Filed Pursuant to Rule 424(b)(5)
Registration Statement No. 333-73570-01
[DAIMLERCHRYSLER LOGO]
Prospectus Supplement
To Prospectus dated November 19, 2002
$1,000,000,000
DAIMLERCHRYSLER MASTER OWNER TRUST
Issuer
FLOATING RATE AUTO DEALER LOAN ASSET BACKED NOTES, SERIES 2002-B,
DUE NOVEMBER 15, 2007
DAIMLERCHRYSLER WHOLESALE RECEIVABLES LLC, Seller
DAIMLERCHRYSLER SERVICES NORTH AMERICA LLC, Servicer
BEFORE YOU DECIDE TO INVEST IN THE SERIES 2002-B NOTES, PLEASE READ THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS, ESPECIALLY THE RISK FACTORS BEGINNING
ON PAGE S-9 OF THIS PROSPECTUS SUPPLEMENT AND PAGE 5 OF THE PROSPECTUS.
The Series 2002-B notes are obligations of the issuer only and do not represent
interests in or obligations of the CARCO receivables trust, DaimlerChrysler AG,
DaimlerChrysler Wholesale Receivables LLC, DaimlerChrysler Services North
America LLC or any of their affiliates.
<Table>
Principal amount............... $1,000,000,000
Per annum interest rate........ one-month LIBOR
plus 0.035%
Expected principal payment
date......................... November 15, 2005
Legal final.................... November 15, 2007
Proceeds to seller............. $1,000,000,000 100.0%
</Table>
The underwriter will purchase the Series 2002-B notes 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 $550,000.
The issuer will pay interest on the Series 2002-B notes on the 15th day of each
month. The first payment date will be December 16, 2002.
We will deliver the Series 2002-B notes in book-entry form only on or about
November 26, 2002.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the Series 2002-B notes 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 NOVEMBER 19, 2002.
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 prospectus
supplement and the prospectus. We have not authorized anyone to provide you with
different information.
We suggest you read this prospectus supplement and the prospectus. The
prospectus supplement pages begin with "S." If the terms of the offered
securities described in this prospectus supplement vary with the accompanying
prospectus, you should rely on the information in this prospectus supplement.
We include cross-references to sections in these documents where you can
find further related discussions. Refer to the table of contents on page S-3 in
this document and on pages iv and v 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
- ---------------------------------------------
-- Stated Principal Amount;
Nominal Liquidation Amount S-4
- ---------------------------------------------
-- Series Issuance Date S-5
- ---------------------------------------------
-- Series Cut-Off Date S-5
- ---------------------------------------------
-- Collateral Certificate S-5
- ---------------------------------------------
-- Terms of the Series 2002-B
Notes S-5
- ---------------------------------------------
-- Legal Final S-5
- ---------------------------------------------
-- Revolving Period S-5
- ---------------------------------------------
-- Accumulation Period S-6
- ---------------------------------------------
-- Early Redemption Period S-6
- ---------------------------------------------
-- Credit Enhancement S-6
- ---------------------------------------------
-- Excess Principal Collections S-7
- ---------------------------------------------
-- Monthly Servicing Fee S-7
- ---------------------------------------------
-- Optional Redemption S-7
- ---------------------------------------------
-- Other Series of Notes and
Certificates S-7
- ---------------------------------------------
-- ERISA Considerations S-7
- ---------------------------------------------
-- Tax Status S-7
- ---------------------------------------------
-- Note Ratings S-7
- ---------------------------------------------
-- Risk Factors S-8
- ---------------------------------------------
-- Notes Not Listed on any
Exchange S-8
- ---------------------------------------------
RISK FACTORS S-9
- ---------------------------------------------
-- Only some of the assets of the
issuer will be available to
make payments on the Series
2002-B notes S-9
- ---------------------------------------------
-- The timing of principal
payments may not be as
expected S-10
- ---------------------------------------------
-- Credit enhancement is limited
and may be reduced S-11
- ---------------------------------------------
-- The CARCO receivables trust
and the issuer are dependent
on DCS and DaimlerChrysler S-11
- ---------------------------------------------
-- Your ability to resell notes
is limited S-11
- ---------------------------------------------
GLOSSARY S-11
- ---------------------------------------------
USE OF PROCEEDS S-12
- ---------------------------------------------
THE DEALER FLOORPLAN FINANCING
BUSINESS S-12
- ---------------------------------------------
</Table>
<Table>
<Caption>
- ---------------------------------------------
SECTION PAGE
- ---------------------------------------------
THE ACCOUNTS S-14
- ---------------------------------------------
DCS'S PERFORMANCE HISTORY S-15
- ---------------------------------------------
-- Loss Experience S-15
- ---------------------------------------------
-- Aging Experience S-16
- ---------------------------------------------
-- Geographic Distribution S-17
- ---------------------------------------------
MATURITY AND PRINCIPAL PAYMENT
CONSIDERATIONS S-18
- ---------------------------------------------
SERIES PROVISIONS S-19
- ---------------------------------------------
-- General S-19
- ---------------------------------------------
-- Interest S-20
- ---------------------------------------------
-- Principal S-21
- ---------------------------------------------
-- Excess Funding Account S-24
- ---------------------------------------------
-- Optional Redemption by the
Issuer S-24
- ---------------------------------------------
DEPOSIT AND APPLICATION OF FUNDS S-25
- ---------------------------------------------
-- Application of Available
Amounts Allocated to Series
2002-B S-25
- ---------------------------------------------
-- Reduction and Reinstatement of
Nominal Liquidation Amounts S-27
- ---------------------------------------------
-- Reductions S-28
- ---------------------------------------------
-- Reinstatements S-29
- ---------------------------------------------
-- Series 2002-B
Overcollateralization Amount S-29
- ---------------------------------------------
-- Allocation Percentages S-30
- ---------------------------------------------
-- Required Participation
Percentage S-31
- ---------------------------------------------
-- Sale of Receivables S-32
- ---------------------------------------------
-- Final Payment of the Series
2002-B Notes S-33
- ---------------------------------------------
-- Shared Excess Available
Interest Amounts S-34
- ---------------------------------------------
-- Shared Excess Available
Principal Amounts S-34
- ---------------------------------------------
-- Early Redemption Events S-34
- ---------------------------------------------
UNDERWRITING S-37
- ---------------------------------------------
LEGAL MATTERS S-37
- ---------------------------------------------
NOTE RATINGS S-37
- ---------------------------------------------
GLOSSARY OF PRINCIPAL TERMS FOR
PROSPECTUS SUPPLEMENT S-38
- ---------------------------------------------
OTHER SERIES OF NOTES A-I-1
- ---------------------------------------------
SERIES OF INVESTOR CERTIFICATES
ISSUED BY THE CARCO RECEIVABLES
TRUST A-II-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 2002-B notes following this summary and in the prospectus.
PARTIES
<Table>
<Caption>
- ---------------------------------------------------------
PARTY DESCRIPTION
- ---------------------------------------------------------
Issuer - DaimlerChrysler Master Owner Trust (the
"ISSUER")
- ---------------------------------------------------------
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 Inkster Road, Farmington Hills,
Michigan 48334, and its telephone number
is (248) 427-2625
- ---------------------------------------------------------
Servicer - DCS, a wholly owned subsidiary of
DaimlerChrysler Corporation
("DAIMLERCHRYSLER")
- ---------------------------------------------------------
Indenture - The Bank of New York
Trustee
- ---------------------------------------------------------
Owner - Chase Manhattan Bank USA, National
Trustee Association
for
Issuer
- ---------------------------------------------------------
CARCO - CARCO Auto Loan Master Trust (the "CARCO
Receivables RECEIVABLES TRUST")
Trust - Owns the receivables and has issued the
collateral certificate to the issuer
- ---------------------------------------------------------
</Table>
TITLE OF SECURITIES
Floating Rate Auto Dealer Loan Asset Backed Notes, Series 2002-B (the
"SERIES 2002-B NOTES").
STATED PRINCIPAL AMOUNT; NOMINAL LIQUIDATION AMOUNT
<Table>
- --------------------------------------------
Stated Principal Amount
of Series 2002-B
notes.................. $1,000,000,000
Initial nominal
liquidation amount of
Series 2002-B notes.... $1,000,000,000
Initial Series 2002-B
overcollateralization
amount................. $ 98,901,099
Initial Series 2002-B
nominal liquidation
amount................. $1,098,901,099
- --------------------------------------------
</Table>
-- The Series 2002-B nominal liquidation amount will
equal the portion of the invested amount of the
collateral certificate allocated to Series 2002-B.
The Series 2002-B notes are secured only by that
portion of the collateral certificate that
corresponds to the Series 2002-B nominal liquidation
amount. The Series 2002-B nominal liquidation amount
will be equal to the sum of (i) the nominal
liquidation amount of the Series 2002-B notes
(initially, $1,000,000,000) and (ii) the Series
2002-B overcollateralization amount (initially,
$98,901,099). The Series 2002-B nominal liquidation
amount, the nominal liquidation amount of the Series
2002-B notes and the Series 2002-B
overcollateralization amount will be subject to
reduction and reinstatement as described in this
prospectus supplement under "Deposit and Application
of Funds -- Reduction and Reinstatement of Nominal
Liquidation Amounts."
S-4
SERIES ISSUANCE DATE
-- November 26, 2002.
SERIES CUT-OFF DATE
-- October 31, 2002.
COLLATERAL CERTIFICATE
The collateral certificate is an investor certificate issued by the CARCO
receivables trust and represents an allocable interest in a pool of receivables
arising from revolving floorplan financing agreements of selected motor vehicle
dealers. The issuer's primary source of funds to make payments on the Series
2002-B notes will be the distributions received on the collateral certificate.
However, only the portion of those distributions that are allocated to Series
2002-B as described in this prospectus supplement will be available to make
payments on the Series 2002-B notes. The Series 2002-B noteholders will not have
any recourse to any other assets of the issuer or any other person for payments
on the Series 2002-B notes. Distributions on the collateral certificate that are
allocated to other series of notes will only be available to make payments on
the Series 2002-B notes under the limited circumstances described in this
prospectus supplement and the prospectus. See "DaimlerChrysler Wholesale
Receivables LLC and the CARCO Receivables Trust" and "Description of the
Investor Certificates Issued by the CARCO Receivables Trust" in the prospectus.
TERMS OF THE SERIES 2002-B NOTES
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 December 16,
2002.
PER ANNUM INTEREST RATE
-- 0.035% above one-month LIBOR (calculated as described herein).
Interest will be calculated on the basis of the actual number of days
in the applicable interest period divided by 360.
INTEREST PERIODS
-- Each period from and including a payment date to but excluding the
following payment date, except that the first interest period will be
from and including the Series 2002-B issuance date to but excluding
the first payment date.
PRINCIPAL PAYMENTS
-- We expect to pay the principal of the Series 2002-B notes (but only
to the extent of the outstanding nominal liquidation amount of the
Series 2002-B notes) in full on November 15, 2005.
-- However, under some circumstances we may pay principal earlier or
later or in reduced amounts. See "Maturity and Principal Payment
Considerations" in this prospectus supplement.
LEGAL FINAL
We will be obligated to pay the principal amount of the Series 2002-B notes
(but only to the extent of the outstanding nominal liquidation amount of the
Series 2002-B notes), to the extent not previously paid, by November 15, 2007.
REVOLVING PERIOD
During the revolving period, we will not pay principal on the Series 2002-B
notes or accumulate principal for that purpose. Instead, we will use the Series
2002-B share of available principal amounts to make principal payments on other
series and/or pay them to the issuer to maintain the interest in the CARCO
receivables trust evidenced by the collateral certificate. The revolving period
will begin at the close of business on the Series 2002-B cut-off date and will
end when the accumulation period begins. The revolving period will also end if
an early redemption period begins.
S-5
ACCUMULATION PERIOD
We will accumulate principal for the Series 2002-B notes during an
accumulation period of no more than five months long unless an early redemption
period that is not terminated begins before the start of the accumulation
period. The latest date on which the accumulation period will commence is
October 1, 2005. During the accumulation period we will accumulate the Series
2002-B share of principal collections for payment on November 15, 2005. See
"Series Provisions -- Principal" in this prospectus supplement.
EARLY REDEMPTION PERIOD
If an early redemption event occurs and is not cured, you will begin to
receive payments of principal. We refer to this period after the occurrence of
an early redemption event as the early redemption period. Early redemption
events are events that might adversely affect the issuer's ability to make
payments on the Series 2002-B notes as originally expected. See "Description of
the Investor Certificates Issued by the CARCO Receivables Trust -- Reinvestment
Events and Early Amortization Events" in the prospectus and "Deposit and
Application of Funds -- Early Redemption Events" in this prospectus supplement
for a description of the events that might cause an early redemption period to
start.
CREDIT ENHANCEMENT
SERIES 2002-B OVERCOLLATERALIZATION AMOUNT
-- On the Series 2002-B cut-off date, the portion of the collateral
certificate allocable to Series 2002-B will equal $1,098,901,099 and
will exceed the outstanding dollar principal amount of the Series
2002-B notes by $98,901,099. The amount of that excess is the initial
Series 2002-B overcollateralization amount. This
overcollateralization amount is intended to protect the Series 2002-B
noteholders from the effect of charge-offs on defaulted receivables
in the CARCO receivables trust that are allocated to Series 2002-B
and any use of available principal amounts to pay interest on the
Series 2002-B notes.
-- The Series 2002-B overcollateralization amount will equal the sum of
(i) 9.89% of the nominal liquidation amount of the Series 2002-B
notes and (ii) the incremental overcollateralization amount, which is
based on the amount of ineligible receivables and dealer
overconcentration amounts in the CARCO receivables trust. The amount
in clause (ii) may fluctuate from time to time.
-- We will allocate distributions on the collateral certificate to
Series 2002-B on the basis of the sum of the nominal liquidation
amount of the Series 2002-B notes and the Series 2002-B
overcollateralization amount. The Series 2002-B overcollateralization
amount will be reduced by:
-- reallocations of available principal amounts otherwise
allocable to the Series 2002-B over-collateralization
amount to pay interest on the Series 2002-B notes; and
-- charge-offs resulting from uncovered defaults on
receivables in the CARCO receivables trust allocated to
Series 2002-B.
Reductions in the Series 2002-B overcollateralization amount will result in
a reduced amount of distributions on the collateral certificate that are
available to make payments on the Series 2002-B notes. If the Series 2002-B
overcollateralization amount is reduced to zero, then those reallocations and
charge-offs will instead
S-6
reduce the nominal liquidation amount of the Series 2002-B notes and you may
incur a loss on your Series 2002-B notes.
EXCESS PRINCIPAL COLLECTIONS
Principal collections allocable to other series of notes, to the extent not
needed to make payments in respect of the other series, will be applied to make
principal payments in respect of the Series 2002-B notes and of other series of
notes then entitled to principal payments.
MONTHLY SERVICING FEE
The monthly servicing fee is the product of 1/12 of 1.0% times the
applicable nominal liquidation amount of the Series 2002-B notes, or less if the
servicer waives any portion of the monthly servicing fee on any date. The annual
Servicing Fee Rate is 1.0%.
OPTIONAL REDEMPTION
The servicer may cause the issuer to redeem the Series 2002-B notes on any
day on or after the day on which the nominal liquidation amount of the Series
2002-B notes is reduced to $100,000,000 or less.
OTHER SERIES OF NOTES AND CERTIFICATES
The issuer has previously issued a series of notes, referred to as the
Floating Rate Auto Dealer Loan Asset Backed Notes, Series 2002-A, and may issue
additional series of notes. A summary of this prior series of notes is contained
in "Other Series of Notes" at the end of this prospectus supplement. The CARCO
receivables trust has previously issued several series of investor certificates
and may issue additional series of investor certificates. A summary of each
series of investor certificates (other than the collateral certificate)
currently outstanding is contained in "Series of Investor Certificates Issued by
the CARCO Receivables Trust" at the end of this prospectus supplement.
ERISA CONSIDERATIONS
It is expected that the Series 2002-B notes will be eligible for purchase
by employee benefit plans. However, plans contemplating the purchase of Series
2002-B notes should consult their counsel before making a purchase. See "ERISA
Considerations" in the prospectus.
TAX STATUS
Sidley Austin Brown & Wood LLP, as special U.S. federal tax counsel to the
issuer, is of the opinion that at the time of initial issuance of the Series
2002-B notes for federal income tax purposes:
-- the Series 2002-B notes will be characterized as debt; and
-- the issuer will not be classified as an association, or a publicly
traded partnership, taxable as a corporation.
By your acceptance of a Series 2002-B note, you will agree to treat your
Series 2002-B notes as indebtedness for federal, state and local income and
franchise tax purposes and Michigan single business tax purposes. See "Tax
Matters" in the prospectus for additional information concerning the application
of federal tax laws.
NOTE RATINGS
The issuer will issue the Series 2002-B notes only if they are rated at the
time of issuance in the highest long-term rating category by at least one
nationally recognized rating agency.
The rating agencies and their ratings only address the likelihood that you
will timely receive your interest payments and you will ultimately receive all
of your required principal payments by the legal final. The rating agencies and
their ratings do not address the likelihood you will receive principal payments
on a scheduled date or whether you will receive any principal on the
S-7
Series 2002-B notes prior to or after the expected principal payment date.
RISK FACTORS
An investment in Series 2002-B notes involves material risks. See "Risk
Factors" in this prospectus supplement and the prospectus.
NOTES NOT LISTED ON ANY EXCHANGE
The Series 2002-B notes will not be listed on an exchange or quoted in an
automated quotation system of a registered securities association. See "Risk
Factors -- Your ability to resell notes is limited" in this prospectus
supplement or the prospectus.
S-8
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 2002-B notes.
ONLY SOME OF THE ASSETS OF THE ISSUER WILL BE AVAILABLE TO MAKE PAYMENTS ON
THE SERIES 2002-B NOTES.
THE SOURCE OF FUNDS FOR
PAYMENTS ON THE NOTES IS
LIMITED: -- The sole source of payment of principal of
or interest on the Series 2002-B notes
will be the portion of the available
principal amounts and available interest
amounts allocated to Series 2002-B. As a
result, you must rely only on the
particular assets allocated as security
for the Series 2002-B notes for payment of
the principal of and interest on the
Series 2002-B notes. You will not have
recourse to any other assets of the issuer
or any other person for payment of your
notes. See "Deposit and Application of
Funds" in this prospectus supplement. If
the interest rates charged on the
receivables decline, the available
interest amounts allocable to Series
2002-B might be reduced at a time when the
interest rate on the Series 2002-B notes
is not declining. Conversely, the interest
rate on the Series 2002-B notes could
increase at a time when the interest rates
on the receivables are declining. Either
situation could result in the use of
available principal amounts allocable to
Series 2002-B to pay interest on the
Series 2002-B notes. If the
overcollateralization amount is not
sufficient to mitigate the effect of such
a change in rates, this could result in
delayed or reduced principal and interest
payments to you.
Also, following a sale of receivables due
to the insolvency of DCS or Daimler
Chrysler, an acceleration of the notes
following an event of default, or on the
legal final, as described in "Deposit and
Application of Funds -- Sale of
Receivables" in this prospectus supplement
and "Sources of Funds to Pay the
Notes -- Sale of Receivables" in the
prospectus, only the proceeds of that sale
allocable to the Series 2002-B notes will
be available to make payments on the
Series 2002-B notes. If the amount of
those proceeds is not enough, you will
incur a loss on your notes.
-- Available principal amounts allocable to
Series 2002-B may be reallocated to pay
interest on the Series 2002-B notes to the
extent that available interest amounts
allocable to Series 2002-B are
insufficient to make such interest
payments. Also, charge-offs of defaulted
receivables in the CARCO receivables trust
allocated to
S-9
Series 2002-B are generally first applied
against the Series 2002-B
overcollateralization amount and, if the
Series 2002-B overcollateralization amount
has been reduced to zero, then applied to
the nominal liquidation amount of the
Series 2002-B notes. If these
reallocations and charge-offs that are
allocated to the nominal liquidation
amount of the Series 2002-B notes are not
reimbursed from excess available funds,
the full stated principal amount of the
Series 2002-B notes will not be repaid.
See "The Notes -- Stated Principal Amount,
Outstanding Dollar Principal Amount and
Nominal Liquidation Amount of Notes --
Nominal Liquidation Amount" in the
prospectus and "Deposit and Application of
Funds -- Reduction and Reinstatement of
Nominal Liquidation Amounts" in this
prospectus supplement.
THE TIMING OF PRINCIPAL PAYMENTS MAY NOT BE AS EXPECTED. Several factors
will have an effect on the amount and timing of principal payments on the Series
2002-B notes. Some of those factors are described below.
YOU MAY NOT RECEIVE YOUR
PRINCIPAL ON THE SERIES 2002-B
EXPECTED PRINCIPAL 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 2002-B notes by their expected
principal payment date will depend on
available principal amounts from other
series of notes, which in turn depend on
the available principal amounts allocable
to the collateral certificate. A series
from which principal amounts are expected
to be available to make payments on the
Series 2002-B notes may enter an early
redemption period before the Series 2002-B
expected principal payment date. Available
principal amounts allocable to that series
will not be available to pay principal of
the Series 2002-B notes. As a result, you
may receive some of your principal later
than the Series 2002-B expected principal
payment date. On written request, the
seller will give you disclosure documents
relating to the other outstanding series
of notes issued by the issuer and the
outstanding series of investor
certificates issued by the CARCO
receivables trust. Those documents
describe the events which could result in
the start of an early redemption period or
early amortization period, as applicable,
for those series.
IF AN EARLY REDEMPTION 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 redemption 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
redemption of the Series 2002-B notes. If
the balance of the receivables in the
CARCO receivables trust is not maintained
at a specified level,
S-10
DCS must designate additional accounts,
the receivables of which will be sold to
the seller. The seller will be required to
transfer those receivables to the CARCO
receivables trust. If additional accounts
are not designated by DCS when required,
an early redemption event will occur.
-- If a bankruptcy event relating to DCS or
DaimlerChrysler were to occur, an early
redemption event would occur. In that case
additional receivables would not be
transferred to the CARCO receivables trust
and principal payments on the Series
2002-B notes would commence.
See "The Dealer Floorplan Financing Business" in the prospectus and
"Maturity and Principal Payment Considerations" and "Deposit and Application of
Funds -- Early Redemption Events" in this prospectus supplement for more
information about the timing of payments on the Series 2002-B notes.
CREDIT ENHANCEMENT IS LIMITED AND MAY BE REDUCED. AS THE CREDIT ENHANCEMENT
IS REDUCED, YOU ARE MORE LIKELY TO INCUR LOSSES AND TO RECEIVE YOUR PRINCIPAL
EARLIER OR LATER THAN YOU EXPECTED. Credit enhancement of the Series 2002-B
notes will be provided by the Series 2002-B overcollateralization amount as
described in this prospectus supplement. The amount of such credit enhancement
is limited and may be reduced from time to time. See "Deposit and Application of
Funds -- Series 2002-B Overcollateralization Amount" for more information about
the credit enhancement for the Series 2002-B notes.
THE CARCO RECEIVABLES TRUST AND THE ISSUER ARE DEPENDENT ON DCS AND
DAIMLERCHRYSLER. The CARCO receivables trust, and therefore the issuer, are
completely dependent upon DCS for the generation of new receivables. The ability
of DCS to generate receivables is in turn dependent to a large extent on the
sales of automobiles and light duty trucks manufactured or distributed by
DaimlerChrysler. Several factors will have an effect on that dependence. If DCS
does not generate sufficient receivables, an early redemption event may occur.
YOUR ABILITY TO RESELL NOTES IS LIMITED. There may be no secondary market
for your notes. The underwriter may participate in making a secondary market in
the Series 2002-B notes, but are under no obligation to do so. We cannot assure
you that a secondary market will develop. If a secondary market does develop, we
cannot assure you that it will continue or that you will be able to resell your
notes. Also, your notes will not be listed on any securities exchange or quoted
in the automated quotation system of any registered securities association. As a
result, you will not have the liquidity that might be provided by that kind of
listing or quotation.
GLOSSARY
You can find a "Glossary of Principal Terms for Prospectus Supplement"
beginning on page S-38 in this prospectus supplement.
S-11
USE OF PROCEEDS
From the net proceeds of the Series 2002-B notes, we will pay
$1,000,000,000 to DCWR. DCWR will use the proceeds to purchase receivables from
DCS or to repay amounts previously borrowed to purchase receivables. DCS will
use the portion of the proceeds paid to it for general corporate purposes.
THE DEALER FLOORPLAN FINANCING BUSINESS
You can read about the dealer floorplan financing business under "The
Dealer Floorplan Financing Business" in the prospectus. The receivables sold to
the CARCO receivables trust were or will be selected from extensions of credit
and advances made by DaimlerChrysler and DCS to approximately 3,120 domestic
motor vehicle dealers.
-- DCS financed 56.9% of the total number of all
DaimlerChrysler-franchised dealers as of September 30, 2002.
-- As of September 30, 2002, approximately 44.7% of the dealers to
which DCS had extended credit lines were
DaimlerChrysler-franchised dealers that operated only
DaimlerChrysler franchises, approximately 38.9% were
DaimlerChrysler-franchised dealers that also operated
non-DaimlerChrysler franchises and approximately 16.4% were
non-DaimlerChrysler dealers.
-- As of September 30, 2002, the balance of principal receivables in
the U.S. Wholesale Portfolio was approximately $10.4 billion.
-- DCS currently services the U.S. Wholesale Portfolio through its
home office and through a network of five Chrysler Financial
business centers and three Mercedes-Benz regional offices located
throughout the United States.
-- As of September 30, 2002, the average credit lines per dealer in
the U.S. Wholesale Portfolio for new and used vehicles (which
includes Auction Vehicles as used vehicles) were $4.3 million and
$0.6 million, respectively, and the average balance of principal
receivables per dealer was $3.3 million.
-- As of September 30, 2002, the aggregate total receivables balance
as a percentage of the aggregate total credit lines was
approximately 67.6%.
The following table sets forth the percentages of dealer account balances
by year of credit line origination for the U.S. Wholesale Portfolio.
U.S. WHOLESALE PORTFOLIO PERCENTAGES BY YEAR
OF CREDIT LINE ORIGINATION
AS OF SEPTEMBER 30, 2002
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------------------------
PRIOR TO
2002 2001 2000 1999 1998 1997 1996 1995 1995
- ---------------------------------------------------------------------------------------------------------------------
5.75% 13.26% 7.54% 7.22% 5.06% 4.24% 2.32% 4.49% 50.12%
- ---------------------------------------------------------------------------------------------------------------------
</Table>
S-12
As of September 30, 2002, the weighted average spread over the prime rate
charged to dealers in the U.S. Wholesale Portfolio was approximately 0.60%.
Used vehicles (which excludes Auction Vehicles) represented approximately
3.14% of the aggregate principal amount of receivables in the U.S. Wholesale
Portfolio as of September 30, 2002. As of September 30, 2002, used vehicles
represented approximately 3.10% of the aggregate principal amount of receivables
in the CARCO receivables trust (including Excluded Receivables).
Finance Hold Experience
The following table provides the percentage of dealers in the U.S.
Wholesale Portfolio that were subject to Finance Hold as of the dates indicated.
FINANCE HOLD EXPERIENCE
<Table>
<Caption>
AS OF
SEPTEMBER 30, AS OF DECEMBER 31,
------------- -----------------------------------------------------------------------------------------
2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992
------------- -----------------------------------------------------------------------------------------
Percentage of Dealers 2.0% 1.9% 0.8% 0.4% 0.9% 2.1% 1.1% 1.8% 1.6% 3.2% 6.8%
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
The percentage of dealers on Finance Hold has trended downward from a high
of 6.8% in 1992. Finance Hold experience has been reflective of overall
macro-economic conditions. DCS management's past experience has indicated that
Finance Hold trends tend to follow the tentative nature of the present business
economy.
Dealer Trouble Experience
The following table provides the number and percentage of dealers in Dealer
Trouble status in the U.S. Wholesale Portfolio as of the dates indicated.
DEALER TROUBLE EXPERIENCE
<Table>
<Caption>
AS OF
SEPTEMBER 30, AS OF DECEMBER 31,
------------- -----------------------------------------------------------------------------------------
2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992
------------- -----------------------------------------------------------------------------------------
Number of
Dealers 11 24 27 27 21 24 20 6 12 21 56
- --------------------------------------------------------------------------------------------------------------------------------
Percentage of
Dealers 0.4% 0.7% 0.8% 0.9% 0.7% 0.7% 0.6% 0.2% 0.3% 0.6% 1.8%
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
Dealer Trouble status indicates those dealers that have probable principal
loss potential. Trends of Dealer Trouble status over the past five years have
held at an average of less than 25 dealers in Dealer Trouble status. DCS
management's past experience has indicated that Dealer Trouble status experience
tends to increase with the threat or occurrence of economic pressures in the
U.S. Although there may be a correlation between dealers on Finance Hold and
dealers in
S-13
Dealer Trouble status, Finance Hold percentages typically trend higher as
management attempts to limit the actual loss experience of dealerships to the
portfolio.
THE ACCOUNTS
As of September 30, 2002, with respect to the Accounts in the CARCO
receivables trust:
-- there were approximately 2,980 Accounts and the principal
receivables balance was approximately $9.5 billion;
-- the average credit lines per dealer for new and used vehicles
(which include Auction Vehicles) were approximately $4.1 million
and $0.6 million, respectively, and the average balance of
principal receivables per dealer was approximately $3.2 million;
and
-- the aggregate total receivables balance as a percentage of the
aggregate total credit line was approximately 67.8%.
Unless otherwise indicated, the statistics included in this paragraph, in the
table below and under "DCS's Performance History -- Geographic Distribution"
with respect to the Accounts and the receivables in the CARCO receivables trust
give effect to approximately $5.5 million of principal receivables balances with
respect to dealers (the "EXCLUDED RECEIVABLES" and the "EXCLUDED DEALERS,"
respectively) that are in voluntary or involuntary bankruptcy proceedings or
voluntary or involuntary liquidation or that, subject to limitations, are being
voluntarily removed by the seller from the CARCO receivables trust. A portion of
those principal receivables was created after those dealers entered into that
status or were designated by the seller for removal from the CARCO receivables
trust and, as a result, are owned by DCS. Principal receivables balances created
prior to those dealers entering into that status or being designated for removal
from the CARCO receivables trust are included in the principal receivables
balance. See "Description of the Investor Certificates Issued by the CARCO
Receivables Trust -- Removal of Accounts" in the prospectus for a description of
the manner in which an Account can be removed from the CARCO receivables trust.
The following table sets forth the percentages of dealer account balances
by year of credit line origination for the accounts in the CARCO receivables
trust.
ACCOUNT PORTFOLIO PERCENTAGES BY YEAR
OF CREDIT LINE ORIGINATION
AS OF SEPTEMBER 30, 2002
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------------------------
PRIOR TO
2002 2001 2000 1999 1998 1997 1996 1995 1995
- ---------------------------------------------------------------------------------------------------------------------
1.62% 13.17% 7.02% 7.78% 5.39% 4.50% 2.33% 3.87% 54.32%
- ---------------------------------------------------------------------------------------------------------------------
</Table>
As of September 30, 2002, the weighted average spread over the prime rate
charged to Dealers was approximately 0.61%.
S-14
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
DaimlerChrysler to DaimlerChrysler-franchised dealers as described under "The
Dealer Floorplan Financing Business -- Relationship with DaimlerChrysler" in the
prospectus. If DaimlerChrysler is not able to or elects not to provide that
assistance, the loss experience in respect of the U.S. Wholesale Portfolio may
be adversely affected. See "Risk Factors -- Risk factors relating to the
collateral certificate and the CARCO receivables trust -- The ability of the
CARCO receivables trust to make payments on the collateral certificate depends
in part on the ability of DaimlerChrysler and DCS to generate receivables and
the ability of DCS to perform its obligations under the pooling and servicing
agreement" in the prospectus and "Risk Factors -- The CARCO receivables trust
and the issuer are dependent on DCS and DaimlerChrysler" in this prospectus
supplement.
LOSS EXPERIENCE FOR THE U.S. WHOLESALE PORTFOLIO
($ IN MILLIONS)
<Table>
<Caption>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
--------------------- ---------------------------------------------------------------------
2002 2001 2001 2000 1999 1998 1997 1996
--------------------- ---------------------------------------------------------------------
Average Principal
Receivables Balance(1) $9,757 $ 9,904 $9,689 $11,336 $ 9,947 $9,236 $8,877 $ 8,825
- -------------------------------------------------------------------------------------------------------------------------------
Net Losses/(Net
Recoveries)(2) $ 10 $ 1 $ 2 $ 1 $ (0) $ 11 $ 4 $ (0)
- -------------------------------------------------------------------------------------------------------------------------------
Net Losses/(Net Recoveries)
as a Percent of
Liquidations 0.020% 0.002% 0.004% 0.001% (0.001)% 0.020% 0.008% (0.000)%
- -------------------------------------------------------------------------------------------------------------------------------
Net Losses/(Net Recoveries)
as a Percent of Average
Principal Receivables
Balance(3) 0.14% 0.01% 0.02% 0.01% (0.00)% 0.12% 0.04% (0.00)%
- -------------------------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990
-----------------------------------------------------------------------------------------
Average Principal Receivables
Balance(1) $ 8,256 $ 6,754 $6,271 $5,344 $4,826 $4,726
- -------------------------------------------------------------------------------------------------------------------------
Net Losses/(Net Recoveries)(2) $ (1) $ (1) $ 12 $ 26 $ 36 $ 23
- -------------------------------------------------------------------------------------------------------------------------
Net Losses/(Net Recoveries) as
a Percent of Liquidations (0.002)% (0.003)% 0.035% 0.098% 0.163% 0.117%
- -------------------------------------------------------------------------------------------------------------------------
Net Losses/(Net Recoveries) as
a Percent of Average
Principal Receivables Balance (0.01)% (0.01)% 0.19% 0.49% 0.75% 0.49%
- -------------------------------------------------------------------------------------------------------------------------
(1) Average Principal Receivables Balance is the average of the month-end principal balances for the thirteen months
ending on the last day of the period, except for the nine months ended September 30, 2002 and 2001, 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, 2002 and 2001 are expressed on an annualized basis and are not
necessarily indicative of the experience for the entire year.
</Table>
S-15
Except for the net loss experience of the U.S. Wholesale Portfolio for the
nine months ended September 30, 2002, net losses have shown favorable trends
over the last four years because of the availability of large amounts of
deficiencies collected after realization on the vehicles. Losses net of
recoveries is expected to increase in the coming three-year period due to the
lack of such collectible deficiencies. DCS management expects that the loss to
liquidation percentage will continue an upward trend with the loss of wholesale
accounts. The trend could reverse itself with increased acquisitions.
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,
------------------- ------------------------------------------------------------------
2002 2001 2000 1999 1998 1997 1996 1995
DAYS ------------------- ------------------------------------------------------------------
<31.................. 38.0% 33.5% 23.0% 36.7% 32.2% 32.5% 31.1% 30.6%
- --------------------------------------------------------------------------------------------------------------------------
31-60................ 27.6% 23.0% 19.8% 21.9% 21.5% 21.9% 20.6% 22.2%
- --------------------------------------------------------------------------------------------------------------------------
61-90................ 11.5% 14.3% 18.3% 16.6% 15.3% 14.7% 16.7% 17.5%
- --------------------------------------------------------------------------------------------------------------------------
91-120............... 7.1% 10.6% 16.6% 11.6% 12.6% 11.0% 12.0% 11.8%
- --------------------------------------------------------------------------------------------------------------------------
121-150.............. 3.9% 7.7% 10.0% 4.4% 8.0% 7.4% 6.7% 6.9%
- --------------------------------------------------------------------------------------------------------------------------
151-180.............. 3.0% 3.5% 2.9% 2.5% 2.9% 3.3% 3.2% 2.4%
- --------------------------------------------------------------------------------------------------------------------------
181-210.............. 2.1% 1.9% 2.8% 1.5% 1.9% 1.9% 2.4% 1.6%
- --------------------------------------------------------------------------------------------------------------------------
211-240.............. 1.5% 1.4% 1.6% 1.3% 1.3% 1.3% 1.5% 1.1%
- --------------------------------------------------------------------------------------------------------------------------
241-270.............. 1.0% 0.9% 1.2% 0.9% 0.9% 1.0% 1.1% 1.1%
- --------------------------------------------------------------------------------------------------------------------------
271-300.............. 0.8% 0.8% 1.1% 0.7% 0.7% 0.9% 0.9% 1.0%
- --------------------------------------------------------------------------------------------------------------------------
301-330.............. 0.9% 0.5% 0.8% 0.4% 0.6% 0.8% 0.7% 0.7%
- --------------------------------------------------------------------------------------------------------------------------
331-360.............. 0.7% 0.3% 0.6% 0.3% 0.4% 0.6% 0.5% 0.6%
- --------------------------------------------------------------------------------------------------------------------------
>360................. 1.9% 1.6% 1.3% 1.2% 1.7% 2.7% 2.6% 2.5%
- --------------------------------------------------------------------------------------------------------------------------
Total................ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
- --------------------------------------------------------------------------------------------------------------------------
</Table>
S-16
GEOGRAPHIC DISTRIBUTION
The following table provides the geographic distribution of the vehicle
inventory for all dealers in the CARCO receivables trust on the basis of
receivables outstanding and the number of dealers generating the portfolio. The
percentages may not add to 100.00% because of rounding.
GEOGRAPHIC DISTRIBUTION OF ACCOUNTS IN THE CARCO RECEIVABLES TRUST
AS OF SEPTEMBER 30, 2002
<Table>
<Caption>
PERCENTAGE OF PERCENTAGE OF
RECEIVABLES RECEIVABLES TOTAL NUMBER OF NUMBER OF
OUTSTANDING(2) OUTSTANDING(2) DEALERS(3) DEALERS(3)
----------------- -------------- --------------- -------------
Texas............................. $ 951,317,266.78 10.00% 192 6.45%
California........................ 739,753,057.04 7.78% 177 5.95%
Florida........................... 644,640,761.80 6.78% 139 4.67%
New York.......................... 545,557,286.07 5.74% 177 5.95%
New Jersey........................ 477,795,243.32 5.02% 135 4.53%
Other(1).......................... 6,153,465,795.68 64.68% 2,157 72.45%
----------------- ------- ----- -------
Total............................. $9,512,529,410.69 100.00% 2,977 100.00%
================= ======= ===== =======
(1) No other state includes more than 5% of the outstanding receivables.
(2) Includes Excluded Receivables.
(3) Includes Excluded Dealers.
</Table>
S-17
MATURITY AND PRINCIPAL PAYMENT CONSIDERATIONS
You will begin receiving principal on your notes if an Early Redemption
Period that is not terminated has commenced. Full payment of the Series 2002-B
notes by the November 2005 payment date (the "SERIES 2002-B EXPECTED PRINCIPAL
PAYMENT DATE") depends on, among other things, repayment by dealers of the
receivables and may not occur if dealer payments are insufficient. Because the
receivables are paid upon retail sale of the underlying vehicle, the timing of
the payments is uncertain. There is no assurance that DCS will generate
additional receivables under the Accounts or that any particular pattern of
dealer payments will occur. Also, the shorter the Accumulation Period Length the
greater the likelihood that payment of the Series 2002-B notes in full by the
Series 2002-B Expected Principal Payment Date will be dependent on the
reallocation to Series 2002-B of Available Principal Amounts which are initially
allocated to other outstanding series of notes. If one or more other series of
notes from which Available Principal Amounts are expected to be available to be
reallocated to the payment of the Series 2002-B notes enters into an early
redemption period before the Series 2002-B Expected Principal Payment Date,
Available Principal Amounts allocated to those series of notes will not be
available to be reallocated to make payments of principal of the Series 2002-B
notes and you may receive your final payment of principal later than the Series
2002-B Expected Principal Payment Date.
Because an Early Redemption Event with respect to the Series 2002-B notes
may occur and would initiate an Early Redemption Period, you may receive the
final payment of principal on your Series 2002-B notes prior to the scheduled
termination of the Revolving Period or prior to the Series 2002-B Expected
Principal Payment Date.
The amount of new receivables generated in any month and monthly payment
rates on the receivables may vary because of seasonal variations in vehicle
sales and inventory levels, retail incentive programs provided by vehicle
manufacturers and various economic factors affecting vehicle sales generally.
The following table sets forth the highest and lowest monthly payment rates for
the U.S. Wholesale Portfolio during any month in the periods shown and the
average of the monthly payment rates for all months during the periods shown.
The monthly payment rate is the percentage equivalent of a fraction, the
numerator of which is the aggregate of all collections of principal during the
period and the denominator of which is the average aggregate principal balance
of receivables in the U.S. Wholesale Portfolio for the period. These monthly
payment rates include principal credit adjustments. We cannot assure you that
the rate of principal collections will be similar to the historical experience
set forth below. As the Eligible Accounts will be only a portion of the entire
U.S. Wholesale Portfolio, historical monthly payment rates with respect to the
Eligible Accounts may be different than those shown below.
MONTHLY PAYMENT RATES FOR THE U.S. WHOLESALE PORTFOLIO
<Table>
<Caption>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------- -----------------------------
2002 2001 2001 2000 1999
------------------- -----------------------------
Highest Month 58.3% 56.8% 62.8% 52.8% 60.5%
- -----------------------------------------------------------------------------
Lowest Month 44.0% 41.5% 41.5% 36.3% 44.7%
- -----------------------------------------------------------------------------
Average of the Months
in the Period 51.7% 48.4% 49.9% 45.6% 52.0%
- -----------------------------------------------------------------------------
<Caption>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992
---------------------------------------------------------------------
Highest Month 60.8% 57.7% 58.3% 59.1% 59.7% 54.7% 50.6%
- --------------------------------------------------------------------------------------------
Lowest Month 42.5% 41.1% 43.2% 36.5% 34.2% 35.9% 34.4%
- --------------------------------------------------------------------------------------------
Average of the Months
in the Period 50.0% 48.2% 49.0% 45.6% 50.3% 46.6% 41.3%
- --------------------------------------------------------------------------------------------
</Table>
S-18
SERIES PROVISIONS
GENERAL
The CARCO receivables trust has issued the collateral certificate under the
Pooling and Servicing Agreement and a Series Supplement relating to the
collateral certificate. The indenture trustee is the pledgee holder of the
collateral certificate for the benefit of the noteholders of all series. The
indenture trustee will make available for inspection a copy of the Pooling and
Servicing Agreement and the Series Supplement, each without exhibits or
schedules, on request. You should refer to the prospectus for additional
information concerning the collateral certificate, the Pooling and Servicing
Agreement and the Series Supplement.
The issuer will issue the Series 2002-B notes pursuant to the indenture and
an indenture supplement. The discussion under this heading "Series Provisions"
and the heading "Deposit and Application of Funds" in this prospectus supplement
and the discussion under the headings "The Notes," "Sources of Funds to Pay the
Notes" and "The Indenture" in the prospectus summarize the material terms of the
Series 2002-B notes, the indenture and the indenture supplement. These summaries
do not purport to be complete and are qualified in their entirety by reference
to the provisions of the notes, the indenture and the indenture supplement.
Neither the indenture nor the indenture supplement limits the aggregate
principal amount of notes that may be issued.
The issuer will pay principal of and interest on the Series 2002-B notes
solely from the portion of Available Interest Amounts and Available Principal
Amounts that are allocated to Series 2002-B under the indenture and the
indenture supplement after giving effect to all allocations and reallocations.
If those sources are not sufficient to pay the Series 2002-B notes, Series
2002-B noteholders will have no recourse to any other assets of the issuer or
any other person or entity for the payment of principal of or interest on the
Series 2002-B notes.
In general, the CARCO receivables trust will allocate collections on the
receivables among each series of its investor certificates, including the
collateral certificate. We describe how these allocations are made under
"Description of the Investor Certificates Issued by the CARCO Receivables Trust"
in the prospectus. The indenture trustee will receive distributions of the
collateral certificate's share of those collections. The indenture trustee will
then allocate those distributions among each series of notes as described in
this prospectus supplement. The Series 2002-B share of distributions on the
collateral certificate is the only source of funds for payments on the Series
2002-B notes. We will apply Available Interest Amounts allocable to Series
2002-B to pay interest on the Series 2002-B notes, to pay the servicing fee and
to cover charge-offs from defaults on the receivables that are allocable to
Series 2002-B. (Such charge-offs allocable to a series of investor certificates
(including the collateral certificate) are referred to in the prospectus as the
"INVESTOR DEFAULT AMOUNT"). The Available Amounts allocable to Series 2002-B
will include those funds allocable to the nominal liquidation amount of the
Series 2002-B notes and the Series 2002-B overcollateralization amount. We will
first use the portion of the funds allocable to the Series 2002-B
overcollateralization amount and any excess available interest collections not
required by other series of notes to cover any interest shortfalls and the
Series 2002-B share of charge-offs on defaulted receivables. If we still have
not covered the interest shortfall, we will use the Series 2002-B share of
Available Principal Amounts to do so. When it is time to distribute principal to
Series 2002-B noteholders or accumulate principal collections for that purpose,
we will use the Series 2002-B share of Available Principal Amounts. Under some
circumstances, we may use Available Principal Amounts allocated to one or more
other series of notes to the extent that such amounts are not then needed by
those series.
S-19
The preceding paragraph is a very simplified description of the primary
allocations and uses of distributions on the collateral certificate. The
following descriptions in this prospectus supplement contain a more precise
description of the calculations of those allocations and the manner, timing and
priorities of the application of those distributions. Many of the calculations
are complex and are described in the definitions of the terms used. The complex
defined terms are needed in order to tell you more precisely the amount that
will be available to make a specified payment. The section called "Glossary of
Principal Terms for Prospectus Supplement" at the end of this prospectus
supplement contains many of these definitions. However, for convenience we often
include the definition where its subject is being discussed.
INTEREST
Interest on the outstanding dollar principal amount of the Series 2002-B
notes will accrue at the Series 2002-B rate and will be payable to the Series
2002-B noteholders on each payment date, commencing December 16, 2002. Interest
payable on any payment date will accrue from and including the preceding payment
date to but excluding that payment date, or, in the case of the first payment
date, from and including the Series 2002-B issuance date to but excluding the
first payment date. Each of those periods is an "INTEREST PERIOD." Interest will
be calculated on the basis of the actual number of days in each Interest Period
divided by 360. Interest due for any payment date but not paid on that payment
date will be due on the next payment date, together with interest on that amount
at the Series 2002-B rate, to the extent permitted by applicable law. We will
make interest payments on the Series 2002-B notes solely out of applicable
distributions on the collateral certificate that are allocated to Series 2002-B.
The Calculation Agent will determine the Series 2002-B rate for each
Interest Period on the LIBOR Determination Date preceding that Interest Period.
The "SERIES 2002-B RATE" will be the per annum rate equal to the applicable
LIBOR plus 0.035%.
"MONTHLY INTEREST" for any payment date means the amount of interest
accrued in respect of the Series 2002-B notes during the Interest Period for
that payment date.
"LIBOR" with respect to any Interest Period will equal the offered rate for
United States dollar deposits for one month that appears on Telerate Page 3750
as of 11:00 A.M., London time, on the second LIBOR Business Day prior to that
Interest Period (a "LIBOR DETERMINATION DATE"). "TELERATE PAGE 3750" means the
display page so designated as reported by Bloomberg Financial Markets
Commodities News, or any other page as may replace that page on that service, or
any other service as may be nominated as the information vendor, for the purpose
of displaying London interbank offered rates of major banks for U.S. dollar
deposits. If that rate appears on Telerate Page 3750, LIBOR will be that rate.
"LIBOR BUSINESS DAY" as used in this prospectus supplement means a day that is
both a Business Day and a day on which banking institutions in the City of
London, England are not required or authorized by law to be closed. If on any
LIBOR Determination Date the offered rate does not appear on Telerate Page 3750,
the Calculation Agent will request each of the reference banks, which shall be
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
S-20
all the quotations. If on that date fewer than two of the reference banks
provide the Calculation Agent with the offered quotations, LIBOR on that date
will be the arithmetic mean, rounded upwards, if necessary, to the nearest
1/100,000 of 1% (.0000001), with five one-millionths of a percentage point
rounded upward, of the offered per annum rates that one or more leading banks in
The City of New York selected by the Calculation Agent are quoting as of 11:00
A.M., New York City time, on that date to leading European banks for United
States dollar deposits for one month. If, however, those banks are not quoting
as described above, LIBOR for that date will be LIBOR applicable to the Interest
Period immediately preceding that Interest Period. The "CALCULATION AGENT" will
initially be the indenture trustee.
PRINCIPAL
We are not scheduled to make principal payments to the Series 2002-B
noteholders until the Series 2002-B Expected Principal Payment Date. However, if
an Early Redemption Period that is not terminated has commenced before the
Series 2002-B Expected Principal Payment Date, we will begin making principal
payments on the payment date in the month following the month in which the Early
Redemption Period begins.
