any
receivable except in accordance with its guidelines for servicing
revolving credit line dealer wholesale loans.
Under the terms of the Pooling and Servicing Agreement, if the seller or
the servicer discovers, or receives written notice, that any covenant of the
servicer set forth above has not
56
been complied with in all material respects and the noncompliance has not been
cured within 30 days, or a longer period as the trustee may agree to, and has a
materially adverse effect on the interests of all certificateholders in any
receivable or Account, DCS, as servicer, will purchase the receivable or all
receivables in the Account, as applicable. If DCS is the servicer, DCS will
purchase the receivable or receivables on the Determination Date following the
expiration of the 30-day cure period and the servicer will be obligated to
deposit into the Collection Account an amount equal to the amount of the
receivable or receivables plus accrued and unpaid interest on that amount. We
shall deem the amount of the deposit a Transfer Deposit Amount. The purchase by
the servicer constitutes the sole remedy available to the certificateholders if
the covenant or warranty of the servicer is not satisfied and the trust's
interest in any purchased receivables shall be automatically assigned to the
servicer.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Unless we state otherwise in the related Series Supplement or prospectus
supplement, the servicer's compensation with respect to the certificates of a
series for its servicing activities and reimbursement for its expenses will be a
monthly servicing fee (the "SERVICING FEE"). The Servicing Fee is an amount
payable in arrears on each distribution date on or before the Series Termination
Date of the series and the Fully Reinvested Date, if any, of the series, and
after that date during the Revolving Period with respect to the series, if the
Revolving Period begins again, equal to one-twelfth of the product of
-- the "SERVICING FEE RATE" set forth in the series Supplement,
-- the Pool Balance as of the last day of the second preceding
Collection Period and
-- the Series Allocation Percentage for the series for the
immediately preceding Collection Period.
Unless we state otherwise in a related Series Supplement or prospectus
supplement, the share of the Servicing Fee allocable to certificateholders of
any series with respect to any distribution date (the "MONTHLY SERVICING FEE")
shall be equal to one-twelfth of the product of
-- the Servicing Fee Rate and
-- the Invested Amount of the series as of the last day of the second
preceding Collection Period.
The seller shall pay the remainder of the Servicing Fee with respect to any
series. The servicer shall be paid the Monthly Servicing Fee with respect to any
series solely to the extent amounts are available for distribution of the
Monthly Servicing Fee under the terms of the Pooling and Servicing Agreement.
The servicer may waive its right to receive the Servicing Fee with respect
to any series on any distribution date, so long as it believes that enough
interest collections will be available on a future distribution date to pay the
Monthly Servicing Fee relating to the waived Servicing Fee. If that happens, we
shall deem the Servicing Fee and the Monthly Servicing Fee for the series and
the distribution date to be zero.
The servicer will pay from its servicing compensation expenses it incurs
when servicing the Accounts and the receivables including, without limitation,
payment of fees and disbursements of the trustee and independent accountants and
all other fees and expenses which are not expressly
57
stated in the Pooling and Servicing Agreement to be payable by the trust or the
certificateholders other than federal, state and local income and franchise
taxes, if any, of the trust or the certificateholders.
MATTERS REGARDING THE SERVICER
The servicer may not resign from its obligations and duties under the
Pooling and Servicing Agreement, except upon determination that those duties are
no longer permissible under applicable law. No resignation will become effective
until the trustee or a successor to the servicer has assumed the servicer's
responsibilities and obligations under the Pooling and Servicing Agreement (DCS
or any successor servicer, the "SERVICER"). The servicer may delegate any of its
duties as servicer to any of its affiliates, but any delegation will not relieve
the servicer of its obligation under the Pooling and Servicing Agreement.
Any person into which, in accordance with the Pooling and Servicing
Agreement, the servicer may be merged or consolidated or any person resulting
from any merger or consolidation to which the servicer is a party, or any person
succeeding to the business of the servicer, will be the successor to the
servicer under the Pooling and Servicing Agreement.
SERVICE DEFAULT
In the event of any Service Default, the trustee, by written notice to the
servicer, may terminate all of the rights and obligations of the servicer, as
servicer, under the Pooling and Servicing Agreement and in and to the
receivables and the proceeds of the receivables and appoint a new servicer (a
"SERVICE TRANSFER"). The rights and interest of the seller under the Pooling and
Servicing Agreement in the Seller's Interest will not be affected by any Service
Transfer. The trustee shall as promptly as possible appoint a successor servicer
and if no successor servicer has been appointed by the trustee and has accepted
the appointment by the time the servicer ceases to act as servicer, all rights,
authority, power and obligations of the servicer under the Pooling and Servicing
Agreement shall pass to and be vested in the trustee. Before any Service
Transfer, the trustee will review any bids obtained from potential servicers
meeting eligibility requirements set forth in the Pooling and Servicing
Agreement to serve as successor servicer for servicing compensation not in
excess of the Servicing Fee, plus excess amounts payable to the seller.
A "SERVICE DEFAULT" refers to any of the following events:
-- failure by the servicer to make any payment, transfer or deposit,
or to give instructions to the trustee to make any payment,
transfer or deposit, on the date the Pooling and Servicing
Agreement requires the servicer to do so, which is not cured
within a five business day grace period;
-- failure by the servicer duly to observe or perform any other
covenants or agreements of the servicer in the Pooling and
Servicing Agreement which failure has a materially adverse effect
on the certificateholders of any outstanding series and which
continues unremedied for a period of 30 days after the date the
trustee shall have given written notice of the failure to the
servicer,
-- the servicer delegates its duties under the Pooling and Servicing
Agreement, except as specifically permitted under that agreement;
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-- any representation, warranty or certification made by the servicer
in the Pooling and Servicing Agreement or in any certificate
delivered under the Pooling and Servicing Agreement proves to have
been incorrect in any material respect when made, has a materially
adverse effect on the rights of the certificateholders of any
outstanding Series, and which materially adverse effect continues
for a period of 60 days after the trustee shall have given written
notice of that fact to the servicer; or
-- events of bankruptcy, insolvency or receivership occur with
respect to the servicer.
However, a delay in or failure of performance referred to under the first
clause for a period of ten business days or referred to under the second, third
or fourth clauses for a period of 60 business days, shall not constitute a
Service Default if the delay or failure was caused by an act of God or other
similar occurrence. If any of those events occurs, the servicer shall not be
relieved from using its best efforts to perform its obligations in a timely
manner in accordance with the terms of the Pooling and Servicing Agreement and
the servicer shall provide the trustee, any Enhancement provider, the seller and
the certificateholders prompt notice of the failure or delay by it, together
with a description of its efforts to so perform its obligations. The servicer
shall immediately notify the trustee in writing of any Service Default.
REPORTS
On each distribution date, including each distribution date that
corresponds to an interest payment date or any Special Payment Date, the trustee
will forward to each certificateholder of record of any series a statement (the
"DISTRIBUTION DATE STATEMENT") prepared by the servicer. The Distribution Date
Statement will set forth information with respect to the trust and the
certificates of the series, as we state in the related Series Supplement and
describe in the related prospectus supplement.
With respect to each interest payment date or Special Payment Date, the
Distribution Date Statement with respect to any Series will include the
following information with respect to the certificates of the series:
-- the total amount distributed on the certificates of the series;
-- the amount of the distribution allocable to principal on the
certificates of the series; and
-- the amount of the distribution allocable to interest on the
certificates of the series.
On or before January 31 of each calendar year, the trustee will furnish, or
cause to be furnished, to each person who at any time during the preceding
calendar year was a certificateholder of record a statement containing the
information required to be provided by an issuer of indebtedness under the Code
for the preceding calendar year or the applicable portion of that year during
which the person was a certificateholder, together with other customary
information which the Code requires issuers of indebtedness to provide and other
customary information which certificateholders need to prepare their tax
returns. See "Tax Matters".
EVIDENCE AS TO COMPLIANCE
The Pooling and Servicing Agreement states that on or before March 31 of
each calendar year, the servicer will cause a firm of nationally recognized
independent public accountants, who
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will also render other services to the servicer or the seller, to furnish a
report regarding matters in connection with the servicing of DCS's portfolio of
wholesale receivables.
The Pooling and Servicing Agreement states that on or before March 31 of
each calendar year, the servicer will deliver to the trustee a statement, signed
by an officer of the servicer. The statement will state that the servicer has
fully performed, or caused to be fully performed, its obligations in all
material respects under the Pooling and Servicing Agreement throughout the
preceding year or, if there has been a default in the performance of any
obligation, will state the nature and status of the default.
You may obtain copies of all statements, certificates and reports furnished
to the trustee by delivering a written request to the trustee.
AMENDMENTS
The seller, the servicer and the trustee may amend the Pooling and
Servicing Agreement and any Series Supplement, without certificateholder
consent, so long as any amendment shall not, as evidenced by an opinion of
counsel, adversely affect in any material respect the interests of the
certificateholders.
The seller, the servicer and the trustee may amend the Pooling and
Servicing Agreement and any Series Supplement with the consent of the holders of
certificates evidencing not less than 66 2/3% of the aggregate unpaid principal
amount of the certificates of all adversely affected series for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of the Pooling and Servicing Agreement or of modifying in any manner
the rights of certificateholders. No amendment, however, may
-- reduce in any manner the amount of or delay the timing of
distributions the servicer is required to make to
certificateholders or deposits of amounts to be so distributed
without the consent of each affected certificateholder,
-- change the definition or the manner of calculating any
Certificateholders' Interest without the consent of each affected
certificateholder,
-- reduce the amount available under any Enhancement without the
consent of each affected certificateholder,
-- adversely affect the rating of any series or class by each Rating
Agency without the consent of the holders of certificates of the
series or class evidencing not less than 66 2/3% of the aggregate
unpaid principal amount of the certificates of the series or class
or
-- reduce that percentage of the unpaid principal amount of
certificates the holders of which are required to consent to any
amendment without the consent of each certificateholder.
Promptly following the execution of any amendment to the Pooling and Servicing
Agreement, other than an amendment described in the preceding paragraph, the
trustee will notify each certificateholder in writing of the substance of the
amendment.
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However, we will deem each holder of a certificate offered by this
prospectus, by its acceptance of the certificate, to have consented to an
amendment to the Pooling and Servicing Agreement that
-- provides that funds in the Collection Account may be invested in
any Eligible Investments,
-- provides that the seller need not make any deposit to the
Collection Account in respect of the Repurchased Receivables Price
of any Designated Receivables repurchased from the trust,
-- otherwise changes the procedures for removing receivables from the
trust as described under "Removal of Accounts",
-- provides that, subject to the limitations we describe in this
prospectus, DCS need not deposit collections with respect to any
Collection Period in the Collection Account until the related
distribution date or
-- permits the designation of Automatic Additional Accounts as we
describe in this prospectus.
The Pooling and Servicing Agreement may not be amended in any manner which
materially adversely affects the interests of any Enhancement provider without
its prior consent.
LIST OF CERTIFICATEHOLDERS
Upon written request of any three or more certificateholders of record, the
trustee will give those certificateholders access during business hours to the
current list of certificateholders of a series or all outstanding series, as
applicable, for purposes of communicating with other certificateholders of the
series or all outstanding series, as applicable, with respect to their rights
under the Pooling and Servicing Agreement. See "Book-Entry Registration' and
"Definitive Certificates".
