<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 13, 1996
REGISTRATION NO. 333-08465
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------
AMENDMENT NO. 1 TO FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
CAPITA EQUIPMENT RECEIVABLES TRUST 1996-1
(ISSUER WITH RESPECT TO THE NOTES)
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
NEW YORK APPLIED FOR
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
Number)
</TABLE>
ANTIGUA FUNDING CORPORATION
(ORIGINATOR OF THE OWNER TRUST DESCRIBED HEREIN)
C/O CT CORPORATION
1209 ORANGE STREET
WILMINGTON, DELAWARE 19801
(302) 658-7581
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
CT CORPORATION
1209 ORANGE STREET
WILMINGTON, DELAWARE 19801
(302) 658-7581
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------
COPIES TO:
<TABLE>
<S> <C>
OWEN C. MARX RICHARD M. SCHETMAN
Dorsey & Whitney LLP Cadwalader, Wickersham & Taft
250 Park Avenue 100 Maiden Lane
New York, New York 10177 New York, New York 10038
(212) 415-9285 (212) 504-6906
</TABLE>
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
----------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earliest effective registration statement
for the same offering: / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
----------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT (1) PRICE (1) REGISTRATION FEE
<S> <C> <C> <C> <C>
Receivable-Backed Notes.................... $1,000,000 $1,000,000 $1,000,000 (2)
</TABLE>
(1) Estimated solely for the purposes of calculating the registration fee
pursuant to Rule 457.
(2) Previously paid.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
This registration statement contains two forms of prospectus: one to be used
in connection with an offering in the United States (the "U.S. Prospectus"),
together with certain separate pages of the U.S. Prospectus to be used in
connection with offers and sales relating to market making transactions in the
Notes by affiliates of the registrant, and one to be used in connection with a
concurrent international offering outside the United States (the "International
Prospectus"). The International Prospectus is substantially the same as the U.S.
Prospectus except for the front cover page and the pages reflecting the
"Underwriting" section. The form of the U.S. Prospectus is included herein and
is followed by the pages related to the market making U.S. Prospectus for the
Notes. All other pages of the U.S. Prospectus for the Notes are also to be used
for the market making U.S. Prospectus. The pages to be used in the International
Prospectus which differ from those in the U.S. Prospectus follow the market
making U.S. Prospectus pages. Each of the pages for the International Prospectus
is labeled "Alternate Page for International Prospectus." Each of the market
making pages for the U.S. Prospectus is labeled "Alternate Page for Market
Making U.S. Prospectus." Each of the U.S. Prospectus and the International
Prospectus will be filed with the Securities and Exchange Commission pursuant to
Rule 424(b) under the Securities Act of 1933, as amended.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS
SUBJECT TO COMPLETION, DATED AUGUST 13, 1996
$
CAPITA EQUIPMENT RECEIVABLES TRUST 1996-1
$ % RECEIVABLE-BACKED NOTES, CLASS A
$ % RECEIVABLE-BACKED NOTES, CLASS B
$ % RECEIVABLE-BACKED NOTES, CLASS C
ANTIGUA FUNDING CORPORATION
DEPOSITOR
AT&T CAPITAL CORPORATION
SERVICER
Capita Equipment Receivables Trust 1996-1 (the "Owner Trust") will be formed
pursuant to a Trust Agreement between Antigua Funding Corporation (the
"Depositor"), which is to be a wholly owned subsidiary of AT&T Capital
Corporation ("TCC") following the consummation of the Merger, and
, as Owner Trustee (the "Owner Trustee"). The Receivable-Backed Notes
(the "Notes") will be issued by the Owner Trust pursuant to an Indenture (the
"Indenture") between the Owner Trust and , as Indenture Trustee
(the "Indenture Trustee"). The property of the Owner Trust (collectively, the
"Trust Assets"), from the date of issuance of the Notes (the "Closing Date") to
the Merger Consummation Date, will consist of the proceeds of the Notes, plus
additional cash, which will be held (and invested in certain Eligible
Investments) in an Escrow Account, and will be sufficient to redeem the Notes at
the Special Redemption Price on the Special Redemption Date if the Merger is not
consummated on or before September , 1996. The cash in the Escrow Account,
together with the proceeds of the Equity Certificates to be issued by the Owner
Trust to the Depositor (which will thereafter be disposed of by the Depositor in
a transaction unrelated to the issuance of the Notes), will be used on the
Merger Consummation Date to acquire a pool of equipment leases (the "Lease
Contracts") and installment sale contracts, promissory notes, loan and security
agreements and similar types of receivables (the "Loan Contracts," and, together
with the Lease Contracts, the "Contracts") and the interest of the Depositor in
certain equipment related to such Contracts (the "Equipment"). TCC will service
the Contracts pursuant to a Transfer and Servicing Agreement, expected to be
entered into among the Depositor, TCC, the Indenture Trustee and the Owner
Trust. Of the Notes being offered, $ , $ and $ initial
principal amount of the Class A Notes, Class B Notes and Class C Notes,
respectively, are being offered initially in the United States by the U.S.