Generally, on each payment date with respect to the Revolving Period, the
Series 2002-B share of Available Principal Amounts will not be used to make
principal payments on the Series 2002-B notes. Instead, we will either:
-- use them to cover a shortfall in the Series 2002-B share of
Available Interest Amounts needed to pay interest on the Series
2002-B notes; or
-- use them to cover principal payments due to the noteholders of any
other series of notes that is in an amortization, early redemption
or accumulation period; or
-- if no other series is then amortizing, repaying or accumulating
principal, pay them to the issuer to maintain the interest in the
CARCO receivables trust evidenced by the collateral certificate
and to be applied in accordance with the Pooling and Servicing
Agreement.
See "Deposit and Application of Funds -- Application of Available Amounts
Allocated to Series 2002-B" and " -- Allocation Percentages" for additional
details.
The "REVOLVING PERIOD" for the Series 2002-B notes will be the period
beginning at the close of business on the Series 2002-B 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 immediately preceding the day on
which an Early Redemption Period commences.
The Revolving Period, however, may recommence upon the termination of an Early
Redemption Period. See "Deposit and Application of Funds -- Early Redemption
Events."
Unless an Early Redemption Period that is not terminated as described in
this prospectus supplement has commenced, the Series 2002-B notes will have an
Accumulation Period during which the Series 2002-B share of Available Principal
Amounts will no longer be used by another series of notes or paid to the issuer
for application under the Pooling and Servicing Agreement. Instead, those
amounts will be accumulated in specified amounts in the principal funding
account
S-21
for the purpose of paying the outstanding dollar principal amount of the Series
2002-B notes in full on the Series 2002-B Expected Principal Payment Date.
The "ACCUMULATION PERIOD" for the Series 2002-B notes will be the period
beginning on the Accumulation Period Commencement Date and terminating on the
earlier of:
-- the payment date on which the outstanding dollar principal amount
of the Series 2002-B notes is reduced to zero; and
-- the close of business on the day immediately preceding the day on
which an Early Redemption Period commences.
Initially, the Accumulation Period is scheduled to be five months long. However,
depending on the performance of the receivables in the CARCO receivables trust,
the length of the Accumulation Period may be shortened to four, three or two
months or a single month as described in the following paragraph.
The "ACCUMULATION PERIOD COMMENCEMENT DATE" for the Series 2002-B notes
will be June 1, 2005 or, if the issuer, acting directly or through the
administrator, elects at its option to delay the start of the Accumulation
Period, a later date selected by the issuer. Delaying the start of the
Accumulation Period will extend the Revolving Period and shorten the
Accumulation Period. The issuer may elect to delay the start of the Accumulation
Period because it believes that (i) the issuer will be able to reallocate
Available Principal Amounts allocable to other series of notes to make larger
monthly deposits into the principal funding account over a shorter period of
time or (ii) the payment rate on the receivables will permit larger monthly
deposits to that account over a shorter period of time. In order to delay the
start of the Accumulation Period, the following things must occur:
-- the issuer must deliver to the indenture trustee a certificate to
the effect that the issuer believes that delaying the start of the
Accumulation Period will not delay any payment of principal to
Series 2002-B noteholders;
-- Standard & Poor's and Moody's must advise the issuer that they
will not lower or withdraw their ratings on the notes of any
series because of the delay in the start of the Accumulation
Period;
-- the amount of principal that the indenture trustee will deposit
into the principal funding account each month during the
Accumulation Period must be increased, so that the sum of all
deposits made during the shortened Accumulation Period will equal
the principal amount due to Series 2002-B noteholders on the
Series 2002-B Expected Principal Payment Date;
-- the Accumulation Period must start no later than October 1, 2005;
and
-- the issuer must make this election no later than the first day of
the last month of the Revolving Period, including extensions of
the Revolving Period.
If the issuer delays the start of the Accumulation Period and an Early
Redemption Event occurs, you may receive some of your principal later than you
would have received it without a delay in the start of the Accumulation Period.
Unless and until an Early Redemption Period that is not terminated as
described in this prospectus supplement has occurred, we will use the funds
accumulated in the principal funding account, including available funds from the
excess funding account that are allocable to
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Series 2002-B, to pay the outstanding dollar principal amount of the Series
2002-B notes on the Series 2002-B Expected Principal Payment Date.
If the outstanding dollar principal amount of the Series 2002-B notes is
not paid in full on the Series 2002-B Expected Principal Payment Date, an Early
Redemption Event will occur, resulting in the start of an Early Redemption
Period. Other Early Redemption Events that will also trigger the start of an
Early Redemption Period are described in "Deposit and Application of
Funds -- Early Redemption Events."
An "EARLY REDEMPTION PERIOD" for the Series 2002-B notes will be a period
beginning on the day on which an Early Redemption Event occurs and terminating
on the earliest of:
-- the payment date on which the outstanding dollar principal amount
of the Series 2002-B notes is reduced to zero;
-- the legal final; and
-- if this Early Redemption Period has commenced before the scheduled
termination of the Revolving Period, the day on which the
Revolving Period recommences under the limited circumstances
described in "Deposit and Application of Funds -- Early Redemption
Events."
On each payment date with respect to the Early Redemption Period, the
Series 2002-B noteholders will receive payments of Monthly Principal and Monthly
Interest.
Monthly Principal is the amount of principal that we will pay to or
accumulate for the Series 2002-B noteholders on a monthly basis. The "MONTHLY
PRINCIPAL" with respect to any payment date relating to the Accumulation Period
or any Early Redemption Period will equal the Available Principal Amounts for
Series 2002-B less any portion thereof that is applied to pay interest on the
Series 2002-B notes on that payment date. However, for each payment date, with
respect to the Accumulation Period, Monthly Principal will not exceed the
Controlled Deposit Amount for that payment date plus any Controlled Deposit
Amount for a prior payment date that has not been previously deposited into the
principal funding account. Also, Monthly Principal in any event will not exceed
the nominal liquidation amount of the Series 2002-B notes. Consequently, if the
nominal liquidation amount of the Series 2002-B notes is reduced by
reallocations of Available Principal Amounts to pay interest on the Series
2002-B notes or by charge-offs due to defaulted receivables and is not
reinstated, you will incur a loss on your Series 2002-B notes.
During the Accumulation Period, we intend to accumulate each month a fixed
amount equal to the "CONTROLLED ACCUMULATION AMOUNT," which is equal to the
outstanding dollar principal amount of the Series 2002-B notes as of the
Accumulation Period Commencement Date, divided by the Accumulation Period
Length. The "ACCUMULATION PERIOD LENGTH" will be the number of full Collection
Periods between the Accumulation Period Commencement Date and the Series 2002-B
Expected Principal Payment Date. Because there may be funds in the excess
funding account allocable to Series 2002-B and the Available Principal Amounts
allocable to Series 2002-B for any payment date may fluctuate, we will be
required to deposit the Controlled Deposit Amount in the principal funding
account on each payment date with respect to the Accumulation Period. The
"CONTROLLED DEPOSIT AMOUNT" for a payment date will be the excess of (i) the
Controlled Accumulation Amount over (ii) any funds in the excess funding account
that are allocable to Series 2002-B and will be deposited into the principal
funding account on that payment date.
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EXCESS FUNDING ACCOUNT
Unless and until an Early Redemption Event shall have occurred or the
Accumulation Period shall have commenced, the CARCO receivables trust trustee
will keep the Series 2002-B share of the excess funded amount for the collateral
certificate in the excess funding account for the collateral certificate. The
CARCO receivables trust trustee will generally invest funds on deposit in the
excess funding account at the direction of the servicer in Eligible Investments.
Those investments must mature on or prior to the next payment date unless the
rating agencies confirm that a longer maturity will not result in the downgrade
or withdrawal of their ratings of the Series 2002-B notes.
We will pay funds on deposit in the excess funding account to the seller or
allocate them to one or more series of investor certificates which are in
amortization or accumulation periods, but only to the extent of any increases in
the Invested Amount of the collateral certificate as a result of the addition of
receivables to the CARCO receivables trust, a reduction in the Seller's
Interest, or a reduction in the invested amount of any other series of
certificates. We will deposit additional amounts in the excess funding account
on a payment date to the extent described under "Description of the Investor
Certificates Issued by the CARCO Receivables Trust -- Excess Funding Account" in
the prospectus.
On each payment date, we will treat the Series 2002-B share of all net
investment income received on amounts in the excess funding account since the
prior payment date as Available Interest Amounts for Series 2002-B.
At the end of the Revolving Period, we will transfer the Series 2002-B
share of any funds (other than investment income) on deposit in the excess
funding account to the principal funding account. No funds allocable to Series
2002-B will be deposited in the excess funding account during any Early
Redemption Period.
OPTIONAL REDEMPTION BY THE ISSUER
Under the indenture, the servicer has the right, but not the obligation, to
cause the issuer to redeem the Series 2002-B notes in whole but not in part on
any day on or after the day on which the nominal liquidation amount of the
Series 2002-B notes is reduced to $100,000,000 or less. This redemption option
is referred to as a clean-up call.
If the servicer elects to cause the issuer to redeem the Series 2002-B
notes, it will cause the issuer to notify the registered holders at least thirty
days prior to the redemption date. The redemption price of the Series 2002-B
notes will equal 100% of the outstanding dollar principal amount of the Series
2002-B notes, plus accrued but unpaid interest on the Series 2002-B notes to but
excluding the date of redemption.
If the issuer is unable to pay the redemption price in full on the
redemption date, monthly payments on the Series 2002-B notes will thereafter be
made until either the principal of and accrued interest on those notes are paid
in full or the legal final occurs, whichever is earlier. Any funds in the
principal funding account and interest funding account for the Series 2002-B
notes will be applied to make the principal and interest payments on the Series
2002-B notes on the redemption date.
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DEPOSIT AND APPLICATION OF FUNDS
We describe how interest collections and principal collections received by
the CARCO receivables trust are allocated among the various series of investor
certificates (including the collateral certificate) under "Sources of Funds to
Pay the Notes -- General" and "Description of the Investor Certificates Issued
by the CARCO Receivables Trust -- Allocation Percentages" in the prospectus. We
describe how interest collections and principal collections allocated to the
collateral certificate are then further allocated between the seller's portion
and the investor portion of the collateral certificate under "Source of Funds to
Pay the Notes -- General" in the prospectus. Only the investor portions of those
collections are available to make payments on the notes.
In the following discussion under this heading "Deposit and Application of
Funds," we describe how the investor portions of those collections are then
further allocated among each series of notes and applied to cover required
payments on the Series 2002-B notes in particular. "AVAILABLE INTEREST AMOUNTS"
will consist of interest collections on the receivables that are allocated to
the investor portion of the collateral certificate. "AVAILABLE PRINCIPAL
AMOUNTS" will consist of principal collections on the receivables and certain
related amounts that are allocated to the investor portion of the collateral
certificate. The Available Interest Amounts and the Available Principal Amounts
are collectively referred to as "AVAILABLE AMOUNTS."
APPLICATION OF AVAILABLE AMOUNTS ALLOCATED TO SERIES 2002-B
Available Interest Amounts for Series 2002-B. Under "-- Allocation
Percentages" below, we describe how we will allocate Available Interest Amounts
among each series of notes. On each payment date, the indenture trustee will
also include the following amounts as part of the Available Interest Amounts
allocated to Series 2002-B:
-- any net investment earnings on funds in the principal funding
account will be withdrawn from the principal funding account and
added to the Available Interest Amounts allocated to the Series
2002-B notes;
-- if the amount of interest at the Series 2002-B rate on funds in
the principal funding account exceeds the net investment earnings
described in the preceding bullet point, the amount of this
excess, referred to as the negative carry amount, will be deducted
from available funds otherwise allocable to the seller and added
to the Available Interest Amounts allocated to the Series 2002-B
notes; and
-- any shared excess Available Interest Amounts allocated from other
series to Series 2002-B, as described in "-- Shared Excess
Available Interest Amounts," will be added to the Available
Interest Amounts allocated to the Series 2002-B notes.
After taking into account the additions described in the above three bullet
points, the Available Interest Amounts allocated to the Series 2002-B notes is
referred to as "SERIES 2002-B AVAILABLE INTEREST AMOUNTS." On each payment date,
the indenture trustee, at the direction of the administrator, will apply Series
2002-B Available Interest Amounts as follows:
-- first, if DCS or any of its affiliates is not the servicer, the
indenture trustee will apply funds to pay the servicing fee;
-- second, the indenture trustee will deposit to the interest funding
account (i) accrued and unpaid interest on the Series 2002-B notes
due on that payment date and (ii) to
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the extent lawful, interest at the Series 2002-B rate on any unpaid delinquent
interest on the Series 2002-B notes;
-- third, if DCS or any of its affiliates is the servicer, the
indenture trustee will apply funds to pay the servicing fee;
-- fourth, if the Available Interest Amounts for Series 2002-B for
that payment date exceeds the amounts payable in clauses first,
second and third, then we will treat that excess amount as
Available Principal Amounts for Series 2002-B to the extent of:
- the amount of charge-offs on defaulted receivables that are
allocable to Series 2002-B for the related Collection Period;
and
- the Series 2002-B nominal liquidation amount deficit, if any;
and
-- fifth, any Series 2002-B Available Interest Amounts that remain
after giving effect to clauses first, second, third and fourth and
reimbursement of waived servicing fees, if any, will be treated as
"SHARED EXCESS AVAILABLE INTEREST AMOUNTS" and will be applied to
shortfalls or deficits of other series of notes or, to the extent
not needed to cover shortfalls or deficits of other series, paid
to the issuer.
The "SERIES 2002-B NOMINAL LIQUIDATION AMOUNT DEFICIT" is the sum of (i) the
nominal liquidation amount deficit of the Series 2002-B notes and (ii) the
Series 2002-B overcollateralization amount deficit. The "NOMINAL LIQUIDATION
AMOUNT DEFICIT OF THE SERIES 2002-B NOTES" is the amount, if any by which (x)
the outstanding dollar principal amount of the Series 2002-B notes less the
amount (other than investment earnings) in the principal funding account and the
Series 2002-B share of the amount (other than investment earnings) in the excess
funding account exceeds (y) the nominal liquidation amount of the Series 2002-B
notes. The "SERIES 2002-B OVERCOLLATERALIZATION AMOUNT DEFICIT" is the amount,
if any, by which (x) the aggregate of reallocations and reductions of the Series
2002-B overcollateralization amount to cover charge-offs and interest shortfalls
exceeds (y) the aggregate amount of reimbursements of such reallocations and
reductions.
The annual Servicing Fee Rate for the collateral certificate is 1.0%. The
monthly servicing fee for the investor portion of the collateral certificate is
1/12 of 1.0% of the aggregate nominal liquidation amounts of the outstanding
series of notes. A portion of that monthly servicing fee will be allocated to
each series of notes pro rata on the basis of the nominal liquidation amount of
the notes of each series. If the servicer, in its sole discretion, elects to
waive any portion of its servicing fee for a payment date, the servicer will
receive such servicing fee on a future payment date out of the amount, if any,
available pursuant to clause fifth above.
Available Principal Amounts for Series 2002-B. Under "-- Allocation
Percentages," we describe how we will allocate Available Principal Amounts among
each series of notes. On each payment date, the indenture trustee will increase
the Available Principal Amounts allocated to the Series 2002-B notes by the
amount of any Available Interest Amounts used to fund the Series 2002-B share of
any charge-offs on defaulted receivables and any Series 2002-B nominal
liquidation amount deficit, as described in clause fourth of the second
preceding paragraph. The resulting sum, referred to as "SERIES 2002-B AVAILABLE
PRINCIPAL AMOUNTS," will be applied by the indenture trustee on each payment
date, at the direction of the administrator, as follows:
-- first, if the Available Interest Amounts for Series 2002-B are not
enough to cover the interest on the Series 2002-B notes specified
in clause second above for that
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payment date, the indenture trustee will deposit to the interest funding account
the amount of that shortfall in an amount not to exceed the Series 2002-B
nominal liquidation amount (after taking into account any reductions due to
charge-offs from defaulted receivables);
-- second, if Series 2002-B is in its Accumulation Period, the
indenture trustee will deposit the Controlled Deposit Amount, to
the extent of any remaining Series 2002-B Available Principal
Amounts, to the principal funding account and will treat any
remaining Series 2002-B Available Principal Amounts as "SHARED
EXCESS AVAILABLE PRINCIPAL AMOUNTS" available to be used to
satisfy the principal funding requirements of other series of
notes or to be reinvested in the collateral certificate to
maintain the Invested Amount of the collateral certificate;
-- third, if Series 2002-B is in an Early Redemption Period, the
indenture trustee will deposit any remaining Series 2002-B
Available Principal Amounts, to the extent of the Series 2002-B
nominal liquidation amount (after taking into account any
reductions due to charge-offs of defaulted receivables and any
application pursuant to clause first), in the principal funding
account for payment to the Series 2002-B noteholders;
-- fourth, if Series 2002-B is not in its Accumulation Period or an
Early Redemption Period, we will treat any remaining Series 2002-B
Available Principal Amounts as Shared Excess Available Principal
Amounts to be used as described in clause second; and
-- fifth, if Series 2002-B is in its Accumulation Period or an Early
Redemption Period and the nominal liquidation amount of the Series
2002-B notes has been deposited to the principal funding account,
we will treat any remaining Available Principal Amounts for Series
2002-B as Shared Excess Available Principal Amounts to be used as
described in clause second. The amount in this clause fifth will
represent the Series 2002-B overcollateralization amount.
The use of Series 2002-B Available Principal Amounts under clause first
above to pay interest on the Series 2002-B notes will result in a reduction in
the Series 2002-B nominal liquidation amount as described under "-- Reduction
and Reinstatement of Nominal Liquidation Amounts".
If the Series 2002-B noteholders cause the CARCO receivables trust to sell
receivables as described under "-- Sale of Receivables," we will pay the
proceeds of such sale to the Series 2002-B noteholders to the extent of the
interest due on the Series 2002-B notes and the nominal liquidation amount of
the Series 2002-B notes, and the Series 2002-B noteholders will not receive any
further Available Amounts or other assets of the issuer.
REDUCTION AND REINSTATEMENT OF NOMINAL LIQUIDATION AMOUNTS
The calculation of a series nominal liquidation amount is described under
"The Notes -- Stated Principal Amount, Outstanding Dollar Principal Amount and
Nominal Liquidation Amount of Notes" in the prospectus. That section contains a
description of reductions and reinstatements of the series nominal liquidation
amount other than on account of principal payments or deposits to the principal
funding account.
S-27
The Series 2002-B nominal liquidation amount at the Series 2002-B Cut-Off
Date is the sum of (i) the $1,000,000,000 initial nominal liquidation amount of
the Series 2002-B notes (which equals the initial outstanding dollar principal
amount of the Series 2002-B notes) and (ii) the $98,901,099 Series 2002-B
overcollateralization amount at the initial issuance of the Series 2002-B notes.
The Invested Amount of the collateral certificate will be the sum of the series
nominal liquidation amounts for each outstanding series of notes.
The Series 2002-B nominal liquidation amount will be calculated on each
payment date. Generally, the Series 2002-B nominal liquidation amount for each
payment date will be an amount equal to the Series 2002-B nominal liquidation
amount as calculated on the prior determination date, decreased by certain
reductions since that date and increased by certain reinstatements since that
date. We describe these reductions and reinstatements below.
REDUCTIONS. The Series 2002-B nominal liquidation amount will be reduced
on any payment date by the following amounts allocated on that payment date:
(A) the amount, if any, of the Series 2002-B Available Principal
Amounts used to pay interest on the Series 2002-B notes as described above
under "-- Application of Available Amounts Allocated to Series
2002-B -- Available Principal Amounts for Series 2002-B" and
(B) the amount of charge-offs on defaulted receivables in the related
Collection Period that are allocated to Series 2002-B to the extent that
they are not covered by Series 2002-B Available Interest Amounts that are
treated as Series 2002-B Available Principal Amounts to cover such
charge-offs as described under "-- Application of Available Amounts
Allocated to Series 2002-B -- Available Interest Amounts for Series
2002-B."
In addition, the portion of the Series 2002-B nominal liquidation amount
constituting the nominal liquidation amount of the Series 2002-B notes will be
(i) reduced by (x) the amount of any funds (other than investment earnings)
deposited into the principal funding account since the prior date on which the
Series 2002-B nominal liquidation amount was calculated and (y) the amount
(other than investment earnings) deposited into the excess funding account since
the prior calculation date in connection with a reduction in principal
receivables that is allocable to Series 2002-B and (ii) increased by amounts
(other than investment earnings) that are withdrawn from the excess funding
account since such prior calculation date in connection with the purchase of
additional principal receivables and are allocable to Series 2002-B. Deposits
into the principal funding account will not reduce the portion of the Series
2002-B nominal liquidation amount constituting the Series 2002-B
overcollateralization amount.
On each payment date, we will allocate the amount of any reduction in the
Series 2002-B nominal liquidation amount due to clause (A) or (B) above as
follows:
-- first, we will reduce the Series 2002-B overcollateralization
amount by the amount of such reduction until the Series 2002-B
overcollateralization amount reaches zero; and
-- second, we will reduce the nominal liquidation amount of the
Series 2002-B notes by any remaining amount of such reduction
until the nominal liquidation amount of the Series 2002-B notes
reaches zero.
When we reduce the Series 2002-B overcollateralization amount as described
in clause first above, we will apply such reduction to the portion of the Series
2002-B overcollateralization amount equal to the Series 2002-B
overcollateralization percentage of the nominal liquidation amount of the Series
2002-B notes (the "PRIMARY SERIES 2002-B OVERCOLLATERALIZATION
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AMOUNT"). In general, if the Primary Series 2002-B Overcollateralization Amount
is reduced below the amount equal to the product of the Series 2002-B
Overcollateralization Percentage and the nominal liquidation amount of the
Series 2002-B notes (calculated without giving effect to any reductions or
reinstatements described under this heading except for reductions due to
deposits to the principal funding account and reductions and increases related
to deposits to and withdrawals from the excess funding account) on any payment
date after giving effect to all allocations and distributions on that date, then
an Early Redemption Event will occur.
While we will reduce the nominal liquidation amount of the Series 2002-B
notes as described above, the outstanding dollar principal amount of the Series
2002-B notes will not be similarly reduced. However, the aggregate principal
paid on the Series 2002-B notes will not exceed the nominal liquidation amount
of the Series 2002-B notes. Consequently, you will incur a loss on your notes if
the Series 2002-B overcollateralization amount is reduced to zero and the
nominal liquidation amount of the Series 2002-B notes is thereafter reduced by
charge-offs or reallocations as described above and not reinstated as described
below.
REINSTATEMENTS. The Series 2002-B nominal liquidation amount will be
reinstated on any payment date by the amount of the Series 2002-B Available
Interest Amounts that we apply to cover the Series 2002-B nominal liquidation
amount deficit pursuant to clause fourth under "-- Application of Available
Amounts Allocated to Series 2002-B -- Available Interest Amounts for Series
2002-B." We will allocate the amount of that reinstatement on that payment date
as follows:
-- first, if the nominal liquidation amount of the Series 2002-B
notes has been reduced by charge-offs or reallocations as
described above and not fully reinstated, we will allocate the
reinstatement amount to the nominal liquidation amount of the
Series 2002-B notes until it equals the outstanding dollar
principal amount of the Series 2002-B less any amounts (other than
investment earnings) in the principal funding account, any
principal payments made to the Series 2002-B noteholders and the
Series 2002-B share of amounts (other than investment earnings) in
the excess funding account; and
-- second, we will allocate any remaining reinstatement amount to the
Series 2002-B overcollateralization amount until the Series 2002-B
overcollateralization amount has been fully reinstated.
The nominal liquidation amounts of other series of notes will be subject to
similar reductions and reinstatements.
SERIES 2002-B OVERCOLLATERALIZATION AMOUNT
The Series 2002-B overcollateralization amount will be equal to the sum of
(i) 9.89% (the "SERIES 2002-B OVERCOLLATERALIZATION PERCENTAGE") of
the then-current nominal liquidation amount of the Series 2002-B notes
(this amount is the Primary Series 2002-B Overcollateralization Amount);
and
(ii) the incremental overcollateralization amount.
However, if an Early Redemption Period has commenced and the Revolving Period
has not recommenced, the nominal liquidation amount of the Series 2002-B notes
referred to in clause (i) above will be the nominal liquidation amount of the
Series 2002-B notes at the commencement of that Early Redemption Period.
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The "INCREMENTAL OVERCOLLATERALIZATION AMOUNT" on any determination date
will equal the product obtained by multiplying
(i) a fraction, the numerator of which is the Series 2002-B nominal
liquidation amount (calculated without including the incremental
overcollateralization amount), and the denominator of which is the Pool
Balance on the last day of the preceding Collection Period
by (ii) the excess, if any, of
(a) the sum of the Overconcentration Amount and the aggregate
amount of Ineligible Receivables on that determination date
over (b) the aggregate amount of Ineligible Receivables and receivables
in accounts containing Dealer Overconcentrations, in each case
that became Defaulted Receivables during the preceding
Collection Period and are not subject to reassignment from the
CARCO receivables trust, unless insolvency events relating to
the seller or DCS have occurred, as further described in the
Pooling and Servicing Agreement.
The terms used in this definition are defined in the "Glossary of Principal
Terms for Prospectus" in the prospectus.
As of the Series 2002-B Cut-Off Date, the Series 2002-B
overcollateralization amount was $98,901,099.
The Series 2002-B overcollateralization amount will vary from time to time
as the amounts in clauses (i) and (ii) above vary from time to time. Also, we
will reduce or reinstate the Series 2002-B overcollateralization amount as
described under "-- Reduction and Reinstatement of Nominal Liquidation Amounts."
Notwithstanding the foregoing, if the long-term unsecured debt of
DaimlerChrysler AG is reduced below BBB- by Standard & Poor's, then the Series
2002-B overcollateralization percentage will be 11.11% rather than 9.89% until
that rating is increased to at least BBB-.
ALLOCATION PERCENTAGES
We will allocate Available Amounts to Series 2002-B on the basis of various
percentages. Which percentage we use depends on whether we are allocating
Available Interest Amounts or Available Principal Amounts and whether the
Available Amounts are received in the Revolving Period, the Accumulation Period
or an Early Redemption Period.
The servicer for the CARCO receivables trust will allocate collections on
the receivables among the various series of investor certificates (including the
collateral certificate) as described under "Sources of Funds to Pay the
Notes -- General" and "Description of the Investor Certificates Issued by the
CARCO Receivables Trust -- Allocation Percentages -- Allocations Among Series"
in the prospectus. In general, we will allocate interest collections, principal
collections, charge-offs and Miscellaneous Payments among series of investor
certificates (including the collateral certificate) pro rata on the basis of
their adjusted invested amounts. The adjusted invested amount of the collateral
certificate will be the sum of the series nominal liquidation amounts for all
outstanding series of notes.
We will allocate the Available Amounts distributed on the collateral
certificate among the series of notes (including Series 2002-B) as follows:
-- Available Interest Amounts and charge-offs on defaulted
receivables will be allocated to each series of notes based on its
series floating allocation percentage;
S-30
-- if a series of notes is not in an amortization, early redemption
or accumulation period, then Available Principal Amounts will be
allocated to that series based on its series floating allocation
percentage;
-- if a series of notes is in an amortization, early redemption or
accumulation period (i.e., the Accumulation Period or any Early
Redemption Period in the case of the Series 2002-B notes), then
Available Principal Amounts will be allocated to that series based
on its series principal allocation percentage; and
-- Miscellaneous Payments allocated to the collateral certificate
will be treated as part of Available Principal Amounts.
The series floating allocation percentage effects, in general, a pro rata
allocation based on the series nominal liquidation amount of each series. The
series floating allocation percentage for Series 2002-B, referred to as the
"SERIES 2002-B FLOATING ALLOCATION PERCENTAGE," for any payment date will be the
percentage equivalent, which shall never exceed 100%, of a fraction, the
numerator of which is the Series 2002-B nominal liquidation amount as of the
last day of the immediately preceding Collection Period and the denominator of
which is the sum of the series nominal liquidation amounts for all series of
notes (including Series 2002-B) on that day.
The series principal allocation percentage is, in general, based on the
series nominal liquidation amount of each series and is fixed for a series at
the end of its revolving period. Consequently, even though we are distributing
or accumulating Available Principal Amounts for the noteholders of any series,
the numerator used for the calculation for that series will not decline. The
series principal allocation percentage for Series 2002-B, referred to as the
"SERIES 2002-B PRINCIPAL ALLOCATION PERCENTAGE," for any payment date will be
the percentage equivalent, which shall never exceed 100%, of a fraction:
-- the numerator of which is the Series 2002-B nominal liquidation
amount as of the last day of the immediately preceding Collection
Period or, if the Accumulation Period or an Early Redemption
Period has commenced, as of the last day of the Collection Period
prior to the commencement of the Accumulation Period or an Early
Redemption Period, as applicable; and
-- the denominator of which is the sum of the series nominal
liquidation amounts for all series of notes as of the last day of
the immediately preceding Collection Period, except that for any
series that is amortizing, repaying or accumulating principal, the
series nominal liquidation amount of that series will be the
series nominal liquidation amount as of the last day of the
Collection Period prior to the commencement of such amortization,
repayment or accumulation.
This fraction will be adjusted to account for any additional issuances of series
of notes since the prior Collection Period.
REQUIRED PARTICIPATION PERCENTAGE
As described under "Description of the Investor Certificates Issued by the
CARCO Receivables Trust -- Addition of Accounts" in the prospectus, the seller
will be required to add to the CARCO receivables trust the receivables of
Additional Accounts if the Pool Balance at the end of a Collection Period is
less than the Required Participation Amount for the following payment date. The
calculation of the Required Participation Amount is a function of the Required
Participation Percentage. The "REQUIRED PARTICIPATION PERCENTAGE" for the
collateral
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certificate is 103%. However, if either (a) the aggregate amount of principal
receivables due from either AutoNation, Inc. and its affiliates or United Auto
Group, Inc. and its affiliates on the close of business on the last day of any
Collection Period is greater than 4% of the Pool Balance on that day or (b) the
aggregate amount of principal receivables due from any other dealer at such time
is greater than 1.5% of the Pool Balance on that day, then the Required
Participation Percentage, as of that last day and with respect to that
Collection Period and the immediately following Collection Period only, will be
104%. Furthermore, the seller may, upon ten days' prior notice to the CARCO
receivables trust trustee and the rating agencies, reduce the Required
Participation Percentage to not less than 100%, so long as the rating agencies
shall not have notified the seller or the servicer that any reduction will
result in a reduction or withdrawal of the rating of the Series 2002-B notes or
any other outstanding series or class of notes.
SALE OF RECEIVABLES
Receivables may be sold upon the insolvency of DCS or DaimlerChrysler, an
acceleration of the Series 2002-B notes after an event of default and on the
legal final of the Series 2002-B notes. If (i) such an insolvency occurs or (ii)
an event of default occurs and the Series 2002-B notes are accelerated, each
holder of Series 2002-B notes may notify the indenture trustee that it desires
to exercise the put feature that is part of its Series 2002-B notes. The "PUT
FEATURE" will be deemed to be exercised only if at least one of the following
conditions is met:
(i) the holders of at least 90% of the outstanding dollar principal
amount of the Series 2002-B notes have notified the indenture trustee that
they desire to exercise the put feature in respect of their Series 2002-B
notes;
(ii) the holders of a majority of the outstanding dollar principal
amount of the Series 2002-B notes have notified the indenture trustee that
they desire to exercise the put feature in respect of their Series 2002-B
notes and the net proceeds of the sale of Receivables pursuant to such
exercise (as described below) plus amounts on deposit in the principal
funding account would be sufficient to pay all amounts due on the Series
2002-B notes; or
(iii) (A) the indenture trustee determines that the funds to be
allocated to the Series 2002-B notes, including (1) the Series 2002-B
Available Interest Amounts and Series 2002-B Available Principal Amounts
and (2) amounts on deposit in the principal funding account, may not be
sufficient on an ongoing basis to make payments on the Series 2002-B notes
as such payments would have become due if such obligations had not been
declared due and payable and (B) holders of at least 66 2/3% of the
outstanding dollar principal amount of the Series 2002-B notes have
notified the indenture trustee that they desire to exercise the put feature
in respect of their Series 2002-B notes.
If the put feature is deemed to be exercised as provided in the preceding
sentence, it will be deemed to be exercised by all holders of the Series 2002-B
notes, whether or not they have actually given notice of their desire to
exercise the put feature. Upon such deemed exercise of the put feature, the
indenture trustee will cause the CARCO receivables trust to sell principal
receivables and the related non-principal receivables (or interests therein) in
the amount described below. The holders of the Series 2002-B notes will maintain
their rights in their Series 2002-B notes until such sale proceeds have been
applied to payment of the amounts due on the Series 2002-B notes and shall
deliver their Series 2002-B notes to the issuer as part of their exercise of the
put feature.
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If principal of or interest on the Series 2002-B notes has not been paid in
full on the legal final (after giving effect to any adjustments, deposits and
payments to be made on that date), the sale will automatically take place on
that date. We will apply proceeds from the sale to the payment of the amounts
due on the Series 2002-B notes. We will pay any excess to the seller.
In the case of any such sale, the amount of receivables sold will be in an
amount not exceeding the Series 2002-B nominal liquidation amount. The nominal
liquidation amount of the Series 2002-B notes will be automatically reduced to
zero upon the sale. After the sale, we will not allocate any further Available
Principal Amounts or Available Interest Amounts to the Series 2002-B notes.
The amount of proceeds from the sale of receivables for the Series 2002-B
notes may be less than the outstanding dollar principal amount of the Series
2002-B notes. This deficiency can arise if the Series 2002-B nominal liquidation
amount was reduced below the outstanding dollar principal amount of the Series
2002-B notes before the sale of receivables or if the sale price for the
receivables was less than the outstanding dollar principal amount of the Series
2002-B notes. These types of deficiencies will not be reimbursed.
Any amount remaining on deposit in the interest funding account when the
Series 2002-B notes have received final payment as described in "-- Final
Payment of the Series 2002-B Notes" after a sale of receivables will be treated
as Available Interest Amounts and be allocated as described in "-- Allocation of
Available Amounts Allocated to Series 2002-B."
FINAL PAYMENT OF THE SERIES 2002-B NOTES
Series 2002-B noteholders will be entitled to payment of principal in an
amount equal to the outstanding dollar principal amount of the Series 2002-B
notes. However, Series 2002-B Available Principal Amounts will be available to
pay principal on the Series 2002-B notes only up to the Series 2002-B nominal
liquidation amount, which may be reduced for charge-offs due to uncovered
defaults on principal receivables in the CARCO receivables trust and
reallocations of Series 2002-B Available Principal Amounts to pay interest on
the Series 2002-B notes. In addition, if a sale of receivables to pay
outstanding amounts on the Series 2002-B notes occurs (as described in "-- Sale
of Receivables"), the amount of receivables sold will be limited to the Series
2002-B nominal liquidation amount. If the Series 2002-B nominal liquidation
amount has been reduced below the outstanding dollar principal amount of the
Series 2002-B notes and not reinstated to that amount as described in this
prospectus supplement, Series 2002-B noteholders will not receive full payment
of the outstanding dollar principal amount of their notes.
On the date of a sale of receivables following acceleration of the Series
2002-B notes or on the legal final of the Series 2002-B notes, the proceeds of
such sale, but only up to the Series 2002-B nominal liquidation amount, will be
available to pay the outstanding dollar principal amount of the Series 2002-B
notes.
The Series 2002-B notes will be considered to be paid in full, the holders
of the Series 2002-B notes will have no further right or claim, and the issuer
will have no further obligation or liability for principal or interest, on the
earliest to occur of:
-- the date of the payment in full of the stated principal amount of
and all accrued interest on the Series 2002-B notes;
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-- the date on which the outstanding dollar principal amount of the
Series 2002-B notes is reduced to zero, and all accrued interest
on the Series 2002-B notes is paid in full;
-- the legal final of the Series 2002-B notes, after giving effect to
all deposits, allocations, reallocations, sales of receivables and
payments to be made on that date; or
-- the date on which a sale of receivables has taken place, as
described in "-- Sale of Receivables."
SHARED EXCESS AVAILABLE INTEREST AMOUNTS
Any Series 2002-B Available Interest Amounts that are not needed to make
payments or deposits for Series 2002-B on any payment date will be available for
allocation to other series of notes. Such excess will be treated as Shared
Excess Available Interest Amounts and will be allocated to cover shortfalls, if
any, in payments or deposits to be covered by Available Interest Amounts for
other series, if any, which have not been covered out of the Available Interest
Amounts allocable to those series. If these shortfalls exceed the Shared Excess
Available Interest Amounts for any payment date, Shared Excess Available
Interest Amounts will be allocated pro rata among the applicable series based on
their respective shortfalls in Available Interest Amounts. To the extent that
Shared Excess Available Interest Amounts exceed those shortfalls, the balance
will be paid to the issuer for application under the Pooling and Servicing
Agreement.
SHARED EXCESS AVAILABLE PRINCIPAL AMOUNTS
Any Series 2002-B Available Principal Amounts that are not needed to make
payments or deposits for Series 2002-B on any payment date will be available for
allocation to other series of notes. Such excess will be treated as Shared
Excess Available Principal Amounts and will be allocated to cover shortfalls, if
any, in payments or deposits to be covered by Available Principal Amounts for
other series, which have not been covered out of the Available Principal Amounts
otherwise allocable to those series. Any reallocation of Series 2002-B Available
Principal Amounts for this purpose will not reduce the nominal liquidation
amount of the Series 2002-B notes. If principal shortfalls exceed the Shared
Excess Available Principal Amounts for any payment date, Shared Excess Available
Principal Amounts will be allocated pro rata among the applicable series based
on their respective shortfalls in Available Principal Amounts. To the extent
that Shared Excess Principal Amounts exceed principal shortfalls, the balance
will be paid to the issuer to be reinvested in the collateral certificate to
maintain the Invested Amount of the collateral certificate and applied in
accordance with the Pooling and Servicing Agreement.
EARLY REDEMPTION EVENTS
The early redemption events (each, an "EARLY REDEMPTION EVENT") with
respect to the Series 2002-B notes will include each of the Early Amortization
Events in the prospectus under "Description of the Investor Certificates Issued
by the CARCO Receivables Trust -- Reinvestment Events and Early Amortization
Events", plus each of the following:
1. failure on the part of DCWR, the servicer or DCS (if DCS is no
longer the servicer), as applicable,
-- to make any payment or deposit required by the Pooling and
Servicing Agreement or the Receivables Purchase Agreement,
including but not limited to
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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 DCS, as seller, in the
Receivables Purchase Agreement or by DCWR in the Pooling and Servicing
Agreement or any information required to be given by DCWR to the CARCO
receivables trust trustee to identify the Accounts proves to have been
incorrect in any material respect when made and continues to be incorrect
in any material respect for a period of 60 days after written notice and as
a result the interests of the certificateholders are materially and
adversely affected. An Early Redemption Event, however, shall not be deemed
to occur if DCWR has repurchased the related receivables or all of the
receivables, if applicable, during that period in accordance with the
provisions of the Pooling and Servicing Agreement;
3. the occurrence of certain events of bankruptcy, insolvency or
receivership relating to DCS or DaimlerChrysler;
4. a failure by DCWR to convey receivables in Additional Accounts to
the CARCO receivables trust within five business days after the day on
which it is required to convey those receivables under the Pooling and
Servicing Agreement;
5. on any payment date, the Primary Series 2002-B
Overcollateralization Amount is reduced to an amount less than the required
amount (described below) on that payment date after giving effect to the
distributions to be made on that payment date; provided that, for the
purpose of determining whether an Early Redemption Event has occurred
pursuant to this clause 5, any reduction of the Primary Series 2002-B
Overcollateralization Amount resulting from reallocations of the Series
2002-B Available Principal Amounts to pay interest on the Series 2002-B
notes in the event LIBOR is equal to or greater than the prime rate upon
which interest on the receivables is calculated on the applicable LIBOR
Determination Date will be considered an Early Redemption Event only if
LIBOR remains equal to or greater than such prime rate for the next 30
consecutive days following such LIBOR Determination Date. The required
Primary Series 2002-B Overcollateralization Amount for a payment date is
the amount equal to the product of the Series 2002-B Overcollateralization
Percentage and the nominal liquidation amount of the Series 2002-B notes
(calculated without giving effect to any reductions or reinstatements
described under "Deposit and Application of Funds -- Reduction and
Reinstatement of Nominal Liquidation Amounts" except for reductions due to
deposits to the principal funding account and reductions and increases
related to deposits to and withdrawals from the excess funding account);
6. any Service Default occurs;
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7. on any Determination Date, as of the last day of the preceding
Collection Period, the aggregate amount of principal receivables relating
to Used Vehicles exceeds 20% of the Pool Balance on that last day;
8. on any Determination Date, the average of the Monthly Payment Rates
for the three preceding Collection Periods, is less than 20%;
9. the outstanding dollar principal amount of the Series 2002-B notes
is not repaid by the Series 2002-B Expected Principal Payment Date;
10. the issuer becomes an investment company within the meaning of the
Investment Company Act of 1940; and
11. the occurrence of an event of default under the indenture.
In the case of any event described in clauses 1, 2 or 6 above, an Early
Redemption Event with respect to Series 2002-B will be deemed to have occurred
only if, after the applicable grace period described in those clauses, if any,
either the indenture trustee or Series 2002-B noteholders holding Series 2002-B
notes evidencing more than 50% of the outstanding dollar principal amount of the
Series 2002-B notes by written notice to the seller, the servicer, the CARCO
receivables trust trustee and the indenture trustee, if given by Series 2002-B
noteholders, declare that an Early Redemption Event has occurred as of the date
of that notice. In the case of any Early Redemption Event that is also an Early
Amortization Event as described in the prospectus or any event described in 3,
4, 5, 7, 8, 9, 10 or 11 above, an Early Redemption Event with respect to Series
2002-B will be deemed to have occurred without any notice or other action on the
part of the indenture trustee or the Series 2002-B noteholders immediately upon
the occurrence of that event.
The Early Redemption Period begins upon the occurrence of an Early
Redemption Event. Under limited circumstances, an Early Redemption Period which
commences before the scheduled end of the Revolving Period may terminate and the
Revolving Period recommence. If an Early Redemption Period results from the
failure by DCWR to convey receivables in Additional Accounts to the CARCO
receivables trust, as described in clause 4 above, during the Revolving Period
and no other Early Redemption Event that has not been cured or waived as
described in this prospectus supplement has occurred, the Early Redemption
Period resulting from that failure will terminate and the Revolving Period will
recommence as of the end of the first Collection Period during which the seller
would no longer be required to convey receivables to the CARCO receivables
trust. However, the Revolving Period will not recommence if the scheduled
termination date of the Revolving Period has occurred. The seller may no longer
be required to convey receivables as described above as a result of a reduction
in the Invested Amount occurring due to principal payments made in respect of
the collateral certificate and the investor certificates of other outstanding
series during the Early Redemption Period or as a result of the subsequent
addition of receivables to the CARCO receivables trust. However, if any Early
Redemption Event, other than an Early Redemption Event described in the clause 3
above or an Early Amortization Event described 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 2002-B notes will not be withdrawn
or lowered as a result of the recommencement; and
-- the consent of Series 2002-B noteholders holding Series 2002-B
notes evidencing more than 50% of the outstanding dollar principal
amount of the Series 2002-B
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notes consent to the recommencement, provided that no other Early Redemption
Event that has not been cured or waived as described in this prospectus
supplement has occurred and the scheduled termination of the Revolving Period
has not occurred.
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting
agreement, the seller has agreed to cause the issuer to sell to Salomon Smith
Barney Inc., as underwriter, and the underwriter has agreed to purchase, all of
the Series 2002-B notes.
Distribution of the Series 2002-B notes will be made from time to time in
negotiated transactions or otherwise at varying prices to be determined at the
time of sale. Proceeds to the seller will be 100.0% of the aggregate principal
amount of the Series 2002-B notes plus accrued interest from November 26, 2002,
before deducting expenses estimated to be $550,000. The underwriter has agreed
to reimburse the seller for a significant portion of those expenses. In
connection with the purchase and sale of the Series 2002-B notes, 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 2002-B
notes, but has no obligation to do so. We cannot assure you that a secondary
market for the Series 2002-B notes will develop or, if it does develop, that it
will continue or that it will provide holders of the Series 2002-B notes with a
sufficient level of liquidity of the Series 2002-B notes.
LEGAL MATTERS
Certain legal matters relating to the Series 2002-B notes 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 issuer 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.
NOTE RATINGS
The issuer will issue the Series 2002-B notes only if they are rated at the
time of issuance in the highest long-term rating category by at least one
nationally recognized rating agency.
The rating agencies and their ratings only address the likelihood that you
will timely receive interest payments due and you will ultimately receive all of
your required principal payments by the legal final. The rating agencies and
their ratings do not address the likelihood you will receive principal payments
on a scheduled date or whether you will receive any principal on your Series
2002-B notes prior to or after the expected principal payment date.
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The ratings assigned to the Series 2002-B notes should be evaluated
independently from similar ratings on other types of securities. A rating is not
a recommendation to buy, sell or hold securities and may be subject to revision
or withdrawal at any time by the rating agency.
GLOSSARY OF PRINCIPAL TERMS FOR PROSPECTUS SUPPLEMENT
"ACCUMULATION PERIOD" means the period beginning on the Accumulation Period
Commencement Date and terminating on the earlier of:
-- the payment date on which the outstanding dollar principal amount
of the Series 2002-B notes is reduced to zero; and
-- the close of business on the day immediately preceding the day on
which an Early Redemption Period commences.
If an Early Redemption Period that is not terminated, as described in "Deposit
and Application of Funds -- Early Redemption Events," has commenced before the
Accumulation Period Commencement Date, the Series 2002-B notes will not have an
Accumulation Period.
"ACCUMULATION PERIOD COMMENCEMENT DATE" means June 1, 2005 or, if the
issuer, acting directly or through the administrator, elects to delay the start
of the Accumulation Period, a later date selected by the issuer. In selecting an
Accumulation Period Commencement Date, the issuer must satisfy the conditions
described under "Series Provisions -- Principal."
"ACCUMULATION PERIOD LENGTH" means the number of full Collection Periods
between the Accumulation Period Commencement Date and the Series 2002-B Expected
Principal Payment Date.
"ADMINISTRATOR" means DCS acting as an administrative agent for the issuer
pursuant to an administration agreement with the issuer and the indenture
trustee.
"AVAILABLE AMOUNTS" means the Available Interest Amounts and the Available
Principal Amounts.
"AVAILABLE INTEREST AMOUNTS" means the interest collections on the
receivables that are allocated to the investor portion of the collateral
certificate.
"AVAILABLE PRINCIPAL AMOUNTS" means the principal collections on the
receivables and certain related amounts that are allocated to the investor
portion of the collateral certificate.
"CALCULATION AGENT" means, initially, the indenture trustee.
"CARCO RECEIVABLES TRUST" means the CARCO Auto Loan Master Trust.
"COLLECTION PERIOD" means, for any payment date, the calendar month
preceding the month in which that payment date occurs.
"CONTROLLED ACCUMULATION AMOUNT" means an amount equal to the outstanding
dollar principal amount of the Series 2002-B notes as of the Accumulation Period
Commencement Date divided by the Accumulation Period Length.
"CONTROLLED DEPOSIT AMOUNT" means, for a payment date, the excess (i) of
the Controlled Accumulation Amount over (ii) any funds in the excess funding
account that are allocable to Series 2002-B and will be deposited into the
principal funding account on that payment date.
"DAIMLERCHRYSLER" means DaimlerChrysler Corporation and its successors.
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"DCS" means DaimlerChrysler Services North America LLC and its successors.
"DCWR" means DaimlerChrysler Wholesale Receivables LLC and its successors.
"EARLY REDEMPTION EVENTS" are described under "Deposit and Application of
Funds -- Early Redemption Events."
"EARLY REDEMPTION PERIOD" means a period beginning on the day on which an
Early Redemption Event occurs and terminating on the earliest of:
-- the payment date on which the outstanding dollar principal amount
of the Series 2002-B notes is reduced to zero;
-- the legal final; and
-- if this Early Redemption Period has commenced before the scheduled
termination of the Revolving Period, the day on which the
Revolving Period recommences under the limited circumstances
described in "Deposit and Application of Funds -- Early Redemption
Events."
"EXCLUDED DEALERS" means the dealers that are in voluntary or involuntary
bankruptcy proceedings or voluntary or involuntary liquidation or that, subject
to limitations, are being voluntarily removed by the seller from the CARCO
receivables trust.
"EXCLUDED RECEIVABLES" means principal receivables with respect to Excluded
Dealers.
"INCREMENTAL OVERCOLLATERALIZATION AMOUNT" is described under "Deposit and
Application of Funds -- Series 2002-B Overcollateralization Amount."
"INTEREST FUNDING ACCOUNT" means a Qualified Account maintained in the name
of the indenture trustee for the benefit of the Series 2002-B noteholders and in
which interest is deposited for payment to the Series 2002-B noteholders.
"INTEREST PERIOD" means, with respect to any payment date, the period from
and including the preceding payment date to but excluding that payment date, or,
in the case of the first payment date, from and including the Series 2002-B
issuance date to but excluding the first payment date.
"INVESTED AMOUNT" means, with respect to the collateral certificate and the
date of determination, the sum of the series nominal liquidation amounts for all
outstanding series of notes on such date.
"ISSUER" means DaimlerChrysler Master Owner Trust and its successors.