The Pooling and Servicing Agreement will not provide for any annual or
other meetings of certificateholders.
THE TRUSTEE
The Bank of New York, a New York banking corporation, will act as trustee
under the Pooling and Servicing Agreement. The Corporate Trust Office of the
Bank of New York is located at 101 Barclay Street, New York, New York 10286. The
seller, the servicer and their respective affiliates may from time to time enter
into normal banking and trustee relationships with the trustee and its
affiliates. The trustee may hold certificates in its own name with the same
rights it would have if it were not the trustee. In addition, for purposes of
meeting the legal requirements of local jurisdictions, the trustee shall have
the power to appoint a co-trustee or separate trustees of all or a part of the
trust. In the event of those appointments, all rights, powers, duties and
obligations shall be conferred or imposed upon the trustee and the separate
trustee or co-trustee jointly, or, in any jurisdiction in which the trustee
shall be incompetent or unqualified to perform some acts, singly upon the
separate trustee or co-trustee, who shall exercise and perform those rights,
powers, duties and obligations solely at the direction of the trustee.
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The trustee may resign at any time, in which event the seller must appoint
a successor trustee. The servicer may also remove the trustee if the trustee
ceases to be eligible to continue as the trustee under the Pooling and Servicing
Agreement or if the trustee becomes insolvent. If that happens, the servicer may
appoint a successor trustee. Any resignation or removal of the trustee and
appointment of a successor trustee does not become effective until the
acceptance of the appointment by the successor trustee.
DESCRIPTION OF THE RECEIVABLES PURCHASE AGREEMENT
The parties to the Receivables Purchase Agreement are DCS, as seller
(together with its predecessors as appropriate, the "RPA SELLER"), and DCWR, as
purchaser. DCS became the RPA seller as successor by merger. DCWR became the
purchaser as assignee of USA, which was in turn an assignee of CARCO. In the
following summary we describe terms of the Receivables Purchase Agreement. The
summary, however, is qualified in its entirety by reference to the Receivables
Purchase Agreement.
SALE OR TRANSFER OF RECEIVABLES
Under the Receivables Purchase Agreement, the RPA seller sold or
transferred to the seller all of its right, title and interest in and to all of
the receivables and the Collateral Security as of the Initial Cut-Off Date and
all of the receivables created after that date. In addition, the RPA seller has
previously designated Additional Accounts, and has previously conveyed to the
seller the Principal Receivables in the Additional Accounts, together with the
related Collateral Security, as of the applicable Additional Cut-Off Date and
all receivables, and related Collateral Security, created after that date. As we
describe in this prospectus, under the Pooling and Servicing Agreement, the
seller has transferred to the trust all of its right, title and interest in and
to the Receivables Purchase Agreement.
In connection with the sale or transfer of the receivables to the seller,
the RPA seller must indicate in its computer files that the receivables have
been sold or transferred to the seller, and that the receivables have been
transferred by the seller to the trust. In addition, the RPA seller must provide
to the seller a computer file or microfiche or written list containing a true
and complete list of all the receivables. The records and agreements relating to
the Accounts and receivables have not and will not be segregated by the RPA
seller from other documents and agreements relating to other accounts and
receivables and are not and will not be stamped or marked to reflect the sale or
transfer of the receivables to the seller. The computer records, however, of the
RPA seller have been and will be marked to evidence the sale or transfer. The
RPA seller has filed UCC financing statements with respect to the receivables
meeting the requirements of Michigan state law. See "Risk Factors -- Legal
Aspects" 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.
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The RPA seller has or will also make representations and warranties to the
seller relating to the receivables to the effect, among other things, that
-- as of the Initial Closing Date and each Series Issuance Date, each
of the Accounts is an Eligible Account and
-- as of the date any new receivable is created, the receivable is an
Eligible Receivable.
If any representation and warranty set forth in this paragraph is breached and
the breach results in an Ineligible Receivable and the requirement that the
seller accept retransfer of the Ineligible Receivable under the Pooling and
Servicing Agreement, the RPA seller shall repurchase the Ineligible Receivable
from the seller on the date of the retransfer. The purchase price for the
Ineligible Receivable shall be the face amount of the Ineligible Receivable, of
which at least the amount of any cash deposit required to be made by the seller
under the Pooling and Servicing Agreement in respect of the retransfer of the
Ineligible Receivable shall be paid in cash.
The RPA seller has or will also make representations and warranties to the
seller to the effect, among other things, that as of the Initial Closing Date
and each Series Issuance Date
-- the Receivables Purchase Agreement is a legal, valid and binding
obligation of the RPA seller and
-- the Receivables Purchase Agreement is a valid sale or transfer to
the seller of all right, title and interest of the RPA seller in
and to the receivables, whether then existing or created after
that time in the Accounts, the Collateral Security and the
proceeds of those items which is effective as to each receivable
upon the creation of that receivable.
If any of the representations and warranties described in this paragraph are
breached and the breach results in the obligation of the seller under the
Pooling and Servicing Agreement to accept retransfer of the receivables, the RPA
seller will repurchase the receivables retransferred to the seller for an amount
of cash equal to the amount of cash the seller is required to deposit under the
Pooling and Servicing Agreement in connection with the retransfer.
The RPA seller has agreed to indemnify the seller and to hold the seller
harmless from and against any and all losses, damages and expenses, including
reasonable attorneys' fees, suffered or incurred by the seller if the foregoing
representations and warranties are materially false.
COVENANTS
In the Receivables Purchase Agreement, the RPA seller has covenanted that
it will perform its obligations under the agreements relating to the receivables
and the Accounts in conformity with its current policies and procedures relating
to the receivables and the Accounts.
The RPA seller has covenanted further that, except for the sale and
conveyances under the Receivables Purchase Agreement and the interests created
under the Pooling and Servicing Agreement, the RPA seller will not sell, pledge,
assign or transfer any interest in the receivables to any other person. The RPA
seller also has covenanted to defend and indemnify the seller for any loss,
liability or expense incurred by the seller in connection with a breach by the
RPA seller of any of its representations, warranties or covenants contained in
the Receivables Purchase Agreement.
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In addition, the RPA seller has expressly acknowledged and consented to the
seller's assignment of its rights relating to the receivables under the
Receivables Purchase Agreement to the trustee.
TERMINATION
The Receivables Purchase Agreement will terminate immediately after the
trust terminates. Also, if under provisions of federal law the RPA seller
becomes party to any bankruptcy or similar proceeding, other than as a claimant,
and if the proceeding is not voluntary and is not dismissed within 60 days of
its institution, the RPA seller will immediately cease to sell or transfer
receivables to the seller and will promptly give notice of that event to the
seller and to the trustee.
LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES
On the Initial Closing Date, the RPA seller sold and assigned the
receivables to the seller, and the seller immediately transferred the
receivables to the trust. The seller has represented and warranted and will
represent and warranty on the Series Issuance Date with respect to each Series
that
-- the transfer to the trust constituted a valid transfer to the
trust of all right, title and interest of the seller in and to the
receivables and
-- under the UCC, as in effect in Michigan or Delaware, as
applicable, there exists a valid, subsisting and enforceable
first-priority perfected ownership interest in the receivables, in
existence at the time of the formation of the trust or at the date
of addition of any Additional Accounts, in favor of the trust and
a valid, subsisting and enforceable first-priority perfected
ownership interest in the receivables created after that time in
favor of the trust on and after their creation.
However, the transfer of receivables by the seller to the trust could be deemed
to create a security interest under the UCC. For a discussion of the trust's
rights arising from these representations and warranties not being satisfied,
see "Description of the Certificates -- Representations and Warranties".
Each of the RPA seller and the seller has represented that the receivables
are "chattel paper" for purposes of the UCC as in effect in Michigan or
Delaware, as applicable. If the receivables are deemed to be chattel paper and
the transfer of the receivables by either the RPA seller to the seller or by the
seller to the trust is deemed either to be a sale or to create a security
interest, the UCC as in effect in Michigan or Delaware, as applicable, applies.
In that case, the transferee must either take possession of the chattel paper or
file an appropriate financing statement or statements in order to perfect its
interest in the chattel paper. Both the seller and the trust have filed
financing statements covering the receivables under the UCC as in effect in
Michigan or Delaware, as applicable, to perfect their respective interests in
the receivables and continuation statements will be filed as required to
continue the perfection of those interests. The receivables have not and will
not be stamped to indicate the interest of the seller or the trustee.
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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 trust's interest. A purchaser of the
receivables who gives new value and takes possession of the instruments which
evidence the receivables, i.e., the chattel paper, in the ordinary course of the
purchaser's business may, under some circumstances, have priority over the
interest of the trust in the receivables. A tax or other government lien on
property of the RPA seller or the seller arising prior to the time a receivable
is conveyed to the trust may also have priority over the interest of the trust
in the receivable. Under the Receivables Purchase Agreement, the RPA seller will
warrant to the seller, and under the Pooling and Servicing Agreement, the seller
has warranted to the trust, that the receivables have been transferred free and
clear of the lien of any third party. Each of the RPA seller and the seller has
also covenanted that it will not sell, pledge, assign, transfer or grant any
lien on any receivable or, except as we describe under "Description of the
Certificates -- The Seller's Certificate", the Seller's Certificate, or any
interest in the Seller's Certificate, other than to the trust. Also, while DCS
is the servicer, cash collections on the receivables may, in some cases, be
commingled with the funds of DCS prior to each distribution date and, in the
event of the bankruptcy of DCS, the trust may not have a perfected interest in
those collections.
MATTERS RELATING TO BANKRUPTCY
The RPA seller has warranted to the seller in the Receivables Purchase
Agreement that the sale of the receivables by it to the seller is a valid sale
of the receivables to the seller. Also, the RPA seller and the seller have
agreed to treat the transactions described in this prospectus as a sale of the
receivables to the seller, and the RPA seller has or will take all actions that
are required under Michigan law to perfect the seller's ownership interest in
the receivables. However, the RPA seller could become a debtor in a bankruptcy
case and a creditor or trustee-in-bankruptcy of the debtor or the debtor itself
could take the position that the sale of receivables from the debtor to the
seller should be recharacterized as a pledge of the receivables to secure a
borrowing from the debtor. In that event, payments of collections of receivables
to the seller could be delayed, or, if the court should rule in favor of any
trustee, debtor in possession or creditor, reduced in amount. See "Risk
Factors -- Various Legal Aspects May Cause Delays in Your Receiving Payments or
May Result in Reduced Payments or Losses on Your Certificates".
In addition, the RPA seller could become a debtor in a bankruptcy case and
a creditor or trustee-in-bankruptcy of the debtor or the debtor itself could
request a court to order that the RPA seller should be substantively
consolidated with the seller. In that event, payments on the certificates could
be delayed, or, if a bankruptcy court should rule in favor of any creditor,
trustee-in-bankruptcy or the debtor, reduced in amount.
The seller has warranted to the trust that the transfer of the receivables
to the trust is a sale of the receivables to the trust. The seller has or will
take all actions that are required under Michigan or Delaware law, as
applicable, to perfect the trust's ownership interest in the receivables and the
seller has warranted to the trust that the trust will at all times have a first
priority perfected ownership interest 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 trust may have priority over the interest of the trust in the receivable.