Underwriters and $ , $ and $ , respectively, are being
offered initially outside the United States by the International Managers. The
Initial Public Offering Price and Underwriting Discount will be identical for
both offerings.
(CONTINUED ON FOLLOWING PAGE)
FOR A DISCUSSION OF CERTAIN FACTORS RELATING TO THIS OFFERING,
SEE "RISK FACTORS" ON PAGE 16 HEREIN.
-------------
THE NOTES WILL REPRESENT OBLIGATIONS OF THE OWNER TRUST AND WILL NOT
REPRESENT INTERESTS IN OR OBLIGATIONS OF ANTIGUA FUNDING CORPORATION, AT&T
CAPITAL CORPORATION OR ANY OF THEIR RESPECTIVE AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE (1) DISCOUNT (2) THE DEPOSITOR (1)(3)
------------------------------ ------------------------ ------------------------
<S> <C> <C> <C>
Per Class A Note.......... % % %
Per Class B Note.......... % % %
Per Class C Note.......... % % %
Total..................... $ $ $
</TABLE>
- ----------------
(1) Plus accrued interest, if any, at the applicable Interest Rate, from
, 1996.
(2) The Depositor has agreed to indemnify the U.S. Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting."
(3) Before deducting expenses payable by the Depositor, estimated to be
$ .
GLOBAL COORDINATORS:
NOMURA INTERNATIONAL GOLDMAN, SACHS & CO.
The Notes are offered severally by the U.S. Underwriters, as specified
herein, subject to prior sale and subject to the U.S. Underwriters' right to
reject orders in whole or in part. It is expected that the Notes will be ready
for delivery in book-entry form through the facilities of The Depository Trust
Company in New York, New York, Cedel Bank, societe anonyme, and the Euroclear
System against payment therefor in immediately available funds on or about
September , 1996.
Application has been made to list the Notes on the Luxembourg Stock
Exchange.
GOLDMAN, SACHS & CO.
-----------
THE DATE OF THIS PROSPECTUS IS SEPTEMBER , 1996
<PAGE>
(CONTINUED FROM PRECEDING PAGE)
The Owner Trust will also issue two classes of certificates of beneficial
interest, the Equity Certificates and the Equipment Certificate, which are not
being offered hereby. The Equipment Certificate will represent an undivided
interest in, and be payable solely from, the Equipment and certain amounts
derived from the sale or other disposition of the Equipment upon expiration or
termination (including an early termination or liquidation) of the related
Contracts and certain other amounts as described herein. Amounts payable on the
Equipment Certificate will not be available for payment of interest and
principal on the Notes. It is expected that the Equity Certificates will
initially represent the right to receive principal in an amount equal to
approximately 4% of the Cut-Off Date Contract Pool Principal Balance, together
with interest thereon at % per annum.
The Notes and the Equity Certificates will be payable solely from, and
secured by, the Amount Available on each Payment Date (which will consist
primarily of the Scheduled Payments due under the Contracts, certain amounts
received upon the prepayment or purchase of Contracts or (to the extent not
payable on the Equipment Certificate) liquidation of the related Equipment,
investment earnings on amounts deposited in the Collection Account established
pursuant to the Indenture, in each case subject to prior application to pay
certain fees and expenses, and amounts permitted to be withdrawn therefor from a
Cash Collateral Account) in the order of priority described herein. The
likelihood of payment of interest on each Class of Notes will be enhanced by the
application of the Amount Available to the payment of such interest prior to the
payment of principal on any of the Notes or the Equity Certificates, as well as
by the preferential right of the Holders of Notes of each such Class to receive
such interest (1) in the case of the Class A Notes, prior to the payment of any
interest on the Class B Notes, the Class C Notes or the Equity Certificates, (2)
in the case of the Class B Notes, prior to the payment of any interest on the
Class C Notes or the Equity Certificates, and (3) in the case of the Class C
Notes, prior to the payment of any interest on the Equity Certificates.