"LEGAL FINAL" means the payment date in November 2007, which is the payment
date on which the Series 2002-B notes are required to be paid.
"LIBOR" means, with respect to any Interest Period, the rate established by
the Calculation Agent, which will equal the offered rate for United States
dollar deposits for one month that appears on Telerate Page 3750 as of 11:00
A.M., London time, on the LIBOR Determination Date. However, if on any LIBOR
Determination Date the offered rate does not appear on Telerate Page 3750, the
Calculation Agent will request each of the reference banks, which shall be major
banks that are engaged in transactions in the London interbank market selected
by the Calculation Agent, to provide the Calculation Agent with its offered
quotation for United States dollar deposits for one month to prime banks in the
London interbank market as of 11:00 A.M., London time, on that date. If at least
two reference banks provide the Calculation Agent with the offered quotations,
LIBOR on that date will be the arithmetic mean, rounded upwards, if
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necessary, to the nearest 1/100,000 of 1% (.0000001), with five one-millionths
of a percentage point rounded upward, of all the quotations. If on that date
fewer than two of the reference banks provide the Calculation Agent with the
offered quotations, LIBOR on that date will be the arithmetic mean, rounded
upwards, if necessary, to the nearest 1/100,000 of 1% (.0000001), with five
one-millionths of a percentage point rounded upward, of the offered per annum
rates that one or more leading banks in The City of New York selected by the
Calculation Agent are quoting as of 11:00 A.M., New York City time, on that date
to leading European banks for United States dollar deposits for one month. If,
however, those banks are not quoting as described above, LIBOR for that date
will be LIBOR applicable to the Interest Period immediately preceding that
Interest Period.
"LIBOR BUSINESS DAY" means a day that is both a Business Day and a day on
which banking institutions in the City of London, England are not required or
authorized by law to be closed.
"LIBOR DETERMINATION DATE" means, with respect to any Interest Period, the
second LIBOR Business Day prior to that Interest Period.
"MONTHLY INTEREST" means, for any payment date, the amount of interest
accrued in respect of the Series 2002-B notes during the Interest Period for
that payment date.
"MONTHLY PRINCIPAL" means, with respect to any payment date relating to the
Accumulation Period or any Early Redemption Period, the Series 2002-B Available
Principal Amounts for that payment date less any portion thereof that is applied
to pay interest on the Series 2002-B notes on that payment date. For each
payment date, however, with respect to the Accumulation Period, Monthly
Principal may not exceed the Controlled Deposit Amount for that payment date
plus any Controlled Deposit Amount for a prior payment date that has not been
previously deposited into the principal funding account. Also, Monthly Principal
in any event will not exceed the nominal liquidation amount of the Series 2002-B
notes.
"NOMINAL LIQUIDATION AMOUNT OF THE SERIES 2002-B NOTES" means the
outstanding dollar principal amount of the Series 2002-B notes (which upon
issuance will be $1,000,000,000), minus the reductions in the nominal
liquidation amount of the Series 2002-B notes described under "Deposit and
Application of Funds -- Reduction and Reinstatement of Nominal Liquidation
Amounts" plus the increases in the nominal liquidation amount of the Series
2002-B notes described under that heading.
"PAYMENT DATE" means the 15th day of each month (or if that 15th day is not
a business day, the next following business day), commencing on December 16,
2002.
"POOL FACTOR" means, for a payment date, an eleven-digit decimal expressing
the Invested Amount as of the Determination Date, determined after taking into
account any reduction in the Invested Amount which will occur on the payment
date, as a proportion of the initial Invested Amount.
"PRIMARY SERIES 2002-B OVERCOLLATERALIZATION AMOUNT" means the Series
2002-B overcollateralization percentage of the nominal liquidation amount of the
Series 2002-B notes.
"PRINCIPAL FUNDING ACCOUNT" means a Qualified Account maintained in the
name of the indenture trustee for the benefit of the Series 2002-B noteholders
and in which principal is accumulated for payment to the Series 2002-B
noteholders.
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"PUT FEATURE" is described under "Deposit and Appreciation of Funds -- Sale
of Receivables."
"REQUIRED PARTICIPATION PERCENTAGE" means, for the collateral certificate,
103%. However, if either (a) the aggregate amount of principal receivables due
from either AutoNation, Inc. and its affiliates or United Auto Group, Inc. and
its affiliates on the close of business on the last day of any Collection Period
is greater than 4% of the Pool Balance on that day or (b) if the aggregate
amount of principal receivables due from any other dealer at such time is
greater than 1.5% of the Pool Balance on that day, the Required Participation
Percentage shall mean, as of that last day and with respect to that Collection
Period and the immediately following Collection Period only, 104%. Furthermore,
the seller may, upon ten days' prior notice to the CARCO receivables trust
trustee and the rating agencies, reduce the Required Participation Percentage to
not less than 100%, so long as the rating agencies shall not have notified the
seller or the servicer that any reduction will result in a reduction or
withdrawal of the rating of the Series 2002-B notes or any other outstanding
series or class of notes.
"REVOLVING PERIOD" means the period beginning at the close of business on
the Series 2002-B 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 immediately preceding the day on
which an Early Redemption Period commences.
The Revolving Period, however, may recommence upon the termination of an Early
Redemption Period.
"SELLER" means DCWR.
"SERIES 2002-B AVAILABLE INTEREST ACCOUNTS" is described under "Deposit and
Application of Funds -- Application of Available Amounts Allocated to Series
2002-B -- Available Interest Amounts for Series 2002-B."
"SERIES 2002-B AVAILABLE PRINCIPAL AMOUNTS" is described under "Deposit and
Application of Funds -- Application of Available Amounts Allocated to Series
2002-B -- Available Principal Amounts for Series 2002-B."
"SERIES 2002-B CUT-OFF DATE" means October 31, 2002.
"SERIES 2002-B EXPECTED PRINCIPAL PAYMENT DATE" means the November 2005
payment date.
"SERIES 2002-B FLOATING ALLOCATION PERCENTAGE" means, for any payment date,
the percentage equivalent, which shall never exceed 100%, of a fraction, the
numerator of which is the Series 2002-B nominal liquidation amount as of the
last day of the immediately preceding Collection Period and the denominator of
which is the sum of the series nominal liquidation amounts for all series of
notes (including Series 2002-B) on that day.
"SERIES 2002-B ISSUANCE DATE" means the date on which the Series 2002-B
notes are initially issued.
"SERIES 2002-B NOMINAL LIQUIDATION AMOUNT" means the sum of (i) the nominal
liquidation amount of the Series 2002-B notes and (ii) the Series 2002-B
overcollateralization amount.
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"SERIES 2002-B NOMINAL LIQUIDATION AMOUNT DEFICIT" is described under
"Deposit and Application of Funds -- Reduction and Reinstatement of Nominal
Liquidation Amounts."
"SERIES 2002-B NOTES" means the issuer's Floating Rate Auto Dealer Loan
Asset Backed Notes, Series 2002-B.
"SERIES 2002-B OVERCOLLATERALIZATION AMOUNT" is described under "Deposit
and Application of Funds -- Series 2002-B Overcollateralization Amount."
"SERIES 2002-B OVERCOLLATERALIZATION PERCENTAGE" means 9.89%, except that,
if the long-term unsecured debt of DaimlerChrysler AG is reduced below BBB- by
Standard & Poor's, the Series 2002-B overcollateralization percentage will be
11.11% until that rating is increased to at least BBB-.
"SERIES 2002-B PRINCIPAL ALLOCATION PERCENTAGE" means, for any payment
date, the percentage equivalent, which shall never exceed 100%, of a fraction:
-- the numerator of which is the Series 2002-B nominal liquidation
amount as of the last day of the immediately preceding Collection
Period or, if the Accumulation Period or an Early Redemption
Period has commenced, as of the last day of the Collection Period
prior to the commencement of the Accumulation Period or an Early
Redemption Period, as applicable; and
-- the denominator of which is the sum of the series nominal
liquidation amounts for all series of notes as of the last day of
the immediately preceding Collection Period, except that for any
series that is amortizing, repaying or accumulating principal, the
series nominal liquidation amount of that series will be the
series nominal liquidation amount as of the last day of the
Collection Period prior to the commencement of such amortization,
repayment or accumulation.
This percentage will be adjusted to account for any additional issuances of
series of notes since the prior Collection Period.
"SERIES 2002-B RATE" means the per annum rate equal to the applicable LIBOR
plus 0.035%.
"SHARED EXCESS AVAILABLE INTEREST AMOUNTS" means, with respect to any
payment date, the sum of, for each series of notes, the Available Interest
Amounts for that series that are not required to be applied in respect of that
series.
"SHARED EXCESS AVAILABLE PRINCIPAL AMOUNTS" means, with respect to any
payment date, the sum of, for each series of notes, the Available Principal
Amounts for that series that are not required to be applied in respect of that
series.
"TELERATE PAGE 3750" means the display page so designated as reported by
Bloomberg Financial Markets Commodities News Service, or any other page as may
replace that page on that service, or any other service as may be nominated as
the information vendor, for the purpose of displaying London interbank offered
rates of major banks for U.S. dollar deposits.
"UNDERWRITER" means Salomon Smith Barney Inc.
"UNDERWRITING AGREEMENT" means the underwriting agreement among the
underwriter, DCWR and DCS dated November 19, 2002.
S-42
ANNEX I
OTHER SERIES OF NOTES
This Annex I sets forth the principal characteristics of the Floating Rate
Auto Dealer Loan Asset Backed Notes, Series 2002-A, previously issued by the
issuer. For more specific information with respect to this series of notes, any
prospective investor should contact DCWR at (248) 427-2565. DCWR will provide,
without charge, to any prospective investor, a copy of the disclosure document
with respect to the series.
1. SERIES 2002-A NOTES
Series Issuance Date...........June 11, 2002
Stated Principal Amount of
Series 2002-A notes............$2,000,000,000
Initial nominal liquidation
amount of Series 2002-A
notes..........................$2,000,000,000
Initial Series 2002-A
overcollateralization amount...$197,802,198
Initial Series 2002-A nominal
liquidation amount.............$2,197,802,198
Scheduled Interest Payment
Dates..........................Monthly, on or about the 15th day of each month
Required Participation
Percentage of Collateral
Certificate....................103%, subject to increase or decrease
Series 2002-A
overcollateralization
percentage.....................9.89% (or, so long as the long-term unsecured
debt of DaimlerChrysler AG is below BBB- by
Standard & Poor's, 11.11%)
Current Outstanding Dollar
Principal Amount...............$2,000,000,000
Revolving Period...............May 31, 2002 to the commencement of the earlier
of the related Accumulation Period or an Early
Redemption Period
Expected Principal Payment
Date...........................May 2005 Interest Payment Date
Legal Final....................May 2007 Interest Payment Date
A-I-1
ANNEX II
SERIES OF INVESTOR CERTIFICATES ISSUED BY THE CARCO RECEIVABLES TRUST
This Annex II sets forth the principal characteristics of the following
series of investor certificates (other than the collateral certificate)
previously issued by the CARCO receivables trust that are outstanding as of the
date of this prospectus supplement:
-- the Floating Rate Auto Loan Asset Backed Certificates, Series
1996-1;
-- the Floating Rate Auto Loan Asset Backed Certificates, Series
1998-1;
-- the Floating Rate Auto Loan Asset Backed Certificates, Series
1999-2;
-- the Floating Rate Auto Loan Asset Backed Certificates, Series
2000-A;
-- the Floating Rate Auto Loan Asset Backed Certificates, Series
2000-B;
-- the Floating Rate Auto Loan Asset Backed Certificates, Series
2000-C; and
-- the Floating Rate Auto Loan Asset Backed Certificates, Series
2001-A.
For more specific information with respect to any series of investor
certificates, any prospective investor should contact DCWR at (248) 427-2565.
DCWR will provide, without charge, to any prospective investor, a copy of the
disclosure document with respect to that series.
1. SERIES 1996-1
Initial Principal Amount....... $500,000,000
Scheduled Interest Payment
Date........................... Monthly, on or about the fifteenth day of each
month
Current Principal Amount....... $500,000,000
Required Participation
Percentage..................... 103%
Initial Subordinated Amount.... Approximately 11.1% of the Invested Amount
Revolving Period............... October 31, 1996 to the earlier of the
commencement of an Accumulation Period or an
Early Amortization Period
Expected Principal Payment
Date........................... November 2003 Payment Date
Termination Date............... October 2005 Payment Date
2. SERIES 1998-1
Initial Principal Amount
Class A-1 Certificates....... $500,000,000
Class A-2 Certificates....... $500,000,000
Scheduled Interest Payment
Date........................... Monthly, on or about the fifteenth day of each
month
Current Principal Amount
Class A-1 Certificates.......$0
A-II-1
Class A-2 Certificates.......$500,000,000
Required Participation
Percentage..................... 103%
Initial Subordinated Amount.... Approximately 11.1% of the Invested Amount
Revolving Period
Class A-1 Certificates....... July 1, 1998 to the earlier of the commencement
of an Accumulation Period or an Early
Amortization Period
Class A-2 Certificates....... July 1, 1998 to the earlier of the commencement
of an Accumulation Period or an Early
Amortization Period
Expected Principal Payment Date
Class A-1 Certificates....... June 2001 Payment Date
Class A-2 Certificates....... June 2003 Payment Date
Termination Date
Class A-1 Certificates....... June 2003 Payment Date
Class A-2 Certificates....... June 2005 Payment Date
3. SERIES 1999-2
Initial Principal Amount
Class A-1 Certificates....... $750,000,000
Class A-2 Certificates....... $600,000,000
Scheduled Interest Payment
Date........................... Monthly, on or about the fifteenth day of each
month
Current Principal Amount
Class A-1 Certificates....... $0
Class A-2 Certificates....... $600,000,000
Required Participation
Percentage..................... 103%
Initial Subordinated Amount Approximately 11.1% of the Invested Amount
Revolving Period
Class A-1 Certificates....... May 1, 1999 to the earlier of the commencement
of an Accumulation Period or an Early
Amortization Period
Class A-2 Certificates....... May 1, 1999 to the earlier of the commencement
of an Accumulation Period or an Early
Amortization Period
Expected Principal Payment Date
Class A-1 Certificates....... May 2002 Payment Date
Class A-2 Certificates....... May 2004 Payment Date
Termination Date
Class A-1 Certificates....... May 2004 Payment Date
A-II-2
Class A-2 Certificates....... May 2006 Payment Date
4. SERIES 2000-A
Initial Principal Amount....... $750,000,000
Scheduled Interest Payment
Date........................... Monthly, on or about the fifteenth day of each
month
Current Principal Amount....... $750,000,000
Required Participation
Percentage..................... 103%
Initial Subordinated Amount.... Approximately 11.1% of the Invested Amount
Revolving Period............... March 31, 2000 to earlier of the commencement of
an Accumulation Period or an Early Amortization
Period
Expected Principal Payment
Date........................... March 2003 Payment Date
Termination Date............... March 2005 Payment Date
5. SERIES 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 Principal Payment
Date........................... October 2003 Payment Date
Termination Date............... October 2005 Payment Date
6. SERIES 2000-C
Initial Principal Amount....... $500,000,000
Scheduled Interest Payment
Date........................... Monthly, on or about the fifteenth day of each
month
Current Principal Amount....... $500,000,000
Required Participation
Percentage..................... 103%
Initial Subordinated Amount.... Approximately 11.1% of the Invested Amount
Revolving Period............... December 8, 2000 to earlier of the commencement
of an Accumulation Period or an Early
Amortization Period
A-II-3
Expected Principal Payment
Date........................... November 2003 Payment Date
Termination Date............... November 2005 Payment Date
7. SERIES 2001-A
Initial Principal Amount....... $1,000,000,000
Scheduled Interest Payment
Date........................... Monthly, on or about the fifteenth day of each
month
Current Principal Amount....... $1,000,000,000
Required Participation
Percentage..................... 103%
Initial Subordinated Amount.... Approximately 11.1% of the Invested Amount
Revolving Period............... December 3, 2001 to earlier of the commencement
of an Accumulation Period or an Early
Amortization Period
Expected Principal Payment
Date........................... November 15, 2004
Termination Date............... November 15, 2006
A-II-4
PROSPECTUS
[DAIMLERCHRYSLER LOGO]
DAIMLERCHRYSLER MASTER OWNER TRUST
Issuer
AUTO DEALER LOAN ASSET BACKED NOTES
DAIMLERCHRYSLER WHOLESALE RECEIVABLES LLC,
Seller
DAIMLERCHRYSLER SERVICES NORTH AMERICA LLC,
Servicer
THE ISSUER--
-- may periodically issue asset backed notes in one or more series
with one or more classes; and
-- will own
-- a certificate issued by a master receivables trust that owns
receivables arising from a portfolio of automobile dealer
revolving floorplan financing agreements; and
-- distributions on that certificate, which consist of payments
due on those receivables.
THE NOTES--
-- will be obligations of the issuer only;
-- will be paid only from the assets of the issuer;
-- will represent the right to payments in the amounts and at the
times described in the prospectus supplement for those notes;
-- will be rated in an investment grade rating category at the time
of issuance by at least one nationally recognized rating agency;
and
-- may have the benefit of one or more forms of credit enhancement.
BEFORE YOU DECIDE TO INVEST IN ANY OF THE NOTES, PLEASE READ THIS PROSPECTUS
AND THE RELATED PROSPECTUS SUPPLEMENT. THERE ARE MATERIAL RISKS IN INVESTING IN
THE NOTES. PLEASE READ THE RISK FACTORS BEGINNING ON PAGE 5 OF THIS PROSPECTUS.
The notes will be obligations of the issuer only and neither the notes nor the
assets of the issuer will represent interests in or obligations of
DaimlerChrysler Wholesale Receivables LLC, DaimlerChrysler AG, DaimlerChrysler
Corporation, DaimlerChrysler Services North America LLC, any of their affiliates
or any other person. The notes are not obligations of or interests in the master
receivables trust.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the notes or determined that this
prospectus or any prospectus supplement is accurate or complete. Any
representation to the contrary is a criminal offense.
The date of this prospectus is November 19, 2002.
READING THIS PROSPECTUS AND THE
ACCOMPANYING PROSPECTUS SUPPLEMENT
We provide information on your notes in two separate documents that offer
varying levels of detail:
-- this prospectus provides general information, some of which may
not apply to a particular series of notes, including your notes
and
-- the accompanying prospectus supplement provides a summary of the
specific terms of your notes.
If the terms of the notes described in this prospectus vary with the
accompanying prospectus supplement, you should rely on the information in the
prospectus supplement.
We include cross-references to sections in these documents where you can
find further related discussions. Refer to the table of contents in the front of
each document to locate the referenced sections.
You should rely only on the information contained in this prospectus and
the accompanying prospectus supplement, including any information incorporated
by reference. We have not authorized anyone to provide you with different
information. The information in this prospectus or the accompanying prospectus
supplement is only accurate as of the dates on their respective covers.
WHERE YOU CAN FIND MORE INFORMATION
The seller has filed a Registration Statement (together with all amendments
and exhibits, the "REGISTRATION STATEMENT") under the Securities Act of 1933, as
amended (the "SECURITIES ACT"), with the Securities and Exchange Commission (the
"SEC") with respect to the notes offered by this prospectus. This prospectus,
which forms part of the Registration Statement, does not contain all of the
information contained in the Registration Statement and the exhibits to the
Registration Statement.
The Registration Statement may be inspected and copied at:
-- the public reference facilities maintained by the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549 (telephone 1-800-732-0330),
-- the SEC's public reference facilities at 233 Broadway, New York,
New York 10279 and
-- the SEC's regional office at Citicorp Center, 500 West Madison
Street, Chicago, Illinois 60661.
Also, the SEC maintains a web site at http://www.sec.gov containing reports,
proxy and information statements and other information regarding registrants
that file electronically with the SEC.
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC allows information filed with it to be incorporated by reference
into this prospectus. The following documents filed with the SEC by the
servicer, on behalf of the issuer, are incorporated in this prospectus by
reference: the CARCO receivables trust's Annual Report on Form 10-K for the year
ended December 31, 2001. All reports and other documents filed by the servicer,
on behalf of the CARCO receivables trust and also on behalf of the issuer, in
ii
accordance with Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent
to the date of this prospectus and prior to the termination of the offering of
the notes shall be deemed to be incorporated by reference in this prospectus.
For purposes of this prospectus, any statement in this prospectus or in a
document incorporated or deemed to be incorporated by reference may be modified
or superseded. Those statements may be modified or superseded by any other
statement in this prospectus, an incorporated document or a document
incorporated by reference. The statement may only be modified or superseded to a
limited extent. The original form of the statement will no longer be a part of
this prospectus. Only the modified form of the statement will constitute a part
of this prospectus.
COPIES OF THE DOCUMENTS
You will receive a free copy of any or all of the documents incorporated in
this prospectus or incorporated by reference into the accompanying prospectus
supplement if:
-- you received this prospectus and
-- you requested the copies from Assistant Secretary, DaimlerChrysler
Services North America LLC, 27777 Inkster Road, Farmington Hills,
Michigan 48334 (telephone: 248-427-2565)
This offer only includes the exhibits to the documents, if the exhibits are
specifically incorporated by reference in the documents. You may also read and
copy these materials at the public reference facilities of the SEC in Washington
D.C., referred to previously.
iii
TABLE OF CONTENTS
<Table>
<Caption>
- -----------------------------------------------
SECTION PAGE
- -----------------------------------------------
SUMMARY 1
- -----------------------------------------------
RISK FACTORS 5
- -----------------------------------------------
-- Your ability to resell notes is
limited 5
- -----------------------------------------------
-- Risk factors relating to the
collateral certificate and the
CARCO receivables trust 5
- -----------------------------------------------
-- Credit enhancement for a series of
notes is limited. If the credit
enhancement is exhausted, you may
incur a loss 8
- -----------------------------------------------
-- Credit ratings of the notes
reflect the rating agency's
assessment of the likelihood that
you will receive your payments of
interest and principal 8
- -----------------------------------------------
-- Book-entry registration may limit
your ability to resell or pledge
your notes 8
- -----------------------------------------------
-- Only some of the assets of the
issuer are available for payments
on any series or class of notes 8
- -----------------------------------------------
-- Allocations of charged-off
receivables in the CARCO
receivables trust could reduce
payments to you 9
- -----------------------------------------------
-- You may receive principal payments
earlier or later than the expected
principal payment date 9
- -----------------------------------------------
-- Class B notes and Class C notes
bear losses before Class A notes
bear any losses 10
- -----------------------------------------------
-- Payment of Class B notes and Class
C notes may be delayed due to the
subordination provisions 10
- -----------------------------------------------
-- You may not be able to reinvest
any early redemption proceeds in a
comparable security 10
- -----------------------------------------------
-- Issuance of additional notes may
affect the timing and amount of
payments to you 11
- -----------------------------------------------
-- You may have limited control of
actions under the indenture and
the pooling and servicing
agreement 11
- -----------------------------------------------
-- Your remedies upon default may be
limited 11
- -----------------------------------------------
DAIMLERCHRYSLER WHOLESALE RECEIVABLES
LLC AND THE CARCO RECEIVABLES TRUST 13
- -----------------------------------------------
-- DaimlerChrysler Wholesale
Receivables LLC 13
- -----------------------------------------------
-- The CARCO Receivables Trust 14
- -----------------------------------------------
THE ISSUER 15
- -----------------------------------------------
USE OF PROCEEDS 16
- -----------------------------------------------
THE DEALER FLOORPLAN FINANCING BUSINESS 16
- -----------------------------------------------
</Table>
<Table>
<Caption>
- -----------------------------------------------
SECTION PAGE
- -----------------------------------------------
-- General 16
- -----------------------------------------------
-- Creation of Receivables 17
- -----------------------------------------------
-- Credit Underwriting Process 18
- -----------------------------------------------
-- Billing, Collection Procedures and
Payment Terms 19
- -----------------------------------------------
-- Revenue Experience 19
- -----------------------------------------------
-- Relationship with DaimlerChrysler 19
- -----------------------------------------------
-- Dealer Monitoring 20
- -----------------------------------------------
-- "Dealer Trouble" Status and DCS's
Write-Off Policy 20
- -----------------------------------------------
-- Additional Information 21
- -----------------------------------------------
THE ACCOUNTS 21
- -----------------------------------------------
DAIMLERCHRYSLER SERVICES NORTH AMERICA
LLC 22
- -----------------------------------------------
THE NOTES 23
- -----------------------------------------------
-- Interest 24
- -----------------------------------------------
-- Principal 25
- -----------------------------------------------
-- Stated Principal Amount,
Outstanding Dollar Principal
Amount and Nominal Liquidation
Amount of Notes 25
- -----------------------------------------------
-- Subordination of Principal 28
- -----------------------------------------------
-- Redemption and Early Redemption of
Notes 29
- -----------------------------------------------
-- Issuances of New Series, Classes
and Subclasses of Notes 30
- -----------------------------------------------
-- Payments on Notes; Paying Agent 31
- -----------------------------------------------
-- Book-Entry Notes 32
- -----------------------------------------------
SOURCES OF FUNDS TO PAY THE NOTES 37
- -----------------------------------------------
-- General 37
- -----------------------------------------------
-- Deposit and Application of Funds 39
- -----------------------------------------------
-- Issuer Accounts 40
- -----------------------------------------------
-- Derivative Agreements 41
- -----------------------------------------------
-- Sale of Receivables 41
- -----------------------------------------------
-- Limited Recourse to the Issuer;
Security for the Notes 42
- -----------------------------------------------
THE INDENTURE 42
- -----------------------------------------------
-- Indenture Trustee 42
- -----------------------------------------------
-- Issuer Covenants 43
- -----------------------------------------------
-- Events of Default 44
- -----------------------------------------------
-- Events of Default Remedies 44
- -----------------------------------------------
-- Early Redemption Events 46
- -----------------------------------------------
</Table>
iv
TABLE OF CONTENTS (CONTINUED)
<Table>
<Caption>
- -----------------------------------------------
SECTION PAGE
- -----------------------------------------------
-- Meetings 47
- -----------------------------------------------
-- Voting 47
- -----------------------------------------------
-- Amendments to the Indenture and
Indenture Supplements 47
- -----------------------------------------------
-- Tax Opinions for Amendments 50
- -----------------------------------------------
-- Addresses for Notices 50
- -----------------------------------------------
-- Issuer's Annual Compliance
Statement 50
- -----------------------------------------------
-- Indenture Trustee's Annual Report 50
- -----------------------------------------------
-- List of Noteholders 51
- -----------------------------------------------
-- Reports 51
- -----------------------------------------------
DESCRIPTION OF THE INVESTOR CERTIFICATES
ISSUED BY THE CARCO RECEIVABLES TRUST 51
- -----------------------------------------------
-- General 51
- -----------------------------------------------
-- Interest 52
- -----------------------------------------------
-- Principal 52
- -----------------------------------------------
-- The Seller's Certificate 55
- -----------------------------------------------
-- New Issuances 55
- -----------------------------------------------
-- Conveyance of Receivables and
Collateral Security 57
- -----------------------------------------------
-- Representations and Warranties 58
- -----------------------------------------------
-- Eligible Accounts and Eligible
Receivables 60
- -----------------------------------------------
-- Ineligible Receivables, the
Installment Balance Amount and the
Overconcentration Amount 62
- -----------------------------------------------
-- Addition of Accounts 63
- -----------------------------------------------
-- Removal of Accounts 65
- -----------------------------------------------
-- Excluded Series 69
- -----------------------------------------------
-- Collection Account 69
- -----------------------------------------------
-- Excess Funding Account 71
- -----------------------------------------------
-- Allocation Percentages 72
- -----------------------------------------------
-- Allocation of Collections;
Deposits in Collection Account 74
- -----------------------------------------------
-- Limited Subordination of Seller's
Interest; Enhancements 75
- -----------------------------------------------
-- Distributions 77
- -----------------------------------------------
-- Defaulted Receivables and
Recoveries 77
- -----------------------------------------------
-- Optional Repurchase 78
- -----------------------------------------------
</Table>
<Table>
<Caption>
- -----------------------------------------------
SECTION PAGE
- -----------------------------------------------
-- Reinvestment Events and Early
Amortization Events 79
- -----------------------------------------------
-- Termination; Fully Reinvested Date 81
- -----------------------------------------------
-- Indemnification 82
- -----------------------------------------------
-- Collection and Other Servicing
Procedures 82
- -----------------------------------------------
-- Servicer Covenants 83
- -----------------------------------------------
-- Servicing Compensation and Payment
of Expenses 84
- -----------------------------------------------
-- Matters Regarding the Servicer 85
- -----------------------------------------------
-- Service Default 85
- -----------------------------------------------
-- Reports 86
- -----------------------------------------------
-- Evidence as to Compliance 86
- -----------------------------------------------
-- Amendments 87
- -----------------------------------------------
-- List of Certificateholders 88
- -----------------------------------------------
-- The CARCO Receivables Trustee 88
- -----------------------------------------------
DESCRIPTION OF THE RECEIVABLES PURCHASE
AGREEMENT 89
- -----------------------------------------------
-- Sale or Transfer of Receivables 89
- -----------------------------------------------
-- Representations and Warranties 90
- -----------------------------------------------
-- Covenants 91
- -----------------------------------------------
-- Termination 91
- -----------------------------------------------
LEGAL ASPECTS OF THE RECEIVABLES 91
- -----------------------------------------------
-- Transfer of Receivables and
Collateral Certificate 91
- -----------------------------------------------
-- Matters Relating to Bankruptcy 93
- -----------------------------------------------
TAX MATTERS 94
- -----------------------------------------------
-- Federal Income Tax Consequences 94
- -----------------------------------------------
-- State and Local Tax Consequences 101
- -----------------------------------------------
ERISA CONSIDERATIONS 101
- -----------------------------------------------
-- General 101
- -----------------------------------------------
EXPERTS 103
- -----------------------------------------------
PLAN OF DISTRIBUTION 104
- -----------------------------------------------
LEGAL MATTERS 106
- -----------------------------------------------
GLOSSARY OF PRINCIPAL TERMS FOR
PROSPECTUS 106
- -----------------------------------------------
ANNEX A: GLOBAL CLEARANCE, SETTLEMENT
AND TAX DOCUMENTATION PROCEDURES A-1
- -----------------------------------------------
</Table>
v
SUMMARY
The following summary describes the main structural features that a series
or class of notes may have. For this reason, this summary does not contain all
the information that may be important to you or that describes all of the terms
of a note. You will find a detailed description of the possible terms of a note
following this summary. Refer to the "Glossary of Principal Terms for
Prospectus" for the definitions of each capitalized term used in this summary
and elsewhere in this prospectus.
PARTIES
<Table>
<Caption>
- ----------------------------------------------------------
PARTY DESCRIPTION
- ----------------------------------------------------------
Issuer - DaimlerChrysler Master Owner Trust (the
"ISSUER")
- ----------------------------------------------------------
Seller - DaimlerChrysler Wholesale Receivables
LLC ("DCWR"), an indirectly owned
subsidiary of DaimlerChrysler Services
North America LLC ("DCS")
- ----------------------------------------------------------
Servicer - DCS, a wholly owned subsidiary of
DaimlerChrysler Corporation
("DAIMLERCHRYSLER"), the successor to
Chrysler Corporation
- ----------------------------------------------------------
Indenture - The Bank of New York
Trustee
- ----------------------------------------------------------
Owner - Chase Manhattan Bank USA, National
Trustee Association
- ----------------------------------------------------------
CARCO - CARCO Auto Loan Master Trust (the "CARCO
Receivables RECEIVABLES TRUST")
Trust
- Owns the receivables and has issued the
collateral certificate to the issuer
- ----------------------------------------------------------
Trustee of - The Bank of New York
CARCO
Receivables
Trust
- ----------------------------------------------------------
</Table>
TITLE OF SECURITIES
Auto Dealer Loan Asset Backed Notes (the "NOTES").
THE ISSUER
The issuer will be governed by a trust agreement between DCWR and the owner
trustee. The primary asset of the issuer is a certificate (the "COLLATERAL
CERTIFICATE") issued by the CARCO receivables trust. The CARCO receivables trust
has outstanding seven series of investor certificates, including the collateral
certificate, that evidence interests in the CARCO receivables trust and receive
a share of the collections on the receivables owned by that trust. The assets of
the CARCO receivables trust include:
-- receivables existing under the accounts at the close of business on
May 31, 1991, receivables generated under the accounts from time to
time after that date during the term of the CARCO receivables trust
as well as receivables generated under any accounts added to the
CARCO receivables trust from time to time;
-- all funds collected or to be collected in respect of the receivables;
-- all funds on deposit in the accounts of the CARCO receivables trust;
-- any other enhancement issued with respect to any particular series or
class; and
1
-- a security interest in motor vehicles and parts inventory, equipment,
fixtures, service accounts and, in some cases, realty and/or a
personal guarantee securing the receivables.
THE ACCOUNTS
The accounts under which the receivables have been or will be generated are
revolving credit agreements entered into with DCS, directly or as successor to
an affiliate, by dealers to finance the purchase of their automobile and light
duty truck and other vehicle inventory. Accounts may be added to, or removed
from, the CARCO receivables trust. See "The Accounts," "Description of the
Investor Certificates Issued by the CARCO Receivables Trust -- Eligible Accounts
and Eligible Receivables," "-- Addition of Accounts" and " -- Removal of
Accounts."
THE RECEIVABLES OWNED BY
CARCO RECEIVABLES TRUST
The receivables consist of advances made by DCS to domestic motor vehicle
dealers to purchase the vehicles. The vehicles consist primarily of new
automobiles, light duty trucks and other vehicles. The principal amount of an
advance in respect of a vehicle typically is equal to the wholesale purchase
price of the vehicle plus destination charges and, subject to exceptions, is due
upon the retail sale of the vehicle. See "The Dealer Floorplan Financing
Business -- Creation of Receivables" and "-- Billing, Collection Procedures and
Payment Terms." The receivables bear interest at a floating rate. See "The
Dealer Floorplan Financing Business -- Revenue Experience."
FORM AND DENOMINATION
OF NOTES; RECORD DATE
You may purchase notes in book-entry form only and in $1,000 increments.
The record date for payments on the notes will be the day preceding the related
payment date.
INTEREST
The issuer will pay interest on the notes in a series with the frequency
specified in the prospectus supplement. Each series or class of notes will have
its own interest rate, which may be fixed, variable, contingent or adjustable or
have any combination of these characteristics and will be specified in the
prospectus supplement. The issuer's sources of funds for the payment of interest
on a series of notes will include:
-- interest and principal distributions on the collateral certificate
allocable to that series; and
-- any available credit enhancement for that series.
Only the amounts allocated to a series are available to make payments on that
series.
PRINCIPAL
The issuer will make principal payments on a series of notes on one or more
dates specified in the prospectus supplement. We will specify in the prospectus
supplement the sources of funds that the issuer will use to pay principal.
Typically, these sources will include:
-- all or a portion of the principal distributions on the collateral
certificate allocable to that series;
-- all or a portion of the interest distributions on the collateral
certificate allocable to that series remaining after the issuer has
made interest payments on that series; and
2
-- any available credit enhancement for that series.
Only the amounts allocated to a series are available to make payments on that
series.
We will set forth in the prospectus supplement for a series the manner in
which the issuer will accumulate or apply available funds toward principal
payments on that series of notes.
Each series of notes will have a revolving period during which we will make
no principal payments on that series of notes. We may structure principal
payments for a class of notes in the following ways, among others:
-- a single expected principal payment date, on which we will repay all
principal at once; or
-- an amortization period, during which we will repay principal on each
specified payment date until we have repaid all principal.
If a series has more than one class of notes, we may repay principal
differently for the various classes.
However, it is possible that principal payments on a class or series of
notes will begin earlier than the date we specify in the prospectus supplement.
If an early redemption event or event of default for a series of notes occurs,
the issuer will apply all principal distributions allocated to that series to
the repayment of the outstanding principal of notes in that series, unless we
provide in the prospectus supplement that those funds will be set aside for
payment on a later date. An early redemption event or an event of default will
likely cause us to repay principal on the notes earlier than the expected date
we specified in the prospectus supplement for that series. Also, an early
redemption event or an event of default may result in delays or reductions in
the payments on your notes.
The servicer or other designated person may have the option to purchase the
outstanding notes of a series when its stated principal amount is reduced to a
specified level.
OVERCOLLATERALIZATION AMOUNT;
ENHANCEMENTS
Unless we otherwise specify in the related prospectus supplement, the
overcollateralization amount for a series will be subordinated to the rights of
the noteholders of that series to the extent described in the related prospectus
supplement. Also, we may provide other enhancements. See "Sources of Funds to
Pay the Notes."
TAX MATTERS
In the opinion of Sidley Austin Brown & Wood LLP, special federal income
tax counsel for the seller, the CARCO receivables trust and the issuer,
-- the notes of each series will be characterized as debt for federal
income tax purposes; and
-- the issuer will not be classified as an association, or a publicly
traded partnership, taxable as a corporation under federal income tax
law.
By your acceptance of a note, you will agree to treat your note as indebtedness
of the seller for federal, state and local income and single business tax
purposes. We might issue the notes with original issue discount. See "Tax
Matters" for additional information concerning the application of federal and
Michigan tax laws.
ERISA CONSIDERATIONS
If you are an employee benefit plan, you should review the considerations
discussed
3
under "ERISA Considerations" in this prospectus and consult counsel before
investing in the notes. In general, subject to those considerations and to the
conditions described in that section and unless otherwise specified in the
prospectus supplement, you may purchase notes of any series.
NOTE RATINGS
We will issue the notes of a series only if they are rated in an investment
grade rating category by at least one nationally recognized rating agency.
The rating agencies and their ratings do not address whether you will
receive any principal on your notes prior to or after the expected principal
payment date.
RISK FACTORS
An investment in any series of notes involves material risks. See "Risk
Factors" in this prospectus and in the accompanying prospectus supplement.
4
RISK FACTORS
In this section and in the related prospectus supplement under the heading
"Risk Factors," we discuss the principal risk factors for an investment in the
notes.
YOUR ABILITY TO RESELL NOTES IS LIMITED.
There may be no secondary market for your notes. Underwriters may
participate in making a secondary market in the notes, but are under no
obligation to do so. We cannot assure you that a secondary market will develop.
If a secondary market does develop, we cannot assure you that it will continue
or that you will be able to resell your notes. Also, your notes will not be
listed on any securities exchange or quoted in the automated quotation system of
any registered securities association. As a result, you will not have the
liquidity that might be provided by that kind of listing or quotation.
RISK FACTORS RELATING TO THE COLLATERAL CERTIFICATE AND THE CARCO RECEIVABLES
TRUST.
The primary assets of the issuer are the collateral certificate and the
distributions made on the collateral certificate. Consequently, the factors that
affect the ability of the CARCO receivables trust to make distributions on the
collateral certificate also affect the issuer's ability to make payments on your
notes.
-- VARIOUS LEGAL ASPECTS MAY CAUSE DELAYS IN YOUR RECEIVING
PAYMENTS OR MAY RESULT IN REDUCED PAYMENTS OR LOSSES ON YOUR
NOTES.
This risk factor discusses various ways in which a third party may become
entitled to receive collections on the receivables instead of the CARCO
receivables trust. If that happens, you will experience delays in payments on
your notes and may experience reductions in payments on your notes. Ultimately,
you may incur a loss on your notes.
There are limited circumstances under the Uniform Commercial Code and
applicable federal law in which prior or subsequent transferees of receivables
could have an interest in the receivables with priority over the CARCO
receivables trust's interest. See "Legal Aspects of the Receivables -- Transfer
of Receivables and the Collateral Certificate."
DCS and the seller have and will treat the transfer of receivables to the
CARCO receivables trust described in this prospectus as a sale of the
receivables to the seller and then to the CARCO receivables trust. However, DCS
and/or the seller may become a debtor in a bankruptcy case and a creditor or
trustee-in-bankruptcy of the debtor or the debtor itself may take the position
that the sale of receivables to the seller or to the CARCO receivables trust, or
the sale of the collateral certificate to the issuer, should be recharacterized
as a pledge of the receivables (or the collateral certificate) to secure a
borrowing of the debtor. In that case, the CARCO receivables trust and the
issuer could experience delays in payments of collections of receivables to it
or, should the court rule in favor of any trustee, debtor or creditor,
reductions in the amount of the payments could result. Also, if the transfer of
receivables to the seller is recharacterized as a pledge, a tax or government
lien on the property of DCS arising before any receivables come into existence
may have priority over the seller's interest in the receivables. See "Legal
Aspects of the Receivables -- Matters Relating to Bankruptcy."
5
At the time a vehicle is sold, DCS's security interest in the vehicle will
terminate. Therefore, if a dealer fails to remit to DCS amounts owed with
respect to vehicles that have been sold, the related receivables will no longer
be secured by vehicles.
-- THE TIMING OF PAYMENTS ON THE RECEIVABLES WILL DETERMINE
WHETHER WE WILL PAY PRINCIPAL ON THE NOTES WHEN INTENDED.
Dealers pay receivables upon the retail sale of the underlying vehicle. The
timing of those sales is uncertain. Also, we cannot assure you that there will
be additional receivables created under the Accounts or that any particular
pattern of dealer repayments will occur. The payment of principal on the notes
depends on dealer repayments. As a result, you may not receive your principal
when you expected because:
-- the notes of your series or class may not be fully amortized by
its expected payment date, if any, or
-- the payment of principal to noteholders or the deposit of
principal in a principal funding account during an accumulation
period, if any, with respect to your series or class of notes may
not equal the controlled amortization amount or controlled deposit
amount, if any, with respect to the series or class.
-- SOCIAL, ECONOMIC AND OTHER FACTORS WILL AFFECT THE LEVEL OF THE
COLLECTIONS ON THE RECEIVABLES AND MAY AFFECT THE AMOUNT OF THE
DISTRIBUTIONS OF THE COLLATERAL CERTIFICATE AND THEREFORE
PAYMENTS ON THE NOTES.
Payments of the receivables are largely dependent upon the retail sale of
the related vehicles. The level of retail sales of cars and light duty trucks
may change as the result of a variety of social and economic factors. Economic
factors include
-- 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 CARCO RECEIVABLES TRUST TO MAKE PAYMENTS ON
THE COLLATERAL CERTIFICATE DEPENDS IN PART ON THE ABILITY OF
DAIMLERCHRYSLER AND DCS TO GENERATE RECEIVABLES AND THE ABILITY
OF DCS TO PERFORM ITS OBLIGATIONS UNDER THE POOLING AND
SERVICING AGREEMENT.
Neither DCS nor DaimlerChrysler is obligated to make any payments in
respect of the receivables, the collateral certificate or any notes. However,
the CARCO receivables trust and the issuer depend completely upon DCS to
generate new receivables. The ability of DCS to generate receivables depends in
turn to a large extent on the sales of automobiles and light duty trucks and
other vehicles manufactured or distributed by DaimlerChrysler. We cannot assure
you that DCS 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.
6
DCS makes representations and warranties with respect to the
characteristics of the receivables. In some cases, DCS would be required to
purchase receivables with respect to which the representations and warranties
have been breached. If DCS fails to make a required repurchase, the issuer may
have less funds. In addition, subject to limitations, DCS has the ability to
change the terms of the Accounts, including the rate and the credit line, as
well as change its underwriting procedures. These changes could reduce the
amount of collections received on the receivables and therefore reduce the
amount of funds received by the issuer.
Under agreements between DaimlerChrysler and DaimlerChrysler-franchised
dealers, DaimlerChrysler is committed to purchase unmiled vehicles from the
dealers upon dealer termination. If DaimlerChrysler is not able to repurchase
the new vehicles under the repurchase provision of new vehicles in the dealer
agreements, losses with respect to the receivables may be adversely affected.
See "The Dealer Floorplan Financing Business -- Relationship with
DaimlerChrysler." Also, because a substantial number of the vehicles to be sold
by the dealers are manufactured or distributed by DaimlerChrysler, if
DaimlerChrysler were temporarily or permanently no longer manufacturing or
distributing vehicles, the rate of sales of DaimlerChrysler-manufactured
vehicles owned by the Dealers would decrease. In that case, payment rates and
the loss experience with respect to the receivables will be adversely affected.
See "The Dealer Floorplan Financing Business."
-- OTHER CERTIFICATEHOLDERS MAY CONTROL THE ACTIONS OF THE CARCO
RECEIVABLES TRUST. THEIR ACTIONS MAY BE ADVERSE TO YOUR
INTEREST.
In some cases, the consent or approval of the holders of a specified
percentage of the aggregate unpaid principal amount of all outstanding investor
certificates of all outstanding series issued by the CARCO receivables trust
will be required to direct some actions. These actions include amending the
pooling and servicing agreement in some cases and directing a reassignment of
the entire portfolio of receivables. Also, following the occurrence of an
insolvency event with respect to the seller, the holders of certificates
evidencing more than 50% of the aggregate unpaid principal amount of each series
of certificates or each class of each series of certificates, and any holder of
a supplemental certificate, will be required to direct the trustee for the CARCO
receivables trust not to sell or otherwise liquidate the receivables. The
holders of notes may have no control over such actions by holders of
certificates.
-- THE ISSUANCE OF ADDITIONAL SERIES OF CERTIFICATES MAY ADVERSELY
AFFECT YOUR INTEREST.
The CARCO receivables trust, as a master trust, has previously issued
several series of investor certificates and may issue additional series of
investor certificates which may be represented by different classes within a
series. A series supplement delivered under the pooling and servicing agreement
in connection with the issuance of any other series of investor certificates
will specify principal terms applicable to the series. No series supplement may
change the terms of the investor certificates of another series or the terms of
the pooling and servicing agreement as applied to the investor certificates of
another series. See "Description of the Investor Certificates Issued by the
CARCO Receivables Trust -- New Issuances." However, we cannot assure you that
the terms of any one series of investor certificates might not have an impact on
the timing or amount of payments received by a certificateholder of any other
series and, consequently, on the timing or amount of payments received by a
noteholder.
7
CREDIT ENHANCEMENT FOR A SERIES OF NOTES IS LIMITED.
IF THE CREDIT ENHANCEMENT IS EXHAUSTED, YOU MAY INCUR A LOSS.
We will provide credit enhancement of each series of notes by creating an
overcollateralization amount to the extent described in the related prospectus
supplement. The amount of the credit enhancement is limited and will be reduced
from time to time as described in the related prospectus supplement. If the
credit enhancement is exhausted, you are much more likely to incur a loss. See
"Description of the Investor Certificates Issued by the CARCO Receivables
Trust -- Limited Subordination of Seller's Interest; Enhancements."
CREDIT RATINGS OF THE NOTES REFLECT THE RATING AGENCY'S ASSESSMENT OF
THE LIKELIHOOD THAT YOU WILL RECEIVE YOUR PAYMENTS OF INTEREST AND PRINCIPAL.
Unless we specify otherwise in the related prospectus supplement, it will
be a condition to the issuance of the notes of each series offered by this
prospectus that they be rated in an investment grade rating category by at least
one nationally recognized rating agency. Any rating assigned to the notes of a
series or a class by a rating agency
-- will reflect the rating agency's assessment of the likelihood that
noteholders of the series or class will receive the payments of
interest and principal required to be made under the indenture and
-- will be based primarily on the value of the receivables in the
CARCO receivables trust, the overcollateralization amount and the
availability of any enhancement with respect to the series or
class.
The rating will not be a recommendation to buy, hold or sell notes of the series
or class, and the rating will not comment as to the market price or suitability
for a particular investor. We cannot assure you that a rating will remain for
any given period of time or that a rating agency will not reduce or withdraw a
rating in the future if in its judgment circumstances in the future so warrant.
A reduction in the rating of your notes may reduce the market value of your
notes.
BOOK-ENTRY REGISTRATION MAY LIMIT YOUR ABILITY TO RESELL OR PLEDGE YOUR NOTES.
Unless we otherwise specify in the prospectus supplement relating to a
series of notes, the notes of each series will initially be book-entry notes and
will not be registered in your name or your nominee's name. Accordingly, you
will not be recognized by the indenture trustee as the "noteholder." You will
only be able to exercise the rights of a noteholder indirectly through DTC and
its participating organizations, and, if applicable, through Euroclear or
Clearstream and their respective participating organizations. See "The Notes"
and "-- Book-Entry Notes."
ONLY SOME OF THE ASSETS OF THE ISSUER
ARE AVAILABLE FOR PAYMENTS ON ANY SERIES OR CLASS OF NOTES.
The sole source of payment of principal of or interest on a series or class
of notes is provided by:
-- the portion of the principal collections and interest collections
received by the issuer under the collateral certificate and
available to that series or class of notes after giving effect to
all allocations and reallocations;
-- the applicable trust accounts for that series or class of notes;
and
8
-- payments received under any applicable credit enhancement or
derivative agreement for that series or class of notes.
As a result, you must rely only on the particular assets allocated to your
series or class as security for your series or class for repayment of the
principal of and interest on your notes. You will not have recourse to any other
assets of the issuer or any other person for payment of your notes. See "Sources
of Funds to Pay the Notes."
A further restriction applies if the holders of a series or class of notes
directs the CARCO receivables trust to sell receivables following an event of
default and acceleration, or on the applicable legal maturity date, as described
in "Sources of Funds to Pay the Notes -- Sale of Receivables." In that case,
that series or class of notes has recourse only to the proceeds of that sale and
investment earnings on those proceeds.