DCWR's limited liability agreement provides that it shall not file a voluntary
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application for relief under Title 11 of the United States Code (the "BANKRUPTCY
CODE") without the affirmative vote of the two independent directors of its
member. Under the Pooling and Servicing Agreement, the trustee, all
certificateholders and any Enhancement provider will covenant that they will not
at any time institute against the seller any bankruptcy, reorganization or other
proceedings under any federal or state bankruptcy or similar law. In addition,
other steps will be taken to avoid the seller's becoming a debtor in a
bankruptcy case. However, the seller could become a debtor in a bankruptcy case,
and a bankruptcy trustee for the seller or the seller as debtor in possession or
a creditor of the seller could take the position that the transfer of the
receivables from the seller to the trust should be recharacterized as a pledge
of the receivables. In that event, payments on the certificates could be delayed
or, should the court rule in favor of any trustee, debtor in possession or
creditor, reduced in amount.
The seller does not intend to file, and DCS has agreed that it will not
cause the seller to file, a voluntary application for relief under the
Bankruptcy Code or any similar applicable state law with respect to the seller
so long as the seller is solvent and does not foresee becoming insolvent.
If the RPA seller or the seller were to become a debtor in a bankruptcy
case, a Reinvestment Event or an Early Amortization Event would occur with
respect to the certificates of each series. In that event, under the Receivables
Purchase Agreement, new receivables would no longer be transferred to the seller
and, under the Pooling and Servicing Agreement, only collections on receivables
already sold to the seller and transferred to the trust would be available to be
applied to pay interest accruing on the certificates and to pay the principal
amount of the certificates. If that happens, the servicer must allocate all
collections on Principal Receivables to the oldest principal balance first. If
the bankruptcy court were to alter the allocation method, the rate of payment on
the certificates might be adversely affected. In addition, distributions in
respect of principal on each certificate would not be subject to any applicable
Controlled Distribution Amount.
The occurrence of events of bankruptcy, insolvency or receivership with
respect to the servicer will result in a Service Default. The Service Default,
in turn, may result in a Reinvestment Event or an Early Amortization Event with
respect to a series. If no other Service Default other than the commencement of
the bankruptcy or similar event exists, a trustee-in-bankruptcy of the servicer
may have the power to prevent either the trustee or the certificateholders from
appointing a successor servicer.
Payments made in respect of repurchases of receivables by DCS or the seller
under the Pooling and Servicing Agreement may be recoverable by DCS or the
seller, as debtor in possession, or by a 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.
CARCO does not intend to file, and DCS has agreed that it will not cause
CARCO to file, a voluntary application for relief under the Bankruptcy Code or
any similar applicable state law with respect to CARCO so long as CARCO is
solvent and does not foresee becoming insolvent.
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TAX MATTERS
FEDERAL INCOME TAX CONSEQUENCES
We discuss below federal income tax consequences to holders of the
certificates. This discussion does not purport to deal with all aspects of
federal income taxation that may be relevant to holders of the certificates in
light of their personal investment circumstances, nor to holders subject to
special treatment under the federal income tax laws, for example, banks, life
insurance companies and tax-exempt organizations. Prospective investors are
advised to consult their own tax advisors with regard to the federal income tax
consequences of holding and disposing of the certificates, as well as the tax
consequences arising under the laws of any state, foreign country or other
jurisdiction. This discussion is based upon present provisions of the Internal
Revenue Code of 1986 (the "CODE"), the regulations promulgated under the Code,
and judicial or ruling authority, all of which are subject to change, which
change may be retroactive. No ruling on any of the issues discussed below will
be sought from the IRS.
The discussion assumes that a certificate is issued in registered form, has
all payments denominated in U.S. dollars, has a term that exceeds one year, and
does not bear "contingent interest" as defined in Section 871(h)(4) of the Code.
Moreover, except as provided below, the discussion assumes that the interest on
the certificate meets the requirements for "qualified stated interest" under
Treasury regulations (the "OID REGULATIONS") relating to original issue discount
("OID"), and that any OID on the certificate, i.e., any excess of the principal
amount of the certificate over its issue price, does not exceed a de minimis
amount, i.e., is less than 1/4% of its principal amount multiplied by the number
of full years until its maturity date, all within the meaning of the OID
regulations. If those conditions are not satisfied, additional tax
considerations will be disclosed in the applicable prospectus supplement.
TREATMENT OF THE CERTIFICATES AS INDEBTEDNESS OF THE SELLER. The seller
and the holders of certificates offered by this prospectus will express in the
Pooling and Servicing Agreement the intent that, for federal, state and local
income and franchise tax purposes and Michigan single business tax purposes, the
certificates will be indebtedness of the seller secured by the receivables and
any other trust assets allocable to the certificates. DCWR, by the acceptance of
the assignment of the Pooling and Servicing Agreement will agree, and each
Certificateholder, by the acceptance of a certificate, will agree to treat the
certificates as indebtedness of the seller for federal, state and local income
and franchise tax purposes and Michigan single business tax purposes. However,
the Pooling and Servicing Agreement refers to the transfer of the receivables as
a "sale" for non-tax purposes, and because different criteria are used in
determining the non-tax accounting treatment of the transaction, the seller will
treat the Pooling and Servicing Agreement, for non-tax purposes, as effecting a
transfer of an ownership interest in the receivables and not as creating a debt
obligation of the seller.
A basic premise of federal income tax law is that the economic substance of
a transaction determines the tax consequences. The form of a transaction, while
a relevant factor, is not conclusive evidence of its economic substance. In
appropriate circumstances, the courts have allowed taxpayers, as well as the
IRS, to treat a transaction in accordance with its economic substance, as
determined under federal income tax law, even though the participants in the
transaction have characterized it differently for non-tax purposes.
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The determination of whether the economic substance of a property transfer
is a sale or a loan secured by the transferred property has been made by the IRS
and the courts on the basis of numerous factors designed to determine whether
the transferor has relinquished, and the transferee has obtained, substantial
incidents of ownership in the property. Among those factors, the primary factors
examined are whether the transferee has the opportunity to gain if the property
increases in value, and has the risk of loss if the property decreases in value.
Based upon its analysis of those factors, Sidley Austin Brown & Wood LLP,
special tax counsel to the seller and the trust ("TAX COUNSEL"), is of the
opinion that for federal income tax purposes the seller will properly be treated
as the owner of the receivables and any other trust assets allocable to the
certificates and, accordingly, the certificates will properly be characterized
as indebtedness of the seller that is secured by the receivables and the other
assets.
INTEREST INCOME TO CERTIFICATEHOLDERS. Assuming the certificates are debt
obligations for federal income tax purposes, they will not be considered issued
with OID, except as discussed below or in the applicable prospectus supplement.
Interest on the certificates will be taxable as ordinary interest income when
received by certificateholders utilizing the cash-basis method of accounting and
when accrued by certificateholders utilizing the accrual method of accounting.
Under the OID regulations, a holder of a certificate issued with a de minimis
amount of OID must include the OID in income, on a pro rata basis, as principal
payments are made on the Certificate. A certificateholder who buys a certificate
for less than its principal amount will be subject to the "market discount"
rules of the Code, and a certificateholder who buys a certificate for more than
its principal amount will be subject to the premium amortization rules of the
Code.
However, if any interest due on a series or class of certificates is not
paid in full on its scheduled payment date, or if the amount of interest payable
currently on a series or class is reduced because of a limitation based on the
average interest rate currently payable on the receivables, certificates of that
series or class will after that time be considered to be issued with OID.
Moreover, even before that event, the certificates of a series or class would be
considered to have OID from their date of issuance unless, at the time of
issuance, the likelihood of a late payment or nonpayment of interest, or
reduction in the amount of interest payable based on the interest rate currently
payable on the receivables, on the series or class was considered a "remote
contingency" under applicable Treasury regulations.
The seller intends to take the position, based on the exception for remote
contingencies, that OID does not arise on a series or class of certificates
unless and until an event described in the first sentence of the preceding
paragraph occurs. However, if the Investor certificates of a series or class
were considered to have OID, either initially or subsequently, all holders of
certificates of that series or class would after that time be required to accrue
OID into income at a rate equal to the full interest rate payable on the
certificates, probably determined without regard to any limitation based upon
the interest payable on the receivables, whether or not all or part of the
interest on the certificates was paid currently. Moreover, the holders would be
required to accrue any de minimis discount into income over the life of the
certificates rather than when principal is paid. As a result, holders might be
required to report taxable income prior to the receipt of cash attributable to
the income.
The trustee will be required to report annually to the IRS, and to each
certificateholder of record, the amount of interest paid on the certificates and
the amount of interest withheld for federal income taxes, if any, for each
calendar year, except as to exempt holders. Exempt holders
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are holders that are corporations, tax-exempt organizations, qualified pension
and profit-sharing trusts, individual retirement accounts, or nonresident aliens
who provide certification as to their status as nonresidents. Accordingly, each
nonexempt certificateholder will be required to provide, under penalties of
perjury, a certificate on IRS Form W-9 containing the holder's name, address,
federal taxpayer identification number and a statement that the holder is not
subject to backup withholding. Should a nonexempt certificateholder fail to
provide the required certification, the trustee, or the Participants or Indirect
Participants, will be required to withhold, or cause to be withheld, a specified
percentage of the interest, and principal, otherwise payable to the holder, and
remit the withheld amounts to the IRS as a credit against the holder's federal
income tax liability.
POSSIBLE CLASSIFICATION OF THE TRUST AS A PARTNERSHIP OR ASSOCIATION. As
described above, it is the opinion of Tax Counsel that the certificates will
properly be characterized as debt of the seller for federal income tax purposes.
However, that opinion is not binding on the IRS and thus no assurance can be
given that that characterization will prevail.
For example, if the IRS were to contend successfully that the certificates
were not debt of the seller for federal income tax purposes, the trust might be
classified for federal income tax purposes as a partnership, an association
taxable as a corporation or a "publicly traded partnership" taxable as a
corporation. If the certificates are treated as interests in a partnership, the
partnership would in all likelihood be treated as a "publicly traded
partnership". A publicly traded partnership is taxable as a corporation. If the
partnership were nevertheless not taxable as a corporation, because of an
exception for an entity whose income is interest income that is not derived in
the conduct of a financial business, it would not be subject to federal income
tax. Rather, each item of income, gain, loss, deduction and credit generated
through the ownership of the receivables by the partnership would be passed
through to the partners in the partnership, including the certificateholders,
according to their respective interests in the partnership.
The income reportable by the certificateholders as partners in a
partnership could differ from the income reportable by the certificateholders as
holders of debt. However, except as provided below, it is not expected that the
differences would be material. If the certificateholders were treated as
partners, a cash basis certificateholder might be required to report income when
it accrues to the partnership rather than when it is received by the
certificateholder. Moreover, if the certificates are interests in a partnership,
an individual's share of expenses of the partnership would be miscellaneous
itemized deductions that in the aggregate are allowed only to the extent they
exceed two percent of the individual's adjusted gross income, and are subject to
other limitations, meaning that the individual might be taxed on a greater
amount of income than the stated interest on the certificates. Finally, if any
certificates are treated as equity interests in a partnership in which other
certificates are debt, all or part of a tax-exempt investor's share of income
from the certificates that are treated as equity would be treated as unrelated
debt-financed income under the Code taxable to the investor.