Likewise, the likelihood of payment of principal on each Class of Notes will be
enhanced by the preferential right of the Holders of Notes of each such Class to
receive such principal, to the extent of the Amount Available after payment of
interest on the Notes and the Equity Certificates as aforesaid, (i) in the case
of the Class A Notes, prior to the payment of any principal on the Class B
Notes, the Class C Notes or (except as described herein) the Equity
Certificates, (ii) in the case of the Class B Notes, prior to the payment of any
principal on the Class C Notes or (except as described herein) the Equity
Certificates, and (iii) in the case of the Class C Notes, prior to the payment
of any principal on the Equity Certificates, except as described herein. See
"Description of the Notes."
To the extent the Amount Available is sufficient therefor, interest at the
rate per annum noted above for each of the Class A, Class B and Class C Notes
(the applicable "Interest Rate") will be paid to Holders of each Class of Notes,
and principal will be paid on the applicable Class of Notes, on the day of
each month (or, if such day is not a Business Day, on the next succeeding
Business Day), commencing October , 1996 (each, a "Payment Date"). The Stated
Maturity Date for the Class A Notes, the Class B Notes and the Class C Notes is
, , and , respectively.
The Notes are subject to redemption in whole as described herein under
"Description of the Notes -- Special Redemption" and "-- Optional Purchase of
Contracts."
There is currently no secondary market for the Notes and there is no
assurance that one will develop. The U.S. Underwriters expect, but will not be
obligated, to make a market in the Notes in the United States. The International
Managers expect, but will not be obligated, to make a market in the Notes
outside the United States. There is no assurance that either such market will
develop, or if either such market does develop, that such market will continue.
See "Risk Factors."
It is a condition of issuance of the Notes that each of Standard & Poor's
Ratings Services, Moody's Investors Service, Inc., Duff & Phelps Credit Rating
Co. and Fitch Investors Service, L.P. (i) rate the Class A Notes in its highest
rating category, (ii) rate the Class B Notes " ," " ," " " and
" ," respectively, and (iii) rate the Class C Notes " ," " ,"
" " and " ," respectively. See "Ratings of the Notes."
IN CONNECTION WITH THIS OFFERING, THE U.S. UNDERWRITERS AND/OR INTERNATIONAL
MANAGERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE
MARKET PRICE OF THE NOTES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
Upon receipt of a request by an investor who has received an electronic
Prospectus from any Underwriter or a request by such investor's representative
within the period during which there is an obligation to deliver a Prospectus,
such Underwriter will promptly deliver, or cause to be delivered, without
charge, to such investor a paper copy of the Prospectus.
The Depositor has not authorized any offer of Notes to the public in the
United Kingdom within the meaning of the Public Offers of Securities Regulations
1995 (the "Regulations"). The Notes may not lawfully be offered or sold to
persons in the United Kingdom except in circumstances which do not result in an
offer to the public in the United Kingdom within the meaning of the Regulations
or otherwise in compliance with all applicable provisions of the Regulations.
The Depositor does not intend to register the Notes under the Securities and
Exchange Law of Japan (the "SEL"). Accordingly, the Notes may not be offered or
sold directly or indirectly in Japan, and this Prospectus may not be distributed
or circulated in Japan, except in circumstances that do not constitute an offer
to the public within the meaning of the SEL.
<PAGE>
INCORPORATION BY REFERENCE
All documents filed by the Servicer, on behalf of the Owner Trust, pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), after the date of this Prospectus and prior to the
termination of the offering of the Notes shall be deemed to be incorporated by
reference into this Prospectus. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any subsequently filed document which also is
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Depositor will provide without charge to each person to whom a copy of
this Prospectus is delivered, on the written or oral request of such person, a
copy of any or all of the documents incorporated herein by reference, except the
exhibits to such documents. Requests for such copies should be directed to
Antigua Funding Corporation, 1209 Orange Street, Wilmington, Delaware 19801,
Attention: Secretary.
AVAILABLE INFORMATION
The Depositor, as the originator of the Owner Trust, has filed a
Registration Statement under the Securities Act of 1933, as amended (the
"Securities Act"), with the Securities and Exchange Commission (the
"Commission") on behalf of the Owner Trust with respect to the Notes offered
pursuant to this Prospectus. For further information, reference is made to the
Registration Statement and amendments thereof and to the exhibits thereto, which
are available for inspection without charge at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549;
7 World Trade Center, 13th Floor, New York, New York 10048; and Northwest Atrium
Center, 500 Madison Street, Chicago, Illinois 60661. Copies of the Registration
Statement and amendments thereof and exhibits thereto may be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549 at prescribed rates. The Commission also maintains a World Wide Web
site which provides on-line access to reports, proxy and information statements
and other information regarding registrants that file electronically with the
Commission at the address "http://www.sec.gov."