ALLOCATIONS OF CHARGED-OFF RECEIVABLES
IN THE CARCO RECEIVABLES TRUST COULD REDUCE PAYMENTS TO YOU.
The servicer will charge off the receivables arising in the accounts in the
CARCO receivables trust portfolio if the receivables become uncollectible. The
collateral certificate will be allocated a portion of these charged-off
receivables. If the amount of charged-off receivables allocated to the
collateral certificate exceeds the amount of funds available for reimbursement
of those charge-offs, the available funds under the collateral certificate may
not be sufficient to pay the full stated principal amount of your notes.
You will not receive full payment of your notes if the nominal liquidation
amount of your notes has been reduced by charge-offs of receivables in the CARCO
receivables trust or as the result of reallocations of principal collections to
pay interest on senior classes of notes, and those amounts have not been
reimbursed from excess interest collections. See "The Notes -- Stated Principal
Amount, Outstanding Dollar Principal Amount and Nominal Liquidation Amount of
Notes."
YOU MAY RECEIVE PRINCIPAL PAYMENTS
EARLIER OR LATER THAN THE EXPECTED PRINCIPAL PAYMENT DATE.
We cannot assure that you will receive the principal amount of your notes
on its expected principal payment date. An early redemption event is an event
that indicates that we may not be able to make payments on your notes as we had
intended. See "Description of the Investor Certificates Issued by the CARCO
Receivables Trust -- Reinvestment Events and Early Amortization Events." If an
early redemption event or an event of default for a series occurs, the issuer
will apply all distributions of principal allocated to that series to the
repayment of the principal of the notes of that series, unless we otherwise
specify in the related prospectus supplement. The occurrence of an early
redemption event or an event of default will likely cause us to begin payment of
principal earlier than the related expected principal payment date. However,
such events may result in delays or reductions in the payment of principal and
could result in a loss on your notes.
9
CLASS B NOTES AND CLASS C NOTES BEAR LOSSES
BEFORE CLASS A NOTES BEAR ANY LOSSES.
A series may include Class B notes and Class C notes. Class B notes of a
series will be subordinated in right of payment of principal to Class A notes of
that series, and Class C notes of a series are subordinated in right of payment
of principal to Class A notes and Class B notes of that series. In general,
unless we specify otherwise in the related prospectus supplement, interest
payments on a class of notes of a series will not be subordinated in right of
payment to interest payments on any other class of notes of that series.
In all series with subordinated classes of notes, principal collections
that are allocable to the subordinated classes of notes may be reallocated to
pay interest on senior classes of notes of that series. Also, unless we specify
otherwise in the related prospectus supplement, losses on charged-off
receivables in the CARCO receivables trust are allocated first to the
subordinated classes of a series. See "The Notes -- Stated Principal Amount,
Outstanding Dollar Principal Amount and Nominal Liquidation Amount of
Notes -- Nominal Liquidation Amount" and "-- Subordination of Principal." If
these reallocations and losses are not reimbursed from excess interest
collections, the full stated principal amount of the subordinated classes of
notes may not be repaid.
If there is a sale of the receivables owned by the CARCO receivables trust
because of a sale or repurchase of the interest represented by the collateral
certificate after a default by the servicer of the CARCO receivables trust, the
net proceeds of the sale allocable to principal payments with respect to the
collateral certificate that are allocable to a series will generally be used
first to pay amounts due to Class A noteholders of that series, next to pay
amounts due to Class B noteholders, if any, of that series, and lastly, for
amounts due to Class C noteholders, if any, of that series. This could cause a
loss to Class C noteholders or the Class B noteholders.
PAYMENT OF CLASS B NOTES AND CLASS C NOTES
MAY BE DELAYED DUE TO THE SUBORDINATION PROVISIONS.
In general, no payment of principal of Class B notes, if any, of a series
will be made until all principal of Class A notes of that series has been paid,
and no payment of principal of Class C notes, if any, of that series will be
made until all principal of Class A notes and Class B notes of that series has
been paid, even if the subordinated notes have reached their expected principal
payment date, or have had an early redemption event, event of default or other
optional or mandatory redemption. See "The Notes -- Subordination of Principal."
YOU MAY NOT BE ABLE TO REINVEST
ANY EARLY REDEMPTION PROCEEDS IN A COMPARABLE SECURITY.
If your notes are redeemed at a time when prevailing interest rates are
relatively low, you may not be able to reinvest the redemption proceeds in a
comparable security with an effective interest rate as high as that of your
notes.
10
ISSUANCE OF ADDITIONAL NOTES MAY AFFECT
THE TIMING AND AMOUNT OF PAYMENTS TO YOU.
The issuer expects to issue notes from time to time. New notes may be
issued without notice to existing noteholders and without their consent, and may
have different terms from outstanding notes. For a description of the conditions
that must be met before the issuer can issue new notes, see "The
Notes -- Issuance of New Series, Classes and Subclasses of Notes."
The issuance of a new series of notes could adversely affect the timing and
amount of payments on outstanding notes. For example, if notes issued after your
notes have a higher interest rate than your notes, the result could be that
there is a smaller amount of shared excess interest collections available to pay
interest on your notes. Also, when new notes are issued, the voting rights of
your notes may be diluted. See "Risk Factors -- You may have limited control of
actions under the indenture and the pooling and servicing agreement."
YOU MAY HAVE LIMITED CONTROL OF ACTIONS
UNDER THE INDENTURE AND THE POOLING AND SERVICING AGREEMENT.
Under the indenture, some actions require the vote of noteholders holding a
specified percentage of the aggregate outstanding dollar principal amount of
notes of a series, class or subclass or all the notes. These actions include
accelerating the payment of principal of the notes or consenting to amendments
relating to the collateral certificate. In the case of votes by series or votes
by holders of all of the notes of a series that has subordinated notes, the
Class A outstanding dollar principal amount will generally be substantially
greater than the Class B or Class C outstanding dollar principal amounts.
Consequently, the Class A noteholders will generally have the ability to
determine whether and what actions should be taken and may be expected to act
solely in their interest. The Class B and Class C noteholders will generally
need the concurrence of the Class A noteholders to cause actions to be taken.
YOUR REMEDIES UPON DEFAULT MAY BE LIMITED.
Your remedies may be limited if an event of default under your class of
notes occurs. After an event of default affecting your class of notes, any funds
in the principal funding account and the interest funding account with respect
to that series or class of notes will be applied to pay principal of and
interest on those notes or reallocated or retained for the benefit of any senior
classes of notes of that series. Then, in each following month, principal
collections and interest collections allocated to those notes will either be
deposited into the applicable principal or interest funding account and applied
to make monthly principal and interest payments on those notes or reallocated or
retained for the benefit of any senior classes of notes until the earlier of the
date those notes are no longer necessary to provide subordination protection for
senior classes of notes or until the legal maturity date of those notes.
Any funds in the applicable principal funding account that are not
reallocated to other classes of that series and any funds in the applicable
interest funding account will be available to pay principal of and interest on
that class of notes. However, if your notes are Class B notes or Class C notes,
you generally will receive full payment of principal of those notes only to the
extent provided in the related prospectus supplement.
Following an event of default and acceleration, and on the applicable legal
final maturity date, holders of notes will have the ability to cause a sale of
receivables -- or a sale of interests in
11
receivables -- held by the CARCO receivables trust only under the limited
circumstances as described in "The Indenture -- Events of Default Remedies" and
"Sources of Funds to Pay the Notes -- Sale of Receivables." Even if a sale of
receivables is permitted, we cannot assure you that the proceeds of the sale
will be enough to pay unpaid principal of and interest on your notes.
You can find a "Glossary of Principal Terms for Prospectus" beginning on
page 106 in this prospectus.
12
DAIMLERCHRYSLER WHOLESALE RECEIVABLES LLC AND THE CARCO RECEIVABLES TRUST
DAIMLERCHRYSLER WHOLESALE RECEIVABLES LLC
DCWR is a limited liability company formed under the laws of the State of
Delaware on February 4, 2000 as a wholly owned subsidiary of the predecessor of
DCS, for the limited purpose of purchasing wholesale, retail and other
receivables from DCS and transferring the receivables to third parties or
issuing indebtedness secured by receivables to third parties. DCWR acquired the
Seller's Interest from U.S. Auto Receivables Company ("USA") on May 31, 2000. At
that time DCWR assumed the obligations of the seller under the Pooling and
Servicing Agreement and the obligations of the purchaser under the Receivables
Purchase Agreement. On August 8, 1991, USA had acquired the Seller's Interest
from Chrysler Auto Receivables Company ("CARCO") and assumed those obligations.
As of May 31, 2000, USA was merged into a member of DCWR and no longer exists.
CARCO is a wholly-owned subsidiary of DCS.
DCWR is deemed to have made all representations and warranties of the
seller in the Pooling and Servicing Agreement and any Series Supplement with
respect to any series of investor certificates outstanding as of May 31, 2000.
In addition, DCWR has assumed the obligations of USA under the investor
certificates with respect to any outstanding series, the Pooling and Servicing
Agreement and the Receivables Purchase Agreement and has agreed to hold USA
harmless from any liability related to those obligations. Obligations
transferred to and assumed by DCWR include USA's obligation with respect to the
subordinated notes held by DCS, the proceeds of which were used to fund a
portion of the purchase price of receivables from Chrysler Credit Corporation
("CCC") on the Initial Closing Date and a portion of the purchase prices of the
receivables arising in the Additional Accounts added to the trust on Addition
Dates subsequent to the Initial Closing Date. DCS may make additional
subordinated loans to DCWR in the future.
The seller has taken steps in structuring the transactions contemplated by
this prospectus that are intended to insure that the voluntary or involuntary
application for relief by DCS under the United States Bankruptcy Code or similar
applicable state laws ("INSOLVENCY LAWS") will not result in the consolidation
of the assets and liabilities of the seller with those of DCS. These steps
include the creation of the seller as a separate, limited-purpose, indirect
subsidiary under a limited liability company agreement containing limitations on
the nature of the seller's business, as described above, and on the seller's
ability to commence a voluntary case or proceeding under any Insolvency Law
without the consent of the two independent directors of one of its members.
However, we cannot assure you that the activities of the seller would not result
in a court concluding that the assets and liabilities of the seller should be
consolidated with those of DCS in a proceeding under any Insolvency Law. See
"Risk Factors -- Risk factors relating to the collateral certificate and the
CARCO receivables trust -- Various legal aspects may cause delays in your
receiving payments or may result in reduced payments or losses on your notes"
and "Legal Aspects of the Receivables -- Matters Relating to Bankruptcy."
Also, tax and other statutory liabilities, including liabilities to the
Pension Benefit Guaranty Corporation relating to the underfunding of pension
plans, of DaimlerChrysler, DCS or their affiliates can be asserted against the
seller. To the extent that any of those liabilities arise after the transfer of
receivables to the CARCO receivables trust, the CARCO receivables trust's
13
interest in the receivables would be prior to the interest of the claimant with
respect to the liabilities.
However, the existence of a claim against the seller could permit the
claimant to subject the seller to an involuntary proceeding under the Bankruptcy
Code or other Insolvency Law. See "Risk Factors -- Risk factors relating to the
collateral certificate and the CARCO receivables trust -- Various legal aspects
may cause delays in your receiving payments or may result in reduced payments or
losses on your notes" and "-- Risk factors relating to the collateral
certificate and the CARCO Receivables Trust -- The ability of the CARCO
receivables trust to make payments on the collateral certificate depends in part
on the ability of DaimlerChrysler and DCS to generate receivables and the
ability of DCS to perform its obligations under the pooling and servicing
agreement" and "Legal Aspects of the Receivables -- Matters Relating to
Bankruptcy."
DCWR's executive offices are located at 27777 Inkster Road, Farmington
Hills, Michigan 48334, and its telephone number is (248) 427-2625.
THE CARCO RECEIVABLES TRUST
The CARCO receivables trust was formed in accordance with the laws of the
State of New York under the Pooling and Servicing Agreement. The property of the
trust consists of:
-- 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 CARCO
receivables trust from time to time, but excluding receivables in
any Accounts that are removed from the CARCO receivables trust
from time to time after the Initial Cut-Off Date;
-- 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 CARCO receivables trust;
-- any Enhancement issued with respect to any particular series or
class of investor certificates; and
-- a security interest in the vehicles and any other collateral
security.
See "Description of the Investor Certificates Issued by the CARCO Receivables
Trust -- Addition of Accounts." See "Description of the Receivables Purchase
Agreement" for a summary of terms of the Receivables Purchase Agreement.
DCS will not convey to the CARCO receivables trust receivables ("FLEET
RECEIVABLES") originated in connection with multiple new vehicle orders of at
least five vehicles by specified Dealers. The terms "receivables" and "principal
receivables" as used in this prospectus will not refer to Fleet Receivables.
The property of the CARCO receivables trust may also include Enhancements
for the benefit of certificateholders of a particular series or class. The
collateral certificate will not have
14
the benefit of any such Enhancement. 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 CARCO receivables trust the
receivables of the Additional Accounts; and
-- to designate from time to time Accounts to be removed and to
require the CARCO receivables trustee to convey receivables in the
Removed Accounts to the seller.
The CARCO receivables trust was formed to issue certificates under the
Pooling and Servicing Agreement and prior to formation had no assets or
obligations. The CARCO receivables trust will not engage in any business
activity other than:
-- acquiring and holding the receivables and the other assets of the
trust and proceeds from the receivables and those assets;
-- issuing the investor 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 CARCO receivables trust to have any
need for, or source of, capital resources other than the assets of the CARCO
receivables trust.
THE ISSUER
DaimlerChrysler Master Owner Trust will be the issuer of the notes. It will
be a Delaware statutory business trust.
The issuer exists for the exclusive purposes of:
-- acquiring and holding the collateral certificate and other assets,
including the proceeds of these assets;
-- issuing series of notes;
-- making payments on the notes; and
-- engaging in other activities that are necessary or incidental to
accomplish these limited purposes.
The issuer will be operated pursuant to a trust agreement between DCWR and
Chase Manhattan Bank USA, National Association, as owner trustee. The issuer
will not have any officers or directors. Its administrator is DCS. As
administrator of the issuer under an administration agreement, DCS will
generally direct the administrative actions to be taken by the issuer.
15
The assets of the issuer will consist primarily of:
-- the collateral certificate;
-- derivative agreements that, subject to the terms of the related
indenture supplement, the issuer has entered into or may enter
into to manage interest rate or currency risk relating to some
classes of notes; and
-- the issuer accounts.
The issuer does not expect to have any other significant assets.
DCWR and the owner trustee may amend the trust agreement without the
consent of the noteholders or the indenture trustee so long as the issuer
delivers to the indenture trustee an officer's certificate to the effect that
the issuer reasonably believes that the amendment will not adversely affect in
any material respect the interests of the noteholders. Accordingly, neither the
indenture trustee nor any holder of any note will be entitled to vote on any
such amendment.
In addition, the trust agreement may also be amended with the consent of
the indenture trustee and holders of at least 66 2/3% of the outstanding dollar
principal amount of the notes affected by the amendment in any material respect.
However, an amendment to the trust agreement that increases or reduces the
amount of, or accelerates or delays the timing of, collections of payments in
respect of the collateral certificate or distributions to the noteholders
requires the consent of all noteholders affected by the amendment.
USE OF PROCEEDS
Unless we otherwise provide in the related prospectus supplement:
-- we will pay the net proceeds from the sale of a series of notes 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 CARCO
Receivables 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 CARCO receivables trust under the
Pooling and Servicing Agreement were or will be selected from extensions of
credit and advances, known as "wholesale" or "floorplan" financing, made by
DaimlerChrysler, directly or as successor to Chrysler Corporation, and DCS,
directly or as a successor to affiliates, to domestic motor vehicle dealers.
These funds are used by dealers to purchase new and used vehicles manufactured
or distributed by DaimlerChrysler and other manufacturers pending sale to retail
buyers. As described in this prospectus, receivables transferred to the CARCO
receivables trust are secured by the vehicles and, in many cases, parts
inventory, equipment, fixtures and service accounts of the vehicle
16
dealers. In some cases, the receivables are also secured by realty owned by,
and/or a personal guarantee of, a vehicle dealer.
DCS, as successor to Chrysler Financial Company L.L.C. ("CFC LLC"),
Chrysler Financial Corporation ("CFC CORP.") and Chrysler Credit Corporation
("CCC"), is the primary wholesale financing source for
DaimlerChrysler-franchised dealers in the United States. DaimlerChrysler
vehicles for which DCS provides wholesale financing include vehicles
manufactured under the CHRYSLER, DODGE and JEEP trademarks.
DCS, directly or as successor to CFC LLC, CFC Corp. or CCC, has extended
credit lines to DaimlerChrysler-franchised dealers that also operate
non-DaimlerChrysler franchises and non-DaimlerChrysler dealers. DCS services the
accounts of domestic dealers financed by it (the "U.S. WHOLESALE PORTFOLIO")
through its Farmington Hills Support office located in Farmington Hills,
Michigan and through a network of Chrysler Financial business centers and
Mercedes-Benz regional offices located throughout the United States.
Vehicles financed by any dealer under the floorplan program are categorized
by DCS, under its policies and procedures, as New Vehicles or Used Vehicles
based on whether the vehicles qualify for the new or used wholesale and retail
interest rate chargeable to the dealer in connection with the vehicles financed.
Currently, "NEW VEHICLES" consist of
-- 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 vehicles and other vehicles distributed by
DaimlerChrysler franchised dealers concurrently with the shipment of the
vehicles to the financed dealer.
Once a dealer has commenced the floorplanning of a manufacturer's vehicles
through DCS, DCS will finance all purchases of vehicles by the dealer from the
manufacturer. DCS will cancel this arrangement, however, if a dealer's inventory
is considered by DCS to be seriously overstocked, if a dealer is experiencing
financial difficulties or if a dealer requests controlled vehicle releases. In
those circumstances, known as "FINANCE HOLD," the applicable local business
center or regional office of DCS assumes control of vehicle releases to the
dealer. DCS makes special arrangements to finance inter-dealer sales of
vehicles.
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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 the applicable DCS business center or
regional office. After receipt of the application, the business center or
regional office investigates the prospective dealer. The business center or
regional office reviews the prospective dealer's credit reports and bank
references and evaluates the dealer's marketing capabilities and start-up
financial resources and credit requirements. When an existing dealer requests
the establishment of a wholesale new vehicle credit line, the business center or
regional office reviews the dealer's credit reports, including the experience of
the dealer's current financing source, and bank references. Further, the
business center or regional office investigates the dealer's current state of
operations and management, including evaluating a factory reference, and
marketing capabilities. For credit lines within a business center's or regional
office's approval limits, the business center or regional office either approves
or disapproves the dealer's request. For credit lines in excess of a business
center's or regional office's approval limits, the business center or regional
office transmits the requisite documentation to the Farmington Hills Support
Dealer Credit Department for approval or disapproval. DCS applies the same
underwriting standards for dealers franchised by other manufacturers.
Upon approval, dealers execute a series of financing agreements with DCS
and, in the case of DaimlerChrysler-franchised dealers, DaimlerChrysler. These
agreements provide DCS a first priority security interest in the vehicles and
other collateral and a demand master promissory note in favor of DCS. Under
these agreements, DCS requires all dealers to maintain insurance coverage for
each vehicle for which it provided floorplan financing, with DCS designated as
loss payee.
The size of a credit line initially offered to a dealer is based upon the
dealer's sales record, or, in the case of a prospective dealer, expected annual
sales, and the dealer's effective net worth. The amount of a dealer's credit
line for new vehicles is adjusted quarterly by DCS. The adjustment is based upon
the dealer's average new vehicle sales during the prior 180 days and is,
typically, in an amount sufficient to finance a 75-day supply of vehicles. The
amount of a dealer's credit line for used vehicles is also adjusted
periodically. This adjustment is based upon the dealer's average used vehicle
sales for the prior 180 days and is, typically, in an amount sufficient to
finance 50% of a 30 to 45-day supply of vehicles. DCS determines the size of a
dealer's auction vehicle credit line on a case by case basis and makes
adjustments periodically based on DCS's practices and procedures.
The aggregate amount advanced for each Used Vehicle is equal to the
National Automotive Dealers Association's Official Wholesale Used Car Trade-in
Guide wholesale book value for the vehicle. However, the aggregate amount of the
credit line for the used vehicles may not exceed 50% of the value of the
dealer's total inventory of used vehicles. The amount advanced for New
18
Vehicles and all Auction Vehicles is equal to the amount invoiced with respect
to the vehicles and the auction purchase price, including auction fees, of the
Auction Vehicles, respectively.
BILLING, COLLECTION PROCEDURES AND PAYMENT TERMS
DCS prepares and distributes each month to each dealer a statement setting
forth billing and related account information. DCS generates and mails each
dealer's bills on the sixth and seventh calendar day of the month. Interest and
other nonprincipal charges must be paid by the end of the month in which they
are billed. DCS bills interest and handling fees in arrears, but bills insurance
costs in advance. Upon the sale of a vehicle for which it has provided floorplan
financing, DCS is entitled to receive payment in full of the related advance.
Dealers remit payments by check directly to DCS's local business centers and
regional offices or electronically via an electronic funds transfer system
maintained by the Farmington Hills Support office.
REVENUE EXPERIENCE
DCS charges dealers interest at a floating rate based on the rate (the
"PRIME RATE") designated as the "prime rate" from time to time by financial
institutions selected by DCS, plus a designated spread ranging from 0.00% to
1.00% on New Vehicles. The prime rate is reset by DCS on the first and sixteenth
days of every month and is applied to all balances outstanding during the
applicable period. The actual spread for each dealer is determined according to
the total amount of the dealer's credit lines. DCS typically increases the
spreads charged on Used Vehicle balances by an additional 0.75%. Previously
owned vehicles, however, purchased at a DaimlerChrysler closed auction are
financed at the applicable New Vehicle rate. In the case of a few larger
dealers, DCS charges the dealers interest at a floating rate based on LIBOR plus
2.75% up to the prime rate plus 0.25%.
RELATIONSHIP WITH DAIMLERCHRYSLER
DaimlerChrysler provides to some DaimlerChrysler-franchised dealers
financial assistance in the form of working capital loans and other loans. In
addition, DaimlerChrysler provides floorplan assistance to all
DaimlerChrysler-franchised dealers through a number of formal and informal
programs. On all new vehicle financings, DaimlerChrysler reimburses dealers
directly for the finance costs for a specified period from the date of shipment.
DaimlerChrysler also has a supplemental floorplan assistance program. In this
program, DaimlerChrysler reimburses dealers at the time of retail sale, for a
specified amount depending upon the vehicle model.
Under an agreement between DaimlerChrysler and each
DaimlerChrysler-franchised dealer, DaimlerChrysler commits to repurchase unsold
new vehicles in inventory upon 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
19
elects not to provide the assistance, the loss experience of DCS in respect of
the U.S. Wholesale Portfolio may be adversely affected. In addition, because a
substantial number of the vehicles sold by the dealers are manufactured or
distributed by DaimlerChrysler, if DaimlerChrysler were temporarily or
permanently no longer in that business, the rate of sales of DaimlerChrysler-
manufactured vehicles would decrease. This would adversely affect payment rates
and the loss experience of the U.S. Wholesale Portfolio. See "Risk
Factors -- Risk factors relating to the collateral certificate and the CARCO
receivables trust -- The ability of the CARCO receivables trust to make payments
on the collateral certificate depends in part on the ability of DaimlerChrysler
and DCS to generate receivables and the ability of DCS to perform its
obligations under the pooling and servicing agreement."
DEALER MONITORING
DCS's local business centers and regional offices monitor the level of each
dealer's wholesale credit line on a periodic basis. Dealers are permitted to
exceed those lines on a temporary basis. For example, a dealer may, immediately
prior to a seasonal sales peak, purchase more vehicles than it is otherwise
permitted to finance under its existing credit lines. As another example,
because of slow inventory turnover, a dealer's credit lines may be reduced prior
to its liquidating a sufficient portion of its vehicle inventory. If at any time
DCS learns that a dealer's balance exceeds its approved credit lines, DCS will
evaluate the dealer's financial position and may temporarily increase the
dealer's credit lines or place the dealer in a disciplinary category known as
"finance hold." See "-- Creation of Receivables."
Personnel from the business centers and regional offices conduct audits of
dealer vehicle inventories on a regular basis. The timing of each visit is
varied and no advance notice is given to the audited dealer. Auditors review
dealers' financial records and conduct a physical inventory of the vehicles on
the dealers' premises. Through the audit process, DCS reconciles each dealer's
physical inventory with its records of financed vehicles. Audits are intended to
identify instances where a dealer sold vehicles but did not immediately repay
the related advances. The audit process also aids DCS in determining in those
instances whether a dealer received sale proceeds but diverted the proceeds to
uses other than the repayment of the obligations to DCS.
"DEALER TROUBLE" STATUS AND DCS'S WRITE-OFF POLICY
Under some circumstances, DCS will classify a dealer under "DEALER TROUBLE"
status. The circumstances include
-- 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,
20
-- 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 uncollectible and attempts to liquidate all
possible collateral remaining. During the course of a liquidation, DCS may
recognize additional losses or recoveries.
ADDITIONAL INFORMATION
We will set forth in the prospectus supplement for each series additional
information with respect to the Dealer Floorplan Financing Business.
THE ACCOUNTS
The receivables arise in the revolving financing arrangements (the
"ACCOUNTS") with domestic motor vehicle dealers ("DEALERS") franchised by
DaimlerChrysler and/or other automobile manufacturers. DCS selected the Accounts
from all the wholesale accounts in the U.S. Wholesale Portfolio that are
Eligible Accounts (the "ELIGIBLE PORTFOLIO"). Each Account in the Eligible
Portfolio must be an account established by DCS, directly or as successor to CFC
LLC, CFC Corp. or CCC, in the ordinary course of business and meet other
criteria provided in the Pooling and Servicing Agreement. See "Description of
the Investor Certificates Issued by the CARCO Receivables
Trust -- Representations and Warranties." DCS and the seller have represented
that each believes that the Accounts will be representative of the accounts in
the Eligible Portfolio and that the inclusion of the Accounts, as a whole, will
not represent an adverse selection from the Eligible Portfolio.
From time to time, dealers deposit funds with DCS in cash management
accounts, limited in amount to the amount of the wholesale accounts. DCS applies
funds deposited by a dealer in its cash management account to reduce the
dealer's outstanding Principal Receivables balance. Under some circumstances, a
dealer may reborrow the funds.
Under the Pooling and Servicing Agreement, the seller, and under the
Receivables Purchase Agreement, DCS has the right, subject to limitations and
conditions, and in some circumstances is obligated, to choose from time to time
additional qualifying wholesale accounts to be included as Accounts and to
convey to the trust some of the receivables of the Additional Accounts,
including receivables created after the conveyance. These accounts must meet the
eligibility criteria set forth above as of the date the accounts are designated
as Additional Accounts. DCS will convey the receivables then existing, with
exceptions, or later created under the Additional Accounts to the seller. The
seller will then convey them to the CARCO receivables trust. See "Description of
the Investor Certificates Issued by the CARCO Receivables Trust -- Addition of
Accounts." In addition, as of any Additional Cut-Off Date in respect of
Additional Accounts and
21
the date any new receivables are generated, DCS will represent and warrant to
the seller, and the seller will represent and warrant to the CARCO receivables
trust, that the receivables meet the eligibility requirements set forth in the
Pooling and Servicing Agreement. See "Description of the Investor Certificates
Issued by the CARCO Receivables Trust -- Conveyance of Receivables and
Collateral Security." Under some circumstances specified in the Pooling and
Servicing Agreement, the seller has the right to remove Accounts, and the
receivables arising from the Accounts, from the CARCO receivables trust. See
"Description of the Investor Certificates Issued by the CARCO Receivables
Trust -- Removal of Accounts." During the term of the CARCO receivables trust,
the Accounts from which the receivables arise will be the same Accounts
designated by the seller on the Initial Cut-Off Date plus any Additional
Accounts, minus any Accounts removed from the CARCO receivables trust.
We will provide additional information about the Accounts in each
prospectus supplement.
DAIMLERCHRYSLER SERVICES NORTH AMERICA LLC
DCS, a Michigan limited liability company and a wholly-owned subsidiary of
DaimlerChrysler, is a financial services organization. It is the continuing
company resulting from a merger on November 30, 2001, of CFC LLC into DCS. DCS
has substantially the same assets and liabilities that CFC LLC had. CFC LLC, a
Michigan limited liability company, was the continuing limited liability company
resulting from a merger on October 28, 1998, of CFC Corp. into CFC LLC. CFC
Corp., a Michigan corporation, was the continuing corporation resulting from a
merger on June 1, 1967, of a financial services subsidiary of Chrysler
Corporation, as predecessor of DaimlerChrysler, into a newly acquired,
previously nonaffiliated finance company incorporated in 1926. DCS is engaged in
the following:
-- 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 -- Risk Factors relating to the collateral certificate and the
CARCO receivables trust -- The ability of the CARCO receivables trust to make
payments on the collateral certificate depends in part on the ability of
DaimlerChrysler and DCS to generate receivables and the ability of DCS to
perform its obligations under the pooling and servicing agreement." DCS's
executive offices are located at 27777 Inkster Road, Farmington Hills, Michigan
48334 and its telephone number is (248) 427-2625.
CCC, a wholly owned subsidiary of CFC Corp., provided retail, wholesale and
lease financing services to automobile dealers and their customers throughout
the United States. On December 31, 1995, CCC merged into CFC Corp. CFC Corp., in
accordance with the terms of the Pooling and Servicing Agreement and the
Receivables Purchase Agreement, assumed all the rights and obligations of CCC
under (a) the Pooling and Servicing Agreement, including rights and obligations
of the servicer, and (b) the Receivables Purchase Agreement, including rights
22
and obligations of the seller. After that merger, CFC Corp. provided retail,
wholesale and lease financing services to automobile dealers and their customers
throughout the United States. On October 25, 1998, CFC Corp. merged into CFC
LLC. CFC LLC, under the terms of the Pooling and Servicing Agreement, assumed
all the rights and obligations of CFC Corp. under (a) the Pooling and Servicing
Agreement, including rights and obligations of the servicer, and (b) the
Receivables Purchase Agreement, including rights and obligations of the seller.
After that merger, CFC LLC provided retail, wholesale and lease financing
services to automobile dealers and their customers throughout the United States.
On November 30, 2001, CFC LLC merged into DCS. DCS, under the terms of the
Pooling and Servicing Agreement, assumed all the rights and obligations of CFC
LLC under (a) the Pooling and Servicing Agreement, including rights and
obligations of the servicer, and (b) the Receivables Purchase Agreement.
We will provide additional information about DCS in the prospectus
supplement for each series.
THE NOTES
The notes will be issued pursuant to the indenture. The indenture does not
limit the aggregate stated principal amount of notes that may be issued.
The notes will be issued in series. Each series of notes will consist of
Class A notes (or a single class of notes) and may also consist of Class B notes
and Class C notes. Each class of notes may have subclasses. Whenever a "class"
of notes is referred to in this prospectus or any supplement to this prospectus,
it also includes all subclasses of that note class, unless the context otherwise
requires.
The issuer may offer notes denominated in any foreign currency. We will
describe the specific terms of any note denominated in a foreign currency in the
applicable supplement to this prospectus.
If we so specify in a supplement to this prospectus, the noteholders of one
or more classes will have the benefit of a derivative agreement, including an
interest rate or currency swap, cap, collar, guaranteed investment contract or
other agreement for the exclusive benefit of that class or those classes. We
will describe any derivative agreement for the benefit of a class and the
financial institution that provides it in the applicable supplement to this
prospectus.
The issuer will pay principal of and interest on a class of notes solely
from the portion of interest collections and principal collections distributed
on the collateral certificate that are available to that class of notes after
giving effect to all allocations and reallocations, amounts in any issuer
account relating to that class of notes, and amounts received under any
derivative agreement or any enhancement relating to that class of notes. If
those sources are not sufficient to pay the notes of that class, those
noteholders will have no recourse to any other assets of the issuer or the
assets of any other entity for the payment of principal of or interest on those
notes.
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We will include the following terms of the notes in a supplement to this
prospectus:
-- the series designation;
-- the rate per annum at which the notes will bear interest, if any,
or the formula or index on which that rate will be determined and
the date from which interest will accrue;
-- the payment dates, if any, for the notes;
-- the stated principal amount of each Class of notes and, if there
is more than one class of notes, whether they are Class A notes,
Class B notes or Class C notes or a subclass of any of those
classes;
-- the overcollateralization amount, if any, for that class of notes;
-- the currency of payment of principal of and interest on the notes,
if other than U.S. dollars;
-- the expected principal payment date of the notes;
-- the legal final maturity date of the notes, which will be no later
than the termination date of the collateral certificate;
-- the times at which the notes may, pursuant to any optional or
mandatory redemption provisions, be redeemed, and the other terms
and provisions of those redemptions;
-- any additional events of default or early redemption events for
the notes of that series;
-- if the notes have the benefit of a derivative agreement, the terms
of that agreement and a description of the counterparty to that
agreement; and
-- other terms of the notes.
Holders of notes of any outstanding series or class will not have the right
to review or consent to any subsequent issuance of notes. A series or class of
notes may be issued privately, which series or class would therefore not be
offered pursuant to this prospectus and a prospectus supplement.
The issuer may, without the consent of any noteholders, issue additional
notes of an existing class of notes. Any such issuance of additional notes must
satisfy the applicable conditions under "-- Issuances of New Series, Classes and
Subclasses of Notes" below.
INTEREST
Each note, except zero-coupon discount notes, will bear interest at either
a fixed rate or a floating rate, which will be specified in the related
prospectus supplement. We will specify the interest accrual period in the
related prospectus supplement. Until the expected principal payment date for a
discount note, accreted principal will be capitalized as part of the principal
of the note and reinvested in the collateral certificate. The applicable
supplement to this prospectus will specify the interest rate to be borne by a
discount note after an event of default or after its expected principal payment
date.
If interest collections allocable to the collateral certificate are less
than expected, principal collections allocable to (i) the overcollateralization
amount for the applicable series or (ii) the
24
notes of that series may be used to pay interest on the notes of that series.
However, this reallocation of principal would reduce the Invested Amount of the
collateral certificate, as well as the overcollateralization amount or the
nominal liquidation amount of the specified classes of notes of that series.
Reductions of these amounts would have the effect of reducing principal
collections and interest collections on the collateral certificate that are
allocable to that series, unless these reductions are reimbursed from excess
interest collections. See "Sources of Funds to Pay the Notes -- Deposit and
Application of Funds."
If interest on a note is not paid within five business days after it is
due, an event of default will occur with respect to that note. See "The
Indenture -- Events of Default."
PRINCIPAL
We will specify the timing and the amount of payments of principal of a
note in the related supplement to this prospectus.
For some notes, the issuer expects to pay the stated principal amount of
each note in one payment on that note's expected principal payment date, and the
issuer is obligated to do so if funds are available for that purpose. It is not
an event of default if the principal of a note is not paid on its expected
principal payment date because no funds are available for that purpose.
Principal of a note may be paid earlier than its expected principal payment
date if an early redemption event or an event of default occurs. See "The
Indenture -- Early Redemption Events" and "-- Events of Default."
Principal of a note may be paid later than its expected principal payment
date if sufficient funds are not allocable from the CARCO receivables trust to
the collateral certificate, or are not allocable under the indenture to the
series or class of notes to be paid. If the stated principal amount of a note is
not paid in full on its legal final maturity date, an event of default will
occur with respect to that note. See "The Indenture -- Events of Default."
A series of notes may provide for the variable funding and amortization of
those notes from time to time.
See "Risk Factors -- You may receive principal payments earlier or later
than the expected principal payment date" for a discussion of factors that may
affect the timing of principal payments on the notes.
STATED PRINCIPAL AMOUNT, OUTSTANDING DOLLAR PRINCIPAL AMOUNT AND
NOMINAL LIQUIDATION AMOUNT OF NOTES
Each note will have:
-- a stated principal amount;
-- an outstanding dollar principal amount; and
-- a nominal liquidation amount.
Stated Principal Amount. The stated principal amount of a note is the
amount that is stated on the face of the note to be payable to its holders. It
can be denominated in U.S. dollars or in a foreign currency.
25
Outstanding Dollar Principal Amount. For U.S. dollar notes (other than
discount notes), the outstanding dollar principal amount is the same as the
stated principal amount, less principal payments to the noteholders. For foreign
currency notes, the outstanding dollar principal amount is the U.S. dollar
equivalent of the stated principal amount of the notes, less dollar payments to
derivative counterparties with respect to principal. For discount notes, the
outstanding dollar principal amount is an amount stated in, or determined by a
formula described in, the applicable supplement to this prospectus.
Nominal Liquidation Amount. The nominal liquidation amount of a note is a
U.S. dollar amount based on the outstanding dollar principal amount of that
note, but with some reductions -- including reductions from reallocations of
principal collections and allocations of charge-offs of defaulted principal
receivables in the CARCO receivables trust -- and increases described under this
heading. The nominal liquidation amount of a note corresponds to the portion of
the Invested Amount of the collateral certificate that would be allocated to
that note if the CARCO receivables trust were liquidated.
In most circumstances, the nominal liquidation amount of a note, together
with its share of any funds on deposit in the applicable principal funding
account and its share of any funds in the excess funding account for the
collateral certificate, will be equal to the outstanding dollar principal amount
of that note. However, if there are reductions in the nominal liquidation amount
of a note as a result of reallocations of principal collections from that note
to pay interest on notes of the same series, or as a result of charge-offs of
defaulted principal receivables in the CARCO receivables trust, there will be a
deficit in the nominal liquidation amount of that note. Unless that deficiency
is reimbursed through the reinvestment of excess interest collections on the
collateral certificate, the stated principal amount of some notes will not be
paid in full.
A subordinated note's nominal liquidation amount is used to calculate the
maximum amount of funds that may be reallocated from that subordinated note to
pay interest on senior notes of the same series. The nominal liquidation amount
of a note is also used to calculate the amount of principal collections that can
be allocated for payment of principal to a note, or paid to the counterparty to
a derivative agreement, if applicable. This means that if the nominal
liquidation amount of a note has been reduced by charge-offs of defaulted
principal receivables in the CARCO receivables trust or by reallocations of
principal collections to pay interest on notes, the holders of notes with the
reduced nominal liquidation amount may receive less than the full stated
principal amount of their notes, either because the amount of U.S. dollars
allocated to pay them is less than the outstanding dollar principal amount of
the notes, or because the amount of U.S. dollars allocated to pay the
counterparty to a derivative agreement is less than the amount necessary to
obtain enough of the applicable foreign currency for payment of their notes in
full.
The nominal liquidation amount of a note may be reduced as follows:
-- If there are charge-offs of defaulted principal receivables in the
CARCO receivables trust, the portion of charge-offs allocated to a
series of notes will reduce that series' nominal liquidation
amount to the extent these charge-offs are greater than that
series' available excess interest collections. For a series that
has an overcollateralization amount, we will allocate these
reductions first to the overcollateralization amount. Any
remaining reductions will be allocated to the nominal liquidation
amounts of the notes of that series. If the series has
subordinated classes of notes, the reductions allocated to the
notes of that series will
26
be initially allocated pro rata to each class of notes based on
the nominal liquidation amount of that class. Then we will
reallocate these reductions to the subordinated classes of notes
of that series in succession, beginning with the most subordinated
class. The prospectus supplement for any series of notes may
provide for a different allocation of these reductions.
-- If principal collections are reallocated from an
overcollateralization amount of a series to the notes of that
series, the overcollateralization amount will be reduced by the
amount of that reallocation. If principal collections are
reallocated from a class of notes of a series to pay interest on
the classes of notes of that series, the nominal liquidation
amount of that class from which the reallocation is made will be
reduced by the amount of the reallocations. For example, the
amount of the reallocation of principal collections to pay
interest on Class A notes will be applied first, to reduce the
nominal liquidation amount of Class C notes of the same series to
the extent of the required subordinated amount of Class C notes
for that class of Class A notes, and second, to reduce the nominal
liquidation amount of Class B notes of the same series to the
extent of the required subordinated amount of Class B notes for
that class of Class A notes. The amount of the reallocation of
principal collections to pay interest on Class B notes will be
applied to reduce the nominal liquidation amount of Class C notes
of the same series to the extent of the required subordination
amount of Class C notes for that class of Class B notes. No
principal of Class A notes may be reallocated to pay interest on
any class of notes if the prospectus supplement so provides. The
prospectus supplement for any series of notes may provide for a
different allocation of these reductions.
-- The nominal liquidation amount of a series or class of notes will
be reduced by the amount on deposit in its principal funding
account (other than investment earnings) after giving effect to
all allocations, reallocations and payments. This includes
principal collections that are deposited directly into that
series' or class's principal funding account, or reallocated from
the principal funding account for a subordinated class. The
nominal liquidation amount of a series or class of notes will also
be reduced by its allocable share of deposits to the excess
funding account for the collateral certificate in connection with
a reduction in principal receivables.
-- The nominal liquidation amount of a note will be reduced by the
amount of all payments of principal of that note without
duplicating the reductions due to any related deposits to the
principal funding account.
-- If the holders of a class or series of notes direct a sale of
receivables after an event of default and acceleration or on its
legal final maturity date, the nominal liquidation amount of that
class or series is automatically reduced to zero. See "Sources of
Funds to Pay the Notes -- Sale of Receivables."
The nominal liquidation amount of a class or series of notes can be
increased as follows:
-- The nominal liquidation amount of a series or class of notes will
be increased by its allocable share of withdrawals from the excess
funding account for the collateral certificate in connection with
the purchase of an interest in additional principal receivables.
27
-- For a class of discount notes, the nominal liquidation amount will
increase over time as principal accretes, to the extent that
interest collections are allocated to that class for that purpose.
-- If excess interest collections are available, we will apply them
to reimburse earlier reductions in the nominal liquidation amount
from charge-offs of defaulted principal receivables in the CARCO
receivables trust or from reallocations of principal collections
from the overcollateralization amount of a series to pay interest
on the notes of that series or from subordinated classes of a
series to pay interest on senior classes of that series or from
the senior class of a series to pay interest on that senior class.
These reimbursements will be allocated to each series pro rata
based on the sum of all unreimbursed reductions of each class in
that series. Within each series, the increases will be allocated
in order of seniority of the notes of that series.
-- If principal collections have been reallocated from the principal
funding account for a subordinated class to the principal funding
account for a senior class of notes of the same series, the
nominal liquidation amount of the subordinated class will be
increased by the amount of the reallocation, and the nominal
liquidation amount of the senior class will be reduced by the same
amount.
If the nominal liquidation amount of your notes has been reduced because of
charge-offs or reallocations to pay interest and the reduction has not been
reimbursed from excess interest collections, you will not receive repayment of
all of your principal.
The nominal liquidation amount of a note may not be reduced below zero and
may not be increased above the outstanding dollar principal amount of that note,
less any amounts on deposit in the applicable principal funding account.
If a note held by DCWR, the issuer or any of their affiliates is canceled,
the nominal liquidation amount of that note is automatically reduced to zero,
with a corresponding automatic reduction in the Invested Amount of the
collateral certificate.
The cumulative net amount of reductions of the nominal liquidation amount
of any note due to reallocation of principal collections to pay interest on
notes and charge-offs of principal receivables in the CARCO receivables trust
cannot exceed the initial outstanding dollar principal amount of that note.
Allocations of charge-offs of defaulted principal receivables in the CARCO
receivables trust and reallocations of principal collections to other notes or
to pay interest reduce the nominal liquidation amount of the applicable
outstanding notes only, and do not affect notes that are issued after that time.
SUBORDINATION OF PRINCIPAL
If a series of notes has only one class, the credit enhancement for that
class will be the overcollateralization amount. If a series of notes has more
than one class, then the subordinate notes of that series will serve as credit
enhancement for the senior notes of that series. Such a series of notes may also
have an overcollateralization amount. The following paragraphs under this
subheading illustrate how this subordination works in the case of a series that
has Class A notes, Class B notes and Class C notes. The prospectus supplement
for a series may provide for different subordination arrangements among the
senior and subordinate classes of a series.
28
Principal payments on Class B notes and Class C notes of a series are
subordinated to payments on Class A notes of that series. Subordination of Class
B notes and Class C notes of a series provides credit enhancement for Class A
notes of that series.
Principal payments on Class C notes of a series are subordinated to
payments on Class A notes and Class B notes of that series. Subordination of
Class C notes of a series provides credit enhancement for the Class A notes and
Class B notes of that series.
In all series, principal collections that are allocable to subordinated
classes of notes may be reallocated to pay interest on senior classes of notes
of that series and, if so specified, on designated subordinated classes of notes
of that series. In addition, charge-offs of defaulted principal receivables in
the CARCO receivables trust are allocated first to the subordinated classes of a
series. See "The Notes -- Stated Principal Amount, Outstanding Dollar Principal
Amount and Nominal Liquidation Amount of Notes -- Nominal Liquidation Amount of
Notes" and "Sources of Funds to Pay the Notes -- Deposit and Application of
Funds."
No principal payments will be made on a subordinated class of notes until
all principal of the senior classes of notes of that series has been paid in
full. However, there are several exceptions to this rule. Principal may be paid
to the holders of subordinated classes while notes of senior classes of that
series are still outstanding under the following circumstances:
-- If the nominal liquidation amount of a subordinated class has been
reduced as a result of an allocation of charge-offs of defaulted
principal receivables to that class or reallocation of principal
collections from that class to pay interest on senior classes, and
that reduction is later reimbursed from excess interest
collections, the amount of that reimbursement is no longer
subordinated to the senior classes of that series and may be paid
to the holders of the subordinated class while the notes of senior
classes are still outstanding.
-- If principal collections have been reallocated from the principal
funding account for a subordinated class to the principal funding
account for a senior class of notes of the same series, then the
subordinated classes of notes of that series may be paid.
REDEMPTION AND EARLY REDEMPTION OF NOTES
Each class of notes will be subject to mandatory redemption on its expected
principal payment date.
If we so specify in the related prospectus supplement, the servicer may, at
its option, cause the issuer to redeem any note before its expected principal
payment date. The prospectus supplement will indicate at what times the issuer
may exercise that right of redemption and if the redemption may be made in whole
or in part as well as any other terms of the redemption. The issuer will give
notice to holders of the affected notes before any optional redemption date.
If we so specify in the related prospectus supplement, a noteholder may, at
its option, require the issuer to redeem the holder's notes before the expected
principal payment date. The prospectus supplement will indicate at what times a
noteholder may exercise that right of redemption and if the redemption may be
made in whole or in part as well as any other terms of the redemption.
In addition, if an early redemption event occurs in respect of a series,
the issuer will be required to redeem each affected note of that series to the
extent funds are available for that
29
purpose. The issuer will give notice to holders of the affected notes before an
early redemption date. See "The Indenture -- Early Redemption Events" for a
description of the early redemption events and their consequences to holders of
notes.
Whenever the issuer is required to redeem a note before its legal final
maturity date, it will do so only if and to the extent funds are allocated to
the collateral certificate and to that note. A noteholder will have no claim
against the issuer if the issuer fails to make a required redemption of notes
because no funds are available for that purpose. The failure to redeem before
the legal final maturity date under these circumstances will not be an event of
default.
ISSUANCES OF NEW SERIES, CLASSES AND SUBCLASSES OF NOTES
The issuer may issue new notes of a series, class or subclass, so long as
the conditions of issuance are met. These conditions include:
-- on or before the third business day before a new issuance of
notes, the issuer gives the indenture trustee and the rating
agencies notice of the issuance;
-- the issuer delivers to the indenture trustee a certificate stating
that
-- the issuer reasonably believes that the new issuance will not
at the time of its occurrence or at a future date (1) cause an
early redemption event or event of default, (2) adversely
affect the amount or timing of payments to holders of notes of
any series or (3) adversely affect the security interest of the
indenture trustee in the collateral securing the outstanding
notes;
-- all instruments furnished to the indenture trustee conform to
the requirements of the indenture and constitute sufficient
authority under the indenture for the indenture trustee to
authenticate and deliver the notes;
-- the form and terms of the notes have been established in
conformity with the provisions of the indenture;
-- all laws and requirements with respect to the execution and
delivery by the issuer of the notes have been complied with in
all material respects;
-- the issuer has the power and authority to issue the notes; and
-- the notes have been duly authorized, are binding obligations of
the issuer, and are entitled to the benefits of the indenture;
-- the issuer delivers to the indenture trustee and the rating
agencies an opinion of counsel that for federal income tax and
Michigan income and single business tax purposes (1) the new
issuance will not adversely affect in any material respect the
characterization as debt of any outstanding investor certificates
issued by the CARCO receivables trust, other than the collateral
certificate, (2) the new issuance will not cause a taxable event
to holders of CARCO receivables trust investor certificates and
(3) following the new issuance, the CARCO receivables trust will
not be an association, or a publicly traded partnership, taxable
as a corporation, except that, if certain conditions are
satisfied, the issuer at its option will not be required to
deliver these tax opinions;
-- the issuer delivers to the indenture trustee and the rating
agencies an opinion of counsel that for federal income tax and
Delaware income and franchise tax purposes
30
(1) the new issuance will not adversely affect in any material respect the
characterization of the notes of any outstanding series, class or subclass as
debt, (2) the new issuance will not cause a taxable event to holders of any
outstanding notes, (3) following the new issuance, the issuer will
not be an association, or a publicly traded partnership, taxable as a
corporation and (4) following the new issuance, the newly issued
notes will be properly characterized as debt, except that, if certain
conditions are satisfied, the issuer at its option will not be
required to deliver these tax opinions;
-- at the time of the new issuance, either the rating condition
described in "Summary -- Note Ratings" is satisfied or the issuer
obtains confirmation from the rating agencies that the new
issuance of notes will not cause a reduction or withdrawal of the
rating of any outstanding notes rated by that rating agency;
-- no early amortization event with respect to the collateral
certificate has occurred and is continuing as of the date of the
new issuance; and
-- any other conditions specified in the related prospectus
supplement are satisfied.