If, alternatively, the trust were treated as either an association taxable
as a corporation or a "publicly traded partnership" taxable as a corporation,
the resulting entity would be subject to federal income taxes at corporate tax
rates on its taxable income generated by ownership of the receivables. Moreover,
distributions by the entity would probably not be deductible in computing the
entity's taxable income and all or part of distributions to certificateholders
would probably be treated as dividend income to the certificateholders. An
entity-level tax could result in reduced
69
distributions to certificateholders and the certificateholders could be liable
for a share of an entity-level tax.
Because the seller will treat the certificates as indebtedness for federal
income tax purposes, the trustee, and Participants and Indirect Participants,
will not comply with the tax reporting requirements that would apply under these
alternative characterizations of the certificates.
FOREIGN INVESTORS. Tax Counsel has given its opinion that the certificates
will properly be classified as debt of the seller for federal income tax
purposes. If the certificates are so treated:
-- interest paid or accrued to a nonresident alien or foreign
corporation or partnership would be exempt from U.S. income tax
and withholding, including backup withholding. However, the holder
must comply with applicable identification requirements and may
not actually or constructively own 10% or more of the voting stock
of the seller, be a bank receiving interest described in Code
section 881(c)(3)(A) or be a controlled foreign corporation with
respect to the seller. Applicable identification requirements will
generally be satisfied if there is delivered to a securities
clearing organization, or bank or other financial institution that
holds the certificates on behalf of the customer in the ordinary
course of its trade or business
-- IRS Form W-8 or W-8BEN signed under penalties of perjury by
the beneficial owner of the certificates stating that the
holder is not a U.S. person and providing the holder's name
and address,
-- IRS Form 1001 or W-8BEN signed by the beneficial owner of the
certificates or the owner's agent claiming exemption from
withholding under an applicable tax treaty, or
-- IRS Form 4224 or W-8ECI signed by the beneficial owner of the
certificates or the owner's agent claiming exemption from
withholding of tax on income connected with the conduct of a
trade or business in the United States.
Form W-8BEN and W-8ECI are effective until the third succeeding calendar year
from the date the form is signed. Moreover, a foreign investor that is not an
individual or corporation for federal income tax purposes may have additional
reporting requirements and should consult its tax advisor.
However, in any case, the applicable form must be delivered under
applicable procedures and must be properly transmitted to the United States
entity otherwise required to withhold tax and none of the entities receiving the
form may have actual knowledge that the holder is a U.S. person or that any
certification on the form is false.
A holder of a certificate who is a nonresident alien or foreign corporation
will not be subject to United States federal income tax on gain realized on the
sale, exchange or redemption of the certificate. However,
-- the gain must not be effectively connected to a trade or
business carried on by the holder in the United States,
-- in the case of a holder that is an individual, the holder must
not be present in the United States for 183 days or more
during the taxable year in which the sale, exchange or
redemption occurs and
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-- in the case of gain representing accrued interest, the
conditions described in the first clause must be satisfied.
A certificate held by an individual who at the time of death is a
nonresident alien will not be subject to United States federal estate tax as a
result of the individual's death if, immediately before his death,
-- the individual did not actually or constructively own 10% or
more of the voting stock of the seller and
-- the holding of the certificate was not effectively connected
with the conduct by the decedent of a trade or business in the
United States.
If the IRS were to contend successfully that the certificates are interests
in a partnership, not taxable as a corporation, a certificateholder that is a
nonresident alien or foreign corporation might be required to file a U.S.
individual or corporate income tax return and pay tax on its share of
partnership income at regular U.S. rates, including, in the case of a
corporation, the branch profits tax, and would be subject to withholding tax on
its share of partnership income. If the certificates are recharacterized as
interests in an association taxable as a corporation or a "publicly traded
partnership" taxable as a corporation, to the extent distributions on the
certificates were treated as dividends, a nonresident alien individual or
foreign corporation would be taxed on the gross amount of those dividends, and
subject to withholding, at a rate of 30% unless the rate were reduced by an
applicable treaty.
BACKUP WITHHOLDING. A certificateholder may be subject to backup
withholding with respect to interest paid on the certificates if the
certificateholder, upon issuance, fails to supply the trustee or his broker with
his taxpayer identification number, furnishes an incorrect taxpayer
identification number, fails to report interest, dividends or other "reportable
payments", as defined in the Code, properly, or, in some cases, fails to provide
the trustee or his broker with a certified statement, under penalty of perjury,
that he is not subject to backup withholding.
The trustee will be required to report annually to the IRS, and to each
certificateholder of record, the amount of interest paid, and OID accrued, if
any, on the certificates, and the amount of interest withheld for U.S. federal
income taxes, if any, for each calendar year, except as to exempt holders.
Exempt holders are holders that are corporations, tax-exempt organizations or
nonresident aliens who provide certification as to their status as nonresidents.
As long as the only "certificateholder" of record is Cede & Co., as nominee for
DTC, certificateholders and the IRS will receive tax and other information
including the amount of interest paid on the certificates owned from
participants and indirect participants rather than from the trustee. The
trustee, however, will respond to requests for necessary information to enable
participants, indirect participants and other persons to complete their reports.
Each non-exempt certificateholder will be required to provide, under penalty of
perjury, a certificate on IRS Form W-9 containing his or her name, address,
correct federal taxpayer identification number and a statement that he or she is
not subject to backup withholding. Should a nonexempt certificateholder fail to
provide the required certification, the participants or indirect participants,
or the paying agent, will be required to withhold a portion of the interest and
principal, otherwise payable to the holder, and remit the withheld amount to the
IRS as a credit against the holder's federal income tax liability.
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STATE AND LOCAL TAX CONSEQUENCES
The servicer will service and collect the receivables in Michigan. The
State of Michigan imposes a state individual income tax and a single business
tax which is based partially upon the net income of corporations, partnerships
and other entities doing business in the State of Michigan. This discussion is
based upon present provisions of Michigan statutes and the regulations
promulgated under those statutes, and applicable judicial or ruling authority,
all of which are subject to change, which change may be retroactive. No ruling
on any of the issues discussed below will be sought from the Michigan Department
of Treasury.
If the certificates are treated as debt of the seller for federal income
tax purposes, in the opinion of Christopher A. Taravella, Esq., Vice President
and General Counsel of the seller, Michigan tax counsel to the seller and the
trust ("MICHIGAN TAX COUNSEL"), this treatment will also apply for Michigan tax
purposes. Under this treatment, the trust will not be subject to the Michigan
single business tax and certificateholders not otherwise subject to Michigan tax
would not become subject to the tax solely because of their ownership of the
certificates. Certificateholders already subject to taxation in Michigan,
however, could be required to pay tax on the income generated from ownership of
these certificates.
In the alternative, if the trust is treated as a partnership, not taxable
as a corporation, for federal income tax purposes, in the opinion of Michigan
Tax Counsel, the same treatment should also apply for Michigan tax purposes. In
that case, the resulting constructive partnership should not be treated as doing
business in Michigan but rather should be treated as a passive holder of
investments and, as a result, should not be subject to the Michigan single
business tax, which, if applicable, could result in reduced distributions to
certificateholders. Certificateholders also should not be subject to Michigan
single business tax on the income received through the partnership.
Under current law, certificateholders that are nonresidents of Michigan and
that are not otherwise subject to Michigan income tax should not be subject to
Michigan income tax on the income from the constructive partnership. Under
current law corporate certificateholders are not subject to Michigan income tax.
In any event, classification of the arrangement as a "partnership" would not
cause a certificateholder not otherwise subject to taxation in Michigan to pay
Michigan tax on income beyond that derived from the certificates.
If the certificates are instead treated as ownership interests in an
association or "publicly traded partnership", the hypothetical entity should not
be subject to the Michigan single business tax, which, if applicable, could
result in reduced distributions to certificateholders. A certificateholder not
otherwise subject to tax in Michigan would not become subject to Michigan tax as
a result of its mere ownership of that type of interest.
Because each state's income tax laws vary, it is impossible to predict the
income tax consequences to the certificateholders in all of the state taxing
jurisdictions in which they are already subject to tax. Certificateholders are
urged to consult their own tax advisors with respect to state income and
franchise taxes.
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ERISA CONSIDERATIONS
GENERAL
Section 406 of ERISA and Section 4975 of the Code prohibit a pension,
profit-sharing or other employee benefit plan from engaging in transactions
involving "plan assets" with persons that are "parties in interest" under ERISA
or "disqualified persons" under the Code with respect to the plan. A violation
of these "prohibited transaction" rules may generate excise tax and other
liabilities under ERISA and the Code for that person. For example, a prohibited
transaction would arise, unless an exemption were available, if the certificates
of a series or class were viewed as debt of the seller and the seller were a
disqualified person or party in interest with respect to a plan that acquired
certificates of that series or class.
Moreover, additional prohibited transactions could arise if the assets of
the trust were deemed to constitute assets of any plan that owned certificates.
The Department of Labor ("DOL") has issued a final regulation (the "PLAN ASSETS
REGULATION") concerning the definition of what constitutes the "plan assets" of
an employee benefit plan subject to ERISA or the Code or an individual
retirement account ("IRA") (collectively referred to as "BENEFIT PLANS"). Under
the Plan Assets Regulation the assets and properties of corporations,
partnerships and other entities in which a Benefit Plan acquires an "equity
interest" could be deemed to be assets of the Benefit Plan in some
circumstances. Accordingly, if Benefit Plans purchase certificates, the trust
could be deemed to hold plan assets of the Benefit Plan unless one of the
exceptions under the Plan Assets Regulation is applicable to the trust.
The Plan Assets Regulation only applies to the purchase by a Benefit Plan
of an "equity interest" in an entity. Assuming that the certificates of a series
or class are equity interests, the Plan Assets Regulation contains an exception
that provides that if a Benefit Plan acquires a "publicly-offered security", the
issuer of the security is not deemed to hold plan assets. A publicly-offered
security is a security that is
-- freely transferable,
-- part of a class of securities that is owned by 100 or more
investors independent of the issuer and of one another and
-- either is
-- part of a class of securities registered under Section 12(b)
or 12(g) of the Exchange Act or
-- sold to the plan as part of an offering of securities to the
public under an effective registration statement under the
Securities Act and the class of securities of which the
security is a part is registered under the Exchange Act within
120 days, or a later time as may be allowed by the Commission,
after the end of the fiscal year of the issuer during which
the offering of the securities to the public occurred.
The certificates of each series and class must be separately tested under,
and may each meet, the criteria of publicly-offered securities as described
above. There are no restrictions imposed on the transfer of the certificates.