PAYMENTS ON NOTES; PAYING AGENT
The notes will be issued in book-entry form and payments of principal of
and interest on the notes will be made in U.S. dollars as described under
"-- Book-Entry Notes" unless the stated principal amount of the notes is
denominated in a foreign currency.
The issuer and the indenture trustee, and any agent of the issuer or the
indenture trustee, will treat the registered holder of any note as the absolute
owner of that note, whether or not the note is overdue and notwithstanding any
notice to the contrary, for the purpose of making payment and for all other
purposes.
The issuer will make payments on a note to the registered holder of the
note at the close of business on the record date established for the related
payment date.
The issuer expects to designate the corporate trust office of The Bank of
New York, in New York City, as its paying agent for the notes of each series.
The issuer will identify any other entities appointed to serve as paying agents
on notes of a series or class in a prospectus supplement. The issuer may at any
time designate additional paying agents or rescind the designation of any paying
agent or approve a change in the office through which any paying agent acts.
However, the issuer will be required to maintain a paying agent in each place of
payment for a series or class of notes.
After notice by publication, all funds paid to a paying agent for the
payment of the principal of or interest on any note of any series which remains
unclaimed at the end of two years after the principal or interest becomes due
and payable will be repaid to the issuer. After funds are repaid to the issuer,
the holder of that note may look only to the issuer for payment of that
principal or interest.
DENOMINATIONS
The notes offered by this prospectus will be issued in denominations of
$1,000 and multiples of $1,000 in excess of that amount.
31
RECORD DATE
If the notes are in book-entry form, the record date for payment of the
notes will be the day before the related payment date. If the notes are in
definitive form, the record date for a payment date will be the last day of the
calendar month ending prior to that payment date.
GOVERNING LAW
The laws of the State of New York will govern the notes and the indenture.
FORM, EXCHANGE, AND REGISTRATION AND TRANSFER OF NOTES
The notes offered by this prospectus will be issued in registered form. The
notes will be represented by one or more global notes registered in the name of
The Depository Trust Company, as depository, or its nominee. We refer to each
beneficial interest in a global note as a "book-entry note." For a description
of the special provisions that apply to book-entry notes, see "-- Book-Entry
Notes."
A holder of notes may exchange those notes for other notes of the same
class of any authorized denominations and of the same aggregate stated principal
amount and tenor.
Any holder of a note may present that note for registration of transfer,
with the form of transfer properly executed, at the office of the note registrar
or at the office of any transfer agent that the issuer designates. Holders of
notes will not be charged any service charge for the exchange or transfer of
their notes. Holders of notes that are to be transferred or exchanged will be
liable for the payment of any taxes and other governmental charges described in
the indenture before the transfer or exchange will be completed. The note
registrar or transfer agent, as the case may be, will effect a transfer or
exchange when it is satisfied with the documents of title and identity of the
person making the request.
The issuer expects to appoint The Bank of New York as the note registrar
for the notes. The issuer also may at any time designate additional transfer
agents for any series or class of notes. The issuer may at any time rescind the
designation of any transfer agent or approve a change in the location through
which any transfer agent acts. However, the issuer will be required to maintain
a transfer agent in each place of payment for the notes.
BOOK-ENTRY NOTES
The notes offered by this prospectus will be in book-entry form. This means
that, except under the limited circumstances described in this subheading under
"-- Definitive Notes", purchasers of notes will not be entitled to have the
notes registered in their names and will not be entitled to receive physical
delivery of the notes in definitive paper form. Instead, upon issuance, all the
notes of a class will be represented by one or more fully registered permanent
global notes, without interest coupons.
Each global note will be deposited with a securities depository named The
Depository Trust Company and will be registered in its name or the name of its
nominee. No global note representing book-entry notes may be transferred except
as a whole by DTC to a nominee of DTC, or by a nominee of DTC to another nominee
of DTC. Thus, DTC or its nominee will be the only registered holder of the notes
and will be considered the sole representative of the beneficial owners of notes
for purposes of the indenture.
32
The registration of the global notes in the name of Cede & Co. or another
nominee of DTC will not affect beneficial ownership and is performed merely to
facilitate subsequent transfers. The book-entry system is used because it
eliminates the need for physical movement of securities.
Purchasers of notes in the United States can hold interests in the global
notes only through DTC, either directly, if they are participants in that
system -- such as a bank, brokerage house or other institution that maintains
securities accounts for customers with DTC or its nominee -- or otherwise
indirectly through a participant in DTC. Purchasers of notes in Europe can hold
interests in the global notes only through Clearstream or through Euroclear
Bank, S.A./N.V., as operator of the Euroclear System.
Because DTC will be the only registered owner of the global notes,
Clearstream and Euroclear will hold positions through their respective U.S.
depositories, which in turn will hold positions on the books of DTC.
As long as the notes are in book-entry form, they will be evidenced solely
by entries on the books of DTC, its participants and any indirect participants.
Thus, each beneficial owner of a book-entry note will hold its note indirectly
through a hierarchy of intermediaries, with DTC at the "top" and the beneficial
owner's own securities intermediary at the "bottom."
The issuer, the indenture trustee and their agents will not be liable for
the accuracy of, and are not responsible for maintaining, supervising or
reviewing DTC's records or any participant's or indirect participant's records
relating to book-entry notes. The issuer, the indenture trustee and their agents
also will not be responsible or liable for payments made on account of the
book-entry notes.
Until definitive notes are issued to the beneficial owners as described in
this subheading under "-- Definitive Notes," all references to "holders" of
notes means DTC. The issuer, the indenture trustee and any paying agent,
transfer agent or securities registrar may treat DTC as the absolute owner of
the notes for all purposes.
Beneficial owners of book-entry notes should realize that the issuer will
make all distributions of principal and interest on their notes to DTC and will
send all required reports and notices solely to DTC as long as DTC is the
registered holder of the notes. DTC and the participants are generally required
to receive and transmit all distributions, notices and directions from the
indenture trustee to the beneficial owners through the chain of intermediaries.
Similarly, the indenture trustee will accept notices and directions solely
from DTC. Therefore, in order to exercise any rights of a holder of notes under
the indenture, each person owning a beneficial interest in the notes must rely
on the procedures of DTC and, in some cases, Clearstream or Euroclear. If the
beneficial owner is not a participant in that system, then it must rely on the
procedures of the participant and, if applicable, indirect participant through
which that person owns its interest. DTC has advised the issuer that it will
take actions under the indenture only at the direction of its participants,
which in turn will act only at the direction of the beneficial owners. Some of
these actions, however, may conflict with actions it takes at the direction of
other participants and beneficial owners.
Notices and other communications by DTC to participants, by participants to
indirect participants, and by participants and indirect participants to
beneficial owners will be governed by arrangements among them.
33
Beneficial owners of book-entry notes should also realize that book-entry
notes may be more difficult to pledge because of the lack of a physical note.
Beneficial owners may also experience delays in receiving payments on their
notes since distributions will initially be made to DTC and must be transferred
through the chain of intermediaries to the beneficial owner's account.
THE DEPOSITORY TRUST COMPANY
DTC is a limited-purpose trust company organized under the New York Banking
Law and is a "banking institution" within the meaning of the New York Banking
Law. DTC is also a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered under Section 17A of the Securities Exchange Act of
1934. DTC was created to hold securities deposited by its participants and to
facilitate the clearance and settlement of securities transactions among its
participants through electronic book-entry changes in accounts of the
participants, thus eliminating the need for physical movement of securities. The
rules applicable to DTC are on file with the Securities and Exchange Commission.
CLEARSTREAM BANKING, SOCIETE ANONYME
Clearstream is registered as a bank in Luxembourg and is regulated by the
Banque Centrale du Luxembourg, the Luxembourg Central Bank, which supervises
Luxembourg banks. Clearstream holds securities for its customers and facilitates
the clearance and settlement of securities transactions by electronic book-entry
transfers between their accounts. Clearstream provides various services,
including safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending and borrowing.
Clearstream also deals with domestic securities markets in over 30 countries
through established depository and custodial relationships. Clearstream has
established an electronic bridge with Euroclear in Brussels to facilitate
settlement of trades between Clearstream and Euroclear.
Clearstream's customers are worldwide financial institutions including
underwriters, securities brokers and dealers, banks, trust companies and
clearing corporations. Clearstream's U.S. customers are limited to securities
brokers and dealers, and banks. Indirect access to Clearstream is available to
other institutions that clear through or maintain a custodial relationship with
an account holder of Clearstream.
EUROCLEAR SYSTEM
Euroclear was created in 1968 to hold securities for participants of
Euroclear and to clear and settle transactions between Euroclear participants
through simultaneous electronic book-entry delivery against payment. This system
eliminates the need for physical movement of securities and any risk from lack
of simultaneous transfers of securities and cash. Euroclear includes various
other services, including securities lending and borrowing and interfaces with
domestic markets in several countries. The Euroclear Operator is the Euroclear
Bank, S.A./N.V. The Euroclear Operator conducts all operations. All Euroclear
securities clearance accounts and Euroclear cash accounts are accounts with the
Euroclear Operator. Euroclear participants include banks, including central
banks, securities brokers and dealers and other professional financial
intermediaries and may include the underwriters. Indirect access to Euroclear is
also available to other firms that clear through or maintain a custodial
relationship with a Euroclear participant, either directly or indirectly.
34
The Euroclear Operator holds a banking license granted to it, and is
regulated by, the Belgian Banking and Finance Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System, and applicable Belgian
law. These Terms and Conditions govern transfers of securities and cash within
Euroclear, withdrawals of securities and cash from Euroclear, and receipts of
payments with respect to securities in Euroclear. All securities in Euroclear
are held on a fungible basis without attribution of specific securities to
specific securities clearance accounts. The Euroclear Operator acts under the
Terms and Conditions only on behalf of Euroclear participants, and has no record
of or relationship with persons holding through Euroclear participants.
This information about DTC, Clearstream and Euroclear has been provided by
each of them for informational purposes only and is not intended to serve as a
representation, warranty or contract modification of any kind.
DISTRIBUTIONS ON BOOK-ENTRY NOTES
The issuer will make distributions of principal of and interest on
book-entry notes to DTC. These payments will be made in immediately available
funds by the issuer's paying agent, The Bank of New York, at the office of the
paying agent in New York City that the issuer designates for that purpose.
In the case of principal payments, the global notes must be presented to
the paying agent in time for the paying agent to make those payments in
immediately available funds in accordance with its normal payment procedures.
Upon receipt of any payment of principal of or interest on a global note,
DTC will immediately credit the accounts of its participants on its book-entry
registration and transfer system. DTC will credit those accounts with payments
in amounts proportionate to the participants' respective beneficial interests in
the stated principal amount of the global note as shown on the records of DTC.
Payments by participants to beneficial owners of book-entry notes will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name," and will be the responsibility of those participants.
Distributions on book-entry notes held beneficially through Clearstream
will be credited to cash accounts of Clearstream participants in accordance with
its rules and procedures, to the extent received by its U.S. depository.
Distributions on book-entry notes held beneficially through Euroclear will
be credited to the cash accounts of Euroclear participants in accordance with
the Terms and Conditions, to the extent received by its U.S. depository.
In the event definitive notes are issued, distributions of principal and
interest on definitive notes will be made directly to the holders of the
definitive notes in whose names the definitive notes were registered at the
close of business on the related record date.
35
GLOBAL CLEARANCE AND SETTLEMENT PROCEDURES
Initial settlement for the notes will be made in immediately available
funds. Secondary market trading between DTC participants will occur in the
ordinary way in accordance with DTC's rules and will be settled in immediately
available funds using DTC's Same-Day Funds Settlement System. Secondary market
trading between Clearstream participants and/or Euroclear participants will
occur in the ordinary way in accordance with the applicable rules and operating
procedures of Clearstream and Euroclear and will be settled using the procedures
applicable to conventional eurobonds in immediately available funds.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Clearstream or
Euroclear participants, on the other, will be effected in DTC in accordance with
DTC's rules on behalf of the relevant European international clearing system by
the U.S. depositories. However, cross-market transactions of this type will
require delivery of instructions to the relevant European international clearing
system by the counterparty in that system in accordance with its rules and
procedures and within its established deadlines, European time. The relevant
European international clearing system will, if the transaction meets its
settlement requirements, deliver instructions to its U.S. depository to take
action to effect final settlement on its behalf by delivering or receiving notes
in DTC, and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. Clearstream participants and
Euroclear participants may not deliver instructions directly to DTC.
Because of time-zone differences, credits to notes received in Clearstream
or Euroclear as a result of a transaction with a DTC participant will be made
during subsequent securities settlement processing and will be credited the
business day following a DTC settlement date. The credits to or any transactions
in the notes settled during processing will be reported to the relevant
Euroclear or Clearstream participants on that business day. Cash received in
Clearstream or Euroclear as a result of sales of notes by or through a
Clearstream participant or a Euroclear participant to a DTC participant will be
received with value on the DTC settlement date, but will be available in the
relevant Clearstream or Euroclear cash account only as of the business day
following settlement in DTC.
Although DTC, Clearstream and Euroclear have agreed to these procedures in
order to facilitate transfers of notes among participants of DTC, Clearstream
and Euroclear, they are under no obligation to perform or continue to perform
these procedures and these procedures may be discontinued at any time.
DEFINITIVE NOTES
Beneficial owners of book-entry notes may exchange those notes for
definitive notes registered in their name only if:
-- DTC is unwilling or unable to continue as depository for the
global notes or ceases to be a registered "clearing agency" and
the issuer is unable to find a qualified replacement for DTC;
-- the issuer, in its sole discretion, elects to terminate the
book-entry system through DTC; or
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-- any event of default has occurred with respect to those book-entry
notes, and beneficial owners evidencing not less than 50% of the
unpaid outstanding dollar principal amount of the notes of that
class advise the indenture trustee and DTC that the continuation
of a book entry system is no longer in the best interests of those
beneficial owners.
If any of these three events occurs, DTC is required to notify the
beneficial owners through the chain of intermediaries that the definitive notes
are available. The appropriate global note will then be exchangeable in whole
for definitive notes in registered form of like tenor and of an equal aggregate
stated principal amount, in specified denominations. Definitive notes will be
registered in the name or names of the person or persons specified by DTC in a
written instruction to the registrar of the notes. DTC may base its written
instruction upon directions it receives from its participants. Thereafter, the
holders of the definitive notes will be recognized as the "holders" of the notes
under the indenture.
REPLACEMENT OF NOTES
The issuer will replace at the expense of the holder any mutilated note,
upon surrender of that note to the indenture trustee. The issuer will replace at
the expense of the holder any notes that are destroyed, lost or stolen upon
delivery to the indenture trustee of evidence of the destruction, loss or theft
of those notes satisfactory to the issuer and the indenture trustee. In the case
of a destroyed, lost or stolen note, the issuer and the indenture trustee may
require the holder of the note to provide an indemnity satisfactory to the
indenture trustee and the issuer before a replacement note will be issued.
ACQUISITION AND CANCELLATION OF NOTES BY THE ISSUER AND THE SELLER
The issuer, the seller and their affiliates may acquire notes in the open
market or otherwise.
The issuer, the seller and their affiliates may cause the notes acquired by
them to be canceled and notes so canceled will no longer be outstanding.
SOURCES OF FUNDS TO PAY THE NOTES
GENERAL
The primary source of funds for the payment of principal of and interest on
the notes is the collateral certificate issued by the CARCO receivables trust to
the issuer. The collateral certificate is one of the series of investor
certificates issued by the CARCO receivables trust. For a description of the
CARCO receivables trust and its assets, see "DaimlerChrysler Wholesale
Receivables LLC and the CARCO Receivables Trust." For a description of how we
will determine the payments to be made on the investor certificates issued by
the CARCO receivables trust, including the collateral certificate, see
"Description of the Investor Certificates Issued by the CARCO Receivables
Trust."
Interest collections and principal collections allocated to the collateral
certificate will be deposited every month by the CARCO receivables trust into
the issuer's collection account.
The collateral certificate has no specified interest rate and will be
allocated its share of cash collections on the receivables and its share of
charge-offs on defaulted principal receivables.
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Allocations of charge-offs and interest collections are made, first, pro
rata among each series of investor certificates issued by the CARCO receivables
trust, including the collateral certificate, based on the ratio that the
Adjusted Invested Amount of each series of investor certificates bears to the
Trust Adjusted Invested Amount. This ratio, when expressed as a percentage, is
the Series Allocation Percentage. The Adjusted Invested Amount of the collateral
certificate will be the sum of the series nominal liquidation amounts for all
series of notes. Next, within each series of investor certificates (including
the collateral certificate) allocations of series allocable charge-offs and
series allocable interest collections to the seller's portion, on the one hand,
and the investor portion, on the other, will be made based on the ratio that:
-- either (i) the Invested Amount (with respect to each series of
investor certificates other than the collateral certificate) or
(ii) the sum of the series nominal liquidation amounts for all
series of notes (with respect to the collateral certificate) bears
to
-- the product of (a) the applicable Series Allocation Percentage and
(b) the Pool Balance.
This ratio, when expressed as a percentage, is known as the CARCO Floating
Allocation Percentage. Application of this percentage as calculated for the
collateral certificate results in the investor portion of interest collections
and charge-offs allocable to the notes. The seller's portion of interest
collections is released to the seller and is not available for payments on the
notes.
The size of the collateral certificate will fluctuate according to the sum
of the series nominal liquidation amounts of all outstanding series of notes
issued by the issuer and represents the investment of the collateral certificate
in the Pool Balance. Unless we specify otherwise in the related prospectus
supplement, the series nominal liquidation amount of a series will be the sum of
the nominal liquidation amount of the notes of that series plus any
overcollateralization amount for that series. The overcollateralization amount
for a series will be subordinated to the notes of that series to the extent
described in the related prospectus supplement and, in effect, will represent
the interest of the seller in the series nominal liquidation amount of that
series. The Seller's Interest in the CARCO receivables trust owned by DCWR
represents the interest in the principal receivables in the CARCO receivables
trust not represented by any series of investor certificates (including the
collateral certificate) issued by the CARCO receivables trust.
Principal collections on the receivables are allocated among series of
investor certificates (including the collateral certificate) similarly to the
allocation of interest collections on the receivables (i.e., on the basis of
Series Allocation Percentage). However, when one or more series of investor
certificates begin to accumulate principal or amortize, principal collections
allocable to other series of investor certificates that are not accumulating or
amortizing will be used to satisfy the principal accumulation or payment
requirements of those series of investor certificates that are accumulating or
amortizing. For this purpose, the collateral certificate will be treated as
accumulating principal or amortizing to the extent that any series of notes is
accumulating or amortizing.
We will allocate to the seller's portion, on the one hand, and the investor
portion, on the other, those principal collections on the receivables that we
have allocated to the collateral certificate. The seller's portion of principal
collections is released to the seller and is not available for payments on the
notes. We will allocate to the investor portion in the proportion that the sum
of the series nominal liquidation amounts for all outstanding series of notes
bears to the product
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of the Series Allocation Percentage for the collateral certificate and the Pool
Balance. For those series of notes that do not require principal amounts to be
deposited into a principal funding account or paid to noteholders, the series
nominal liquidation amount calculation will be "floating," i.e. calculated as of
the last day of each Collection Period. For those series of notes which require
principal amounts to be deposited into a principal funding account or paid to
noteholders, the series nominal liquidation amount will be "fixed" as of the
last day of the Collection Period immediately before the issuer begins to
allocate Available Principal Amounts to the principal funding account for that
series or before the occurrence of the expected principal payment date, an early
redemption event, an event of default or other optional or mandatory redemption,
i.e. calculated as of the last day of the Collection Period prior to any
reductions in the series nominal liquidation amount due to deposits or payments
of principal.
If principal collections on the receivables allocated to the collateral
certificate are currently needed to pay the notes or to make a deposit into the
issuer accounts, they will be deposited into the issuer's collection account.
Otherwise, collections of principal receivables allocated to the collateral
certificate will be reallocated to other series of investor certificates that
have principal shortfalls or reinvested in the CARCO receivables trust to
maintain the Invested Amount of the collateral certificate. The reallocation of
those principal collections to other series of investor certificates will not
reduce the size of the collateral certificate. If the collateral certificate has
a shortfall in principal collections, but other series of investor certificates
have excess principal collections, a portion of the excess principal collections
allocated to other series of investor certificates will be reallocated to the
collateral certificate and any other investor certificates which may have a
shortfall in principal collections. The collateral certificate's share of the
excess principal collections will be paid to the issuer and treated as Available
Principal Amounts.
Upon a sale of receivables, or interests therein, following an insolvency
of DCS or DaimlerChrysler, an acceleration following an event of default, or the
applicable legal final maturity date for a series of notes, as described in the
related prospectus supplement, the series nominal liquidation amount for that
series, and the portion of the Invested Amount of the collateral certificate
related to that series will be reduced to zero and that series will no longer
receive any allocations of Available Interest Amounts or Available Principal
Amounts from the issuer.
Following an Early Amortization Event with respect to the collateral
certificate, which is also an early redemption event for the notes, all
principal collections on the receivables for any Collection Period allocated to
the investor portion of the collateral certificate will be used to cover
principal payments on the notes.
A prospectus supplement for a series of notes may provide for allocations
for that series that are different from those described above.
For a detailed description of the application of collections and allocation
of charge-offs by the CARCO receivables trust, see "Description of the Investor
Certificates Issued by the CARCO Receivables Trust" in this prospectus.
DEPOSIT AND APPLICATION OF FUNDS
The amount of interest collections on the receivables that is allocated and
paid on the collateral certificate will first be allocated between the seller's
portion and the investor portion as described under "-- General" above. These
allocations will be made on each payment date. The
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interest collections allocated to the investor portion are "AVAILABLE INTEREST
AMOUNTS." Available Interest Amounts will, in turn, be allocated pro rata to
each series of notes based on a fraction:
-- the numerator of which is the series nominal liquidation amount
for that series on the last day of the Collection Period
immediately preceding such payment date; and
-- the denominator of which is the aggregate series nominal
liquidation amount for all series on that day.
This fraction will adjust to account for any additional issuances or final
payment of notes of that series since the prior Collection Period.
The amount of principal collections on the receivables and Miscellaneous
Payments that is allocated to and paid on the collateral certificate will first
be allocated between the seller's portion and the investor portion as described
under "-- General" above. The principal collections and Miscellaneous Payments
allocated to the investor portion are "AVAILABLE PRINCIPAL AMOUNTS." Available
Principal Amounts will, in turn, be allocated to each series of notes pro rata
based on a fraction:
-- the numerator of which is the series nominal liquidation amount of
that series as of the last day of the immediately preceding
Collection Period (or the issuance date of that series in the case
of the first payment date) or, if the Accumulation Period or an
Early Redemption Period for that series has commenced, as of the
last day of the Collection Period ending prior to the commencement
of the Accumulation Period or Early Redemption Period, as
applicable; and
-- the denominator of which is the sum of the series nominal
liquidation amounts for all series of notes as of the last day of
the immediately preceding Collection Period, except that for any
series of notes that is amortizing, repaying or accumulating
principal, the series nominal liquidation amount of that series
will be the series nominal liquidation amount as of the last day
of the Collection Period prior to the commencement of such
amortization, repayment or accumulation.
This fraction will adjust to account for any additional issuances of the
notes of each series since the prior Collection Period. If Available Principal
Amounts for any payment date are less than the aggregate monthly principal
payments or deposits required to be made for all series of notes, and any series
of notes has excess Available Principal Amounts remaining after the application
of its allocation in accordance with its indenture supplement, then any such
excess will be applied to each other series of notes to the extent such series
still needs to cover a monthly principal payment or deposit, pro rata on the
basis of their respective shortfalls.
In the case of a series of notes having more than one class, Available
Principal Amounts and Available Interest Amounts allocated to that series will
be allocated and applied to each class in the manner and order of priority
described in the accompanying prospectus supplement.
ISSUER ACCOUNTS
The issuer has established a collection account for the purpose of
receiving distributions on the collateral certificate.
If we so specify in the related prospectus supplement, the issuer may
direct the indenture trustee to establish and maintain in the name of the
indenture trustee supplemental accounts for
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any series or class of notes for the benefit of the related noteholders. Most
series will have an interest funding account and a principal funding account.
Typically, funds will be transferred from the collection account to these
supplemental accounts in order to make payments of interest on and principal of
the notes, to make payments under any applicable derivative agreements, and for
other purposes as specified in the related prospectus supplement.
The collection account, together with the supplemental accounts described
in this section, are referred to as issuer accounts. Issuer accounts will be
Qualified Accounts and amounts deposited to issuer accounts may only be invested
in Eligible Investments. Each supplemental account for a series may be a
subaccount of one master account for that series.
DERIVATIVE AGREEMENTS
Some notes may have the benefit of one or more derivative agreements, which
may be a currency, interest rate or other swap, a cap, a collar, a guaranteed
investment contract or other similar arrangements with various counterparties.
In general, the issuer will receive payments from counterparties to the
derivative agreements in exchange for the issuer's payments to them, to the
extent required under the derivative agreements. Payments received from
derivative counterparties with respect to interest payments on
dollar-denominated notes of a series will generally be treated as Available
Interest Amounts for such series. We will include the specific terms of any
derivative agreement applicable to a series or class of notes and a description
of the related counterparty in the related prospectus supplement.
SALE OF RECEIVABLES
In addition to a sale of receivables following an insolvency of
DaimlerChrysler or DCS, if a series or class of notes has an event of default
and is accelerated before its legal final maturity date, the CARCO receivables
trust may sell receivables, or interests therein, if the conditions described in
"The Indenture -- Events of Default" and "-- Events of Default Remedies" are
satisfied.
If principal of or interest on a series or class of notes has not been paid
in full on its legal final maturity date, the sale will automatically take place
on that date. Proceeds from such sale will be immediately paid toward payment on
those notes.
Unless we specify otherwise in the related prospectus supplement, the
amount of receivables sold will be up to the series nominal liquidation amount
of the series. The nominal liquidation amount of a series or class in respect of
which a sale is made will be automatically reduced to zero upon such sale. No
more Available Principal Amounts or Available Funds will be allocated to those
notes. Noteholders will receive the proceeds of such sale in an amount not to
exceed the lesser of (i) the outstanding dollar principal amount of those notes,
plus unpaid interest on those notes and (ii) the nominal liquidation amount of
such series or class, as applicable, plus accrued interest. Notes whose
noteholders have caused sales of receivables are no longer outstanding under the
indenture once the sale occurs.
After giving effect to a sale of receivables for a series or class of
notes, the amount of proceeds on deposit in a principal funding account may be
less than the outstanding dollar principal amount of that series or class. This
deficiency can arise because the series nominal liquidation amount of that
series or class was reduced before the sale of receivables or because
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the sale price for the receivables was less than the outstanding dollar
principal amount. Unless we specify otherwise in the prospectus supplement,
these types of deficiencies will not be reimbursed.
LIMITED RECOURSE TO THE ISSUER; SECURITY FOR THE NOTES
The portion of Available Funds and Available Principal Amounts allocable to
a series or class of notes after giving effect to all allocations and
reallocations, funds for that series or class on deposit in the applicable
issuer accounts, any applicable derivative agreement for that series or class
and proceeds of sales of receivables for that series or class provide the only
sources of payment for principal of or interest on that series or class of
notes. Noteholders will have no recourse to any other assets of the issuer or
any other person or entity for the payment of principal of or interest on the
notes.
The notes of all series are secured by a shared security interest in the
collateral certificate and the collection account, but each series or class of
notes is entitled to the benefits of only that portion of those assets allocated
to it under the indenture and the related indenture supplement. Each series or
class of notes is also secured by a security interest in any applicable
supplemental account and any applicable derivative agreement.
THE INDENTURE
The notes of a series will be issued pursuant to the terms of the indenture
and the related indenture supplement. The discussion under this heading, the
discussions under "The Notes" in this prospectus and certain sections in the
related prospectus supplement summarize the material terms of the notes, the
indenture and the related indenture supplement. These summaries do not purport
to be complete and are qualified in their entirety by reference to the
provisions of the notes, the indenture and the related indenture supplement.
INDENTURE TRUSTEE
The Bank of New York, a New York banking corporation, will act as trustee
under the indenture for the notes. Its principal corporate trust office is
located at 101 Barclay Street, New York, New York 10286.
The indenture trustee may resign at any time. The issuer may also remove
the indenture trustee if the indenture trustee is no longer eligible to act as
trustee under the indenture or if the indenture trustee becomes insolvent. In
all circumstances, the issuer must appoint a successor indenture trustee for the
notes. Any resignation or removal of the indenture trustee and appointment of a
successor indenture trustee will not become effective until the successor
indenture trustee accepts the appointment.
The issuer or its affiliates may maintain accounts and other banking or
trustee relationships with the indenture trustee and its affiliates.
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ISSUER COVENANTS
The issuer will not, among other things:
-- claim any credit on or make any deduction from the principal and
interest payable on the notes, other than amounts withheld in good
faith from such payments under the Internal Revenue Code or other
applicable tax law,
-- voluntarily dissolve or liquidate, or
-- permit (A) the validity or effectiveness of the indenture to be
impaired, or permit the lien created by the indenture to be
amended, hypothecated, subordinated, terminated or discharged, or
permit any person to be released from any covenants or obligations
with respect to the notes under the indenture except as may be
expressly permitted by the indenture, (B) any lien, charge,
excise, claim, security interest, mortgage or other encumbrance
(other than the lien created by the indenture) to be created on or
extend to or otherwise arise upon or burden the collateral for the
notes or proceeds thereof or (C) the lien of the indenture not to
constitute a valid first priority security interest in the assets
of the issuer.
The issuer may not engage in any activity other than the activities
described in "The Issuer" in this prospectus. The issuer will not incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the notes.
The issuer also covenants that if:
-- the issuer defaults in the payment of interest on any series or
class of notes when such interest becomes due and payable and such
default continues for a period of five business days following the
date on which such interest became due and payable, or
-- the issuer defaults in the payment of the principal of any series
or class of notes on its legal final maturity date, or
-- and any such default continues beyond any specified period of
grace for such series or class of notes,
the issuer will, upon demand of the indenture trustee, pay to the indenture
trustee, for the benefit of the holders of the notes of the affected series or
class, the whole amount then due and payable on those notes for principal and
interest (after giving effect to any allocation requirements described in this
prospectus and the related prospectus supplement), with interest, to the extent
that payment of such interest will be legally enforceable, upon the overdue
installments of interest, at such rate or rates described in the related
prospectus supplement. In addition, the issuer will pay an amount sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the indenture trustee, its
agents and counsel and all other compensation due to the indenture trustee. If
the issuer fails to pay such amounts upon such demand, the indenture trustee may
institute a judicial proceeding for the collection of those unpaid amounts.
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EVENTS OF DEFAULT
Each of the following events is an event of default for any related series
or class of notes:
-- the issuer's failure, for a period of five business days, to pay
interest on any note of the related series or class when due;
-- the issuer's failure to pay the stated principal amount of any
note of the related series or class on its legal final maturity
date;
-- the issuer's default in the performance, or breach, of any other
of its other covenants or warranties in the indenture, for a
period of sixty (60) days after either the indenture trustee or
the holders of 25% of the aggregate outstanding dollar principal
amount of the outstanding notes of the affected series or class
have provided written notice requesting remedy of that default or
breach, and, as a result of that default or breach, the interests
of the related noteholders are materially and adversely affected
and continue to be materially and adversely affected during the
sixty (60) day period;
-- the occurrence of certain events of bankruptcy, insolvency,
conservatorship or receivership of the issuer; and
-- any additional events of default specified in the prospectus
supplement relating to the series or class.
Failure to pay the full stated principal amount of a note on its expected
principal payment date will not constitute an event of default. An event of
default with respect to one series or class of notes will not necessarily be an
event of default with respect to any other series or class of notes.
EVENTS OF DEFAULT REMEDIES
The occurrence of some events of default involving the bankruptcy or
insolvency of the issuer results in an automatic acceleration of all of the
notes. If other events of default occur and are continuing with respect to any
series or class, either the indenture trustee or the holders of a majority in
aggregate outstanding dollar principal amount of the notes of that series or
class (or of all notes (treated as one class) in the case of certain events of
defaults with respect to all notes) may declare the principal of all those
outstanding notes to be immediately due and payable. This declaration of
acceleration may generally be rescinded by the holders of a majority in
aggregate outstanding dollar principal amount of outstanding notes of that
series or class.
If a series or class of notes is accelerated before its legal final
maturity date, each holder of the accelerated notes may notify the indenture
trustee that it desires to exercise the put feature that is part of its notes.
The "PUT FEATURE" will be deemed to be exercised only if at least one of the
following conditions is met:
(i) the holders of at least 90% of the outstanding dollar principal
amount of the notes of that series or class have notified the indenture
trustee that they desire to exercise the put feature in respect of their
notes;
(ii) the holders of a majority of the outstanding dollar principal
amount of the notes of that series or class have notified the indenture
trustee that they desire to exercise the put feature in respect of their
notes and the net proceeds of the sale of Receivables pursuant to
44
such exercise (as described below) plus amounts on deposit in the principal
funding account would be sufficient to pay all amounts due on the notes of
that series or class; or
(iii) (A) the indenture trustee determines that the funds to be
allocated to the notes of that series or class, including (1) Available
Interest Amounts and Available Principal Amounts allocated to that series
or class and (2) amounts on deposit in the principal funding account, may
not be sufficient on an ongoing basis to make payments on the notes of that
series or class as such payments would have become due if such obligations
had not been declared due and payable and (B) holders of at least 66 2/3%
of the outstanding dollar principal amount of the notes of that series or
class have notified the indenture trustee that they desire to exercise the
put feature in respect of their notes.
If the put feature is deemed to be exercised as provided in the preceding
sentence, it will be deemed to be exercised by all holders of the notes of that
series or class, whether or not they have actually given notice of their desire
to exercise the put feature. Upon such deemed exercise of the put feature, the
indenture trustee will cause the CARCO receivables trust to sell principal
receivables and the related non-principal receivables (or interest therein) in
the amount described below. The holders of the accelerated notes will maintain
their rights in their notes until such sale proceeds have been applied to
payment of the amounts due on their notes and shall deliver their notes to the
issuer as part of their exercise of the put feature.
If an event of default occurs relating to the failure to pay principal of
or interest on a series or class of notes in full on the legal final maturity
date, the issuer will automatically direct the CARCO receivables trust to sell
receivables on the date, as described in "Sources of Funds to Pay the
Notes -- Sale of Receivables."
If a sale of receivables does not take place following an acceleration of a
series or class of notes, then:
-- The issuer will continue to hold the collateral certificate, and
distributions on the collateral certificate will continue to be
applied in accordance with the distribution provisions of the
indenture and the related indenture supplement.
-- Principal will be paid on the accelerated series or class of notes
to the extent funds are received from the CARCO receivables trust
and available to the accelerated series or class after giving
effect to all allocations and reallocations and payment is
permitted by the subordination provisions of the senior notes, if
any, of the same series.
-- On the legal final maturity date of the accelerated notes, if the
notes have not been paid in full, the indenture trustee will
direct the CARCO receivables trust to sell receivables as provided
in the applicable indenture supplement.
The holders of a majority in outstanding dollar principal amount of any
accelerated series or class of notes have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the indenture
trustee, or exercising any trust or power conferred on the indenture trustee.
However, this right may be exercised only if the direction provided by the
noteholders does not conflict with applicable law or the indenture or the
related indenture supplement or have a substantial likelihood of involving the
indenture trustee in personal liability. The holder of any note will have the
right to institute suit for the enforcement of payment of principal of and
interest on such note on its legal final maturity date.
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Generally, if an event of default occurs and any notes are accelerated, the
indenture trustee is not obligated to exercise any of its rights or powers under
the indenture unless the holders of affected notes offer the indenture trustee
reasonable indemnity. Upon acceleration of the maturity of a series or class of
notes following an event of default, the indenture trustee will have a lien on
the collateral for those notes ranking senior to the lien of those notes for its
unpaid fees and expenses.
The indenture trustee has agreed, and the noteholders will agree, that they
will not at any time institute against the issuer, DCWR, or the CARCO
receivables trust any bankruptcy, reorganization or other proceeding under any
federal or state bankruptcy or similar law.
EARLY REDEMPTION EVENTS
The issuer is required to redeem in whole or in part, to the extent that
funds are available for that purpose, each affected series or class of notes
upon the occurrence of an early redemption event. Early redemption events
include each of the following:
-- the occurrence of a note's expected principal payment date;
-- each of the Early Amortization Events applicable to the collateral
certificate, as described under "Description of the Investor
Certificates Issued by the CARCO Receivables Trust -- Reinvestment
Events and Early Amortization Events";
-- the issuer becoming an "investment company" within the meaning of
the Investment Company Act of 1940, as amended; and
-- any additional early redemption event specified in the related
prospectus supplement.
The redemption price of a note so redeemed will be the outstanding dollar
principal amount of that note, plus accrued interest -- or, in the case of
discount notes, principal accreted but unpaid on that note -- to but excluding
the date of redemption, which will be the next payment date. If the amount of
Available Interest Amounts and Available Principal Amounts allocable to the
series or class of notes to be redeemed, together with funds on deposit in the
applicable principal funding account and interest funding account and any
amounts payable to the issuer under any applicable derivative agreement are
insufficient to pay the redemption price in full on the next payment date after
giving effect to the subordination provisions and allocations to any other notes
ranking equally with those notes, monthly payments on the notes to be redeemed
will thereafter be made on each payment date until the stated principal amount
of the notes plus all accrued and unpaid interest are paid in full, or the legal
maturity date of the notes occurs, whichever is earlier.
No Available Principal Amounts will be allocated to a series or class of
notes with a nominal liquidation amount of zero, even if the stated principal
amount of that series or class has not been paid in full. However, any funds
previously deposited in the applicable principal funding account or interest
funding account and any amounts received from an applicable derivative agreement
will still be available to pay principal of and interest on that series or class
of notes. In addition, if Available Interest Amounts are available, they can be
applied to reimburse reductions in the nominal liquidation amount of that series
or class resulting from reallocations of Available Principal Amounts to pay
interest on classes of notes or from charge-offs of defaulted principal
receivables in the CARCO receivables trust.
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Payments on redeemed notes will be made in the same priority as described
in the related prospectus supplement. The issuer will give notice to holders of
the affected notes before an early redemption date.
MEETINGS
The indenture trustee may call a meeting of the holders of notes of a
series or class at any time. The indenture trustee will call a meeting upon
request of the issuer or the holders of at least 10% in aggregate outstanding
dollar principal amount of the outstanding notes of the series or class.
The quorum for a meeting is a majority of the holders of the outstanding
dollar principal amount of the related series or class of notes, as the case may
be, unless a higher percentage is specified for approving action taken at the
meeting, in which case the quorum is the higher percentage.
VOTING
Any action or vote to be taken by the holders of a majority, or other
specified percentage, of any series or class of notes may be adopted by the
affirmative vote of the holders of a majority, or the applicable other specified
percentage, of the aggregate outstanding dollar principal amount of the
outstanding notes of that series or class, as the case may be.
Any action or vote taken at any meeting of holders of notes duly held in
accordance with the indenture will be binding on all holders of the affected
notes or the affected series or class of notes, as the case may be.
Notes held by the issuer, DaimlerChrysler, DCS or their affiliates will not
be deemed outstanding for purposes of voting or calculating quorum at any
meeting of noteholders.
AMENDMENTS TO THE INDENTURE AND INDENTURE SUPPLEMENTS
Upon delivery of a CARCO receivables trust tax opinion and issuer tax
opinion, as described under "-- Tax Opinions for Amendments" below, and upon
delivery by the issuer to the indenture trustee of an officer's certificate to
the effect that the issuer reasonably believes that such amendment will not and
is not reasonably expected to (i) result in the occurrence of an early
redemption event or event of default, (ii) adversely affect the amount of funds
available to be distributed to the noteholders of any series of notes or the
timing of such distributions, or (iii) adversely affect the security interest of
the indenture trustee in the collateral securing the notes, the indenture may be
amended, supplemented or otherwise modified without the consent of any
noteholders to:
-- evidence the succession of another entity to the issuer, and the
assumption by such successor of the covenants of the issuer in the
indenture and the notes;
-- add to the covenants of the issuer, or have the issuer surrender
any of its rights or powers under the indenture, for the benefit
of the noteholders of any or all series or classes;
-- add to the indenture certain provisions expressly permitted by the
Trust Indenture Act, as amended;
47
-- cure any ambiguity, to correct or supplement any provision that
may be inconsistent with any other provision or to make any other
provisions with respect to matters or questions arising under the
indenture;
-- establish any form of note under the indenture, and to provide for
the issuance of any series or class of notes (as described under
"The Notes -- Issuances of New Series, Classes and Subclasses of
Notes") and to set forth the terms thereof, or to add to the
rights of the noteholders of any series or class;
-- provide for the acceptance of a successor indenture trustee under
the indenture with respect to one or more series or classes of
notes and to add to or change any of the provisions of this
indenture as will be necessary to provide for or facilitate the
administration of the trusts under the indenture by more than one
indenture trustee;
-- provide for the consolidation of the CARCO receivables trust and
the issuer;
-- if one or more additional sellers are added to, or replaced under,
the pooling and servicing agreement, or if one or more additional
beneficiaries are added to, or replaced under, the trust
agreement, make any necessary changes to the indenture or any
other related document;
-- provide for the addition of collateral securing the notes and the
issuance of notes backed by any such additional collateral;
-- provide for additional or alternative credit enhancement for any
notes; or
-- if the collateral certificate is the only outstanding investor
certificate issued by the CARCO receivables trust, dissolve the
CARCO receivables trust and terminate the Pooling and Servicing
Agreement, permit the issuer to acquire the receivables directly
and enter into a sale and servicing agreement that contains, to
the extent applicable, the sale and servicing provisions of the
Pooling and Servicing Agreement and amend all documents to reflect
the direct ownership of the receivables by the issuer.
The indenture or any indenture supplement may also be amended without the
consent of the indenture trustee or any noteholders upon delivery of a CARCO
receivables trust tax opinion and issuer tax opinion, as described under "-- Tax
Opinions for Amendments" below, for the purpose of adding provisions to, or
changing in any manner or eliminating any of the provisions of, the indenture or
any indenture supplement or of modifying in any manner the rights of the holders
of the notes under the indenture or any indenture supplement, provided, however,
that the issuer shall (i) deliver to the indenture trustee and the owner trustee
an officer's certificate to the effect that the issuer reasonably believes that
such amendment will not and is not reasonably expected to (a) result in the
occurrence of an early redemption event or event of default, (b) adversely
affect the amount of funds available to be distributed to the noteholders or any
series or class of notes or the timing of such distributions, or (c) adversely
affect the security interest of the indenture trustee in the collateral securing
the notes and (ii) receive written confirmation from each rating agency that
such amendment will not result in the reduction or withdrawal of the ratings of
any outstanding notes which it has rated.
Upon delivery of a CARCO receivables trust tax opinion and issuer tax
opinion as described under "-- Tax Opinions for Amendments" below, the issuer
and the indenture trustee may
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modify and amend the indenture or any indenture supplement, with prior notice to
each rating agency and the consent of the holders of not less than 66 2/3% in
aggregate dollar principal amount of the outstanding notes of each series or
class affected by that modification or amendment. However, if the modification
or amendment would result in any of the following events occurring, it may be
made only with the consent of the holder of each note affected by the
modification or amendment:
-- a change in any date scheduled for the payment of interest on any
note, the expected principal payment date or legal final maturity
date of any note;
-- a reduction of the stated principal amount of, or interest rate
on, any note, or a change in the method of computing the
outstanding dollar principal amount, the adjusted outstanding
dollar principal amount, or the nominal liquidation amount in a
manner that is adverse to any noteholder;
-- a reduction of the amount of a discount note payable upon the
occurrence of an early redemption event or other optional or
mandatory redemption or upon the acceleration of its legal final
maturity date;
-- an impairment of the right to institute suit for the enforcement
of any payment on any note;
-- a reduction of the percentage in outstanding dollar principal
amount of notes of any series or class, the consent of whose
holders is required for modification or amendment of the indenture
or any indenture supplement or for waiver of compliance with
provisions of the indenture or indenture supplement or for waiver
of defaults and their consequences;
-- a modification of any of the provisions governing the amendment of
the indenture, any indenture supplement or the issuer's agreements
not to claim rights under any law which would affect the covenants
or the performance of the indenture or any indenture supplement,
except to increase any percentage or to provide that certain other
provisions of the indenture cannot be modified or waived without
the consent of the holder of each outstanding note affected by
such modification;
-- permission being given to create any lien or other encumbrance on
the collateral ranking senior to the lien of the indenture;
-- a change in the city or political subdivision so designated with
respect to any series or class of notes where any principal of, or
interest on, any note is payable; or
-- a change in the method of computing the amount of principal of, or
interest on, any note on any date.
The holders of a majority in aggregate outstanding dollar principal amount
of the notes of a series or class may waive, on behalf of the holders of all the
notes of that series or class, compliance by the issuer with specified
restrictive provisions of the indenture or the indenture supplement.
The holders of a majority in aggregate outstanding dollar principal amount
of the notes of an affected series or class may, on behalf of all holders of
notes of that series or class, waive any past default under the indenture or the
indenture supplement with respect to notes of that series or class. However, the
consent of the holders of all outstanding notes of a series or class is
49
required to waive any past default in the payment of principal of, or interest
on, any note of that series or class or in respect of a covenant or provision of
the indenture that cannot be modified or amended without the consent of the
holders of each outstanding note of that series or class.
TAX OPINIONS FOR AMENDMENTS
No amendment to the indenture, the Pooling and Servicing Agreement or the
CARCO receivables trust agreement will be effective unless the issuer has
delivered to the indenture trustee, the owner trustee and the rating agencies an
opinion of counsel that:
-- for federal income tax purposes (1) the amendment will not
adversely affect the characterization as debt of any outstanding
series or class of investor certificates issued by the CARCO
receivables trust that were characterized as debt at the time of
their issuance, (2) the amendment will not cause a taxable event
to holders of the CARCO receivables trust investor certificates,
and (3) following the amendment, the CARCO receivables trust will
not be an association, or publicly traded partnership, taxable as
a corporation; and
-- for federal income tax purposes (1) the amendment will not
adversely affect the characterization of the notes of any
outstanding series or class as debt, (2) the amendment will not
cause a taxable event to holders of any outstanding notes, and (3)
following the amendment, the issuer will not be an association, or
publicly traded partnership, taxable as a corporation.
ADDRESSES FOR NOTICES
Notices to holders of notes will be given by mail sent to the addresses of
the holders as they appear in the note register.
ISSUER'S ANNUAL COMPLIANCE STATEMENT
The issuer is required to furnish annually to the indenture trustee a
statement concerning its performance or fulfillment of covenants, agreements or
conditions in the indenture as well as the presence or absence of defaults under
the indenture.
INDENTURE TRUSTEE'S ANNUAL REPORT
The indenture trustee is required to mail each year to all registered
noteholders a report concerning:
-- its eligibility and qualifications to continue as trustee under
the indenture,
-- any amounts advanced by it under the indenture,
-- the amount, interest rate and maturity date or indebtedness owing
by the issuer to it in the indenture trustee's individual
capacity,
-- the property and funds physically held by it as indenture trustee,
-- any release or release and substitution of collateral subject to
the lien of the indenture that has not previously been reported,
and
-- any action taken by it that materially affects the notes and that
has not previously been reported.
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LIST OF NOTEHOLDERS
Three or more holders of notes of any series, each of whom has owned a note
for at least six months, may, upon written request to the indenture trustee,
obtain access to the current list of noteholders of the issuer for purposes of
communicating with other noteholders concerning their rights under the indenture
or the notes. The indenture trustee may elect not to give the requesting
noteholders access to the list if it agrees to mail the desired communication or
proxy to all applicable noteholders.
REPORTS
Monthly reports containing information on the notes and the collateral
securing the notes will be filed with the Securities and Exchange Commission if
such reports are required to be filed by applicable law. These reports will not
be sent to noteholders. See "Where You Can Find More Information" in this
prospectus for information as to how these reports may be accessed.
DESCRIPTION OF THE INVESTOR CERTIFICATES ISSUED BY THE CARCO RECEIVABLES TRUST
GENERAL
The CARCO receivables trust has issued and will issue the investor
certificates of a series under an Amended and Restated Pooling and Servicing
Agreement (as amended and supplemented from time to time, the "POOLING AND
SERVICING AGREEMENT"), among DCWR, as seller of the receivables, DCS, as
servicer of the receivables, and the CARCO receivables trust trustee. The
collateral certificate is a series of investor certificates issued by the CARCO
receivables trust. The Pooling and Servicing Agreement will be substantially in
the form filed as an exhibit to the Registration Statement of which this
prospectus is a part. The CARCO receivables trust trustee will make available
for inspection a copy of the Pooling and Servicing Agreement, without exhibits
or schedules, to a noteholder on written request. The following summary
describes terms that may be applicable to the investor certificates of each
series, is not complete and is qualified in its entirety by reference to the
Pooling and Servicing Agreement and the applicable Series Supplement.
The investor certificates of each series will evidence undivided beneficial
interests in assets of the CARCO receivables trust allocated to the
certificateholders of the series (the "CERTIFICATEHOLDERS' INTEREST"). Each of
these interests will represent the right to receive from the CARCO receivables
trust assets funds in order to make payments of interest on and principal of the
certificates of the applicable series under the Pooling and Servicing Agreement
as described in the related Series Supplement or, in the case of the collateral
certificate, the right to receive from the CARCO receivables trust assets funds
in order to make payments of interest on and principal of the notes issued by
the issuer under the indenture and indenture supplements.
Dissolution of CARCO receivables trust. When the Adjusted Invested Amounts
of all series of the investor certificates other than the collateral certificate
have been reduced to zero, the seller, in its sole discretion, may dissolve the
CARCO receivables trust. If that occurs, the receivables will be transferred to
the issuer. The issuer would enter into a sale and servicing agreement with DCWR
and DCS to purchase receivables from DCWR on terms comparable to
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the analogous purchase provisions of the Pooling and Servicing Agreement and to
have DCS service the receivables on terms comparable to the analogous servicing
provisions of the Pooling and Servicing Agreement.
INTEREST
The certificates of a series or class will accrue interest on their
principal balance at the per annum rate set forth in the related Series
Supplement. The collateral certificate, however, will not bear interest at a
specified interest rate. Nonetheless, the collateral certificate will entitle
its holder to receive an allocable share of interest collections on the
receivables owned by the CARCO receivables trust like any other series of
investor certificates. The indenture trustee will apply the investor portion of
the amount of interest collections so allocated to the collateral certificate
among the notes generally to cover interest payments and other amounts owed on
or with respect to the notes. See "Sources of Funds to Pay the Notes." In the
case of each series of investor certificates other than the collateral
certificate, the CARCO receivables trustee will apply the amount of interest
collections allocated to these investor certificates generally to cover interest
payments and other amounts owed on or with respect to them.
PRINCIPAL
The amount of principal collections and Miscellaneous Payments allocated to
a series of investor certificates will be applied with respect to that series or
to classes of that series depending on whether the related investor certificates
are in a revolving, accumulation, reinvestment or early amortization period. In
the case of the collateral certificate, however, these periods will not apply.
Instead, the collateral certificate will entitle its holder to receive at all
times an allocable share of principal collections and Miscellaneous Payments.
The indenture trustee will apply the investor portion of the amount of principal
collections and Miscellaneous Payments so allocated to the collateral
certificate among the notes to cover principal payments and, if applicable,
shortfalls of interest payments owed on the notes. See "Sources of Funds to Pay
the Notes." The manner in which the indenture trustee applies principal
collections and Miscellaneous Payments with respect to a particular note will
depend on whether that note is in a revolving, accumulation or early redemption
period. The prospectus supplement will specify the principal payment structure
applicable to the related notes.
In the remainder of this subsection entitled "-- Principal," we provide a
general description of the principal payment structures applicable to a series
of investor certificates other than the collateral certificate (the
"NON-COLLATERAL CERTIFICATES"). This summary is being provided for your
information only and does not apply to the collateral certificate.
The non-collateral certificates of each series or class will have a
revolving period (the "REVOLVING PERIOD"). During the Revolving Period,
principal collections and other amounts otherwise allocable to the
Certificateholders' Interest of that series or class of non-collateral
certificates will not be paid to their certificateholders. Instead, they will
be:
-- 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 of investor certificates.
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A Revolving Period for a series of non-collateral certificates will begin on the
date stated in the related Series Supplement (the "SERIES CUT-OFF DATE") and end
on the earlier of:
-- 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 of non-collateral certificates has more than one class, each class
may have a different Revolving Period.
We may use any of the following structures for paying principal on a series
or class of non-collateral certificates.
A series of non-collateral certificates may have an accumulation period
(the "ACCUMULATION PERIOD"). The Accumulation Period will begin at the close of
business on the date specified in or determined in the manner specified in the
related Series Supplement and end on the earliest of:
-- 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
non-collateral certificates of the series.
During the Accumulation Period for a series of non-collateral certificates,
we will deposit principal collections and other amounts allocable to the
Certificateholders' Interest of the series, which may include some Excess
Principal Collections, on each payment date in a trust account established for
the benefit of the certificateholders of the series (a "PRINCIPAL FUNDING
ACCOUNT"). The CARCO receivables trust trustee will apply the amounts in the
Principal Funding Account, together with any amounts in the Excess Funding
Account allocable to the series, to make principal distributions to the
certificateholders of the series when due. The amount to be deposited in a
Principal Funding Account for any series of non-collateral certificates on any
payment date may, but will not necessarily, be limited to the Controlled Deposit
Amount. The "CONTROLLED DEPOSIT AMOUNT" is an amount stated in the related
Series Supplement plus, in the case of some payment dates, any amounts in the
Excess Funding Account allocable to the series. If a series of non-collateral
certificates has more than one class, each class may have a different
Accumulation Period and a separate Principal Funding Account and Controlled
Deposit Amount. Also, there may be priorities among the classes with respect to
deposits of principal into the Principal Funding Accounts.
A series of non-collateral certificates may have a controlled amortization
period (the "CONTROLLED AMORTIZATION PERIOD"). The Controlled Amortization
Period will begin at the close of business on the date stated in or determined
in the manner stated in the related prospectus supplement and will end on the
earliest of:
-- 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
non-collateral certificates of the series.
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During the Controlled Amortization Period for a series of non-collateral
certificates, the CARCO receivables trust trustee will apply principal
collections and other amounts allocable to the Certificateholders' Interest of
the series, which may include Excess Principal Collections and amounts in the
Excess Funding Account, on each payment date to make principal distributions to
any class of certificateholders of the series then scheduled to receive
distributions. The amount to be distributed to those certificateholders may be
limited to the Controlled Amortization Amount for the series. If a series of
non-collateral certificates has more than one class, each class may have a
different Controlled Amortization Period and a separate Controlled Amortization
Amount. In addition, the related prospectus supplement may describe priorities
among the classes with respect to the distributions.
A series of non-collateral certificates may have a reinvestment period (the
"REINVESTMENT PERIOD"). The Reinvestment Period will begin on the day on which a
Reinvestment Event has occurred and end on the earliest of:
-- 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
non-collateral certificates of the series.
During the Reinvestment Period for a series of non-collateral certificates,
we will deposit principal collections and other amounts allocable to the
Certificateholders' Interest of the series, which may include some Excess
Principal Collections, on each payment date in a Principal Funding Account. The
trustee will apply the funds in the Principal Funding Account, together with any
amounts in the Excess Funding Account allocable to the series, to make principal
distributions to the certificateholders of the series when due. The amount to be
deposited in a Principal Funding Account for any series on any payment date will
not be limited to any Controlled Deposit Amount or Controlled Amortization
Amount. If a series of non-collateral certificates has more than one class, each
class may have a separate Principal Funding Account and there may be priorities
among the classes with respect to deposits of principal into the Principal
Funding Accounts.
The "EARLY AMORTIZATION PERIOD" for a series of non-collateral certificates
is the period beginning on the day on which an Early Amortization Event has
occurred with respect to the series and ending on the earliest of:
-- payment in full of the outstanding principal amount of the
non-collateral certificates of the 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 of non-collateral
certificates will terminate its Revolving Period, Reinvestment Period,
Controlled Amortization Period or Accumulation Period, as applicable. Further,
we will no longer pay principal collections and some other amounts allocable to
the Certificateholders' Interest of that series of non-collateral certificates
to the seller or the holders of any other outstanding series. Instead, the CARCO
receivables trust trustee will distribute them as principal payments to the
applicable
54
certificateholders of that series monthly on each payment date beginning with
the payment date following the Collection Period in which that Early
Amortization Period begins (each of those payment dates, a "SPECIAL PAYMENT
DATE"). During an Early Amortization Period for a series of non-collateral
certificates, distributions of principal to certificateholders of the series
will not be limited to any Controlled Deposit Amount or Controlled Amortization
Amount. In addition, on the first Special Payment Date for any series of
non-collateral certificates, to the extent stated in the related Series
Supplement, the CARCO receivables trust trustee will distribute any funds on
deposit in its Excess Funding Account, if any, and any funds on deposit in its
Principal Funding Account with respect to that series to the certificateholders
of the relevant class or series up to the outstanding principal balance of their
certificates. See "-- Reinvestment Events and Early Amortization Events" for a
discussion of the events which might lead to the beginning of an Early
Amortization Period with respect to a Series.
The CARCO receivables trust may use any combination of the above described
structures for a series or class of non-collateral certificates.
THE SELLER'S CERTIFICATE
The Pooling and Servicing Agreement provides that the seller may, from time
to time, exchange a portion of the certificate evidencing the Seller's Interest
(the "SELLER'S CERTIFICATE") for another certificate (a "SUPPLEMENTAL
CERTIFICATE") for transfer or assignment to a person or entity chosen by the
seller upon the execution and delivery of a supplement to the Pooling and
Servicing Agreement, if
-- 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 CARCO receivables trust 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 CARCO receivables trust trustee to
issue one or
55
more new series of investor certificates after the issuance of the collateral
certificate. Under the Pooling and Servicing Agreement, the seller may specify,
among other things, with respect to any series:
-- 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, if any, 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 such new series (if consisting of
non-collateral certificates) has a Controlled Amortization Period or
Accumulation Period which may have a different length and begin on a different
date than the Controlled Amortization Period or Accumulation Period for any
other series of non-collateral certificates. Further, one or more series may be
in their Reinvestment Periods, Early Amortization Periods, Controlled
Amortization Periods or Accumulation Periods while other series are not.
Under the Pooling and Servicing Agreement and a Series Supplement, a new
series may be issued only if specified conditions are satisfied. The seller may
cause the issuance of a new series by notifying the CARCO receivables trust
trustee at least five business days in advance of the applicable Series Issuance
Date. The notice shall state the designation of any series, and classes within a
series, if any. The Pooling and Servicing Agreement states that the CARCO
receivables trust trustee will issue a new series only when it is delivered the
following:
-- a Series Supplement in form satisfactory to the CARCO receivables
trust trustee signed by the seller and the servicer and specifying
the Principal Terms of the series;
-- the form of any Enhancement and any related agreement;
-- an opinion of counsel to the effect that, for federal income tax
and Michigan income and single business tax purposes;
56
-- the issuance will not adversely affect the characterization
of the non-collateral 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
-- except in the case of the collateral certificate, 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 investor 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 of investor certificates; 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 CARCO receivables trust trustee
will issue the series.
CONVEYANCE OF RECEIVABLES AND COLLATERAL SECURITY
DCWR has sold and assigned or will sell and assign to the CARCO receivables
trust:
-- 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 CARCO receivables trust
trustee a computer file or microfiche or written list containing a true and
complete list showing for each Account, as of the Initial Cut-Off Date and the
applicable Additional Cut-Off Date:
-- its account number;
-- the outstanding balance of the receivables in the Account; and
-- the outstanding balance of principal receivables in the Account.
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DCS will retain and will not deliver to the CARCO receivables trust trustee
any other records or agreements relating to the receivables. Except as set forth
above, DCS has not and will not segregate the records and agreements relating to
the trust's receivables from those relating to other accounts of DCS. DCS has
not and will not stamp or mark the physical documentation relating to the
receivables to reflect the transfer of the receivables to the trust. The seller
will file one or more financing statements in accordance with applicable state
law to perfect the CARCO receivables trust's interest in the receivables, the
Collateral Security, the Receivables Purchase Agreement and the proceeds of
those items. See "Risk Factors" and "Legal Aspects of the Receivables."
As contemplated above and as described below under "-- Addition of
Accounts", the seller has the right, subject to limitations and conditions, and
in some circumstances is obligated, to designate from time to time additional
accounts to be included as Additional Accounts, to purchase from DCS the
receivables then existing or created after that time in the Additional Accounts
and to convey the receivables to the CARCO receivables trust. Each Additional
Account must be an Eligible Account. In respect of any conveyance of receivables
in Additional Accounts, the seller will follow the procedures set forth in the
preceding paragraph, except the list will show information for the Additional
Accounts as of the date the Additional Accounts are identified and selected (the
"ADDITIONAL CUT-OFF DATE").
REPRESENTATIONS AND WARRANTIES
The seller will represent and warrant to the CARCO receivables trust, among
other things, that:
-- as of each Series Cut-Off Date, and the date of issuance of any
series (a "SERIES ISSUANCE DATE"), or, in the case of the
Additional Accounts, as of the Additional Cut-Off Date and the
date the related receivables are transferred to the CARCO
receivables trust (an "ADDITION DATE"), each Account or Additional
Account was an Eligible Account;
-- as of the Series Cut-Off Date, or as of the Additional Cut-Off
Date, in the case of any Additional Accounts, or as of the date
any future receivable is generated (a "RECEIVABLES TRANSFER
DATE"), each receivable is an Eligible Receivable or, if the
receivable is not an Eligible Receivable, the receivable is
conveyed to the CARCO receivables trust as described below under
"-- Ineligible Receivables, the Installment Balance Amount and the
Overconcentration Amount";
-- each receivable and all Collateral Security conveyed to the CARCO
receivables trust on the Receivables Transfer Date or, in the case
of Additional Accounts, on the Addition Date, and all of the
seller's right, title and interest in the Receivables Purchase
Agreement, have been conveyed to the CARCO receivables trust free
and clear of any liens; and
-- all appropriate consents and governmental authorizations required
to be obtained by the seller in connection with the conveyance of
each receivable or Collateral Security have been duly obtained.
If the seller breaches any representation and warranty described in the
preceding paragraph the CARCO receivables trust will reassign the related
receivables to the seller in the manner
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described in the following paragraph. However, the CARCO receivables 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 CARCO receivables trust trustee, after the
earlier to occur of the discovery of the breach by the seller or
the servicer or receipt of written notice of the breach by the
seller or the servicer; and
-- the breach has a materially adverse effect on the
Certificateholders' Interest in the receivable or, in the case of
a breach relating to an Account, all receivables in the related
Account ("INELIGIBLE RECEIVABLES").
The CARCO receivables trust will reassign each Ineligible Receivable to the
seller on or before the end of the Collection Period in which the reassignment
obligation arises by deducting the principal balance of the receivable from the
Pool Balance. A deduction may cause the Pool Balance minus the aggregate
Invested Amounts for all outstanding series (the "SELLER'S PARTICIPATION
AMOUNT") to be less than the aggregate Available Subordinated Amounts for all
outstanding series (the "TRUST AVAILABLE SUBORDINATED AMOUNT") on the second
business day preceding the payment date (each second business day preceding a
Distribution Day, a "DETERMINATION DATE"), after giving effect to the
allocations, distributions, withdrawals and deposits to be made on the payment
date. For this purpose, the Available Subordinated Amount for the collateral
certificate is zero because the Invested Amount for the collateral certificate
includes the sum of the overcollateralization amounts for all of the series of
notes, and the over-collateralization amount for the series of notes serves the
same function as the Available Subordinated Amount does for a series of
non-collateral certificates. If this happens, the seller must make a deposit
into the Collection Account in immediately available funds in an amount equal to
the amount by which the Seller's Participation Amount would be less than the
Trust Available Subordinated Amount (that amount, a "TRANSFER DEPOSIT AMOUNT").
If the Transfer Deposit Amount is not so deposited, the principal balance of the
related Ineligible Receivables will be deducted from the Pool Balance only to
the extent the Seller's Participation Amount is not reduced below the Trust
Available Subordinated Amount. Any principal balance not so deducted will not be
reassigned and will remain part of the CARCO receivables trust. The reassignment
of any receivable to the seller and the payment of any related Transfer Deposit
Amount will be the sole remedy available against the seller for any breach of
the representations and warranties described above in this section with respect
to the receivables.
The seller will also represent and warrant to the CARCO receivables trust
that, among other things, as of each Series Issuance Date:
-- 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 CARCO receivables trust of all
right, title and interest of the seller in the receivables and the
Collateral Security, whether then existing or created after that
time, the Receivables Purchase Agreement, and the proceeds of
those items, including proceeds in any of the accounts established
for the benefit of the
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certificateholders of any series, subject to the rights of certain
purchasers with respect to some of the Collateral Security, under
the UCC as then in effect in the State of Michigan, which is
effective as to each receivable existing on the Initial Closing
Date, or as of the Addition Date, if applicable, or, as to each
receivable arising after those dates, upon the creation of that
receivable and until termination of the CARCO receivables trust.
If a breach of any of the representations and warranties described in the
preceding paragraph has a materially adverse effect on the Certificateholders'
Interest in the receivables, either the CARCO receivables trust trustee or the
holders of certificates of all outstanding series evidencing not less than a
majority of the aggregate unpaid principal amount of all outstanding series, by
written notice to the seller and the servicer, and to the trustee and the
provider of any Enhancement if given by certificateholders, may direct the
seller to accept the reassignment of the Certificateholders' Interest of all
series within 60 days of the notice, or within a longer period specified in the
notice. The seller must accept the reassignment of the Certificateholders'
Interest on a payment date occurring within the 60-day period. However, the
reassignment need not be made if at the end of the applicable period, the
representations and warranties shall then be true and 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 payment date on which the purchase is scheduled to
be made;
-- accrued and unpaid interest on the unpaid principal amount of the
non-collateral certificates at the applicable certificate rate,
together with interest on overdue interest; and
-- with respect to any particular series of investor certificates
(including the collateral certificate), any other amounts stated
in its Series Supplement.
The payment of the reassignment price for all outstanding series will be
considered a payment in full of the Certificateholders' Interest. The CARCO
receivables trust trustee will distribute those funds to the applicable
certificateholders upon presentation and surrender of the certificates. If the
CARCO receivables trust trustee or the certificateholders give a notice as
provided in the preceding paragraph, the obligation of the seller to make any
deposit will be the sole remedy respecting a breach of the representations and
warranties available to certificateholders or the CARCO receivables trust
trustee on behalf of the certificateholders.
DCWR will be deemed to have made all the representations and warranties of
the seller in the Pooling and Servicing Agreement and in any Series Supplement
with respect to any series or class of certificates.
ELIGIBLE ACCOUNTS AND ELIGIBLE RECEIVABLES
As discussed under "-- Representations and Warranties" above, the seller
represents that, as of specified times, the Accounts are Eligible Accounts and
the receivables are Eligible Receivables.
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An "ELIGIBLE ACCOUNT" is a wholesale financing line of credit extended by
DCS, directly or as successor to CFC LLC, CFC Corp. or CCC, to a dealer, which,
as of its date of determination:
-- is established by DCS, directly or as successor to CFC LLC, CFC
Corp. or CCC, in the ordinary course of business under a floorplan
financing agreement;
-- is in favor of an Eligible Dealer;
-- is in existence and maintained and serviced by DCS, directly or as
successor to CFC LLC, 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 LLC, 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 LLC, 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 LLC, CFC
Corp., DCS or the seller in connection with the creation of the
receivable or the transfer of the receivable to the CARCO
receivables trust or the performance by CCC, CFC LLC, CFC Corp. or
DCS of the floorplan financing agreement under which the
receivable was created, have been duly obtained;
-- as to which at all times following the transfer of the receivable
to the CARCO receivables trust, the CARCO receivables trust will
have good and marketable title
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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 CARCO receivables 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 CARCO receivables trust is
not subject to any right of rescission, setoff, or any other
defense, including defenses arising out of violations of usury
laws, of the dealer;
-- as to which, at the time of transfer of the receivable to the
CARCO receivables trust, DaimlerChrysler, CCC, CFC LLC, CFC Corp.,
DCS and the seller have satisfied all their respective obligations
with respect to the receivable required to be satisfied at that
time;
-- as to which, at the time of transfer of the receivable to the
CARCO receivables trust, neither DaimlerChrysler, CCC, CFC LLC,
CFC Corp. or DCS nor the seller has taken or failed to take any
action which would impair the rights of the trust or the
certificateholders;
-- 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 CARCO receivables trust with all
applicable governmental authorization.
The CARCO receivables trust trustee did not and will not make any initial
or periodic general examination of the receivables or any records relating to
the receivables for the purpose of establishing the presence or absence of
defects, compliance with representations and warranties of the seller or for any
other purpose. Also, the CARCO receivables trust trustee will not make any
initial or periodic general examination of the servicer for the purpose of
establishing the compliance by the servicer with its representations or
warranties, the observation of its obligations under the Pooling and Servicing
Agreement or for any other purpose. The servicer, however, will deliver to the
CARCO receivables trust trustee on or before March 31 of each calendar year, an
opinion of counsel with respect to the validity of the interest of the trust in
and to the receivables and other components of the CARCO receivables trust.
INELIGIBLE RECEIVABLES, THE INSTALLMENT BALANCE AMOUNT
AND THE OVERCONCENTRATION AMOUNT
For the purpose of facilitating the administration and reporting
requirements of the servicer under the Pooling and Servicing Agreement, the
seller will transfer all Ineligible Receivables arising in an Eligible Account
to the CARCO receivables trust. If, however, the Series Supplement for a series
of non-collateral certificates 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 of non-collateral certificates so states, the
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Incremental Subordinated Amount for the series shall be adjusted to reflect, on
each payment date:
-- the aggregate principal amount of receivables in the trust on the
payment date which are Dealer Overconcentrations (the "DEALER
OVERCONCENTRATION AMOUNT") allocable to the Certificateholders'
Interest of the series; and
-- the portion of the aggregate amount of Installment Balances in
respect of which DCS has not received an offsetting payment from
the related dealer on the payment date (the "INSTALLMENT BALANCE
AMOUNT") allocable to the Certificateholders' Interest of the
series.
"DEALER OVERCONCENTRATIONS" on any payment date means, with respect to any
dealer or group of affiliated dealers, the excess, if any, 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 payment date over
-- 2% of the Pool Balance on the last day of the immediately
preceding Collection Period; provided that when the certificates
that were outstanding at the time the collateral certificate was
issued are no longer outstanding, the percentage applicable to
certain dealers or groups of dealers will be 4% rather than 2%.
At its option, the servicer may purchase one or more Ineligible Receivables
or one or more receivables that are part of a Dealer Concentration, in each case
at a price equal to the principal amount plus accrued and unpaid interest.
The collateral certificate will not have an Incremental Subordinated
Amount. However, unless we otherwise specify in the related prospectus
supplement, the series nominal liquidation amount for a series of notes will
include the overcollateralization amount for that series, which may in turn be
sized on the basis of the amount of Ineligible Receivables and an
overconcentration amount.
ADDITION OF ACCOUNTS
Subject to the conditions described in this paragraph, the seller has the
right to designate from time to time additional accounts to be included as
Accounts (the "ADDITIONAL ACCOUNTS"). Also, the seller must add the receivables
of Additional Accounts if the Pool Balance on the last day of any Collection
Period is less than the Required Participation Amount as of the following
payment date, after giving effect to the allocations, distributions, withdrawals
and deposits to be made on the payment date. In that case, unless insolvency
events have occurred with respect to the seller, DCS or DaimlerChrysler, then
DCS under the Receivables Purchase Agreement must sell to the seller, and the
seller under the Pooling and Servicing Agreement must transfer and assign to the
CARCO receivables trust, within 10 business days after the end of the Collection
Period, interests in all receivables arising in the Additional Accounts, whether
the receivables are
63
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 of investor certificates;
-- 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 CARCO receivables trust 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; provided that such percentage will be 10% rather than 8%
when we have retired all those certificates that were outstanding
when the collateral certificate was issued; and
-- the number of Automatic Additional Accounts designated during any
calendar year shall not exceed 20% of the number of Accounts as of
the first day of the calendar year.
On or before the first business day of each Collection Period beginning in
January, April, July and October of each calendar year, the seller shall have
requested and obtained notification from each Rating Agency of any limitations
to the right of the seller to designate Eligible Accounts as Automatic
Additional Accounts during any period which includes the Collection Period. On
or before January 31, April 30, July 31 and October 31 of each calendar year,
the CARCO receivables trust trustee shall have received confirmation from each
Rating Agency that the addition of all Automatic Additional Accounts included as
Accounts during the three consecutive Collection Periods ending in the calendar
month prior to that date shall not have resulted in any applicable Rating Agency
reducing or withdrawing its rating of any outstanding series or class of
certificates. On or before January 31 and July 31 of each calendar year, or on
or before the last day of each month in some circumstances, the seller shall
have delivered to the CARCO receivables trust trustee, each Rating Agency and
any Enhancement provider an opinion of counsel with respect to the Automatic
Additional Accounts included as Accounts during the preceding calendar year
confirming the validity and perfection of each transfer of that Automatic
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Additional Accounts. If the CARCO receivables trust trustee has not received the
Rating Agency confirmation or opinion of counsel with respect to any Automatic
Additional Accounts, the seller must remove the Automatic Additional Accounts
from the CARCO receivables trust.
Each Additional Account, including each Automatic Additional Account, must
be an Eligible Account at the time of its addition. However, since Additional
Accounts may not have been a part of the initial portfolio of CCC, CFC LLC, CFC
Corp. or DCS, they may not be of the same credit quality as the initial
Accounts. Additional Accounts may have been originated by CCC, CFC LLC, CFC
Corp. or DCS at a later date using credit criteria different from those which
were applied to the initial Accounts or may have been acquired by CCC, CFC LLC,
CFC Corp. or DCS from another wholesale lender that had different credit
criteria. In addition, the seller will be permitted to designate Additional
Accounts that contain receivables that have been sold or pledged to third
parties. However, following the applicable Additional Cut-Off Date, no
receivables arising after the Additional Cut-Off Date in any of those Accounts
shall be sold or pledged to any third parties.
The "REQUIRED PARTICIPATION AMOUNT" for any date is an amount equal to the
sum of:
-- the sum of the amounts for each series of non-collateral
certificates obtained by multiplying the Required Participation
Percentage for the series by the Initial Invested Amount for the
series at that time. However, each Excluded Series will be
excluded from this calculation until the Invested Amount of the
related Paired Series is reduced to zero;
-- the Trust Available Subordinated Amount on the immediately
preceding Determination Date, after giving effect to the
allocations, distributions, withdrawals and deposits to be made on
the payment date following the Determination Date; and
-- the sum of (x) the sum of the amounts for each series of notes
obtained by multiplying the Required Participation Percentage for
that series by the nominal liquidation amount of that series of
notes at that time and (y) the sum of the overcollateralization
amounts for each series of notes on the preceding payment date,
after giving effect to the allocations, deposits and payments made
on that payment date.
The "REQUIRED PARTICIPATION PERCENTAGE" for a series of non-collateral
certificates will be specified in the related Series Supplement.
REMOVAL OF ACCOUNTS
The seller shall have the right at any time, but no more frequently than
once a month, to require the removal from the CARCO receivables trust of
Eligible Accounts. To remove any Eligible Account, the seller, or the servicer
on its behalf, shall, among other things:
-- furnish to the CARCO receivables trust trustee, any Enhancement
provider and the Rating Agencies a written notice (the "REMOVAL
NOTICE") stating the Determination Date on which removal of one or
more Accounts will commence (the "REMOVAL COMMENCEMENT DATE") and
the Accounts to be removed from the CARCO receivables trust (the
"DESIGNATED ACCOUNTS");
-- determine on the Removal Commencement Date the aggregate principal
balance of receivables in respect of each Designated Account (the
"DESIGNATED BALANCE");
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-- from and after the Removal Commencement Date, cease to transfer to
the CARCO receivables 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 CARCO receivables trust, to be further allocated under
the Pooling and Servicing Agreement, interest collections in
respect of each Designated Account with respect to
receivables in all Designated Accounts sold to the CARCO
receivables trust and
-- 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 of investor certificates 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 CARCO
receivables trust trustee and any Enhancement provider an
officers' note confirming the items set forth in the sixth,
seventh and eighth clauses above and a Tax Opinion with respect to
the removal.
No Designated Accounts shall be removed if the removal will cause the
rating of any outstanding series or class of certificates to be reduced or
withdrawn.
The seller shall also have the right, but shall not be obligated, to remove
from the CARCO receivables trust any Account with respect to which the related
dealer has gone into "Dealer Trouble Status" as described under "The Dealer
Floorplan Business -- 'Dealer Trouble Status' and DCS's Write-off Policy." To do
so, the seller will take the actions specified in the first five clauses of the
second preceding paragraph.
On any date on which an Account becomes an Ineligible Account, which date
will be deemed the Removal Commencement Date for the Account, the seller will
start the removal of the Account from the CARCO receivables trust by taking each
of the actions specified in the first five clauses of the preceding paragraph
with respect to the Ineligible Account.
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Upon satisfaction of the above conditions, on the Removal Date with respect
to any the Designated Account, the seller will stop allocating collections of
receivables to the Designated Account, which shall be deemed removed from the
CARCO receivables trust for all purposes (a "REMOVED ACCOUNT").
In addition to the removal rights described in the four paragraphs above,
the seller shall have the right at any time to remove Accounts from the CARCO
receivables trust and, in connection with the removal, repurchase the then
existing receivables in the Accounts. To remove Accounts and repurchase the then
existing receivables in those Accounts, the seller, or the servicer on its
behalf, shall, among other things:
-- furnish to the CARCO receivables trust, each Enhancement provider
and the Rating Agencies a Removal Notice stating the Designated
Accounts which are to be removed, and the then existing
receivables in the Designated Accounts (the "DESIGNATED
RECEIVABLES") which are to be repurchased from the CARCO
receivables trust and the Determination Date on which the removal
of the Designated Accounts and the purchase of the Designated
Receivables will occur (the "REMOVAL AND REPURCHASE DATE");
-- deliver to the CARCO receivables trust trustee on the Removal and
Repurchase Date a computer file or microfiche or written list
containing a true and complete list of the Removed Accounts
stating for each Account its account number and the aggregate
amount of receivables outstanding in the Account;
-- represent and warrant that the removal of any Eligible Account and
the repurchase of the receivables then existing in the Account on
any Removal and Repurchase Date shall not, in the reasonable
belief of the seller, cause an Early Amortization Event or
Reinvestment Event to occur with respect to any series of investor
certificates or cause the Pool Balance to be less than the
Required Participation Amount;
-- represent and warrant that no selection procedures believed by the
seller to be adverse to the interests of the certificateholders of
any series of investor certificates were used in selecting the
Designated Accounts and that the selection procedures were applied
so as to randomly select the Designated Accounts from the entire
population of Accounts;
-- represent and warrant as of the Removal and Repurchase Date that
the list of Removed Accounts delivered to the CARCO receivables
trust trustee as of the Removal and Repurchase Date, is true and
complete in all material respects;
-- 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;
-- deliver to the CARCO receivables trust trustee, each Rating Agency
and any Enhancement providers a Tax Opinion, dated the Removal and
Repurchase Date, with respect to the removal and repurchase; and
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-- deliver to the CARCO receivables trust 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 CARCO
receivables trust trustee in writing that the removal and repurchase will not
cause the Rating Agency's rating of any outstanding series or class of investor
certificates to be reduced or withdrawn.
Upon satisfaction of the above conditions, on the Removal and Repurchase
Date with respect to any Designated Account and Designated Receivables, the
Designated Account shall be deemed removed, and the Designated Receivables
("REPURCHASED RECEIVABLES") shall be deemed repurchased, from the CARCO
receivables trust for all purposes.
The seller, however, shall have the right to require the reassignment to it
of all the CARCO receivables trust's right, title and interest in the
receivables then existing and created after that time in Accounts ("AUTOMATIC
REMOVED ACCOUNTS") designated by the seller, together with existing and future
collections and proceeds from those receivables, upon satisfaction of the
following conditions:
-- on or before the fifth business day immediately preceding the date
upon which the Accounts are to be removed, the seller shall have
given the CARCO receivables trust trustee, each Enhancement
provider and the Rating Agencies a Removal Notice specifying the
date for removal of the Automatic Removed Accounts (the "AUTOMATIC
REMOVAL DATE");
-- on or prior to the date that is five business days after the
Automatic Removal Date, the seller shall have delivered to the
CARCO receivables trust trustee a computer file or microfiche or
written list containing a true and complete list of the Automatic
Removed Accounts stating for each Account, as of the removal
notice date, its account number and the aggregate amount of
receivables outstanding in the Account;
-- the seller shall have represented and warranted as of each
Automatic Removal Date that the list of Automatic Removed Accounts
delivered to the CARCO receivables trust trustee, as of the
Automatic Removal Date, is true and complete in all material
respects and that the selection procedures for selecting Automatic
Removed Accounts were applied so as to randomly select the
Automatic Removed Accounts from the entire population of Accounts;
-- the CARCO receivables trust trustee shall have received
confirmation from each Rating Agency that the removal will not
cause the Ratings Agency's rating of any outstanding series or
class of certificates to be reduced or withdrawn;
-- the seller shall have delivered to the CARCO receivables trust
trustee, each Rating Agency and any Enhancement providers an
officers' certificate, dated the Automatic Removal Date, to the
effect that the seller reasonably believes the removal will not
cause an Early Amortization Event or Reinvestment Event to occur
with respect to any series of investor certificates; and
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-- the seller shall have delivered to the CARCO receivables trust
trustee, each Rating Agency and any Enhancement providers a Tax
Opinion, dated the Automatic Removal Date, with respect to the
removal.
However, from and after the date on which no series issued prior to March
10, 1999, is outstanding, the conditions specified in the first clause above
that relate to Enhancement providers and Rating Agencies and the conditions
specified in the fourth, fifth and sixth clauses above will not be required if
all of the Accounts to be removed have liquidated and have zero balances.
Upon satisfaction of the above conditions, on the Automatic Removal Date
the CARCO receivables trust's interest in the receivables arising in the
Automatic Removed Accounts, all monies due and to become due and all amounts
received with respect to the receivables and all proceeds of the receivables
shall be deemed removed from the trust for all purposes.
EXCLUDED SERIES
A series of investor certificates may be designated as an excluded series
(an "EXCLUDED SERIES") with respect to a series of notes previously issued by
the CARCO receivables trust as to which the Accumulation Period or Controlled
Amortization Period has commenced (a "PAIRED SERIES"). This allows a seller, in
effect, to replace an accumulating amortizing series with a new series without
waiting for the accumulating amortizing series to be paid in full.
Each Excluded Series will be prefunded with an initial deposit to a
prefunding account in an amount equal to the initial principal balance of the
Excluded Series. The source of funds will primarily be the proceeds of the
offering of the Excluded Series. Any prefunding account will be held for the
benefit of the Excluded Series and not for the benefit of the Paired Series. As
funds are accumulated in the Principal Funding Account for the Paired Series or
distributed to holders of notes of the Paired Series, the CARCO receivables
trust trustee will distribute to the seller an equal amount of funds from any
prefunding account for the Excluded Series. Until payment in full of the Paired
Series, no interest collections, principal collections, Defaulted Amounts or
Miscellaneous Payments will be allocated to the related Excluded Series. Also,
it is expected that any Excluded Series will be excluded from the calculation of
the Required Participation Amount as described under "-- Addition of Accounts."
COLLECTION ACCOUNT
In general, either the servicer, subject to limitations, will hold the
CARCO receivables trust's funds or the CARCO receivables trust trustee will keep
those funds in accounts that must be Eligible Deposit Accounts.
The servicer has established and will maintain an Eligible Deposit Account
for the benefit of the certificateholders in the name of the CARCO receivables
trust trustee, on behalf of the CARCO receivables trust (the "COLLECTION
ACCOUNT"). "ELIGIBLE DEPOSIT ACCOUNT" means either:
-- 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
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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 CARCO receivables trust
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") or
-- a certificate of deposit rating of P-1 by Moody's or A-1+ by
Standard & Poor's, or
-- is otherwise acceptable to each Rating Agency; 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 of 30
days or less, but in no event occurring later than the payment date next
succeeding the trustee's acquisition of the book-entry securitized, negotiable
instruments or physical securities, except as otherwise provided in the related
Series Supplement. Eligible Investments are limited to:
-- 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
CARCO receivables trust's investment or contractual commitment to
invest in the demand deposits, the deposits or certificates of
deposit, the commercial paper or other short-term unsecured debt
obligations, other than obligations the rating of which is based
on the credit of a person or entity other than the depository
institution or trust company of the depositary institution or
trust company, must have a credit rating from each of the Rating
Agencies in its highest investment category;
-- commercial paper having, at the time of the CARCO receivables
trust's investment or contractual commitment to invest in the
commercial paper, a rating from each of the Rating Agencies in its
highest investment category;
-- 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;
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-- bankers' acceptances issued by any depository institution or trust
company referred to in the second clause of this sentence;
-- 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 CARCO receivables trust trustee that the CARCO receivables
trust's investment in the financial asset will not cause the
Rating Agency to reduce or withdraw its then rating of any
outstanding class or series.
Any earnings, net of losses and investment expenses, on funds in the
Collection Account will be credited to the Collection Account. The servicer will
have the revocable power to instruct the CARCO receivables trust trustee to make
withdrawals and payments from the Collection Account for the purpose of making
payments under the Pooling and Servicing Agreement. The servicer may select an
appropriate agent as representative of the servicer for the purpose of choosing
the investments.
EXCESS FUNDING ACCOUNT
Except, to the extent provided in the related Series Supplement, during an
Early Amortization Period or Reinvestment Period for a series, we will keep the
Excess Funded Amount, if any, for that series in an Eligible Account (the
"EXCESS FUNDING ACCOUNT") established with the CARCO receivables trust trustee
for the series. The "EXCESS FUNDED AMOUNT" for a series will initially equal the
excess, if any, of the initial principal balance of the investor certificates of
the series over the Initial Invested Amount of the series. Initially, the
collateral certificate will not have an Excess Funded Amount. The CARCO
receivables trust trustee will invest funds on deposit in the Excess Funding
Account for a series of investor certificates at the direction of the servicer
in Eligible Investments. The investments must mature on or prior to the next
payment date. The servicer may select an agent for the purpose of designating
the investments.
The CARCO receivables trust trustee will distribute funds on deposit in the
Excess Funding Account for a series to the seller or allocate them to one or
more other series which are in Controlled Amortization, Early Amortization,
Reinvestment or Accumulation Periods to the extent of any increases in the
Invested Amount of that series as a result of the addition of receivables to the
CARCO receivables trust, a reduction in the Seller's Interest, or a reduction in
the Initial Invested Amount of any other series. In the case of the collateral
certificate, it will be allocated funds from the Excess Funding Account of
another series of investor certificates if any series of notes secured by the
collateral certificate is in an accumulation or amortization period and has
insufficient principal collections and other funds to cover required
distributions on it. The CARCO receivables trust trustee will deposit additional
amounts in the Excess Funding Account for a series on a payment date to the
extent that the sum of the Certificateholders' Interest of the series in
principal receivables (or the sum of the nominal liquidation amounts for the
notes of all series in the case of the collateral certificate) and the amount on
deposit in the Excess Funding Account, if any, for the series prior to that date
is less than the outstanding principal balance of the certificates of the series
(or of all of the notes in the case of the collateral certificate), but only to
the extent that funds are available as provided in the related Series
Supplement. The
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allocation of additional receivables to increase the Invested Amount of each
series that provides for an Excess Funding Account or similar arrangement
involving fluctuating levels of investment in the receivables will generally be
made pro rata on the basis of the amounts in the excess Funding Accounts or a
similar basis. The deposit of amounts in the Excess Funding Accounts for each of
those series will generally be made pro rata on the basis of their respective
Adjusted Invested Amounts.
On each payment date, we will apply all investment income earned on amounts
in the Excess Funding Account for any series since the preceding payment date as
described in this prospectus and in the related prospectus supplement.
The CARCO receivables 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 payment date or payment dates specified in or determined in
the manner provided in the Series Supplement for the series
to the certificateholders of the series or a class of the series or deposit
those amounts in the Principal Funding Account for the series or a class of the
series, in each case if and to the extent the related Series Supplement so
states. Also, except as otherwise provided in the related Series Supplement, we
will not deposit funds in the Excess Funding Account for a series during any
Early Amortization Period or Reinvestment Period with respect to the series or
with respect to any Collection Period following the Collection Period stated in
or determined in the manner provided in the Series Supplement for the series.
ALLOCATION PERCENTAGES
We will allocate collections to each series of investor certificates
(including the collateral certificate) and then between the seller and the
certificateholders of that series on the basis of various percentages. Which
percentage we use depends on whether the collections being allocated are
interest collections or principal collections or other amounts and, in the case
of non-collateral certificates, whether or not the collections are received in
the Revolving Period for a series.
ALLOCATIONS AMONG SERIES OF CERTIFICATES. Under the Pooling and Servicing
Agreement, during each Collection Period the servicer will allocate to each
outstanding Series its share of interest collections, principal collections,
Defaulted Receivables and Miscellaneous Payments based on the applicable Series
Allocable Interest Collections, Series Allocable Principal Collections, Series
Allocable Defaulted Amount and Series Allocable Miscellaneous Payments.
"SERIES ALLOCABLE INTEREST COLLECTIONS", "SERIES ALLOCABLE PRINCIPAL
COLLECTIONS", "SERIES ALLOCABLE DEFAULTED AMOUNT" and "SERIES ALLOCABLE
MISCELLANEOUS PAYMENTS" are, with respect to any series of certificates for any
Collection Period, the product of the Series Allocation Percentage for the
series and the amount of interest collections, principal collections, the
Defaulted Amounts and Miscellaneous Payments, respectively, with respect to the
Collection Period.
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"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 payment date available to
be treated as Miscellaneous Payments as described below under
"-- Principal Collections for all Series" below.
"SERIES ALLOCATION PERCENTAGE" is, with respect to a series for any
Collection Period, the percentage equivalent of a fraction, the numerator of
which is the Adjusted Invested Amount of the series as of the last day of the
immediately preceding Collection Period and the denominator of which is the
Trust Adjusted Invested Amount as of that last day.
"ADJUSTED INVESTED AMOUNT" is, with respect to a series other than the
collateral certificate for any date, an amount equal to the sum of
-- 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 payment date during the Collection
Period in which the date occurs.
The Adjusted Invested Amount for the collateral certificate will be the sum of
the series nominal liquidation amounts for all series of notes.
"TRUST ADJUSTED INVESTED AMOUNT" is, with respect to any Collection Period,
the sum of the Adjusted Invested Amounts for all outstanding series of investor
certificates.
"INITIAL INVESTED AMOUNT" is, with respect to any series of non-collateral
certificates and for any date, the amount stated in the related Series
Supplement. The Initial Invested Amount for any series may be increased or
decreased from time to time as stated in the related Series Supplement,
including as a result of deposits to or withdrawals from the Excess Funding
Account, if any, for the series.
ALLOCATION BETWEEN THE CERTIFICATEHOLDERS AND THE SELLER. The servicer
will allocate amounts initially allocated to each series between the
Certificateholders' Interest and the Seller's Interest for each Collection
Period as stated in the related Series Supplement and described in the related
prospectus supplement. The manner in which amounts allocated to the collateral
certificate are allocated between the seller and the investors is described
under "Sources of Funds to Pay the Notes -- General."
PRINCIPAL COLLECTIONS FOR ALL SERIES. We will allocate principal
collections allocated to the Certificateholders' Interest of any series, for any
Collection Period with respect to any Accumulation Period, Controlled
Amortization Period, Reinvestment Period or Early Amortization Period with
respect to the series or a class of the series, first to make required payments
of principal to the Principal Funding Account or to the Certificateholders of
the series or class, in each case if and to the extent stated in the Series
Supplement for the series. The required principal distributions in the case of
the collateral certificate are the sum of the required principal payments on the
notes or required deposits to a principal funding account at the time of
determination. The servicer will determine the amount of available
certificateholder principal collections for each series and any Collection
Period remaining after the required payments, if any
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("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 CARCO receivables trust trustee will pay the balance
to the seller if the Seller's Participation Amount, determined after giving
effect to any principal receivables transferred to the CARCO receivables trust
on that date, exceeds the Trust Available Subordinated Amount (which, solely for
this purpose, will include overcollateralization amounts to the extent provided
in the Series Supplement for the collateral certificate) for the immediately
preceding Determination Date, after giving effect to the allocations,
distributions, withdrawals and deposits to be made on the payment date
immediately following the Determination Date. Any amount not allocated to the
seller because the Seller's Participation Amount does not exceed the Trust
Available Subordinated Amount (determined as provided in the preceding sentence)
will be held unallocated ("UNALLOCATED PRINCIPAL COLLECTIONS") until the
Seller's Participation Amount exceeds the Trust Available Subordinated Amount
(determined as provided in the preceding sentence), at which time we will
allocate the amount to the seller. However, if an Early Amortization Period,
Accumulation Period, Controlled Amortization Period or Reinvestment Period
commences for any series of non-collateral certificates, the amount will be
treated as a Series Allocable Miscellaneous Payment.
ALLOCATION OF COLLECTIONS; DEPOSITS IN COLLECTION ACCOUNT
On each Determination Date, the servicer will calculate the amounts to be
allocated in respect of collections on receivables received with respect to the
related Collection Period to the certificateholders of each outstanding series
or class or the seller in accordance with the Series Supplements.
The servicer, no later than two business days after the processing date,
will deposit all collections received with respect to the receivables,
excluding, with exceptions, portions allocable to the seller, in each Collection
Period into the Collection Account. However, the servicer need not make daily
deposits if:
-- 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,
-- 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.
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In that case, subject to any limitations referred to below, DCS may use for its
own benefit all collections until the related payment date. At that time DCS
will make the deposits in an amount equal to the net amount of the deposits and
withdrawals which would have been made if deposits were made on a daily basis.
However, before ceasing daily deposits as described above, the seller must
deliver to the trustee written confirmation from the applicable Rating Agencies
that the failure by DCS to make daily deposits will not cause the Rating
Agencies to reduce or withdraw the 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 CARCO receivables trust must make to
certificateholders;
-- the amounts the CARCO receivables trust must deposit into any
account maintained for the benefit of certificateholders of any
series and other parties; and
-- the amounts the CARCO receivables trust must pay to any
Enhancement provider on the payment date relating to the
Collection Period.
Also, if, at any time prior to that payment date, the amount of collections
deposited in the Collection Account exceeds the amount the servicer is required
to deposit, the servicer will be permitted to withdraw the excess from the
Collection Account.
On any date on which the servicer deposits collections in the Collection
Account, the servicer will distribute directly to the seller the amount of the
interest collections allocable to each series specified in the related Series
Supplement and described in the related prospectus supplement. However, the
CARCO receivables trust trustee will make that distribution only if the Seller's
Participation Amount, determined after giving effect to any Principal
Receivables transferred to the CARCO receivables trust on the date, exceeds the
Trust Available Subordinated Amount for the immediately preceding Determination
Date, after giving effect to the allocations, distributions, withdrawals and
deposits required to be made on the payment date immediately following the
Determination Date. Also, during the Revolving Period for any series, subject to
limitations, the servicer will distribute directly to the seller on each date of
deposit the amount of principal collections allocable to each series stated in
the related Series Supplement and described in the related prospectus supplement
if the Seller's Participation Amount, determined after giving effect to any
principal receivables transferred to the trust on that date, exceeds the Trust
Available Subordinated Amount for the immediately preceding Determination Date,
after giving effect to the allocations, distributions, withdrawals and deposits
the servicer is to make on the payment date immediately following the
Determination Date.
LIMITED SUBORDINATION OF SELLER'S INTEREST; ENHANCEMENTS
SUBORDINATION OF SELLER'S INTEREST. With respect to any series of
certificates other than the collateral certificate, we will subordinate the
Seller's Interest to the rights of certificateholders of the series to the
extent described in the related Series Supplement. This will provide credit
enhancement to the series. The amount of the subordination with respect to any
series other than the collateral certificate is the "AVAILABLE SUBORDINATED
AMOUNT" for the series. We will decrease and increase the Available Subordinated
Amount for any series from time to time if and to the extent described in the
related Series Supplement. The Series Supplement for each series will specify
the manner in which the servicer may draw upon collections attributable to the
Available
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Subordinated Amount for the series to make payments to or for the benefit of the
holders of certificates of the series. If we so state in the related Series
Supplements, the Available Subordinated Amount for a series may be available to
more than one series of certificates.
In the case of the collateral certificate, the credit enhancement for the
noteholders will be in the form of the overcollateralization amount for each
series of notes. The Adjusted Invested Amount of the collateral certificate will
be the sum of the series nominal liquidation amounts for all series of notes.
The series nominal liquidation amount for a series of notes includes the
overcollateralization amount for that series. The calculation of the
overcollateralization amount for a series of notes will be described in the
related prospectus supplement.
ENHANCEMENTS. In addition to the subordination described above, for any
series of non-collateral certificates, 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.
We may also provide enhancements to a series or class or classes of a series of
non-collateral certificate 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 of non-collateral certificates. The CARCO
receivables 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 of non-collateral
certificates, 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.