The certificates will be sold as part of an offering under an effective
registration statement under the Securities Act, and may or may not be timely
registered
73
under the Exchange Act. Based on information provided by the underwriter or
placement agent for certificates of any series or class that will be registered
under the Exchange Act, the seller will notify the trustee as to whether or not
certificates of the series or, if the series consists of more than one class,
each class will be held by at least 100 separately named persons at the
conclusion of the offering, unless the related prospectus supplement states
otherwise. The seller will not determine whether the 100-investor requirement of
the exception for publicly offered securities is satisfied as to the
certificates of any series or class. Prospective purchasers may obtain a copy of
the notification described in the third preceding sentence from the trustee at
101 Barclay Street, New York, New York 10286.
If the certificates of any series or class fail to meet the criteria of
publicly-offered securities and the trust's assets are deemed to include assets
of Benefit Plans that are holders of the certificates, transactions involving
the trust and "parties in interest" or "disqualified persons" with respect to
the plans might be prohibited under Section 406 of ERISA and Section 4975 of the
Code unless an exemption is applicable. Thus, for example, if a participant in
any Benefit Plan is an obligor or guarantor of one of the receivables, under DOL
interpretations the purchase of the certificates by the plan could constitute a
prohibited transaction. There are a number of class exemptions issued by the DOL
that may apply in that event. However, even if all of the conditions specified
in the exemptions are satisfied, they would probably not apply to all
transactions involving the trust's assets.
In light of the foregoing, fiduciaries of a Benefit Plan considering the
purchase of certificates of any series or class should consult their own counsel
as to whether the assets of the trust which are represented by the certificates
would be considered plan assets, and the consequences that would apply if the
trust's assets were considered plan assets.
In addition, based on the reasoning of the United States Supreme Court's
decision in John Hancock Life Ins. Co. v. Harris Trust and Sav. Bank, 510 U.S.
86 (1993), under some circumstances assets in the general account of an
insurance company may be deemed to be plan assets for some purposes. Under that
reasoning a purchase of certificates with assets of an insurance company's
general account might be subject to the prohibited transaction rules described
above. Insurance companies investing assets of their general accounts should
also consider the potential effects of the enactment of Section 401(c) of ERISA,
Prohibited Transaction Exemption 95-60, and Labor Department Regulation Section
2550.401c-1.
Unless the applicable prospectus supplement states otherwise, if the
certificates will not be timely registered under the Exchange Act, or if the
seller does not notify the trustee, as described above, that the certificates of
any particular series or class will be expected to be held by at least 100
persons, the certificates of the series or class, as the case may be, may not be
acquired by any Benefit Plan or by any entity investing assets that are treated
as assets of a Benefit Plan. Furthermore, in that case, the Pooling and
Servicing Agreement, the Series Supplement and each certificate will provide
that each holder of the certificate shall be deemed to have represented and
warranted that it is not a Benefit Plan and is not purchasing the certificate on
behalf of a Benefit Plan or with assets that are treated as assets of a Benefit
Plan.
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EXPERTS
The financial statements of the trust as of December 31, 2000 and 1999, and
for each of the years in the three-year period ended December 31, 2000, have
been incorporated by reference in this prospectus and in the registration
statement in reliance upon the report by KPMG LLP, independent certified public
accountants, incorporated by reference in this prospectus, and upon the
authority of that firm as experts in accounting and auditing.
PLAN OF DISTRIBUTION
The seller may sell certificates offered by this prospectus in any of three
ways:
-- through underwriters or dealers;
-- directly to one or more purchasers; or
-- through agents.
We will set forth in the related prospectus supplement the terms of the
offering of any series certificates, including, without limitation
-- the names of any underwriters,
-- the purchase price of the certificates and the proceeds to the
seller from the sale,
-- any underwriting discounts and other items constituting
underwriter's compensation,
-- any initial public offering price and
-- any discounts or concessions allowed or reallowed or paid to
dealers.
If the seller uses underwriters in a sale of any certificates of a series,
the certificates will be acquired by the underwriters for their own account and
may be resold from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying prices
to be determined at the time of sale or at the time of commitment for the
certificates. The certificates may be offered to the public either through
underwriting syndicates represented by managing underwriters or by underwriters
without a syndicate. Unless we set forth otherwise in the related prospectus
supplement, the obligations of the underwriters to purchase the certificates
will be subject to conditions precedent, and the underwriters will be obligated
to purchase all of the certificates if any of the certificates are purchased.
Any initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
Certificates of a series may also be offered and sold, if we so state in
the related prospectus supplement, in connection with a remarketing upon their
purchase, in accordance with a redemption or repayment under their terms, by one
or more firms ("REMARKETING FIRMS") acting as principals for their own accounts
or as agents for the seller. We will identify in the related prospectus
supplement any remarketing firm and describe the terms of its agreement, if any,
with the seller and its compensation. Remarketing firms may be deemed to be
underwriters in connection with the certificates they remarket.
Certificates 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 certificates, and we
75
will set forth any commissions payable by the seller to the agent, in the
related prospectus supplement. Unless we indicate otherwise in the related
prospectus supplement, any agent will act on a best efforts basis for the period
of its appointment.
Each underwriting agreement and placement agreement will provide that DCWR
and DCS will indemnify the underwriters and agents, respectively, against civil
liabilities, including liabilities under the Securities Act, or contribute to
payments the several underwriters and agents, as applicable, may be required to
make in respect of those civil liabilities.
The trust may, from time to time, invest the funds in its accounts in
Eligible Investments acquired from the underwriters, agents or the seller.
We will set forth the place and time of delivery for a series of
certificates in the prospectus supplement.
Until the distribution of the certificates of a series is completed, rules
of the Commission may limit the ability of the underwriters and selling group
members to bid for and purchase those certificates. As an exception to these
rules, the underwriters are permitted to engage in transactions that stabilize
the price of those certificates. Those transactions consist of bids or purchases
for the purpose of pegging, fixing or maintaining the price of the certificates.
Purchases of a certificate for the purpose of stabilization could cause the
price of the certificate 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 certificates of that series and may purchase those
certificates on the open market to cover positions created by short sales. Short
sales involve the sale by the underwriters of a greater number of certificates
than they are required to purchase in the offering. The underwriters must close
out any short position by purchasing certificates 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 certificates 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 certificates or preventing or retarding a decline in the market
price of certificates. As a result, the price of the certificates 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 certificates 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 certificates of a series are offered in the United Kingdom, each
underwriter and placement agent will represent and agree that
-- it has not offered or sold, and will not offer or sell, any of
those certificates 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,
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-- it has complied and will comply with all applicable provisions of
those regulations and all applicable provisions of the Financial
Services and Markets Act 2000 (the "FMSA") of Great Britain with
respect to anything done by it in relation to those securities in,
from or otherwise involving the United Kingdom 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 FMSA) received by it in
connection with the issue or sale of any certificates in
circumstances in which Section 21(l) of the FMSA does not apply to
the trust.
If you initially receive an electronic copy of the prospectus and
prospectus supplement from an underwriter, you will receive a paper copy of the
prospectus and prospectus supplement upon request to the underwriter. Upon
receipt of a qualifying request, the underwriter will promptly deliver a paper
copy of the prospectus and prospectus supplement to you free of charge.
LEGAL MATTERS
Certain legal matters relating to the certificates 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 trust by the
counsel we named in the applicable prospectus supplement, which may also be
Sidley Austin Brown & Wood LLP. Sidley Austin Brown & Wood LLP from time to time
represents DaimlerChrysler Services North America LLC and its affiliates on
other matters.
77
GLOSSARY OF TERMS FOR PROSPECTUS
"Accounts" means the revolving financing arrangements with dealers
franchised by DaimlerChrysler and/or other automobile manufacturers in which the
receivables arise.
"Accumulation Period" means, for any applicable series, the period
beginning at the close of business on the date specified in or determined in the
manner specified in the prospectus supplement and ending on the earliest of:
-- the beginning of a Reinvestment Period with respect to the series,
-- the beginning of an Early Amortization Period with respect to the
series and
-- payment in full of the outstanding principal amount of the series
certificates.
"Addition Date" means, in the case of an Additional Account, the date on
which the receivables in the Additional Account are first transferred to the
trust.
"Additional Accounts" means the additional accounts which the seller has
the right, subject to conditions, to designate from time to time to be included
as Accounts.
"Additional Cut-Off Date" means, with respect to any Additional Accounts,
the date those Additional Accounts are identified and selected.
"Adjusted Invested Amount" means, with respect to a series for any date, an
amount equal to the sum of
-- the Initial Invested Amount of the series, minus unreimbursed
Investor Charge-Offs for the series and
-- the Available Subordinated Amount with respect to the series,
after giving effect to the allocations, distributions, withdrawals
and deposits to be made on the distribution date during the
Collection Period in which that date occurs.
"Adjustment Payment" means, to the extent that a reduction in the Seller's
Interest would reduce the Seller's Participation Amount below the Trust
Available Subordinated Amount for the immediately preceding Determination Date,
after giving effect to the allocations, distributions, withdrawals and deposits
to be made on the distribution date, a cash amount equal to the deficiency which
will be deposited by the seller into the Collection Account in immediately
available funds on the day on which the servicer makes the adjustment.
"Auction Vehicles" means, collectively, the vehicles purchased by a dealer
at a closed auction conducted by DaimlerChrysler.
"Automatic Additional Accounts" means the Additional Accounts which the
seller may designate from time to time, at its discretion, subject only to some
limitations.
"Automatic Removal Date" means the date upon which the Automatic Removed
Accounts are to be removed.
"Automatic Removed Accounts" means the Accounts, designated by the seller,
with respect to which the seller shall have the right to require the
reassignment to it of all the trust's right, title and interest in, to and under
the receivables then existing and created after that time, all monies due or to
become due and all amounts received with respect to those receivables and all
proceeds of those receivables in or with respect to the Accounts, upon
satisfaction of the following conditions:
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-- on or before the fifth business day immediately preceding the date
upon which the Accounts are to be removed, the seller shall have
given the trust, each Enhancement provider and the Rating Agencies
a Removal Notice specifying the Automatic Removal Date of the
Automatic Removed Accounts;
-- on or prior to the date that is five business days after the
Automatic Removal Date, the seller shall have delivered to the
trustee a computer file or microfiche or written list containing a
true and complete list of the Automatic Removed Accounts stating
for each Account, as of the removal notice date, its account
number and the aggregate amount of receivables outstanding in the
Account;
-- the seller shall have represented and warranted as of each
Automatic Removal Date that the list of Automatic Removed Accounts
delivered pursuant to the second clause above, as of the Automatic
Removal Date, is true and complete in all material respects;
-- the trustee shall have received confirmation from each Rating
Agency that the removal will not cause the Ratings Agency's rating
of any outstanding series or class of certificates to be reduced
or withdrawn;
-- the seller shall have delivered to the trustee, each Rating Agency
and any Enhancement providers an officers' certificate, dated the
Automatic Removal Date, to the effect that the seller reasonably
believes the removal will not cause an Early Amortization Event or
Reinvestment Event to occur with respect to any series; and
-- the seller shall have delivered to the trustee, each Rating Agency
and any Enhancement providers a Tax Opinion, dated the Automatic
Removal Date, with respect to the removal.
"Available Subordinated Amount" means the amount of the subordination for a
series.
"Bankruptcy Code" means Title 11 of the United States Code.
"Benefit Plans" means, collectively, employee benefit plans subject to
ERISA or the Code or individual retirement accounts.
"CARCO" means Chrysler Auto Receivables Company.
"CCC" means Chrysler Credit Corporation.
"Certificateholders' Interest" means, for any series, the undivided
beneficial interests in certain assets of the trust allocated to the Interest of
the Certificateholders of the series.
"certificates" means the Auto Loan Asset Backed Certificates.
"CFC" means Chrysler Financial Company L.L.C.
"CFC Corp." means Chrysler Financial Corporation.
"Citibank" means Citibank, N.A.
"Clearstream" means Clearstream Banking, societe anonyme.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Security" means, in respect of the receivables, a security
interest in vehicles and parts inventory, equipment, fixtures, service accounts
and, in some cases, realty and a personal guarantee.
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"Collection Account" means an Eligible Deposit Account which the servicer
has established and will maintain for the benefit of the certificateholders in
the name of the trustee, on behalf of the trust.
"Collection Period" means, for any distribution date, the calendar month
preceding the month in which that distribution date occurs.
"Commission" means the Securities and Exchange Commission.
"Controlled Amortization Period" means, for any applicable series, a
controlled amortization period which will begin at the close of business on the
date stated in or determined in the manner stated in the related prospectus
supplement and will end on the earliest of:
-- the beginning of a Reinvestment Period with respect to the series,
-- the beginning of an Early Amortization Period with respect to the
series and
-- payment in full of the outstanding principal amount of the
certificates of that series.
"Controlled Deposit Amount" means, for any series, an amount stated in the
related prospectus supplement plus, in the case of some distribution dates, any
amounts in the Excess Funding Account allocable to the series.
"Cooperative" means Euroclear S.C., a Belgian cooperative corporation.
"DaimlerChrysler" means DaimlerChrysler Corporation, the successor to
Chrysler Corporation.
"DCS" means DaimlerChrysler Services North America LLC and its successors
in interest.
"DCWR" means DaimlerChrysler Wholesale Receivables LLC and its successors
in interest.
"Dealer Overconcentrations" means, on any distribution date, with respect
to any Dealer or group of affiliated Dealers, the excess of
-- the aggregate principal amount of receivables due from the Dealer
or group of affiliated Dealers on the last day of the Collection
Period immediately preceding that distribution date over
-- 2% of the Pool Balance on the last day of the immediately
preceding Collection Period.
"Dealer Trouble" means a status under which a dealer will be classified by
DCS under some circumstances which include
-- failure to remit any principal or interest payment when due,
-- any notifications of liens, levies or attachments and
-- a general deterioration of its financial condition.
"dealers" or "Dealers" means domestic automobile dealers franchised by
DaimlerChrysler and/or other automobile manufacturers.
"Defaulted Amount" means for any Collection Period will be an amount, which
shall not be less than zero, equal to (a) the principal amount of receivables
that became Defaulted Receivables during the preceding Collection Period minus
(b) the sum of (i) the full amount of any Defaulted Receivables subject to
reassignment to the seller or purchase by the servicer for the Collection Period
unless events of bankruptcy, insolvency or receivership have occurred with
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respect to either of the seller or the servicer, in which event the Defaulted
Amount will not be reduced for those Defaulted Receivables and (ii) the excess,
if any, for the immediately preceding Determination Date of the amount
determined pursuant to this clause (b) for that Determination Date over the
amount determined pursuant to clause (a) for that Determination Date.
"Defaulted Receivables" means on any Determination Date
-- all receivables which were charged off as uncollectible in respect
of the immediately preceding Collection Period and
-- all receivables which were Eligible Receivables when transferred
to the trust, which arose in an Account which became an Ineligible
Account after the date of transfer of the receivables to the trust
and which were not Eligible Receivables for any six consecutive
Determination Dates after that date.
"Definitive Certificates" means the certificates of a series or class
issued in fully registered, certificated form to certificateholders or their
nominees.
"Depository" means DTC, together with any successor depository selected by
the seller.
"Designated Accounts" means the Accounts to be removed from the trust.
"Designated Balance" means the aggregate principal balance of receivables
in respect of each of the Designated Accounts.
"Designated Receivables" means, at any time, the then existing receivables
in the Designated Accounts.
"Determination Date" means each second business day preceding a
Distribution Day.
"Distribution Date Statement" means a statement prepared by the servicer
and forwarded by the trustee to each certificateholder of record of any series
on each distribution date, including each distribution date that corresponds to
an interest payment date or any Special Payment Date, that sets forth
information with respect to the trust and the certificates of the series, as
stated in the related Series Supplement and described in the related prospectus
supplement.
"DOL" means the Department of Labor.
"Early Amortization Event" means any of the events so defined in the
related Series Supplement and, described in the related prospectus supplement,
as well as each of the following events:
-- the occurrence of events of bankruptcy, insolvency or receivership
relating to the trust or the seller; and
-- the trust or DCWR becomes an investment company within the meaning
of the Investment Company Act of 1940.
"Early Amortization Period" means the period beginning on the day on which
an Early Amortization Event has occurred with respect to a series and ending on
the earliest of:
-- payment in full of the outstanding principal amount of the
certificates of that series,
-- the recommencement of the Revolving Period in accordance with the
related Series Supplement and
-- the Termination Date for the series.
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"Eligible Account" means a wholesale financing line of credit extended by
DCS, directly or as successor to CFC, CFC Corp. or CCC, to a Dealer, which, as
of its date of determination:
-- is established by DCS, directly or as successor to CFC, CFC Corp.
or CCC, in the ordinary course of business under a floorplan
financing agreement,
-- is in favor of an Eligible Dealer,
-- is in existence and maintained and serviced by DCS, directly or as
successor to CFC, CFC Corp. or CCC, and
-- 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:
-- which is located in the United States of America, including its
territories and possessions,
-- 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,
-- in which DaimlerChrysler or any affiliate of DaimlerChrysler does
not have an equity investment and
-- which has not been classified by the servicer as being under
Dealer Trouble status.
"Eligible Deposit Account" means either
-- a segregated account with an Eligible Institution or
-- a segregated trust account with the corporate trust department of
a depository institution organized under the laws of the United
States or any one of the states of the United States, or any
domestic branch of a foreign bank, having corporate trust powers
and acting as trustee for funds deposited in such account, so long
as any of the securities of the depository institution has a
credit rating from each Rating Agency in one of its generic rating
categories which signifies investment grade.
"Eligible Institution" means
-- the corporate trust department of the trustee or
-- a depository institution organized under the laws of the United
States or any one of the states of the United States, or the
District of Columbia, or a domestic branch of a foreign bank,
which at all times (i) has either (x) a long-term unsecured debt
rating of A2 or better by Moody's and of AAA or better by Standard
& Poor's and F1 or better by Fitch or (y) a certificate of deposit
rating of P-1 by Moody's or A-1+ by Standard & Poor's and Fitch
and (ii) is a member of the FDIC.
"Eligible Investments" means book-entry securities, negotiable instruments
or physical securities having original or remaining maturities of 30 days or
less, but in no event occurring later than the distribution date next succeeding
the trustee's acquisition of those securities or instruments, except as
otherwise provided in the related Series Supplement. Eligible Investments are
limited to:
-- direct obligations of, and obligations fully guaranteed as to
timely payment by, the United States of America;
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-- demand deposits, time deposits or certificates of deposit of any
depositary institution or trust company incorporated under the
laws of the United States of America or any state of the United
States, or any domestic branch of a foreign bank, and subject to
supervision and examination by Federal or state banking or
depository institution authorities. However, at the time of the
trust's investment or contractual commitment to invest in those
investments, the commercial paper or other short-term unsecured
debt obligations, other than obligations the rating of which is
based on the credit of a person or entity other than the
depository institution or trust company, of that entity shall have
a credit rating from each of the Rating Agencies in its highest
investment category;
-- commercial paper having, at the time of the trust's investment or
contractual commitment to invest in the commercial paper, a rating
from each of the Rating Agencies in its highest investment
category;
-- except during a Reinvestment Period with respect to any series,
investments in money market funds having a rating from each of the
Rating Agencies in its highest investment category or otherwise
approved in writing by each of the Rating Agencies;
-- bankers' acceptances issued by any depository institution or trust
company referred to in the second clause of this sentence;
-- certain repurchase obligations, including those of appropriately
rated broker-dealers and financial institutions; and
-- any other investment consisting of a financial asset that by its
terms converts to cash within a finite period of time, provided
that each Rating Agency shall have notified the seller, the
servicer and the trustee that the trust's investment in that
investment will not cause its then rating of any outstanding class
or series with respect to which it is a Rating Agency to be
reduced or withdrawn.
"Eligible Portfolio" means all the wholesale accounts in the U.S. Wholesale
Portfolio that are Eligible Accounts.
"Eligible Receivable" means a receivable
-- which was originated or acquired by DCS, directly or as successor
to CFC, CFC Corp. or CCC, in the ordinary course of business,
-- which has arisen under an Eligible Account and is payable in
United States dollars,
-- which is owned by DCS, CFC, CFC Corp. or CCC at the time of sale
to the seller,
-- which represents the obligation of a Dealer to repay an advance
made to the Dealer to finance the acquisition of vehicles,
-- which at the time of creation and at the time of transfer to the
trust is secured by a perfected first priority security interest
in the related vehicle,
-- which was created in compliance in all respects with all
requirements of law applicable to it and pursuant to a floorplan
financing agreement which complies in all respects with all
requirements of law applicable to any party to the agreement,
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-- with respect to which all consents and governmental authorizations
required to be obtained by DaimlerChrysler, CCC, CFC Corp., CFC,
DCS or the seller in connection with the creation of the
receivable or the transfer of the receivable to the trust or the
performance by CCC, CFC Corp., CFC or DCS of the floorplan
financing agreement under which the receivable was created, have
been duly obtained,
-- as to which at all times following the transfer of the receivable
to the trust, the trust will have good and marketable title to the
receivable free and clear of all liens arising prior to the
transfer or arising at any time, other than liens permitted under
the Pooling and Servicing Agreement,
-- which has been the subject of a valid transfer and assignment from
the seller to the trust of all the seller's interest in the
receivable, including any proceeds of the receivable,
-- 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,
-- which at the time of transfer to the trust is not subject to any
right of rescission, setoff, or any other defense, including
defenses arising out of violations of usury laws, of the Dealer,
-- as to which, at the time of transfer of the Receivable to the
trust, DaimlerChrysler, CCC, CFC Corp., CFC, DCS and the seller
have satisfied all their respective obligations with respect to
the Receivable required to be satisfied at that time,
-- as to which, at the time of transfer of the Receivable to the
trust, neither DaimlerChrysler, CCC, CFC Corp., CFC or DCS nor the
seller has taken or failed to take any action which would impair
the rights of the trust or the certificateholders,
-- which constitutes "chattel paper" as defined in Article 9 of the
UCC as then in effect in the State of Michigan and
-- which was transferred to the trust with all applicable
governmental authorization.
"Enhancements" means enhancements which may be provided with respect to one
or more classes of a series, including one or more of the following:
-- letter of credit,
-- surety bond,
-- cash collateral account,
-- spread account,
-- guaranteed rate agreement,
-- swap, including without limitation currency swaps, or other
interest protection agreement,
-- repurchase obligation,
-- cash deposit or
-- another form of credit enhancement described in the related
prospectus supplement.
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"Euroclear Operator" means Euroclear Bank S.A./N.A.
"Euroclear Participants" means participants of Euroclear.
"Excess Funded Amount" means, initially, the initial principal balance of
the certificates of a series over the Initial Invested Amount of the series.
"Excess Funding Account" means an Eligible Account established with the
trustee for a series in which the Excess Funding Amount will be maintained,
except, to the extent provided in the related Series Supplement, during an Early
Amortization Period or Reinvestment Period for the series.