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Additionally, we may set forth in the related Series 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 of non-collateral certificates 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 Series Supplement
for a series of non-collateral certificates, neither subordination of the
Seller's Interest nor the Enhancement, if any, will provide protection against
all risks of loss or will guarantee repayment of the entire principal balance of
the certificates and interest on the certificates. If losses exceed the amount
covered by the subordination or Enhancement or are not covered by the
subordination or Enhancement, certificateholders (including the issuer) will
bear their allocable share of deficiencies. In addition, if we provide specific
Enhancement for the benefit of more than one class or series, certificateholders
of that class or series will be subject to the risk that the Enhancement will be
exhausted by the claims of certificateholders of other classes or series.
DISTRIBUTIONS
The servicer will make payments to certificateholders of a series or a
class from the Collection Account and any accounts established for the benefit
of the certificateholders as we describe in the related prospectus supplement.
DEFAULTED RECEIVABLES AND RECOVERIES
"DEFAULTED RECEIVABLES" on any Determination Date are:
-- 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.
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The "DEFAULTED AMOUNT" for any Collection Period will be an amount, which
shall not be less than zero, equal to:
-- the principal amount of receivables that became Defaulted
Receivables during the preceding Collection Period minus
-- 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 second
clause for the Determination Date over the amount determined
under the first clause for the Determination Date.
The servicer will charge off receivables as uncollectible in accordance with the
servicer's customary and usual policies and procedures for servicing its own
comparable revolving dealer wholesale loan accounts. The servicer will allocate
a portion of the Series Allocable Defaulted Amount for each series and
Collection Period between the certificateholders of the series and the seller as
we state in the related Series Supplement. The portion of the Defaulted Amount
allocated to the certificateholders of a series (including the indenture trustee
as the holder of the collateral certificate) will be the "INVESTOR DEFAULT
AMOUNT" for the series. The servicer will further allocate the Investor Default
Amount for any series that consists of more than one class between those classes
as we state in the related Series Supplement. In the case of the collateral
certificate, the issuer will allocate the Investor Default Amount for the
collateral certificate to each series of notes as described in the related
prospectus supplement. The Investor Default Amount is also referred to as a
charge-off on defaulted receivables.
If the servicer adjusts the amount of any receivable because of a rebate,
billing error or other non-cash items to a dealer, or because the receivable was
created in respect of inventory which was refused or returned by a dealer, we
will reduce the principal amount of each of the Seller's Interest and the Pool
Balance by the amount of the adjustment or charge-off. Further, to the extent
that the reduction in the Seller's Interest would reduce the Seller's
Participation Amount below the Trust Available Subordinated Amount for the
immediately preceding Determination Date, after giving effect to the
allocations, distributions, withdrawals and deposits to be made on the payment
date immediately following that Determination Date, the seller will deposit a
cash amount equal to the deficiency into the Collection Account in immediately
available funds (an "ADJUSTMENT PAYMENT") on the day on which the servicer makes
the adjustment.
OPTIONAL REPURCHASE
If so provided in the Series Supplement relating to a series of
certificates, on any payment date occurring after the Invested Amount of the
certificates of the series is reduced to the percentage of the initial
outstanding principal amount of the investor certificates of the series we state
in the Series Supplement, the servicer will have the option, subject to
conditions, to repurchase the Certificateholders' Interest of the series. The
purchase price will be equal to the Invested Amount of the series on the
Determination Date preceding the payment date on which
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the servicer will make the repurchase plus accrued and unpaid interest on the
unpaid principal amount of the certificates of the series at the applicable
certificate rate, together with interest on overdue interest, to the extent
lawful, plus any other amounts we state in the related Series Supplement. The
servicer will deposit the purchase price in the Collection Account in
immediately available funds on the payment date on which DCS exercises that
option. Following any purchase, the certificateholders of the series will have
no further rights with respect to the Certificateholders' Interest of the
series, other than the right to receive the final distribution on the
certificates of that series. If DCS fails for any reason to deposit the purchase
price, the servicer will continue to make payments to the certificateholders of
the series as we describe in the related Series Supplement.
REINVESTMENT EVENTS AND EARLY AMORTIZATION EVENTS
Beginning on the first payment date following the Collection Period in
which a Reinvestment Event has occurred with respect to any series:
-- the servicer will no longer pay to DCWR principal collections
allocable to the Certificateholders' Interest of the series or
allocate those collections to any other series but instead will
deposit those collections to the Principal Funding Account for the
series monthly on each payment date; and
-- the Controlled Deposit Amount or Controlled Amortization Amount,
if any, will no longer apply to distributions of principal in
respect of the notes of the series,
in each case except as we describe below under this heading or as we state in
the related Series Supplement. A "REINVESTMENT EVENT" is, for any series, any of
the events we so describe in the related Series Supplement. The collateral
certificate will not have any Reinvestment Events.
If any event we so define occurs, we will deem a Reinvestment Event to have
occurred with respect to the series without any notice or other action on the
part of any other party immediately upon the occurrence of the event. The
Reinvestment Period with respect to the series will begin as of the close of
business on the business day immediately preceding the day on which we deem the
Reinvestment Event to have occurred. Monthly deposits of principal to the
Principal Funding Account for the series will, except as we describe below under
"-- Reinvestment Events and Early Amortization Events" or state in the related
Series Supplement, begin on the first payment date following the Collection
Period in which a Reinvestment Period has begun with respect to the series.
Beginning on the first payment date following the Collection Period in
which an Early Amortization Event has occurred with respect to any series:
-- the servicer will no longer pay to DCWR Principal Collections
allocable to the Certificateholders' Interest of the series,
allocate those collections to any other series or retain those
collections in the Principal Funding Account for the series but
instead will distribute those collections to certificateholders of
the series monthly on each payment date; and
-- 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
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series, any of the events we so define in the related Series Supplement, as well
as each of the following events:
-- the occurrence of events of bankruptcy, insolvency or receivership
relating to the CARCO receivables trust or the seller; and
-- the CARCO receivables 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 Series Supplement for a series
occurs, we will deem an Early Amortization Event to have occurred with respect
to the series without any notice or other action on the part of any other party
immediately upon the occurrence of the event. The Early Amortization Period with
respect to the series will begin as of the close of business on the business day
immediately preceding the day on which we deem the Early Amortization Event to
have occurred. Monthly distributions of principal to the certificateholders of
the series will begin on the first payment date following the Collection Period
in which an Early Amortization Period has begun with respect to the series,
except as we describe below under this heading. The failure of the CARCO
receivables trust to pay the outstanding principal amount of the certificates of
any series or class by their Expected Payment Date will have the same
consequences as the occurrence of an Early Amortization Event with respect to
the series or class. We shall deem all references in this prospectus to Early
Amortization Events to include that type of failure.
Even if a Reinvestment Period or an Early Amortization Period begins with
respect to a series, that period may terminate and the Revolving Period with
respect to the series and any class may recommence when the event giving rise to
the beginning of the Reinvestment Period or Early Amortization Period no longer
exists, whether as a result of the distribution of principal to
certificateholders of the series or otherwise, in each case if and to the extent
we state in the Series Supplement for the series.
In addition, if an insolvency event occurs with respect to DCWR, or DCWR
violates its covenant not to create any lien on any receivable, in each case as
provided in the Pooling and Servicing Agreement, on the day of the insolvency
event or violation, as applicable, DCWR will, subject to the actions of the
certificateholders, immediately cease to transfer receivables to the CARCO
receivables trust and promptly give notice to the CARCO receivables trust
trustee of the insolvency event or violation, as applicable. Under the terms of
the Pooling and Servicing Agreement, within 15 days the CARCO receivables trust
trustee will publish a notice of the insolvency event or violation stating that
the CARCO receivables trust trustee intends to sell, liquidate or otherwise
dispose of the receivables in a commercially reasonable manner and on
commercially reasonable terms, unless within a stated period of time holders of
notes of each outstanding series representing more than 50% of the aggregate
unpaid principal amount of the certificates of each outstanding series, or, with
respect to any series with two or more classes, the certificates of each class,
and each person holding a Supplemental Certificate, instruct the CARCO
receivables trust trustee not to sell, dispose of or otherwise liquidate the
receivables and to continue transferring receivables as before the insolvency
event or violation, as applicable. If the portion of the proceeds allocated to
the Certificateholders' Interest and the proceeds of any collections on the
receivables in the Collection Account allocable to the Certificateholders'
Interest are not enough to pay the aggregate unpaid principal balance of the
certificates in full plus accrued and unpaid interest on the certificates,
certificateholders will incur a loss.
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TERMINATION; FULLY REINVESTED DATE
TERMINATION. The CARCO receivables trust will terminate on the earliest to
occur of:
-- the day following the payment 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 CARCO receivables trust is terminated, it will transfer to DCWR all
right, title and interest in the receivables and other funds of the CARCO
receivables trust, other than amounts in the CARCO receivables trust's accounts
for the final distribution of principal and interest to certificateholders.
In any event, the last payment of principal and interest on any series of
certificates will be due and payable no later than the date we state in the
related Series 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";
-- 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
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the servicer has made the final distribution with respect to each series of
certificates or the series' Fully Reinvested Date has occurred, the CARCO
receivables trust trustee will convey and transfer to DCWR, all right, title and
interest in the receivables.
INDEMNIFICATION
The Pooling and Servicing Agreement states that the servicer will indemnify
the CARCO receivables trust and the CARCO receivables trust trustee from and
against any loss, liability, expense, damage or injury suffered or sustained
arising out of any acts, omissions or alleged acts or omissions arising out of
activities of the CARCO receivables trust, the CARCO receivables trust trustee
or the servicer under the Pooling and Servicing Agreement. The servicer will not
so indemnify the CARCO receivables trust or the CARCO receivables trust trustee,
however, if the acts, omissions or alleged acts or omissions constitute fraud,
gross negligence, breach of fiduciary duty or willful misconduct by the CARCO
receivables trust trustee. Also, the servicer will not indemnify the CARCO
receivables trust, the CARCO receivables trust trustee or the certificateholders
for any act taken by the CARCO receivables trust trustee at the request of the
certificateholders or for any tax which the CARCO receivables trust or the
certificateholders is required to pay.
The Pooling and Servicing Agreement states that, except as we describe
above and with other exceptions, neither the seller, the servicer nor any of
their directors, officers, employees or agents will be under any liability to
the CARCO receivables trust, the CARCO receivables trust trustee, the
certificateholders or any other person for taking any action, or for refraining
from taking any action, under the Pooling and Servicing Agreement. However,
neither the seller, the servicer nor any of their directors, officers, employees
or agents will be protected against any liability which would otherwise be
imposed by reason of willful misfeasance, bad faith or gross negligence of any
of those persons in the performance of their duties or by reason of reckless
disregard of their obligations and duties under the Pooling and Servicing
Agreement.
Also, the Pooling and Servicing Agreement states that the servicer is not
under any obligation to appear in, prosecute or defend any legal action which is
not incidental to its servicing responsibilities under the Pooling and Servicing
Agreement. The servicer may, in its sole discretion, undertake any legal action
which it may deem necessary or desirable for the benefit of the
certificateholders with respect to the Pooling and Servicing Agreement and the
rights and duties of the parties to that agreement and the interest of the
certificateholders under that agreement.
COLLECTION AND OTHER SERVICING PROCEDURES
Under the Pooling and Servicing Agreement, the servicer is responsible for
servicing, collecting, enforcing and administering the receivables. The servicer
must do so in accordance with customary and usual procedures for servicing its
own revolving credit line dealer wholesale loans, except where the failure to so
act would not materially and adversely affect the rights of the CARCO
receivables trust.
DCS covenants that it may only change the terms relating to the Accounts
if:
-- 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
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-- 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 CARCO receivables trust include:
-- providing assistance in any inspections of the documents and
records relating to the Accounts and receivables by the CARCO
receivables trust trustee under the Pooling and Servicing
Agreement;
-- maintaining the agreements, documents and files relating to the
Accounts and receivables as custodian for the CARCO receivables
trust; and
-- providing related data processing and reporting services for
certificateholders and on behalf of the CARCO receivables trust
trustee.
SERVICER COVENANTS
In the Pooling and Servicing Agreement the servicer covenants that:
-- 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 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
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purchase the receivable or receivables on the Determination Date following the
expiration of the 30-day cure period and the servicer will be obligated to
deposit into the Collection Account an amount equal to the amount of the
receivable or receivables plus accrued and unpaid interest on that amount. We
shall deem the amount of the deposit a Transfer Deposit Amount. The purchase by
the servicer constitutes the sole remedy available to the certificateholders if
the covenant or warranty of the servicer is not satisfied and the trust's
interest in any purchased receivables shall be automatically assigned to the
servicer.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Unless we state otherwise in the related Series Supplement or prospectus
supplement, the servicer's compensation with respect to the certificates of a
series for its servicing activities and reimbursement for its expenses will be a
monthly servicing fee (the "SERVICING FEE"). The Servicing Fee is an amount
payable in arrears on each payment date on or before the Series Termination Date
of the series and the Fully Reinvested Date, if any, of the series, and after
that date during the Revolving Period with respect to the series, if the
Revolving Period begins again, equal to one-twelfth of the product of:
-- 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 payment 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 (or, in the case of the
collateral certificate, the sum of the nominal liquidation amounts
of the outstanding series of notes) as of the last day of the
second preceding Collection Period.
The seller shall pay the remainder of the Servicing Fee with respect to any
series. The servicer shall be paid the Monthly Servicing Fee with respect to any
series solely to the extent amounts are available for distribution of the
Monthly Servicing Fee under the terms of the Pooling and Servicing Agreement.
The servicer may waive its right to receive the Servicing Fee with respect
to any series on any payment date, so long as it believes that enough interest
collections will be available on a future payment date to pay the Monthly
Servicing Fee relating to the waived Servicing Fee. If that happens, we shall
deem the Servicing Fee and the Monthly Servicing Fee for the series and the
payment date to be zero.
The servicer will pay from its servicing compensation expenses it incurs
when servicing the Accounts and the receivables including, without limitation,
payment of fees and disbursements of the CARCO receivables trust trustee and
independent accountants and all other fees and expenses which are not expressly
stated in the Pooling and Servicing Agreement to be payable by the CARCO
receivables trust or the certificateholders other than federal, state and local
income and franchise taxes, if any, of the trust or the certificateholders.
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MATTERS REGARDING THE SERVICER
The servicer may not resign from its obligations and duties under the
Pooling and Servicing Agreement, except upon determination that those duties are
no longer permissible under applicable law. No resignation will become effective
until the CARCO receivables trust trustee or a successor to the servicer has
assumed the servicer's responsibilities and obligations under the Pooling and
Servicing Agreement (DCS or any successor servicer, the "SERVICER"). The
servicer may delegate any of its duties as servicer to any of its affiliates,
but any delegation will not relieve the servicer of its obligations under the
Pooling and Servicing Agreement.
Any person into which, in accordance with the Pooling and Servicing
Agreement, the servicer may be merged or consolidated or any person resulting
from any merger or consolidation to which the servicer is a party, or any person
succeeding to the business of the servicer, will be the successor to the
servicer under the Pooling and Servicing Agreement.
SERVICE DEFAULT
In the event of any Service Default, the CARCO receivables trustee, by
written notice to the servicer, may terminate all of the rights and obligations
of the servicer, as servicer, under the Pooling and Servicing Agreement and in
and to the receivables and the proceeds of the receivables and appoint a new
servicer (a "SERVICE TRANSFER"). The rights and interest of the seller under the
Pooling and Servicing Agreement in the Seller's Interest will not be affected by
any Service Transfer. The CARCO receivables trust trustee shall as promptly as
possible appoint a successor servicer and if no successor servicer has been
appointed by the CARCO receivables trust trustee and has accepted the
appointment by the time the servicer ceases to act as servicer, all rights,
authority, power and obligations of the servicer under the Pooling and Servicing
Agreement shall pass to and be vested in the CARCO receivables trust trustee.
Before any Service Transfer, the CARCO receivables trust trustee will review any
bids obtained from potential servicers meeting eligibility requirements set
forth in the Pooling and Servicing Agreement to serve as successor servicer for
servicing compensation not in excess of the Servicing Fee, plus excess amounts
payable to the seller.
A "SERVICE DEFAULT" refers to any of the following events:
-- 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 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 noteholders of any outstanding series and which continues
unremedied for a period of 30 days after the date the CARCO
receivables trust 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;
-- 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
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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 CARCO receivables
trust 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 CARCO receivables trust trustee, any Enhancement
provider, the seller and the certificateholders prompt notice of the failure or
delay by it, together with a description of its efforts to so perform its
obligations. The servicer shall immediately notify the CARCO receivables trust
trustee in writing of any Service Default.
REPORTS
On each payment date, including each payment date that corresponds to an
interest payment date or any Special Payment Date, the trustee will forward to
each certificateholder of record of any series a statement (the "DISTRIBUTION
DATE STATEMENT") prepared by the servicer. The Distribution Date Statement will
set forth information with respect to the trust and the certificates of the
series, as we state in the related Series Supplement and describe in the related
prospectus supplement.
With respect to each interest payment date or Special Payment Date, the
Distribution Date Statement with respect to any Series will include the
following information with respect to the certificates of the series:
-- 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 CARCO receivables trust
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 Internal Revenue 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 Internal Revenue 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 CARCO receivables trust
trustee a statement, signed by an officer of the servicer. The statement will
state that the servicer has fully performed, or caused to be fully performed,
its obligations in all material respects under the Pooling and Servicing
Agreement throughout the preceding year or, if there has been a default in the
performance of any obligation, will state the nature and status of the default.
You may obtain copies of all statements, certificates and reports furnished
to the CARCO receivables trust trustee by delivering a written request to the
CARCO receivables trust trustee.
AMENDMENTS
The seller, the servicer and the CARCO receivables trust trustee may amend
the Pooling and Servicing Agreement and any Series Supplement, without
certificateholder consent, so long as any amendment shall not, as evidenced by
an opinion of counsel, adversely affect in any material respect the interests of
the certificateholders.
The seller, the servicer and the CARCO receivables trust trustee may amend
the Pooling and Servicing Agreement and any Series Supplement with the consent
of the holders of certificates evidencing not less than 66 2/3% of the aggregate
unpaid principal amount of the certificates of all adversely affected series for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Pooling and Servicing Agreement or of modifying in
any manner the rights of certificateholders. No amendment, however, may
-- 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 CARCO
receivables trust,
-- otherwise changes the procedures for removing receivables from the
CARCO receivables 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
payment 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
CARCO receivables trust trustee will give those certificateholders access during
business hours to the current list of certificateholders of a series or all
outstanding series, as applicable, for purposes of communicating with other
certificateholders of the series or all outstanding series, as applicable, with
respect to their rights under the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement will not provide for any annual or
other meetings of certificateholders.
THE CARCO RECEIVABLES TRUSTEE
The Bank of New York, a New York banking corporation, will act as trustee
under the Pooling and Servicing Agreement. The Bank of New York is also the
indenture trustee. On August 23, 1996, The Bank of New York succeeded
Manufacturers and Traders Trust Company, as trustee, under the Pooling and
Servicing Agreement (prior to its restatement) and under an Agreement of
Resignation, Appointment and Acceptance dated as of August 23, 1996 between
DCWR, DCS, as successor to CFC Corp., Manufacturers and Traders Trust Company,
as resigning trustee, and The Bank of New York, as successor trustee. The
Corporate Trust Office of the Bank of New York is located at 101 Barclay Street,
New York, New York 10286. The seller, the servicer and their respective
affiliates may from time to time enter into normal banking and trustee
relationships with the CARCO receivables trust trustee and its affiliates. The
CARCO receivables trust trustee may hold certificates in its own name with the
same rights it would have if it were not the CARCO receivables trust trustee. In
addition, for purposes of meeting the legal requirements of local jurisdictions,
the CARCO receivables trust trustee shall have the power to appoint a co-trustee
or separate trustees of all or a part of the CARCO receivables trust. In the
event of those appointments, all rights, powers, duties and obligations shall be
conferred or
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imposed upon the CARCO receivables trust trustee and the separate trustee or
co-trustee jointly, or, in any jurisdiction in which the CARCO receivables trust
trustee shall be incompetent or unqualified to perform some acts, singly upon
the separate trustee or co-trustee, who shall exercise and perform those rights,
powers, duties and obligations solely at the direction of the CARCO receivables
trust trustee.
The CARCO receivables trust trustee may resign at any time, in which event
the seller must appoint a successor CARCO receivables trust trustee. The
servicer may also remove the CARCO receivables trust trustee if the CARCO
receivables trust trustee ceases to be eligible to continue as the CARCO
receivables trust trustee under the Pooling and Servicing Agreement or if the
CARCO receivables trust trustee becomes insolvent. If that happens, the servicer
may appoint a successor CARCO receivables trust trustee. Any resignation or
removal of the CARCO receivables trust trustee and appointment of a successor
CARCO receivables trust trustee does not become effective until the acceptance
of the appointment by the successor CARCO receivables trust trustee.
DESCRIPTION OF THE RECEIVABLES PURCHASE AGREEMENT
The parties to the Receivables Purchase Agreement are DCS, as seller
(together with its predecessors as appropriate, the "RPA SELLER"), and DCWR, as
purchaser. DCS became the RPA seller as successor by merger. DCWR became the
purchaser as assignee of USA, which was in turn an assignee of CARCO. In the
following summary we describe terms of the Receivables Purchase Agreement. The
summary, however, is qualified in its entirety by reference to the Receivables
Purchase Agreement.
SALE OR TRANSFER OF RECEIVABLES
Under the Receivables Purchase Agreement, the RPA seller sold or
transferred to the seller all of its right, title and interest in and to all of
the receivables and the Collateral Security as of the Initial Cut-Off Date and
all of the receivables created after that date. In addition, the RPA seller has
previously designated Additional Accounts, and has previously conveyed to the
seller the Principal Receivables in the Additional Accounts, together with the
related Collateral Security, as of the applicable Additional Cut-Off Date and
all receivables, and related Collateral Security, created after that date. As we
describe in this prospectus, under the Pooling and Servicing Agreement, the
seller has transferred to the CARCO receivables trust all of its right, title
and interest in and to the Receivables Purchase Agreement.
In connection with the sale or transfer of the receivables to the seller,
the RPA seller must indicate in its computer files that the receivables have
been sold or transferred to the seller, and that the receivables have been
transferred by the seller to the CARCO receivables trust. In addition, the RPA
seller must provide to the seller a computer file or microfiche or written list
containing a true and complete list of all the receivables. The records and
agreements relating to the Accounts and receivables have not and will not be
segregated by the RPA seller from other documents and agreements relating to
other accounts and receivables and are not and will not be stamped or marked to
reflect the sale or transfer of the receivables to the seller. The computer
records, however, of the RPA seller have been and will be marked to evidence the
sale or transfer. The RPA seller has filed UCC financing statements with respect
to the receivables
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meeting the requirements of Michigan state law. See "Risk Factors -- Risk
factors relating to the collateral certificate and the CARCO receivables
trust -- Various legal aspects may cause delays in your receiving payments or
may result in reduced payments or losses on your notes" and "Legal Aspects of
the Receivables -- Transfer of Receivables and Collateral Certificate."
REPRESENTATIONS AND WARRANTIES
The RPA seller has or will make representations and warranties to the
seller that, among other things, as of the Initial Closing Date and each Series
Issuance Date, it was duly formed and in good standing and that it has the
authority to consummate the transactions contemplated by the Receivables
Purchase Agreement.
The RPA seller has or will also make representations and warranties to the
seller relating to the receivables to the effect, among other things, that:
-- 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.
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COVENANTS
In the Receivables Purchase Agreement, the RPA seller has covenanted that
it will perform its obligations under the agreements relating to the receivables
and the Accounts in conformity with its current policies and procedures relating
to the receivables and the Accounts.
The RPA seller has covenanted further that, except for the sale and
conveyances under the Receivables Purchase Agreement and the interests created
under the Pooling and Servicing Agreement, the RPA seller will not sell, pledge,
assign or transfer any interest in the receivables to any other person. The RPA
seller also has covenanted to defend and indemnify the seller for any loss,
liability or expense incurred by the seller in connection with a breach by the
RPA seller of any of its representations, warranties or covenants contained in
the Receivables Purchase Agreement.
In addition, the RPA seller has expressly acknowledged and consented to the
seller's assignment of its rights relating to the receivables under the
Receivables Purchase Agreement to the CARCO receivables trust trustee.
TERMINATION
The Receivables Purchase Agreement will terminate immediately after the
CARCO receivables trust terminates. Also, if under provisions of federal law the
RPA seller becomes party to any bankruptcy or similar proceeding, other than as
a claimant, and if the proceeding is not voluntary and is not dismissed within
60 days of its institution, the RPA seller will immediately cease to sell or
transfer receivables to the seller and will promptly give notice of that event
to the seller and to the CARCO receivables trust trustee.
LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES AND THE COLLATERAL CERTIFICATE
On the Initial Closing Date, the RPA seller sold and assigned the
receivables to the seller, and the seller immediately transferred the
receivables to the CARCO receivables trust. The seller has represented and
warranted and will represent and warranty on the Series Issuance Date with
respect to each Series that:
-- the transfer to the CARCO receivables trust constituted a valid
transfer to the CARCO receivables trust of all right, title and
interest of the seller in and to the receivables; and
-- under the UCC, as in effect in Michigan, there exists a valid,
subsisting and enforceable first-priority perfected ownership
interest in the receivables, in existence at the time of the
formation of the trust or at the date of addition of any
Additional Accounts, in favor of the CARCO receivables trust and a
valid, subsisting and enforceable first-priority perfected
ownership interest in the receivables created after that time in
favor of the CARCO receivables trust on and after their creation.
However, the transfer of receivables by the seller to the CARCO receivables
trust could be deemed to create a security interest under the UCC. For a
discussion of the CARCO receivables trust's rights arising from these
representations and warranties not being satisfied, see "Description
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of the Investor Certificates Issued by the CARCO Receivables
Trust -- Representations and Warranties."
Each of the RPA seller and the seller has represented that the receivables
are "chattel paper" for purposes of the UCC as in effect in Michigan. If the
receivables are deemed to be chattel paper and the transfer of the receivables
by either the RPA seller to the seller or by the seller to the trust is deemed
either to be a sale or to create a security interest, the UCC as in effect in
Michigan applies. In that case, the transferee must either take possession of
the chattel paper or file an appropriate financing statement or statements in
order to perfect its interest in the chattel paper. Both the seller and the
CARCO receivables trust trustee have filed financing statements covering the
receivables under the UCC as in effect in Michigan and Delaware, respectively,
to perfect their respective interests in the receivables and continuation
statements will be filed as required to continue the perfection of those
interests. The receivables have not and will not be stamped to indicate the
interest of the seller or the CARCO receivables trust trustee.
There are circumstances under the UCC and applicable federal law in which
prior or subsequent transferees of receivables could have an interest in the
receivables with priority over the CARCO receivables trust's interest. A
purchaser of the receivables who gives new value and takes possession of the
instruments which evidence the receivables, i.e., the chattel paper, in the
ordinary course of the purchaser's business may, under some circumstances, have
priority over the interest of the CARCO receivables trust in the receivables. A
tax or other government lien on property of the RPA seller or the seller arising
prior to the time a receivable is conveyed to the CARCO receivables trust may
also have priority over the interest of the CARCO receivables trust in the
receivable. Under the Receivables Purchase Agreement, the RPA seller will
warrant to the seller, and under the Pooling and Servicing Agreement the seller
has warranted to the CARCO receivables trust, that the receivables have been
transferred free and clear of the lien of any third party. Each of the RPA
seller and the seller has also covenanted that it will not sell, pledge, assign,
transfer or grant any lien on any receivable or, except as we describe under
"Description of the Investor Certificates Issued by the CARCO Receivables
Trust -- The Seller's Certificate," the Seller's Certificate, or any interest in
the Seller's Certificate, other than to the CARCO receivables trust. Also, while
DCS is the servicer, cash collections on the receivables may, in some cases, be
commingled with the funds of DCS prior to each payment date and, in the event of
the bankruptcy of DCS, the CARCO receivables trust may not have a perfected
interest in those collections.
The seller has represented and warranted that its transfer of the
collateral certificate to the issuer is perfected and free and clear of the lien
on interest of any other entity. If this is not correct, the issuer's and the
indenture trustee's interest in the collateral certificate could be impaired.
For example, a prior or subsequent transferee of the collateral certificate
could have an interest in the collateral certificate superior to the interest of
the issuer and the indenture trustee. Also, a tax, governmental or other
nonconsensual lien that attaches to the property of the seller could have
priority over the interest of the issuer and the indenture trustee in the
collateral certificate. The seller will not make any representation as to
whether its transfer of the collateral certificate is a sale or a transfer for
security.
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MATTERS RELATING TO BANKRUPTCY
The RPA seller has warranted to the seller in the Receivables Purchase
Agreement that the sale of the receivables by it to the seller is a valid sale
of the receivables to the seller. Also, the RPA seller and the seller have
agreed to treat the transactions described in this prospectus as a sale of the
receivables to the seller, and the RPA seller has or will take all actions that
are required under Michigan law to perfect the seller's ownership interest in
the receivables. However, the RPA seller could become a debtor in a bankruptcy
case and a creditor or trustee-in-bankruptcy of the debtor or the debtor itself
could take the position that the sale of receivables from the debtor to the
seller should be recharacterized as a pledge of the receivables to secure a
borrowing by the debtor. In that event, payments of collections of receivables
to the seller could be delayed, or, if the court should rule in favor of any
trustee, debtor in possession or creditor, reduced in amount. See "Risk
Factors -- Risk factors relating to the collateral certificate and the CARCO
receivables trust -- Various legal aspects may cause delays in your receiving
payments or may result in reduced payments or losses on your notes."
In addition, the RPA seller could become a debtor in a bankruptcy case and
a creditor or trustee-in-bankruptcy of the debtor or the debtor itself could
request a court to order that the RPA seller should be substantively
consolidated with the seller. In that event, payments on the certificates could
be delayed, or, if a bankruptcy court should rule in favor of any creditor,
trustee-in-bankruptcy or the debtor, reduced in amount.
The seller has warranted to the CARCO receivables trust that the transfer
of the receivables to the CARCO receivables trust is a sale of the receivables
to the CARCO receivables trust. The seller has or will take all actions that are
required under Michigan and Delaware law to perfect the CARCO receivables
trust's ownership interest in the receivables and the seller has warranted to
the CARCO receivables trust that the CARCO receivables trust will at all times
have a first priority perfected ownership interest in the receivables and, with
exceptions, in proceeds of the receivables. Nevertheless, a tax or government
lien on property of DCS or the seller arising prior to the time a receivable is
conveyed to the CARCO receivables trust may have priority over the interest of
the CARCO receivables trust in the receivable. DCWR's limited liability
agreement provides that it shall not file a voluntary application for relief
under Title 11 of the United States Code (the "BANKRUPTCY CODE") without the
affirmative vote of the two independent directors of one of its members. Under
the Pooling and Servicing Agreement, the CARCO receivables trust trustee, all
certificateholders and any Enhancement provider will covenant that they will not
at any time institute against the seller any bankruptcy, reorganization or other
proceedings under any federal or state bankruptcy or similar law. In addition,
other steps will be taken to avoid the seller's becoming a debtor in a
bankruptcy case. However, the seller could become a debtor in a bankruptcy case,
and a bankruptcy trustee for the seller or the seller as debtor in possession or
a creditor of the seller could take the position that the transfer of the
receivables from the seller to the trust should be recharacterized as a pledge
of the receivables or that the transfer of the collateral certificate to the
issuer should be recharacterized as a pledge of the collateral certificate. In
that event, payments on the collateral certificate could be delayed or, should
the court rule in favor of any trustee, debtor in possession or creditor,
reduced in amount.
The seller does not intend to file, and DCS has agreed that it will not
cause the seller to file, a voluntary application for relief under the
Bankruptcy Code or any similar applicable state law with respect to the seller
so long as the seller is solvent and does not foresee becoming insolvent.
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If the RPA seller or the seller were to become a debtor in a bankruptcy
case, a Reinvestment Event or an Early Amortization Event would occur with
respect to the certificates of each series. In that event, under the Receivables
Purchase Agreement, new receivables would no longer be transferred to the seller
and, under the Pooling and Servicing Agreement, only collections on receivables
already sold to the seller and transferred to the CARCO receivables trust would
be available to be applied to pay interest accruing on the certificates and to
pay the principal amount of the certificates. If that happens, the servicer must
allocate all collections on Principal Receivables to the oldest principal
balance first. If the bankruptcy court were to alter the allocation method, the
rate of payment on the certificates (including the collateral certificate) might
be adversely affected. In addition, distributions in respect of principal on
each certificate would not be subject to any applicable Controlled Distribution
Amount.
The occurrence of events of bankruptcy, insolvency or receivership with
respect to the servicer will result in a Service Default. The Service Default,
in turn, may result in a Reinvestment Event or an Early Amortization Event with
respect to a series. If no other Service Default other than the commencement of
the bankruptcy or similar event exists, a trustee-in-bankruptcy of the servicer
may have the power to prevent either the trustee or the certificateholders from
appointing a successor servicer.
Payments made in respect of repurchases of receivables by DCS or the seller
under the Pooling and Servicing Agreement may be recoverable by DCS or the
seller, as debtor in possession, or by a creditor or a trustee-in-bankruptcy of
DCS or the seller as a preferential transfer from DCS or the seller if the
payments are made within one year prior to the filing of a bankruptcy case in
respect of DCS.
TAX MATTERS
FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following summary describes the anticipated material United States
federal income tax consequences of the purchase, ownership and disposition of
the notes issued by the issuer. This discussion is based upon current provisions
of the Internal Revenue Code, existing and proposed Treasury regulations, and
current administrative rulings, judicial decisions and other applicable
authorities. There are no cases or Internal Revenue Service ("IRS") rulings on
similar transactions involving debt issued by a trust with terms similar to
those of the notes and no ruling from the IRS has been or will be sought on any
of the issues discussed below. As a result, we cannot assure you that the IRS
will not challenge the conclusions reached in this discussion. Furthermore,
legislative, judicial or administrative changes may occur, possibly with
retroactive effect, which could affect the accuracy of the statements and
conclusions set forth in this prospectus as well as the tax consequences to
noteholders.
This discussion does not address all aspects of federal income taxation
that may be relevant to the holders of notes in light of their personal
investment circumstances or, except for specific limited discussions of
particular topics, that are relevant to noteholders subject to special treatment
under the federal income tax laws, such as financial institutions,
broker-dealers, life insurance companies, tax-exempt organizations, real estate
investment trusts, regulated investment
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companies, dealers in securities or currencies, holders that hold the notes as
part of a hedge, straddle, "synthetic security" or other integrated transaction
for United States federal income tax purposes and holders whose functional
currency is not the U.S. dollar. Further, this summary does not include any
description of any alternative minimum tax consequences, United States federal
estate or gift tax laws or the tax laws of any state, local or foreign
government that may be applicable to the notes. Unless otherwise specified, this
information is directed only to prospective purchasers who:
-- purchase notes in the initial distribution of the notes;
-- are U.S. noteholders (as defined below); and
-- hold the notes as "capital assets" within the meaning of Section
1221 of the Internal Revenue Code.
As used in this discussion, the term "U.S. noteholder" means a beneficial
owner of a note that is for United States federal income tax purposes:
-- a citizen or resident of the United States;
-- a corporation or partnership (including a person treated as a
corporation or partnership for United States federal income tax
purposes) created or organized in or under the laws of the United
States, any state thereof or the District of Columbia;
-- an estate whose income is subject to United States federal income
tax regardless of its source; or
-- a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one
or more United States persons have the authority to control all
substantial decisions of the trust.
Notwithstanding the preceding sentence, to the extent provided in Treasury
regulations, a trust in existence on August 20, 1996 and treated as a United
States person under the Internal Revenue Code and the applicable Treasury
regulations thereunder before such date, that elects to continue to be treated
as a United States person under the Internal Revenue Code or applicable Treasury
regulations thereunder also will be a U.S. noteholder. As used in this
discussion, the term "non-U.S. noteholder" means a beneficial owner of a note
that is not a U.S. noteholder. If a partnership (including for this purpose any
entity treated as a partnership for United States federal income tax purposes)
is a beneficial owner of the notes, the treatment of a partner in the
partnership will generally depend upon the status of the partner and upon the
activities of the partnership. A holder of the notes that is a partnership and
partners in such partnership should consult their tax advisors about the United
States federal income tax consequences of holding and disposing of the notes.
Prospective investors should consult with their tax advisors as to the
federal, state, local, foreign and any other tax consequences to them of the
purchase, ownership and disposition of notes.
TAX CHARACTERIZATION OF THE ISSUER
Sidley Austin Brown & Wood LLP, special U.S. federal tax counsel to the
seller, the CARCO receivables trust and the issuer ("TAX COUNSEL"), is of the
opinion that, assuming that the terms of the trust agreement and related
documents are complied with, neither the issuer nor
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the CARCO receivables trust will be an association or publicly traded
partnership taxable as a corporation for United States federal income tax
purposes.
The seller will agree, and the noteholders will agree by their purchase of
notes, to treat the notes as debt for federal, state and local income, franchise
and single business tax purposes. Assuming such characterization of the notes is
correct, the United States federal income tax consequences to noteholders
described below under "-- Tax Characterization and Treatment of
Notes -- Characterization as Debt" will apply to the noteholders.
If, contrary to the opinion of Tax Counsel, the IRS were to successfully
assert that one or more classes of notes did not represent debt for federal
income tax purposes, such class or classes of notes may be treated as equity
interests in the issuer. If so treated, the issuer may be treated as a publicly
traded partnership taxable as a corporation with potentially adverse tax
consequences (for instance, the issuer may not be able to reduce its taxable
income by deductions for interest expense on notes recharacterized as equity).
Alternatively, and in the opinion of Tax Counsel, the more likely view is that
the issuer may be treated as a publicly traded partnership that is not be
taxable as a corporation because it falls within an applicable safe harbor.
Nonetheless, treatment of notes as equity interests in such a partnership may
have adverse tax consequences to certain holders of such notes. For example,
income to certain tax-exempt entities (including pension funds) would be
"unrelated business taxable income," income to non-U.S. noteholders may be
subject to United States withholding tax and United States tax return filing
requirements, and individual holders might be subject to certain limitations on
their ability to deduct their share of trust expenses.
Because the seller will, for federal income tax purposes, treat all notes
as indebtedness issued by the issuer characterized as either a partnership or a
division of whichever person owns all of its transferor interest, the beneficial
owner of the transferor interest will not comply with the tax reporting
requirements that would apply under any alternative characterization of the
trust or the notes.
TAX CHARACTERIZATION AND TREATMENT OF THE NOTES
CHARACTERIZATION AS DEBT
For each series of notes, except for any series which is specifically
identified as receiving different tax treatment in the related prospectus
supplement, Tax Counsel will deliver its opinion to the effect that the notes
will be treated as debt for federal income tax purposes. The seller, the
servicer and each noteholder, by acquiring an interest in a note, will agree to
treat the notes as indebtedness for federal, state and local income, single
business and franchise tax purposes. See "-- Tax Characterization of the Issuer"
above in this prospectus for a discussion of certain potential federal income
tax consequences to noteholders if the IRS were to successfully challenge the
characterization of the notes for federal income tax purposes.
TREATMENT OF STATED INTEREST
Based on Tax Counsel's opinion that the notes will be treated as debt for
federal income tax purposes, and assuming the notes are not issued with original
issue discount ("OID"), unless otherwise provided in the applicable prospectus
supplement, the stated interest on a note will be taxable to a noteholder as
ordinary income when received or accrued in accordance with each noteholder's
method of tax accounting. Interest received on a note may constitute "investment
96
income" for purposes of some provisions in the Internal Revenue Code limiting
the deductibility of investment interest expense.
ORIGINAL ISSUE DISCOUNT
Except to the extent indicated in the related prospectus supplement, no
series of notes will be issued with OID in excess of the statutorily defined de
minimis amount. In general, OID is the excess of the "stated redemption price at
maturity" of a debt instrument over its "issue price". A note's "stated
redemption price at maturity" is the total of all payments required to be made
under the note through maturity except for payments of "qualified stated
interest." Generally, interest is qualified stated interest if it is
unconditionally payable in cash or property other than debt instruments of the
issuer at fixed intervals of one year or less during the entire term of the
instrument at specified rates. The "issue price" of a note is the initial price
at which a substantial amount of the notes are sold, excluding sales to bond
houses, brokers or similar persons acting as underwriters, placement agents or
wholesalers.
Although it is not anticipated, except to the extent indicated in the
related prospectus supplement, that any series of notes will be issued at a
greater than de minimis discount, a series of notes may nonetheless be deemed to
have been issued with greater than de minimis OID. First, interest payments on a
series of notes may not be deemed "qualified stated interest" under applicable
Treasury regulations if (i) reasonable legal remedies do not exist to compel
timely payment or (ii) the notes do not otherwise provide terms and conditions
that make the likelihood of late payment (other than a late payment that occurs
within a reasonable grace period) or nonpayment a remote contingency. If a
series of notes does not pay qualified stated interest, all of the taxable
income thereon would be includible in income as OID. Second, the IRS could take
the position (under regulations that have not yet been issued pursuant to
Section 1272(a)(6) of the Internal Revenue Code) that a series of notes has OID.
If a note were treated as being issued with greater than de minimis OID, a
noteholder would be required to include such OID in its income as interest over
the term of the note under a constant yield method. In general, OID must be
included in income in advance of the receipt of cash representing that income.
Thus, each cash distribution would be treated as an amount already included in
income (to the extent OID has accrued as of the date of the interest
distribution and is not allocated to prior distributions) or as a repayment of
principal. This treatment would have no significant effect on noteholders using
the accrual method of accounting. However, cash method noteholders may be
required to report income with respect to the notes in advance of the receipt of
cash attributable to such income. In this situation, a cash method noteholder
would have to rely on other income sources to pay the taxes on its OID income.
Even if a note has OID falling within the de minimis exception, the noteholder
must include such de minimis OID in income proportionately as principal payments
are made on such note.
U.S. noteholders may generally, upon election, include in income all
interest (including stated interest, acquisition discount, original issue
discount, de minimis original issue discount, market discount, de minimis market
discount, and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium) that accrues on a debt instrument by using the constant
yield method applicable to original issue discount, subject to certain
limitations and exceptions.
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SHORT TERM NOTES
A holder of a note that has a fixed maturity date not more than one year
from the issue date of such note (a "SHORT-TERM NOTE") will generally not be
required to include OID income on the note as it accrues. However, the foregoing
rule may not apply if such holder holds the instrument as part of a hedging
transaction, or as a stripped bond or stripped coupon or if the holder is:
-- an accrual method taxpayer; or
-- a bank;
-- a broker or dealer that holds the note as inventory;
-- a regulated investment company or common trust fund; or
-- the beneficial owner of specified pass-through entities specified
in the Internal Revenue Code.
A holder of a Short-Term-Note that is not required to include OID income on
the note as it accrues will instead include the OID accrued on the note in gross
income upon a sale or exchange of the note or at maturity, or if the Short-Term
Note is payable in installments, as principal is paid thereon. A holder would be
required to defer deductions for any interest expense on an obligation incurred
to purchase or carry the Short-Term Note to the extent it exceeds the sum of any
interest income and OID accrued on such note. However, a holder may elect to
include OID in income as it accrues on all obligations having a maturity of one
year or less held by the holder in that taxable year or thereafter, in which
case the deferral rule of the preceding sentence will not apply. For purposes of
this paragraph, OID accrues on a Short-Term Note on a straight-line basis,
unless the holder irrevocably elects, under regulations to be issued by the
Treasury Department, to apply a constant interest method, using the holder's
yield to maturity and daily compounding.
MARKET DISCOUNT AND PREMIUM
A holder who purchases a note after its initial distribution at a discount
that exceeds a statutorily defined de minimis amount will be subject to the
"market discount" rules of the Internal Revenue Code. These rules provide, in
part, that gain on the sale or other disposition of a note and partial principal
payments on a note are treated as ordinary income to the extent of accrued
market discount which has not been previously included in income. The market
discount rules also provide for deferral of interest deductions with respect to
debt incurred to purchase or carry a note that has market discount. Market
discount will be considered to accrue ratably during the period from the date of
acquisition to the maturity date of the note, unless the U.S. noteholder elects
to accrue market discount on the basis of semiannual compounding. A U.S.
noteholder may elect to include market discount in income currently as it
accrues (on either a ratable or semiannual compounding basis), in which case the
rules described above regarding the treatment as ordinary income or gain upon
the disposition of the note and upon the receipt of certain cash payments and
regarding the deferral of interest deductions will not apply. Generally, such
currently included market discount is treated as ordinary interest for United
States federal income tax purposes. Such an election will apply to all debt
instruments acquired by the U.S. noteholder on or after the first day of the
first taxable year to which such election applies and may be revoked only with
the consent of the IRS.
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If a U.S. noteholder purchases a note for an amount that is greater than
the sum of all amounts payable on the notes after the purchase date other than
payments of qualified stated interest, such U.S. noteholder will be considered
to have purchased the note with "amortizable bond premium" equal in amount to
such excess. A U.S. noteholder may elect to amortize such premium using a
constant yield method over the remaining term of the note and may offset
interest otherwise required to be included in respect of the note during any
taxable year by the amortized amount of such excess for the taxable year. Any
election to amortize bond premium applies to all taxable debt instruments
acquired by the U.S. noteholder on or after the first day of the first taxable
year to which such election applies and may be revoked only with the consent of
the IRS.
DISPOSITION OF NOTES
If a noteholder sells a note, the holder generally will recognize gain or
loss in an amount equal to the difference between the amount realized on the
sale and the holder's adjusted tax basis in the note. The adjusted tax basis of
the note to a particular noteholder will equal the holder's cost for the note,
increased by any OID and market discount previously included by such noteholder
in income with respect to the note and decreased by any bond premium previously
amortized and any payments other than qualified stated interest previously
received by such noteholder with respect to such note. Any gain or loss on sale
will be capital gain or loss if the note was held as a capital asset, except for
gain representing accrued interest or accrued market discount not previously
included in income. Capital gain or loss will be long-term if the note was held
by the holder for more than one year and otherwise will be short-term. Any
capital losses realized generally may be used by a corporate taxpayer only to
offset capital gains, and by an individual taxpayer only to the extent of
capital gains plus $3,000 of other income.
NOTES SUBJECT TO CONTINGENCIES
The United States federal income tax consequences to an owner or seller of
notes that provide for one or more contingent payments will vary depending on
the exact terms of the notes and related factors. Such notes may be subject to
rules that differ from the general rules discussed above. The United States
federal income tax consequences to a holder of notes that provide for contingent
payments will be summarized in the related prospectus supplement.
FOREIGN CURRENCY NOTES
Special tax considerations relating to notes denominated in one or more
foreign currencies will be set forth in the applicable prospectus supplement
relating thereto.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The indenture trustee will be required to report annually to the IRS and to
withhold on payments of interest made to the noteholder at the applicable rate,
except as to payments made to exempt holders (generally, corporations,
tax-exempt organizations, qualified pension and profit-sharing trusts,
individual retirement accounts or nonresident aliens who provide certification
as to their status). In addition, upon the sale of a note to (or through) a
broker, the broker must report the sale and withhold on the entire purchase
price at the applicable rate, unless either (i) the broker determines that the
seller is a corporation or other exempt recipient or (ii) the seller certifies
that such seller is a Non-U.S. noteholder (and certain other conditions are
met). Each holder will be required to provide to the indenture trustee, a
certificate, signed under
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penalties of perjury, containing the beneficial owner's name, address, correct
federal taxpayer identification number and a statement that the beneficial owner
is not subject to backup withholding. Certification of the noteholder's non-U.S.
status would be made normally on an IRS Form W-8BEN under penalties of perjury,
although in certain cases it may be possible to submit other documentary
evidence. Non-U.S. noteholders characterized as partnerships or trusts for U.S.
federal income tax purposes may be subject to additional reporting requirements
and should consult their tax advisers. Should a noteholder who is not otherwise
exempt from backup withholding fail to provide the required certification, the
Trustee will be required to withhold on payments of interest made to the
noteholder at the applicable rate and pay the withheld amount to the IRS. Backup
withholding does not constitute a tax and may be credited against the
noteholder's federal income tax liability.
TAX CONSEQUENCES TO NON-U.S. NOTEHOLDERS
Under United States federal income tax law now in effect, subject to
exceptions applicable to certain types of interest, payments of interest by the
issuer to a holder of a note will be considered "portfolio interest". If such
interest is not portfolio interest, then it will be subject to United States
federal income and withholding tax at a rate of 30%, unless such rate is reduced
or eliminated pursuant to an applicable tax treaty or such interest is
effectively connected with the conduct of a trade or business within the United
States and, in either case, the appropriate statement has been provided. A
non-U.S. noteholder that is an individual or corporation (or an entity treated
as a corporation for federal income tax purposes) holding the notes on its own
behalf generally will be exempt from United States federal income taxes and
withholding on payments of principal, premium, interest or original issue
discount on a note, unless such non-U.S. noteholder is a direct or indirect 10%
or greater shareholder of the issuer, a controlled foreign corporation related
to the issuer or seller or a bank extending credit pursuant to a loan agreement
entered into in the ordinary course of its trade or business. To qualify for the
exemption from taxation, the Withholding Agent, as defined below, must have
received a statement (generally made on IRS Form W-8BEN) from the individual or
corporation that:
-- is signed under penalties of perjury by the beneficial owner of
the note,
-- certifies that such owner is not a U.S. noteholder and
-- provides the beneficial owner's name and address.