"Excess Principal Collections" means the amount of available
certificateholder principal collections for each series and any Collection
Period remaining after required payments, if any.
"Excluded Series" means a series of certificates designated as an excluded
series with respect to a Paired Series.
"Fitch" means Fitch, Inc.
"Fleet Receivables" means receivables originated in connection with
multiple new vehicle orders of at least five vehicles by specified Dealers.
"Foreign Agency Depositaries" means Citibank, when acting in its capacity
as depositary for Clearstream, and Morgan, when acting in its capacity as
depositary for Euroclear.
"Fully Reinvested Date" means the date on which the amount on deposit in
the Principal Funding Account with respect to a series equals the outstanding
principal amount of the certificates of the series.
"Global Securities" means the globally offered certificates.
"Holders" means the certificateholders of record under the Pooling and
Servicing Agreement.
"Indirect Participants" means entities including banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly.
"Ineligible Receivables" means any receivable as to which the
Certificateholders' Interest with respect to the receivable will be reassigned
to the seller on the terms and conditions set forth in this prospectus as a
result of a breach by the seller of any representation and warranty described in
the first paragraph of "Representations and Warranties" in this prospectus,
which breach remains uncured for 30 days or a longer period as may be agreed to
by the trustee, after the earlier to occur of the discovery of such breach by
the seller or the servicer or receipt of written notice of such breach by the
seller or the servicer, and which breach has a materially adverse effect on the
Certificateholders' Interest in any receivable or Account.
"Initial Cut-Off Date" means May 31, 1991.
"Initial Invested Amount" means with respect to any series and for any
date, the amount stated as the "Initial Invested Amount" in the related Series
Supplement. The Initial Invested Amount for any series may be increased or
decreased from time to time as stated in the related Series Supplement,
including as a result of deposits to or withdrawals from the Excess Funding
Account, if any, for the series.
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"Insolvency Laws" means the United States Bankruptcy Code or similar
applicable state laws.
"Installment Balance" means, with respect to any dealer, the balance
outstanding after the initial payment by that dealer on any receivable and not
immediately required to be remitted under the related floorplan financing
agreement and floorplan financing guidelines following the date of sale of the
related vehicle.
"Installment Balance Amount" means the portion of the aggregate amount of
Installment Balances in respect of which DCS has not received an offsetting
payment from the related Dealer on a distribution date.
"interest collections" or "Interest Collections" means collections under
the receivables that consist of interest and other non-principal charges,
including insurance fees, amounts recovered with respect to Defaulted
Receivables and insurance proceeds.
"Interest Funding Account" means the one or more trust accounts in which
collections or other amounts, or the portion allocable to a class, will be
deposited if the interest payment dates for a series or class occur less than
monthly.
"Investor Default Amount" means the portion of the Defaulted Amount
allocated to the certificateholders of a series.
"IRA" means an individual retirement account.
"Michigan Tax Counsel" means Christopher A. Taravella, Esq., Vice President
and General Counsel of the seller, Michigan tax counsel to the seller and the
trust or another counsel in that office.
"Miscellaneous Payments" means, for any Collection Period, the sum of
-- Adjustment Payments and Transfer Deposit Amounts received with
respect to the Collection Period and
-- Unallocated Principal Collections on the distribution date
available to be treated as Miscellaneous Payments as described in
this prospectus under "Principal Collections for all Series".
"Monthly Payment Rate" means, for a Collection Period, the percentage
obtained by dividing Principal Collections for the Collection Period by the
daily average Pool Balance for the Collection Period.
"Monthly Servicing Fee" means, unless a related Series Supplement or
prospectus supplement states otherwise, the share of the Servicing Fee allocable
to certificateholders of any series with respect to any distribution date, which
shall generally be equal to one-twelfth of the product of
-- the Servicing Fee Rate and
-- the Invested Amount of the series as of the last day of the second
preceding Collection Period.
"Moody's" means Moody's Investors Service, Inc.
"Morgan" means Morgan Guaranty Trust Company of New York, Brussels, Belgium
office.
"New Vehicles" means
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-- current and prior model year unmiled vehicles,
-- current model year miled vehicles purchased at a closed auction
conducted by DaimlerChrysler and
-- prior model year and two year old miled vehicles.
"New Withholding Regulations" means the Treasury regulations published in
the Federal Register on October 14, 1997.
"OID" means original issue discount.
"OID regulations" means the Treasury regulations relating to OID.
"Overconcentration Amount" means the aggregate principal amount of
receivables in the trust on a distribution date which are Dealer
Overconcentrations.
"Paired Series" means a series of certificates previously issued by the
trust as to which the Accumulation Period or Controlled Amortization Period has
commenced with respect to which a series of certificates may be designated as an
Excluded Series.
"Participants" means the participating organizations of DTC which include
securities brokers and dealers, banks, trust companies and clearing corporations
and may include certain other organizations.
"Plan Assets Regulation" means the final regulation issued by DOL
concerning the definition of what constitutes the "plan assets" of Benefit
Plans.
"Pool Balance" means the aggregate amount of the principal balances of the
receivables.
"Pooling and Servicing Agreement" means the Amended and Restated Pooling
and Servicing Agreement, as amended and supplemented from time to time, among
DCWR, as seller of the receivables, DCS, as servicer of the receivables, and the
trustee.
"prime rate" means the rate designated as the "prime rate" from time to
time by certain financial institutions selected by DCS.
"principal collections" or "Principal Collections" means collections of
principal on the receivables.
"Principal Funding Account" means the trust account established for the
benefit of the certificateholders of a series in which, during the Accumulation
Period for the series, Principal Collections and other amounts allocable to the
Certificateholders' Interest of the series, which may include some Excess
Principal Collections, will be deposited.
"principal receivables" means the portion of the receivables that
represents principal.
"Principal Shortfalls" means any principal distributions to
Certificateholders of any series which are either scheduled or permitted and
which have not been covered out of principal collections and certain other
amounts allocated to the series.
"Principal Terms" means the terms of a series which, under the Pooling and
Servicing Agreement, the seller may specify, including, among other things:
-- its name or designation,
-- its initial principal amount, or method for calculating such
amount,
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-- its certificate rate, or the method for determining its
certificate rate,
-- a date on which it will begin its Accumulation Period or
Controlled Amortization Period, if any,
-- the method for allocating principal and interest to
certificateholders of such series,
-- the percentage used to calculate monthly servicing fees,
-- the issuer and terms of any Enhancement or the level of
subordination provided by the Seller's Interest,
-- the terms on which the certificates of such series may be
exchanged for certificates of another Series, be subject to
repurchase, optional redemption or mandatory redemption by the
seller or be remarketed by any remarketing agent,
-- the Series Termination Date and
-- any other terms permitted by the Pooling and Servicing Agreement.
"Rating Agency" means each rating agency designated by the seller in the
related Series Supplement in respect of any outstanding series or class.
"Registration Statement" means the registration statement, together with
all amendments and exhibits, which the seller has filed under the Securities Act
with the Commission with respect to the certificates offered pursuant to this
prospectus.
"Reinvestment Event" means, for any series, any of the events so defined in
the related Series Supplement and described in the related prospectus
supplement.
"Reinvestment Period" means, for any applicable series, the period
beginning on the day on which a Reinvestment Event has occurred and ending on
the earliest of:
-- the beginning of an Early Amortization Period with respect to the
series,
-- the recommencement of the Revolving Period in accordance with the
related Series Supplement and
-- payment in full of the outstanding principal amount of the
certificates of that series.
"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
Certificates of a series, if the related prospectus supplement so states, in
connection with a remarketing upon their purchase, in accordance with a
redemption or repayment pursuant to their terms.
"Removal and Repurchase Date" means the Determination Date on which the
removal of the Designated Accounts and the purchase of the Designated
Receivables will occur.
"Removal Commencement Date" means the Determination Date on which removal
of one or more Accounts will commence.
"Removal Date" means the Determination Date on which the Designated Balance
in a Designated Account is reduced to zero.
"Removal Notice" means a written notice furnished to the 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.
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"Removed Account" means a Designated Account as to which the seller has
stopped allocating collections of receivables and which has been deemed removed
from the trust for all purposes.
"Repurchased Receivables" means Designated Receivables which have been
deemed repurchased from the trust for all purposes.
"Required Participation Amount" means for any date an amount equal to the
sum of:
-- the sum of the amounts for each series obtained by multiplying the
Required Participation Percentage for the series by the Initial
Invested Amount for the series at that time. However, each
Excluded Series will be excluded from this calculation until the
Invested Amount of the related Paired Series is reduced to zero;
and
-- the Trust Available Subordinated Amount on the immediately
preceding Determination Date, after giving effect to the
allocations, distributions, withdrawals and deposits to be made on
the distribution date following that Determination Date.
"Required Participation Percentage" means, for a series, the required
participation percentage specified in the related Series Supplement.
"Revolving Period" means the revolving period, for the certificates of each
series and class, during which Principal Collections and other amounts otherwise
allocable to the Certificateholders' Interest of that series or class will be
-- paid to the seller,
-- deposited to the Excess Funding Account, if any, for that series
or
-- distributed to, or for the benefit of, the certificateholders of
other classes or series,
A Revolving Period for a series will begin on the Series Cut-off Date and
end on the earlier of:
-- the day immediately before the Accumulation Period commencement
date or the controlled amortization period commencement date for
the series and
-- the day immediately before the day on which an Early Amortization
Event or a Reinvestment Event occurs with respect to the series.
"RPA seller" means DCS, as seller, together with its predecessors as
appropriate, under the Receivables Purchase Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller's Certificate" means the certificate evidencing the Seller's
Interest.
"Seller's Participation Amount" means the Pool Balance minus the aggregate
Invested Amounts for all outstanding series.
"Series Allocable Defaulted Amount" means, with respect to any series of
certificates for any Collection Period, the product of the Series Allocation
Percentage for the series and the amount of the Defaulted Amount with respect to
the Collection Period.
"Series Allocable Interest Collections" means, with respect to any series
of certificates for any Collection Period, the product of the Series Allocation
Percentage for the series and the amount of Interest Collections, with respect
to the Collection Period.
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"Series Allocable Miscellaneous Payments" means, with respect to any series
of certificates for any Collection Period, the product of the Series Allocation
Percentage for the series and the amount of Miscellaneous Payments, with respect
to the Collection Period.
"Series Allocable Principal Collections" means, with respect to any series
of certificates for any Collection Period, the product of the Series Allocation
Percentage for the series and the amount of Principal Collections, with respect
to the Collection Period.
"Series Allocation Percentage" means, with respect to a series for any
Collection Period, the percentage equivalent of a fraction, the numerator of
which is the Adjusted Invested Amount of the series as of the last day of the
immediately preceding Collection Period and the denominator of which is the
Trust Adjusted Invested Amount as of that last day.
"Series Cut-off Date" means, for a series, the date stated in the related
prospectus supplement on which a revolving period for the series will begin.
"Series Issuance Date" means the date of issuance of any series.
"Series Termination Date" means, for any series, the date stated in the
related prospectus supplement, on which the last payment of principal and
interest on any series of certificates will be due and payable, if not
previously paid.
"Service Default" means any of the following events:
-- failure by the servicer to make any payment, transfer or deposit,
or to give instructions to the trustee to make any payment,
transfer or deposit, on the date the servicer is required to do so
under the Pooling and Servicing Agreement, which is not cured
within a five business day grace period;
-- failure by the servicer duly to observe or perform any other
covenants or agreements of the servicer in the Pooling and
Servicing Agreement which failure has a materially adverse effect
on the certificateholders of any outstanding series and which
continues unremedied for a period of 30 days after the date
written notice of the failure shall have been given to the
servicer by the trustee,
-- the servicer delegates its duties under the Pooling and Servicing
Agreement, except as specifically permitted thereunder;
-- any representation, warranty or certification made by the servicer
in the Pooling and Servicing Agreement or in any certificate
delivered pursuant to the Pooling and Servicing Agreement proves
to have been incorrect in any material respect when made, has a
materially adverse effect on the rights of the certificateholders
of any outstanding Series, and which materially adverse effect
continues for a period of 60 days after written notice of that
fact shall have been given to the servicer by the trustee; or
-- events of bankruptcy, insolvency or receivership occur with
respect to the servicer.
Notwithstanding the foregoing, a delay in or failure of performance
referred to under the first clause for a period of ten business days or referred
to under the second, third or fourth clauses for a period of 60 business days,
shall not constitute a Service Default if the delay or failure was caused by an
act of God or other similar occurrence.
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"Service Transfer" means, in the event of any Service Default, an action by
the trustee, by written notice to the servicer, terminating all of the rights
and obligations of the servicer, as servicer, under the Pooling and Servicing
Agreement and in and to the receivables and the proceeds thereof and appointing
a new servicer.
"servicer" means DCS or any successor servicer.
"Servicing Fee" means a monthly servicing fee which constitutes the
servicer's compensation with respect to the certificates of a series for its
servicing activities and reimbursement for its expenses, unless the related
Series Supplement or prospectus supplement states otherwise.
"Servicing Fee Rate" means, for a series, the servicing fee rate set forth
in the related Series Supplement.
"Special Payment Date" means, during an Early Amortization Period for a
series, each distribution date beginning with the distribution date following
the Collection Period in which the Early Amortization Period begins.
"Standard & Poor's" means Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies.
"Supplemental Certificate" means a certificate for which the seller may,
from time to time, exchange a portion of the Seller's Certificate for transfer
or assignment to a person or entity chosen by the seller upon the execution and
delivery of a supplement to the Pooling and Servicing Agreement, if
-- 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,
-- the seller shall have delivered to the trustee, the Rating
Agencies and any Enhancement provider a Tax Opinion with respect
to the exchange and
-- the seller shall have delivered to the trustee written
confirmation from the applicable Rating Agencies that the exchange
will not result in a reduction or withdrawal of the rating of any
outstanding series or class of certificates. Any later transfer or
assignment of a Supplemental Certificate is also subject to the
second and third conditions described in the preceding sentence.
"Tax Counsel" means Sidley Austin Brown & Wood LLP, special federal income
tax counsel to the seller and the trust.
"Tax Opinion" means an opinion of counsel to the effect that, for federal
income and Michigan income and single business tax purposes,
-- such action, other than some specified actions, will not adversely
affect the characterization of the certificates of any outstanding
series or class as debt of the seller and
-- the issuance will not cause a taxable event to any
certificateholders.
"Terms and Conditions" means, collectively, the Terms and Conditions
Governing Use of Euroclear and the related Operative Procedures of the Euroclear
System, and applicable Belgian law.
"Transfer Date" means 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.
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"Transfer Deposit Amount" means, for any Determination Date, the amount by
which the Seller's Participation Amount would be less than the Trust Available
Subordinated Amount, after giving effect to the allocations, distributions,
withdrawals and deposits to be made on that distribution date, following a
deduction by the servicer of the principal balance of a receivable from the Pool
Balance.
"trust" means CARCO Auto Loan Master Trust.
"Trust Adjusted Invested Amount" means with respect to any Collection
Period, the sum of the Adjusted Invested Amounts for all outstanding series.
"Trust Available Subordinated Amount" means the aggregate Available
Subordinated Amounts for all outstanding series.
"U.S. Wholesale Portfolio" means the accounts of domestic dealers financed
and serviced by DCS.
"UCC" means the Uniform Commercial Code.
"Unallocated Principal Collections" means any amount of Principal
Collections which are held unallocated.
"USA" means U.S. Auto Receivables Company.
"Used Vehicles" means previously owned vehicles, other than current model
year miled vehicles purchased at a closed auction conducted by DaimlerChrysler
and prior model year and two year old miled vehicles.
92
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT
AND TAX DOCUMENTATION PROCEDURES
Except in limited circumstances, we will make available the globally
offered certificates (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 Citibank, N.A. ("CITIBANK") and Morgan
Guaranty Trust Company of New York ("MORGAN") as the respective depositaries of
Clearstream and Euroclear and as participants in DTC.
Non-U.S. holders of Global Securities will be exempt from U.S. withholding
taxes if those holders meet requirements and deliver appropriate U.S. tax
documents to the securities clearing organizations or their participants.
INITIAL SETTLEMENT
DTC, in the name of Cede & Co. as nominee of DTC, will hold all Global
Securities in book-entry form. Financial institutions acting on the behalf of
investors as direct and indirect participants in DTC will represent those
investors' interests in the Global Securities. As a result, Clearstream and
Euroclear will hold positions on behalf of their participants through their
respective depositaries, Citibank and Morgan, which in turn will hold those
positions in accounts as participants of DTC.
Investors electing to hold their Global Securities through DTC will follow
the settlement practices applicable to securities previously issued by the
trust. DTC will credit investor securities custody accounts with their holdings
against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Clearstream or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Clearstream or Euroclear will credit
Global Securities to the securities custody accounts on the settlement date
against payment in same-day funds.
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SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that purchasers and sellers can settle on the
desired value date.
Trading between DTC participants. DTC participants will settle secondary
market trades between each other using the procedures applicable to securities
previously issued by the trust in same-day funds.
Trading between Clearstream and/or participants. Clearstream participants
and/or Euroclear participants will settle secondary market trades between each
other using the procedures applicable to conventional eurobonds in same-day
funds.
Trading between DTC seller and Clearstream or Euroclear purchaser. When a
DTC participant desires to transfer Global Securities from its account to the
account of a Clearstream participant or a Euroclear participant the purchaser
will send instructions to Clearstream or Euroclear through a participant at
least one business day prior to settlement. Clearstream or Euroclear will
instruct Citibank or Morgan, respectively, as the case may be, to receive the
Global Securities against payment. Payment will include interest accrued on the
Global Securities from and including the last coupon payment date to and
excluding the settlement date. For transactions settling on the 31st day of the
month, payment will include interest accrued to and excluding the first day of
the following month. Citibank or Morgan will then make payment to the DTC
participant's account against delivery of the Global Securities. After
settlement has been completed, the respective clearing system will credit the
Global Securities to its system and, in accordance with its usual procedures, to
the Clearstream participant's or Euroclear participant's account. The Global
Securities credit will appear the next day, European time, and the cash debit
will be back-valued to, and the interest on the Global Securities will accrue
from, the value date, which would be the preceding day when settlement occurred
in New York. If settlement is not completed on the intended value date, i.e.,
the trade fails, the Clearstream or Euroclear cash debit will be valued instead
as of the actual settlement date.
Clearstream participants and Euroclear participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. They may do so the most directly by prepositioning
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Clearstream or Euroclear. Under
this approach, they may take on credit exposure to Clearstream or Euroclear
until the Global Securities are credited to their accounts one day later.
As an alternative, if Clearstream or Euroclear has extended a line of
credit to them, participants can elect not to preposition funds and allow that
credit line to be drawn upon to finance settlement. Under this procedure,
Clearstream participants or Euroclear participants purchasing Global Securities
would incur overdraft charges for one day, assuming they cleared the overdraft
when the Global Securities were credited to their accounts. However, interest on
the Global Securities would accrue from the value date. Therefore, in many cases
the investment income on the Global Securities earned during that one-day period
may substantially reduce or offset the amount of the overdraft charges, although
this result will depend on each participant's particular cost of funds.
A-2
Since the settlement is taking place during New York business hours, DTC
participants can employ their usual procedures for sending Global Securities to
Citibank or Morgan 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 Citibank or Morgan,
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 Citibank or Morgan, as
appropriate, to deliver the bonds to the DTC participant's account against
payment. Payment will include interest accrued on the Global Securities from and
including the last coupon payment date to and excluding the settlement date. For
transactions settling on the 31st day of the month, payment will include
interest accrued to and excluding the first day of the following month.
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:
-- 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;
-- 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
-- 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
A-3
registered debt issued by U.S. persons, unless the holder takes one of the
following steps to obtain an exemption or reduced tax rate:
-- Exemption for non-U.S. persons (Form W-8BEN). Non-U.S. persons
that are beneficial owners can obtain a complete exemption from
the withholding tax by filing a signed Form W-8BEN (Certificate of
Foreign Status).
-- Exemption for non-U.S. persons with effectively connected income
(Form W-8ECI). A non-U.S. person, including a non-U.S.
corporation or bank with a U.S. branch, for which the interest
income is effectively connected with its conduct of a trade or
business in the United States, can obtain an exemption from the
withholding tax by filing Form W-8ECI (Exemption from Withholding
of Tax on Income Effectively Connected with the Conduct of a Trade
or Business in the United States).
-- Exemption or reduced rate for non-U.S. persons resident in treaty
countries (Form W-8BEN). Non-U.S. persons that are beneficial
owners residing in a country that has a tax treaty with the United
States can obtain an exemption or reduced tax rate, depending on
the treaty terms, by filing Form W-8BEN (Certificate of Foreign
Status of Beneficial Owner for United States Tax Withholding).
-- Exemption for U.S. persons (Form W-9). U.S. persons can obtain a
complete exemption from the withholding tax by filing Form W-9
(Request for Taxpayer Identification Number and Certification).
-- U.S. Federal Income Tax Reporting Procedure. The Global Security
holder, or in the case of a Form 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
and Form W-8ECI are effective for three calendar years.
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.
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No dealer, salesman or other person has been authorized to give any
information or to make any representations, other than those contained in the
prospectus or prospectus supplement. Any information or representations, other
than those contained in the prospectus or prospectus supplement, are not
authorized by the seller or by the underwriter. Do not rely on any information
or representations other than those contained in the prospectus or prospectus
supplement.
We only intend the prospectus supplement to be an offer to sell or a
solicitation of any offer to buy the offered securities if:
-- used in jurisdictions in which the offer or solicitation is
authorized,
-- the person making the offer or solicitation is qualified to do so,
and
-- 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.
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[DAIMLERCHRYSLER LOGO]
CARCO
AUTO LOAN
MASTER TRUST
$1,000,000,000
FLOATING RATE AUTO LOAN
ASSET BACKED CERTIFICATES,
SERIES 2001-A,
DUE NOVEMBER 15, 2006
DAIMLERCHRYSLER WHOLESALE
RECEIVABLES LLC
SELLER
DAIMLERCHRYSLER SERVICES
NORTH AMERICA LLC
SERVICER
PROSPECTUS SUPPLEMENT
SALOMON SMITH BARNEY
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