A "WITHHOLDING AGENT" is the last U.S. payor (or a non-U.S. payor who is a
qualified intermediary, U.S. branch of a foreign person or withholding foreign
partnership) in the chain of payment prior to payment to a non-U.S. holder
(which itself is not a Withholding Agent). Generally, an IRS Form W-8BEN is
effective for the remainder of the year of signature plus three full calendar
years unless a change in circumstances renders any information on the form
incorrect. Notwithstanding the preceding sentence, a W-8BEN with a U.S. taxpayer
identification number will remain effective until a change in circumstances
makes any information on the form incorrect, provided that the Withholding Agent
reports at least annually to the beneficial owner. The beneficial owner must
inform the Withholding Agent within 30 days of such change and furnish a new IRS
Form W-8BEN.
A non-U.S. noteholder that is not an individual or corporation (or an
entity treated as a corporation for federal income tax purposes) holding the
notes on its own behalf may have substantially increased reporting requirements
and should consult its tax advisor.
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A non-U.S. noteholder whose income with respect to its investment in a note
is effectively connected with the conduct of a U.S. trade or business will
generally be taxed as if the holder were a U.S. person, provided that the holder
files an IRS Form W-8ECI.
Certain securities clearing organizations and other entities who are not
beneficial owners, may be able to provide a signed statement to the Withholding
Agent instead of the beneficial owner. However, in such case, the signed
statement may require a copy of the beneficial owner's IRS Form W-8BEN (or a
substitute form).
Any gain realized on the sale, redemption, retirement or, other taxable
disposition of a note by a non-U. S. noteholder will be exempt from United
States federal income and withholding tax so long as:
-- the gain is not effectively connected with the conduct of a trade
or business in the United States by the non-U.S. noteholder; and
-- in the case of a foreign individual, the non-U.S. noteholder is
not present in the United States for 183 days or more in the
taxable year.
If the interest, gain or income on a note held by a non-U.S. noteholder is
effectively connected with the conduct of a trade or business in the United
States by the non-U.S. noteholder, such holder, although exempt from the
withholding tax previously discussed if an appropriate statement is furnished,
will generally be subject to United States federal income tax on the interest,
gain or income at regular federal income tax rates. In addition, if the non-U.S.
noteholder is a foreign corporation, it may be subject to a branch profits tax
equal to 30 percent of its "dividend equivalent amount" within the meaning of
the Internal Revenue Code for the year, subject to adjustment, unless it
qualifies for a lower rate under an applicable tax treaty.
STATE AND LOCAL TAX CONSEQUENCES
In addition to the federal income tax considerations described above,
potential investors should consider the state and local income tax consequences
of acquiring, owning and disposing of the notes. The activities of servicing and
collecting the receivables will be undertaken by the servicer, which is a
Michigan limited liability company. Because of the variation in each state's tax
laws based in whole or in part upon income, state and local income tax law may
differ substantially from the corresponding federal law, and it is thus
impossible to predict tax consequences to the noteholders in all of the state
taxing jurisdictions in which they are already subject to tax. Accordingly, this
discussion does not purport to describe any aspect of the income tax laws of any
state or locality. Therefore, potential investors should consult their own tax
advisors with respect to the various state and local tax consequences of an
investment in the notes.
ERISA CONSIDERATIONS
GENERAL
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended, ("ERISA") and Section 4975 of the Internal Revenue Code, as amended,
(the "CODE") prohibit a pension, profit sharing or other employee benefit or
other plan (such as an individual retirement
101
account and certain types of Keogh Plans) that is subject to Title I of ERISA or
to Section 4975 of the Code from engaging in certain transactions involving
"plan assets" with persons that are "parties in interest" under ERISA or
"disqualified persons" under the Code with respect to the plan. Certain
governmental plans, although not subject to ERISA or the Code, are subject to
federal, state or local laws ("SIMILAR LAW") that impose similar requirements.
Such plans subject to ERISA, Section 4975, or Similar Law are referred to herein
as "PLANS". The acquisition or holding of securities by or on behalf of or with
plan assets of a Plan could give rise to a prohibited transaction if the issuer,
the underwriters, the seller or any of their respective affiliates is or becomes
a party in interest or disqualified person with respect to the Plan. A violation
of these "prohibited transaction" rules may generate excise tax and other
liabilities under ERISA and the Code or under Similar Law for such persons.
Depending on the relevant facts and circumstances, certain prohibited
transaction exemptions may apply to the purchase or holding of the notes -- for
example:
-- Prohibited Transaction Class Exemption ("PTE") 96-23, which
exempts certain transactions effected on behalf of a Plan by an
"in-house asset manager";
-- PTE 95-60, which exempts certain transactions between insurance
company general accounts and parties in interest;
-- PTE 91-38, which exempts certain transactions between bank
collective investment funds and parties in interest;
-- PTE 90-1, which exempts certain transactions between insurance
company pooled separate accounts and parties in interest; and
-- PTE 84-14, which exempts certain transactions effected on behalf
of a Plan by a "qualified professional asset manager."
There can be no assurance that any of these exemptions will apply with respect
to any Plan's investment in the notes, or that such an exemption, if it did
apply, would apply to all prohibited transactions that may occur in connection
with such investment. Furthermore, these exemptions would not apply to
transactions involved in operation of the issuer if, as described below, the
assets of the issuer were considered to include Plan assets.
ERISA also imposes certain duties on persons who are fiduciaries of Plans
subject to ERISA, including the requirements of investment prudence and
diversification, and the requirement that such a Plan's investments be made in
accordance with the documents governing the Plan. Under ERISA, any person who
exercises any authority or control respecting the management or disposition of
the assets of a Plan is considered to be a fiduciary of such Plan. Plan
fiduciaries must determine whether the acquisition and holding of notes and the
operations of the issuer would result in prohibited transactions if Plans that
purchase the notes were deemed to own an interest in the underlying assets of
the issuer under the rules discussed below. There may also be an improper
delegation of the responsibility to manage Plan assets if Plans that purchase
the notes are deemed to own an interest in the underlying assets of the issuer.
Pursuant to Department of Labor Regulation Section 2510.3-101 (the "PLAN
ASSETS REGULATION"), in general when a Plan acquires an equity interest in an
entity such as the issuer and such interest does not represent a "publicly
offered security" or a security issued by an investment company registered under
the Investment Company Act of 1940, as amended, the
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Plan's assets include both the equity interest and an undivided interest in each
of the underlying assets of the entity, unless it is established either that the
entity is an "operating company" or that equity participation in the entity by
"benefit plan investors" is not "significant." In general, an "equity interest"
is defined under the Plan Assets Regulation as any interest in an entity other
than an instrument which is treated as indebtedness under applicable local law
and which has no substantial equity features.
Unless we specify otherwise in the related prospectus supplement, the notes
may be purchased by a Plan. A fiduciary of a Plan must determine that the
purchase of a note is consistent with its fiduciary duties under ERISA and does
not result in a non-exempt prohibited transaction as defined in Section 406 of
ERISA or Section 4975 of the Code. However, the notes may not be purchased with
the assets of a Plan if the seller, an underwriter, the indenture trustee of the
issuer, the owner trustee or any of their affiliates:
-- has investment or administrative discretion with respect to such
Plan assets;
-- has authority or responsibility to give, or regularly gives,
investment advice with respect to such Plan assets for a fee and
pursuant to an agreement or understanding that such advice
-- will serve as a primary basis for investment decisions with
respect to such Plan assets and
-- will be based on the particular investment needs for such Plan; or
-- is an employer maintaining or contributing to such Plan.
Employee benefit plans that are governmental plans (as defined in Section
3(32) of ERISA) and certain church plans (as defined in Section 3(33) of ERISA)
are not subject to ERISA requirements. However, any such governmental or church
plan which is qualified under Section 401(a) of the Code and exempt from
taxation under Section 501(a) of the Code is subject to the prohibited
transaction rules in Section 503 of the Code.
A fiduciary of a Plan considering the purchase of notes of a series should
consult its tax and/or legal advisors regarding whether the assets of the issuer
would be considered plan assets, the possibility of exemptive relief from the
prohibited transaction rules and other issues and their potential consequences.
EXPERTS
The financial statements of CARCO Auto Loan Master Trust as of December 31,
2001 and 2000, and for each of the years in the three-year period ended December
31, 2001, have been incorporated by reference herein and in the registration
statement in reliance upon the report by KPMG LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing. The audit report covering the
December 31, 2001 financial statements contains explanatory language stating
that the financial statements were prepared on the basis of cash receipts and
disbursements, which is a comprehensive basis of accounting other than
accounting principles generally accepted in the United States of America.
103
PLAN OF DISTRIBUTION
The seller may sell notes 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, including, without limitation
-- the names of any underwriters,
-- the purchase price of the notes 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 notes of a series, the
notes will be acquired by the underwriters for their own account and may be
resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices to be
determined at the time of sale or at the time of commitment for the notes. The
notes may be offered to the public either through underwriting syndicates
represented by managing underwriters or by underwriters without a syndicate.
Unless we specify otherwise in the related prospectus supplement, the
obligations of the underwriters to purchase the notes will be subject to
conditions precedent, and the underwriters will be obligated to purchase all of
the notes if any of the notes are purchased. Any initial public offering price
and any discounts or concessions allowed or reallowed or paid to dealers may be
changed from time to time.
Notes of a series may also be offered and sold, if we so state in the
related prospectus supplement, in connection with a remarketing upon their
purchase, in accordance with a redemption or repayment under their terms, by one
or more firms ("REMARKETING FIRMS") acting as principals for their own accounts
or as agents for the seller. We will identify in the related prospectus
supplement any remarketing firm and describe the terms of its agreement, if any,
with the seller and its compensation. Remarketing firms may be deemed to be
underwriters in connection with the notes they remarket.
Notes may also be sold directly by the seller or through agents designated
by the seller from time to time. We will name any agent involved in the offer or
sale of notes, and we will set forth any commissions payable by the seller to
the agent, in the related prospectus supplement. Unless we indicate otherwise in
the related prospectus supplement, any agent will act on a best efforts basis
for the period of its appointment.
Each underwriting agreement and placement agreement will provide that DCWR
and DCS will indemnify the underwriters and agents, respectively, against civil
liabilities, including liabilities under the Securities Act, or contribute to
payments the several underwriters and agents, as applicable, may be required to
make in respect of those civil liabilities.
The issuer may, from time to time, invest the funds in its accounts in
Eligible Investments acquired from the underwriters, agents or the seller.
104
We will set forth the place and time of delivery for a series of notes in
the prospectus supplement.
Until the distribution of the notes of a series is completed, rules of the
Commission may limit the ability of the underwriters and selling group members
to bid for and purchase those notes. As an exception to these rules, the
underwriters are permitted to engage in transactions that stabilize the price of
those notes. Those transactions consist of bids or purchases for the purpose of
pegging, fixing or maintaining the price of the notes. Purchases of a note for
the purpose of stabilization could cause the price of the note to be higher than
it might be in the absence of the purchases.
In connection with the offering of a series, the underwriters may make
short sales of the notes of that series and may purchase those notes on the open
market to cover positions created by short sales. Short sales involve the sale
by the underwriters of a greater number of notes than they are required to
purchase in the offering. The underwriters must close out any short position by
purchasing notes in the open market. The underwriters are more likely to create
a short position if they are concerned that there may be downward pressure on
the price of the notes in the open market after pricing that could adversely
affect investors who purchase in the offering. Similar to other purchase
transactions, the underwriters' purchases to cover the short sales may have the
effect of raising or maintaining the market price of the notes or preventing or
retarding a decline in the market price of notes. As a result, the price of the
notes may be higher than the price that might otherwise exist in the open
market.
Neither DCS, DCWR nor any of the underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the prices of the notes of any series. In addition,
neither DCS, DCWR nor any of the underwriters makes any representation that the
underwriters will engage in the transactions or that the transactions, once
commenced, will not be discontinued without notice.
If any notes of a series are offered in the United Kingdom, each
underwriter and placement agent will represent and agree that
-- it has not offered or sold, and will not offer or sell, any of
those notes to persons in the United Kingdom except to persons
whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments, as principal or agent, for
the purposes of their businesses or otherwise in circumstances
that do not constitute an offer to the public in the United
Kingdom for the purposes of the Public Offers of Securities
Regulations 1995 (the "U.K. REGULATIONS"),
-- it has complied and will comply with all applicable provisions of
the U.K. Regulations and of the Financial Services and Markets Act
2000 (the "FSMA") with respect to anything done by it in relation
to those securities in, from or otherwise involving the United
Kingdom and
-- it has only communicated or caused to be communicated and it will
only communicate or cause to be communicated any invitation or
inducement to engage in investment activity (within the meaning of
section 21 of the FSMA) received by it in connection with the
issue or sale of any series of notes in circumstances in which
section 21(1) of the FSMA does not apply to the issuer.
105
If you initially receive an electronic copy of the prospectus and
prospectus supplement from an underwriter, you will receive a paper copy of the
prospectus and prospectus supplement upon request to the underwriter. Upon
receipt of a qualifying request, the underwriter will promptly deliver a paper
copy of the prospectus and prospectus supplement to you free of charge.
LEGAL MATTERS
Certain legal matters relating to the notes will be passed upon for DCWR by
Sidley Austin Brown & Wood LLP, New York, New York, and for any underwriters,
agents or dealers by the counsel we name in the applicable prospectus
supplement, which may be Sidley Austin Brown & Wood LLP. Federal income tax and
ERISA matters will be passed upon for DCWR and the issuer by the counsel we name
in the applicable prospectus supplement, which may also be Sidley Austin Brown &
Wood LLP. Sidley Austin Brown & Wood LLP from time to time represents
DaimlerChrysler Services North America LLC and its affiliates on other matters.
GLOSSARY OF PRINCIPAL 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 of non-collateral
certificates, the period beginning at the close of business on the date
specified in or determined in the manner specified in the related Series
Supplement and ending on the earliest of:
-- 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
non-collateral certificates of the series.
The collateral certificate will not have an Accumulation Period.
"ADDITION DATE" means, in the case of an Additional Account, the date on
which the receivables in the Additional Account are first transferred to the
CARCO receivables trust.
"ADDITIONAL ACCOUNTS" means the additional accounts which the seller has
the right, subject to conditions, to designate from time to time to be included
as Accounts.
"ADDITIONAL CUT-OFF DATE" means, with respect to any Additional Accounts,
the date those Additional Accounts are identified and selected.
"ADJUSTED INVESTED AMOUNT" means, for any series of investor certificates
(other than the collateral certificate) for any date, an amount equal to the sum
of:
-- 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 payment date during the Collection
Period in which that date occurs.
106
The Adjusted Invested Amount for the collateral certificate is the sum of the
series nominal liquidation amounts for all outstanding series of notes.
"ADJUSTMENT PAYMENT" means, to the extent that a reduction in the Seller's
Interest would reduce the Seller's Participation Amount below the Trust
Available Subordinated Amount for the immediately preceding Determination Date,
after giving effect to the allocations, distributions, withdrawals and deposits
to be made on the payment date, a cash amount equal to the deficiency which will
be deposited by the seller into the Collection Account in immediately available
funds on the day on which the servicer makes the adjustment.
"AUCTION VEHICLES" means, collectively, the vehicles purchased by a dealer
at a closed auction conducted by DaimlerChrysler.
"AUTOMATIC ADDITIONAL ACCOUNTS" means the Additional Accounts which the
seller may designate from time to time, at its discretion, subject only to some
limitations.
"AUTOMATIC REMOVAL DATE" means the date upon which the Automatic Removed
Accounts are to be removed.
"AUTOMATIC REMOVED ACCOUNTS" means the Accounts, designated by the seller,
with respect to which the seller shall have the right to require the
reassignment to it of all the CARCO receivables trust's right, title and
interest in, to and under the receivables then existing and created after that
time, all monies due or to become due and all amounts received with respect to
those receivables and all proceeds of those receivables in or with respect to
the Accounts, upon satisfaction of the following conditions:
-- 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 CARCO receivables trust trustee shall have received
confirmation from each Rating Agency that the removal will not
cause the Ratings Agency's rating of any outstanding series or
class of certificates to be reduced or withdrawn;
-- the seller shall have delivered to the CARCO receivables trust
trustee, each Rating Agency and any Enhancement providers an
officers' certificate, dated the Automatic Removal Date, to the
effect that the seller reasonably believes the removal will not
cause an Early Amortization Event or Reinvestment Event to occur
with respect to any series; and
107
-- the seller shall have delivered to the trustee, each Rating Agency
and any Enhancement providers a Tax Opinion, dated the Automatic
Removal Date, with respect to the removal.
"AVAILABLE SUBORDINATED AMOUNT" means, with respect to a series of
non-collateral certificates, the amount of the subordination for that series of
non-collateral certificates.
"BANKRUPTCY CODE" means Title 11 of the United States Code.
"BENEFIT PLANS" means, collectively, employee benefit plans subject to
ERISA or the Code or individual retirement accounts.
"CARCO" means Chrysler Auto Receivables Company.
"CARCO RECEIVABLES TRUST" means CARCO Auto Loan Master Trust.
"CCC" means Chrysler Credit Corporation.
"CERTIFICATEHOLDERS' INTEREST" means, for any series of investor
certificates (including the collateral certificate), the undivided beneficial
interests in certain assets of the CARCO receivables trust allocated to the
Interest of the Certificateholders of the series.
"CERTIFICATES" OR "INVESTOR CERTIFICATES" means the Auto Loan Asset Backed
Certificates issued by the CARCO receivables trust, including the collateral
certificate.
"CFC CORP." means Chrysler Financial Corporation.
"CFC LLC" means Chrysler Financial Company L.L.C.
"CLEARSTREAM" means Clearstream Banking, societe anonyme.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL CERTIFICATE" means the investor certificate issued by the CARCO
receivables trust and registered in the name of the indenture trustee for the
benefit of the noteholders.
"COLLATERAL SECURITY" means, in respect of the receivables, a security
interest in vehicles and parts inventory, equipment, fixtures, service accounts
and, in some cases, realty and a personal guarantee.
"COLLECTION ACCOUNT" means an Eligible Deposit Account which the servicer
has established and will maintain for the benefit of the certificateholders in
the name of the CARCO receivables trust trustee, on behalf of the CARCO
receivables trust.
"COLLECTION PERIOD" means, for any payment date, the calendar month
preceding the month in which that payment date occurs.
"COMMISSION" or "SEC" means the Securities and Exchange Commission.
"CONTROLLED AMORTIZATION PERIOD" means, for any applicable series of
non-collateral certificates, a controlled amortization period which will begin
at the close of business on the date stated in or determined in the manner
stated in the related Series Supplement and will end on the earliest of:
-- 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
non-collateral certificates of the series.
108
The collateral certificate will not have a Controlled Amortization Period.
"CONTROLLED DEPOSIT AMOUNT" means, for any series of non-collateral
certificates, an amount stated in the related Series Supplement plus, in the
case of some payment dates, any amounts in the Excess Funding Account allocable
to the series.
"DAIMLERCHRYSLER" means DaimlerChrysler Corporation, the successor to
Chrysler Corporation.
"DCS" means DaimlerChrysler Services North America LLC.
"DCWR" means DaimlerChrysler Wholesale Receivables LLC.
"DEALER OVERCONCENTRATIONS" means, on any payment date, with respect to any
Dealer or group of affiliated Dealers, the excess of:
-- the aggregate principal amount of receivables due from the Dealer
or group of affiliated Dealers on the last day of the Collection
Period immediately preceding that payment date over
-- 2% (or with respect to certain dealers, 4%) of the Pool Balance on
the last day of the immediately preceding Collection Period.
"DEALER TROUBLE" means a status under which a dealer will be classified by
DCS under some circumstances which include:
-- 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.
"DEALER TROUBLE STATUS" is described under "The Dealer Floorplan Financing
Business -- 'Dealer Trouble' Status and DCS's Write-off Policy".
"DEFAULTED AMOUNT" means for any Collection Period will be an amount, which
shall not be less than zero, equal to (a) the principal amount of receivables
that became Defaulted Receivables during the preceding Collection Period minus
(b) the sum of (i) the full amount of any Defaulted Receivables subject to
reassignment to the seller or purchase by the servicer for the Collection Period
unless events of bankruptcy, insolvency or receivership have occurred with
respect to either of the seller or the servicer, in which event the Defaulted
Amount will not be reduced for those Defaulted Receivables and (ii) the excess,
if any, for the immediately preceding Determination Date of the amount
determined pursuant to this clause (b) for that Determination Date over the
amount determined pursuant to clause (a) for that Determination Date.
"DEFAULTED RECEIVABLES" means on any Determination Date:
-- 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 CARCO receivables trust, which arose in an Account which
became an Ineligible Account after the date of transfer of the
receivables to the CARCO receivables trust and
109
which were not Eligible Receivables for any six consecutive
Determination Dates after that date.
"DEFINITIVE NOTES" means the notes of a series or class issued in fully
registered, certificated form to noteholders or their nominees.
"DEPOSITORY" means DTC, together with any successor depository selected by
the seller.
"DESIGNATED ACCOUNTS" means the Accounts to be removed from the CARCO
receivables trust.
"DESIGNATED BALANCE" means the aggregate principal balance of receivables
in respect of each of the Designated Accounts.
"DESIGNATED RECEIVABLES" means, at any time, the then existing receivables
in the Designated Accounts.
"DETERMINATION DATE" means each second business day preceding a payment
date.
"DISTRIBUTION DATE STATEMENT" means a statement prepared by the servicer
and forwarded by the CARCO receivables trust trustee to each investor
certificateholder of record of any series on each payment date, including each
payment date that corresponds to an interest payment date or any Special Payment
Date, that sets forth information with respect to the CARCO receivables trust
and the investor certificates of the series, as stated in the related Series
Supplement.
"DOL" means the Department of Labor.
"DTC" means The Depository Trust Company.
"EARLY AMORTIZATION EVENT" means, for any series of investor certificates
(including the collateral certificate), any of the events so defined in the
related Series Supplement, as well as each of the following events:
-- the occurrence of events of bankruptcy, insolvency or receivership
relating to the CARCO receivables 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, for any series of non-collateral
certificates, the period beginning on the day on which an Early Amortization
Event has occurred with respect to a series and ending on the earliest of:
-- payment in full of the outstanding principal amount of the
certificates of the series;
-- the recommencement of the Revolving Period in accordance with the
related Series Supplement; and
-- the Termination Date for the series.
The collateral certificate will not have an Early Amortization Period.
"ELIGIBLE ACCOUNT" means a wholesale financing line of credit extended by
DCS, directly or as successor to CFC LLC, CFC Corp. or CCC, to a Dealer, which,
as of its date of determination:
-- is established by DCS, directly or as successor to CFC LLC, CFC
Corp. or CCC, in the ordinary course of business under a floorplan
financing agreement,
110
-- is in favor of an Eligible Dealer,
-- is in existence and maintained and serviced by DCS, directly or as
successor to CFC LLC, 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 CARCO receivables trust
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 by Standard & Poor's
or (y) a certificate of deposit rating of P-1 by Moody's or A-1+
by Standard & Poor's and (ii) is a member of the FDIC or which is
otherwise acceptable to each Rating Agency.
"ELIGIBLE INVESTMENTS" means book-entry securities, negotiable instruments
or physical securities having original or remaining maturities of 30 days or
less, but in no event occurring later than the payment date next succeeding the
CARCO receivables trust 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;
-- 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
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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 CARCO receivables
trust's investment or contractual commitment to invest in the
commercial paper, a rating from each of the Rating Agencies in its
highest investment category;
-- 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 CARCO receivables trust trustee that the trust's
investment in that investment will not cause its then rating of
any outstanding class or series with respect to which it is a
Rating Agency to be reduced or withdrawn.
"ELIGIBLE PORTFOLIO" means all the wholesale accounts in the U.S. Wholesale
Portfolio that are Eligible Accounts.
"ELIGIBLE RECEIVABLE" means a receivable:
-- which was originated or acquired by DCS, directly or as successor
to CFC LLC, 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 LLC, 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
CARCO receivables 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;
-- with respect to which all consents and governmental authorizations
required to be obtained by DaimlerChrysler, CCC, CFC Corp., CFC
LLC, CFC, DCS or the seller in connection with the creation of the
receivable or the transfer of the receivable to
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the CARCO receivables trust or the performance by CCC, CFC LLC,
CFC Corp. or DCS of the floorplan financing agreement under which
the receivable was created, have been duly obtained;
-- as to which at all times following the transfer of the receivable
to the CARCO receivables trust, the CARCO receivables trust will
have good and marketable title to the receivable free and clear of
all liens arising prior to the transfer or arising at any time,
other than liens permitted under the Pooling and Servicing
Agreement;
-- which has been the subject of a valid transfer and assignment from
the seller to the CARCO receivables trust of all the seller's
interest in the receivable, including any proceeds of the
receivable;
-- 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 CARCO receivables trust is
not subject to any right of rescission, setoff, or any other
defense, including defenses arising out of violations of usury
laws, of the Dealer;
-- as to which, at the time of transfer of the Receivable to the
CARCO receivables trust, DaimlerChrysler, CCC, CFC Corp., CFC LLC,
DCS and the seller have satisfied all their respective obligations
with respect to the Receivable required to be satisfied at that
time;
-- as to which, at the time of transfer of the Receivable to the
CARCO receivables trust, neither DaimlerChrysler, CCC, CFC Corp.,
CFC LLC or DCS nor the seller has taken or failed to take any
action which would impair the rights of the CARCO receivables
trust or the certificateholders;
-- 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 CARCO receivables trust with all
applicable governmental authorization.
"ENHANCEMENTS" means enhancements which may be provided with respect to one
or more classes of a series of non-collateral certificates, including one or
more of the following:
-- 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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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EUROCLEAR" means the Euroclear System.
"EUROCLEAR OPERATOR" means Euroclear Bank, S.A./N.V.
"EUROCLEAR PARTICIPANTS" means participants of Euroclear.
"EXCESS FUNDED AMOUNT" means, initially, the initial principal balance of
the certificates of a series over the Initial Invested Amount of the series.
"EXCESS FUNDING ACCOUNT" means an Eligible Account established with the
CARCO receivables trust trustee for a series of investor certificates in which
the Excess Funding Amount will be maintained, except, to the extent provided in
the related Series Supplement, during an Early Amortization Period or
Reinvestment Period for the series.
"EXCESS PRINCIPAL COLLECTIONS" means the amount of available
certificateholder principal collections for each series of investor certificates
and any Collection Period remaining after required payments, if any.
"EXCLUDED SERIES" means a series of investor certificates designated as an
excluded series with respect to a Paired Series.
"FINANCE HOLD" is described under "The Dealer Floorplan Financing
Business -- Creation of Receivables".
"FLEET RECEIVABLES" means receivables originated in connection with
multiple new vehicle orders of at least five vehicles by specified Dealers.
"FULLY REINVESTED DATE" means the date on which the amount on deposit in
the Principal Funding Account with respect to a series of non-collateral
certificates equals the outstanding principal amount of the certificates.
"GLOBAL SECURITIES" means the globally offered notes.
"INDIRECT PARTICIPANTS" means entities including banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly.
"INELIGIBLE RECEIVABLES" means any receivable as to which the
Certificateholders' Interest with respect to the receivable will be reassigned
to the seller on the terms and conditions set forth in this prospectus as a
result of a breach by the seller of any representation and warranty described in
the first paragraph of "Description of the Investor Certificates Issued by the
CARCO Receivables Trust -- Representations and Warranties" in this prospectus,
which breach remains uncured for 30 days or a longer period as may be agreed to
by the CARCO receivables trust trustee, after the earlier to occur of the
discovery of such breach by the seller or the servicer or receipt of written
notice of such breach by the seller or the servicer, and which breach has a
materially adverse effect on the Certificateholders' Interest in any receivable
or Account.
"INITIAL CUT-OFF DATE" means May 31, 1991.
"INITIAL INVESTED AMOUNT" means, with respect to any series of investor
certificates (other than the collateral certificate) and for any date, the
amount stated as the "Initial Invested Amount" in the related Series Supplement.
The Initial Invested Amount for any series may be increased or decreased from
time to time as stated in the related Series Supplement, including as a result
of deposits to or withdrawals from the Excess Funding Account, if any, for the
series.
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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 payment date.
"INTEREST COLLECTIONS" or "INTEREST COLLECTIONS" means collections under
the receivables that consist of interest and other non-principal charges,
including insurance fees, amounts recovered with respect to Defaulted
Receivables and insurance proceeds.
"INTEREST FUNDING ACCOUNT" means, with respect to a series of
non-collateral certificates, the one or more trust accounts in which collections
or other amounts, or the portion allocable to a class, will be deposited if the
interest payment dates for a series or class occur less than monthly.
"INVESTED AMOUNT" means, with respect to any series of investor
certificates (other than the collateral certificate) and for any date, the
amount stated as the "Invested Amount" in the related Series Supplement. In
general, the Invested Amount for a series of investor certificates (other than
the collateral certificate) is the Initial Invested Amount minus principal
payments (other than principal payments made from the Excess Funding Account) to
certificateholders or deposited in the Principal Funding Account minus
unreimbursed Investor Charge-Offs allocated to such investor certificates. The
Invested Amount for the collateral certificate is the sum of the series nominal
liquidation amounts for all outstanding series of notes.
"INVESTOR DEFAULT AMOUNT" means the portion of the Defaulted Amount
allocated to the certificateholders of a series (including the issuer as holder
of the collateral certificate).
"IRA" means an individual retirement account.
"ISSUER" means DaimlerChrysler Master Owner Trust.
"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 payment date available to
be treated as Miscellaneous Payments as described in this
prospectus under "Description of Investor Certificates Issued by
the CARCO Receivables Trust -- Allocation Percentages -- 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
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series with respect to any payment date, which shall generally be equal to
one-twelfth of the product of:
-- the Servicing Fee Rate; and
-- the Invested Amount of the series (or, in the case of the
collateral certificate, the sum of the nominal liquidation amounts
of the outstanding series of notes) as of the last day of the
second preceding Collection Period.
"MOODY'S" means Moody's Investors Service, Inc. or its successors.
"NEW VEHICLES" means:
-- 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.
"NON-COLLATERAL CERTIFICATES" means the investor certificates other than
the collateral certificate.
"OID" means original issue discount.
"OID REGULATIONS" means the Treasury regulations relating to OID.
"OVERCONCENTRATION AMOUNT" means the aggregate principal amount of
receivables in the CARCO receivables trust on a payment date which are Dealer
Overconcentrations.
"PAIRED SERIES" means a series of non-collateral certificates previously
issued by the CARCO receivables trust as to which the Accumulation Period or
Controlled Amortization Period has commenced with respect to which a series of
certificates may be designated as an Excluded Series.
"PARTICIPANTS" means the participating organizations of DTC which include
securities brokers and dealers, banks, trust companies and clearing corporations
and may include certain other organizations.
"PLAN ASSETS REGULATION" means the final regulation issued by DOL
concerning the definition of what constitutes the "plan assets" of Benefit
Plans.
"POOL BALANCE" means the aggregate amount of the principal balances of the
receivables.
"POOLING AND SERVICING AGREEMENT" means the Amended and Restated Pooling
and Servicing Agreement, as amended and supplemented from time to time, among
DCWR, as seller of the receivables, DCS, as servicer of the receivables, and the
CARCO receivables trust trustee.
"PRIME RATE" means the rate designated as the "prime rate" from time to
time by certain financial institutions selected by DCS.
"PRINCIPAL COLLECTIONS" or "PRINCIPAL COLLECTIONS" means collections of
principal on the receivables.
"PRINCIPAL FUNDING ACCOUNT" means the trust account established for the
benefit of the certificateholders of a series of non-collateral certificates in
which, during the Accumulation Period for the series, Principal Collections and
other amounts allocable to the Certificateholders' Interest of the series, which
may include some Excess Principal Collections, will be deposited.
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"PRINCIPAL RECEIVABLES" means the portion of the receivables that
represents principal.
"PRINCIPAL SHORTFALLS" means any principal distributions to
certificateholders of any series of investor certificates which are either
scheduled or permitted and which have not been covered out of principal
collections and certain other amounts allocated to the series.
"PRINCIPAL TERMS" means the terms of a series of investor certificates
which, under the Pooling and Servicing Agreement, the seller may specify,
including, among other things:
-- its name or designation;
-- its initial principal amount, or method for calculating such
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 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.
"QUALIFIED ACCOUNT" means either:
-- a segregated account (including a securities account) with a
Qualified Institution; or
-- a segregated trust account with the corporate trust department of
a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District
of Columbia (or any domestic branch of a foreign bank), so long as
any of the securities of such depository institution shall have a
credit rating from each rating agency in one of its generic rating
categories which signifies investment grade.
"QUALIFIED INSTITUTION" means either:
-- a depository institution, which may include the indenture trustee
or the owner trustee (so long as it is a paying agent), organized
under the laws of the United States of America or any one of the
states thereof or the District of Columbia, the deposits of which
are insured by the Federal Deposit Insurance Corporation and which
at all times has a short-term unsecured debt rating in the
applicable investment category of each rating agency; or
-- a depository institution acceptable to each rating agency.
"RATING AGENCY" means each rating agency designated by the seller in
respect of any outstanding series or class of certificates or each rating agency
designated by the seller for a series of notes, as the case may be.
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"RECEIVABLES TRANSFER DATE" means the Series Cut-Off Date, or the
Additional Cut-Off Date, in the case of any Additional Accounts, or the date any
future receivable is generated.
"REGISTRATION STATEMENT" means the registration statement, together with
all amendments and exhibits, which the seller has filed under the Securities Act
with the Commission with respect to the collateral certificate and the notes.
"REINVESTMENT EVENT" means, for any series of non-collateral certificates,
any of the events so defined in the related Series Supplement.
"REINVESTMENT PERIOD" means, for any applicable series of non-collateral
certificates, the period beginning on the day on which a Reinvestment Event has
occurred and ending on the earliest of:
-- 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
non-collateral certificates of the series.
The collateral certificate will not have a Reinvestment Period.
"REMARKETING FIRMS" means one or more firms which, acting as principals for
their own accounts or as agents for the seller, may offer and sell the notes of
a series, if the related prospectus supplement so states, in connection with a
remarketing upon their purchase, in accordance with a redemption or repayment
pursuant to their terms.
"REMOVAL AND REPURCHASE DATE" means the Determination Date on which the
removal of the Designated Accounts and the purchase of the Designated
Receivables will occur.
"REMOVAL COMMENCEMENT DATE" means the Determination Date on which removal
of one or more Accounts will commence.
"REMOVAL DATE" means the Determination Date on which the Designated Balance
in a Designated Account is reduced to zero.
"REMOVAL NOTICE" means a written notice furnished to the CARCO receivables
trust trustee, any Enhancement provider and the Rating Agencies by the seller,
or the servicer on its behalf stating the Removal Commencement Date and the
Designated Accounts.
"REMOVED ACCOUNT" means a Designated Account as to which the seller has
stopped allocating collections of receivables and which has been deemed removed
from the CARCO receivables trust for all purposes.
"REPURCHASED RECEIVABLES" means Designated Receivables which have been
deemed repurchased from the CARCO receivables trust for all purposes.
"REQUIRED PARTICIPATION AMOUNT" means for any date an amount equal to the
sum of:
-- the sum of the amounts for each series of certificates obtained by
multiplying the Required Participation Percentage for the series
by the Initial Invested Amount for the series at that time.
However, each Excluded Series will be excluded from this
calculation until the Invested Amount of the related Paired Series
is reduced to zero;
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-- the Trust Available Subordinated Amount on the immediately
preceding Determination Date, after giving effect to the
allocations, distributions, withdrawals and deposits to be made on
the payment date following that Determination Date; and
-- the sum of (x) the sum of the amounts for each series of notes
obtained by multiplying the Required Participant Percentage for
the series by the nominal liquidation amount of that series of
notes at that time and (y) the sum of the overcollateralization
amounts for each series of notes on the preceding payment date,
after giving effect to the allocations, deposits and payments made
on that payment date.
"REQUIRED PARTICIPATION PERCENTAGE" means, for a series, the required
participation percentage specified in the related Series Supplement.
"REVOLVING PERIOD" means, for any series of non-collateral certificates,
the period during which Principal Collections and other amounts otherwise
allocable to the Certificateholders' Interest of that series or class will be:
-- 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.
The collateral certificate will not have a Reinvestment Period. A Revolving
Period for a series of non-collateral certificates will begin on the Series
Cut-off Date and end on the earlier of:
-- 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.
"SEC" or "COMMISSION" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLER'S CERTIFICATE" means the certificate evidencing the Seller's
Interest.
"SELLER'S PARTICIPATION AMOUNT" means the Pool Balance minus the aggregate
Invested Amounts for all outstanding series of certificates.
"SERIES ALLOCABLE DEFAULTED AMOUNT" means, with respect to any series of
certificates for any Collection Period, the product of the Series Allocation
Percentage for the series and the amount of the Defaulted Amount with respect to
the Collection Period.
"SERIES ALLOCABLE INTEREST COLLECTIONS" means, with respect to any series
of certificates for any Collection Period, the product of the Series Allocation
Percentage for the series and the amount of Interest Collections, with respect
to the Collection Period.
"SERIES ALLOCABLE MISCELLANEOUS PAYMENTS" means, with respect to any series
of certificates for any Collection Period, the product of the Series Allocation
Percentage for the series and the amount of Miscellaneous Payments, with respect
to the Collection Period.
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"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
Series Supplement on which a revolving period for the series of certificates
will begin.
"SERIES ISSUANCE DATE" means the date of issuance of any series.
"SERIES SUPPLEMENT" means a supplement to the Pooling and Servicing
Agreement that provides for a series of investor certificates.
"SERIES TERMINATION DATE" means, for any series, the date stated in the
related prospectus supplement, on which the last payment of principal and
interest on any series of certificates will be due and payable, if not
previously paid.
"SERVICE DEFAULT" means any of the following events:
-- failure by the servicer to make any payment, transfer or deposit,
or to give instructions to the CARCO receivables trust trustee to
make any payment, transfer or deposit, on the date the servicer is
required to do so under the Pooling and Servicing Agreement, which
is not cured within a five 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 CARCO receivables trust 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.
"SERVICE TRANSFER" means, in the event of any Service Default, an action by
the CARCO receivables trust trustee, by written notice to the servicer,
terminating all of the rights and
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obligations of the servicer, as servicer, under the Pooling and Servicing
Agreement and in and to the receivables and the proceeds thereof and appointing
a new servicer.
"SERVICER" means DCS or any successor servicer.
"SERVICING FEE" means a monthly servicing fee which constitutes the
servicer's compensation with respect to the certificates of a series for its
servicing activities and reimbursement for its expenses, unless the related
Series Supplement or prospectus supplement states otherwise.
"SERVICING FEE RATE" means, for a series, the servicing fee rate set forth
in the related Series Supplement.
"SPECIAL PAYMENT DATE" means, during an Early Amortization Period for a
series, each payment date beginning with the payment date following the
Collection Period in which the Early Amortization Period begins.
"STANDARD & POOR'S" means Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc. or its successors.
"SUPPLEMENTAL CERTIFICATE" means a certificate for which the seller may,
from time to time, exchange a portion of the Seller's Certificate for transfer
or assignment to a person or entity chosen by the seller upon the execution and
delivery of a supplement to the Pooling and Servicing Agreement, if:
-- 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 CARCO receivables trust
trustee, the Rating Agencies and any Enhancement provider a Tax
Opinion with respect to the exchange; and
-- the seller shall have delivered to the CARCO receivables trust
trustee written confirmation from the applicable Rating Agencies
that the exchange will not result in a reduction or withdrawal of
the rating of any outstanding series or class of certificates. Any
later transfer or assignment of a Supplemental Certificate is also
subject to certain conditions.
"TAX COUNSEL" means Sidley Austin Brown & Wood LLP, special federal income
tax counsel to the seller, the CARCO receivables trust and the issuer.
"TAX OPINION" means an opinion of counsel to the effect that, for federal
income tax and Michigan income and single business tax purposes:
-- such action, other than some specified actions, will not adversely
affect the characterization of the non-collateral 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 DEPOSIT AMOUNT" means, for any Determination Date, the amount by
which the Seller's Participation Amount would be less than the Trust Available
Subordinated Amount, after giving effect to the allocations, distributions,
withdrawals and deposits to be made on that payment date, following a deduction
by the servicer of the principal balance of a receivable from the Pool Balance.
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"TRUST ADJUSTED INVESTED AMOUNT" means with respect to any Collection
Period, the sum of the Adjusted Invested Amounts for all outstanding series of
certificates.
"TRUST AVAILABLE SUBORDINATED AMOUNT" means the aggregate Available
Subordinated Amounts for all outstanding series of non-collateral certificates.
"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.
"U.S. WHOLESALE PORTFOLIO" means the accounts of domestic dealers financed
and serviced by DCS.
"USED VEHICLES" means previously owned vehicles, other than current model
year miled vehicles purchased at a closed auction conducted by DaimlerChrysler
and prior model year and two year old miled vehicles.
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ANNEX A
GLOBAL CLEARANCE, SETTLEMENT
AND TAX DOCUMENTATION PROCEDURES
Except in limited circumstances, we will make available the globally
offered notes (the "GLOBAL SECURITIES") only in book-entry form. Unless we state
otherwise in a prospectus supplement for a series, investors in the Global
Securities may hold the Global Securities through any of DTC, Clearstream or
Euroclear. Investors may trade the Global Securities as home market instruments
in both the European and U.S. domestic markets. Initial settlement and all
secondary trades will settle in same-day funds.
Investors holding Global Securities through Clearstream and Euroclear will
conduct secondary market trades between each other in the ordinary way under
their normal rules and operating procedures and under conventional eurobond
practice, i.e., seven calendar day settlement.
Investors holding Global Securities through DTC will conduct secondary
market trades between each other under the rules and procedures applicable to
U.S. corporate debt obligations.
Clearstream or Euroclear and DTC participants holding Global Securities
will effect secondary cross-market trades between each other on a
delivery-against-payment basis through their respective depositaries, who are
participants in DTC.
Non-U.S. holders of Global Securities will be exempt from U.S. withholding
taxes if those holders meet requirements and deliver appropriate U.S. tax
documents to the securities clearing organizations or their participants.
INITIAL SETTLEMENT
DTC, in the name of Cede & Co. as nominee of DTC, will hold all Global
Securities in book-entry form. Financial institutions acting on the behalf of
investors as direct and indirect participants in DTC will represent those
investors' interests in the Global Securities. As a result, Clearstream and
Euroclear will hold positions on behalf of their participants through their
respective depositaries, which in turn will hold those positions in accounts as
participants of DTC.
Investors electing to hold their Global Securities through DTC will follow
the settlement practices applicable to securities previously issued by the
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.
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.
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Trading between DTC participants. DTC participants will settle secondary
market trades between each other using the procedures applicable to securities
previously issued by the issuer in same-day funds.
Trading between Clearstream and/or participants. Clearstream participants
and/or Euroclear participants will settle secondary market trades between each
other using the procedures applicable to conventional eurobonds in same-day
funds.
Trading between DTC seller and Clearstream or Euroclear purchaser. When a
DTC participant desires to transfer Global Securities from its account to the
account of a Clearstream participant or a Euroclear participant the purchaser
will send instructions to Clearstream or Euroclear through a participant at
least one business day prior to settlement. Clearstream or Euroclear will
instruct their respective depositary to receive the Global Securities against
payment. Payment will include interest accrued on the Global Securities from and
including the last coupon payment date to and excluding the settlement date. For
transactions settling on the 31st day of the month, payment will include
interest accrued to and excluding the first day of the following month the
depositary will then make payment to the DTC participant's account against
delivery of the Global Securities. After settlement has been completed, the
respective clearing system will credit the Global Securities to its system and,
in accordance with its usual procedures, to the Clearstream participant's or
Euroclear participant's account. The Global Securities credit will appear the
next day, European time, and the cash debit will be back-valued to, and the
interest on the Global Securities will accrue from, the value date, which would
be the preceding day when settlement occurred in New York. If settlement is not
completed on the intended value date, i.e., the trade fails, the Clearstream or
Euroclear cash debit will be valued instead as of the actual settlement date.
Clearstream participants and Euroclear participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. They may do so the most directly by prepositioning
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Clearstream or Euroclear. Under
this approach, they may take on credit exposure to Clearstream or Euroclear
until the Global Securities are credited to their accounts one day later.
As an alternative, if Clearstream or Euroclear has extended a line of
credit to them, participants can elect not to preposition funds and allow that
credit line to be drawn upon to finance settlement. Under this procedure,
Clearstream participants or Euroclear participants purchasing Global Securities
would incur overdraft charges for one day, assuming they cleared the overdraft
when the Global Securities were credited to their accounts. However, interest on
the Global Securities would accrue from the value date. Therefore, in many cases
the investment income on the Global Securities earned during that one-day period
may substantially reduce or offset the amount of the overdraft charges, although
this result will depend on each participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
participants can employ their usual procedures for sending Global Securities to
the related depositary for the benefit of Clearstream participants or Euroclear
participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC participant a cross-market transaction will
settle no differently than a trade between two DTC participants.
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Trading between Clearstream or Euroclear seller and DTC purchaser. Due to
time zone differences in their favor, Clearstream and Euroclear participants may
employ their customary procedures for transactions in which they are to transfer
Global Securities by the respective clearing system, through the related
depositary, to a DTC participant. The seller will send instructions to
Clearstream or Euroclear through a participant at least one business day prior
to settlement. In these cases, Clearstream or Euroclear will instruct the
related depositary to deliver the bonds to the DTC participant's account against
payment. Payment will include interest accrued on the Global Securities from and
including the last coupon payment date to and excluding the settlement date. For
transactions settling on the 31st day of the month, payment will include
interest accrued to and excluding the first day of the following month.
Clearstream or Euroclear will then reflect the payment in the account of the
Clearstream participant or Euroclear participant the following day, and
back-value to the value date, which would be the preceding day, when settlement
occurred in New York, the receipt of the cash proceeds in the Clearstream or
Euroclear participant's account. Should the Clearstream or Euroclear participant
have a line of credit with its respective clearing system and elect to be in
debit in anticipation of receipt of the sale proceeds in its account, the
back-valuation will extinguish any overdraft charges incurred over that one-day
period. If settlement is not completed on the intended value date, i.e., the
trade fails, Clearstream or Euroclear would instead value as of the settlement
date the receipt of the cash proceeds in the Clearstream or Euroclear
participant's account.
Finally, day traders that use Clearstream or Euroclear and that purchase
Global Securities from DTC participants for delivery to Clearstream participants
or Euroclear participants should note that these trades would automatically fail
on the sale side unless affirmative action were taken. At least three techniques
should be readily available to eliminate this potential problem:
-- 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 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 of a note and are individuals or
entities treated as corporations for federal income tax purposes
can obtain a complete exemption from the withholding tax by filing
a signed Form W-8BEN (Certificate of Foreign Status). A non-U.S.
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person not described in the foregoing sentence that beneficially
owns a note may be subject to more complex rules.
-- Exemption for non-U.S. persons with effectively connected income
(Form W-8ECI). A non-U.S. person that for federal income tax
purposes is an individual or entity treated as a corporation,
including a non-U.S. corporation or bank with a U.S. branch, for
which the interest income from a note is effectively connected
with its conduct of a trade or business in the United States, can
obtain an exemption from the withholding tax by filing Form W-8ECI
(Exemption from Withholding of Tax on Income Effectively Connected
with the Conduct of a Trade or Business in the United States). A
non-U.S. person not described in the foregoing sentence that
beneficially owns a note may be subject to more complex rules.
-- Exemption or reduced rate for non-U.S. persons resident in treaty
countries (Form W-8BEN). Non-U.S. persons that are beneficial
owners of a note and that for federal income tax purposes are
individuals or entities treated as corporations residing in a
country that has a tax treaty with the United States can obtain an
exemption or reduced tax rate, depending on the treaty terms, by
filing Form W-8BEN. A non-U.S. person not described in the
foregoing sentence that beneficially owns a note may be subject to
more complex rules.
-- 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 are generally effective for three calendar years and Form
W-8ECI is effective for one calendar year.
In this summary, we have not dealt with all aspects of federal income tax
withholding that may be relevant to foreign holders of these Global Securities.
We advise investors to consult their own tax advisors for specific tax advice
concerning their holding and disposing of these Global Securities.
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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]
DAIMLERCHRYSLER
MASTER OWNER TRUST
$1,000,000,000
AUTO DEALER LOAN
ASSET BACKED NOTES,
SERIES 2002-B,
DUE NOVEMBER 15, 2007
DAIMLERCHRYSLER WHOLESALE
RECEIVABLES LLC
SELLER
DAIMLERCHRYSLER SERVICES
NORTH AMERICA LLC
SERVICER
PROSPECTUS SUPPLEMENT
SALOMON SMITH BARNEY
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