REPORTS TO NOTEHOLDERS
Unless and until Definitive Notes are issued, monthly unaudited reports
containing information concerning the Owner Trust, and prepared by the Servicer,
will be sent by the Indenture Trustee on behalf of the Owner Trust only to Cede
& Co., as nominee of The Depository Trust Company ("DTC") and registered holder
of the Notes, and to the Luxembourg Paying Agent. See "Description of the Notes
- -- Book-Entry Registration." Such reports will not constitute financial
statements prepared in accordance with generally accepted accounting principles.
See "Description of the Notes -- Reports to Noteholders" for additional
information concerning periodic reports to Noteholders. Note Owners may receive
such reports, upon written request to the Indenture Trustee, together with a
certification that they are Note Owners, and payment of any expenses associated
with the distribution of such reports. Any such request should be made to the
Indenture Trustee at the following address:
. Neither TCC nor the Depositor intends to send any of its financial
reports to Note Owners. The Servicer, on behalf of the Owner Trust, will file
with the Commission periodic reports concerning the Owner Trust to the extent
required under the Exchange Act and the rules and regulations of the Commission
thereunder.
i
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
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<S> <C>
INCORPORATION BY REFERENCE................................................................................ i
AVAILABLE INFORMATION..................................................................................... i
REPORTS TO NOTEHOLDERS.................................................................................... i
PROSPECTUS SUMMARY........................................................................................ 1
RISK FACTORS.............................................................................................. 16
Limited Liquidity; Book-Entry Registration.............................................................. 16
Subordination; Limited Assets........................................................................... 16
Yield and Prepayment Considerations..................................................................... 17
Bankruptcy and Insolvency Risks......................................................................... 17
Certain Legal Aspects................................................................................... 19
No Gross-Up for Withholding Tax......................................................................... 20
THE MERGER................................................................................................ 20
THE DEPOSITOR AND THE OWNER TRUST......................................................................... 21
The Depositor........................................................................................... 21
The Owner Trust......................................................................................... 22
Capitalization of the Owner Trust....................................................................... 23
The Owner Trustee....................................................................................... 23
AT&T CAPITAL CORPORATION.................................................................................. 23
THE ORIGINATORS........................................................................................... 24
AT&T Capital Leasing Services, Inc...................................................................... 24
AT&T Credit Corporation and NCR Credit Corp............................................................. 25
AT&T Commercial Finance Corporation..................................................................... 25
Underwriting and Servicing.............................................................................. 26
THE CONTRACTS............................................................................................. 30
Description of the Contracts............................................................................ 30
Representations and Warranties Made by TCC.............................................................. 32
Certain Statistics Relating to the Preliminary Contract Pool............................................ 35
Certain Statistics Relating to Delinquencies and Defaults............................................... 38
DESCRIPTION OF THE NOTES.................................................................................. 40
General................................................................................................. 40
Distributions........................................................................................... 40
Class A Interest........................................................................................ 42
Class B Interest........................................................................................ 42
Class C Interest........................................................................................ 42
Principal............................................................................................... 43
Special Redemption of the Notes......................................................................... 43
Subordination of Class B and Class C Notes and Equity Certificates...................................... 44
Cash Collateral Account................................................................................. 44
Liquidated Contracts.................................................................................... 45
Optional Purchase of Contracts.......................................................................... 45
Trust Accounts.......................................................................................... 45
Reports to Noteholders.................................................................................. 46
Book-Entry Registration................................................................................. 47
Definitive Notes........................................................................................ 50
Modification of Indenture Without Noteholder Consent.................................................... 50
Modification of Indenture With Noteholder Consent....................................................... 51
Events of Default; Rights Upon Event of Default......................................................... 51
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
SECTION PAGE
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<S> <C>
Certain Covenants....................................................................................... 52
Annual Compliance Statement............................................................................. 53
Indenture Trustee's Annual Report....................................................................... 53
Satisfaction and Discharge of Indenture................................................................. 53
The Indenture Trustee................................................................................... 53
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENT....................................................... 54
Transfer and Assignment of Contracts and Equipment...................................................... 54
Collections on Contracts................................................................................ 54
Servicing............................................................................................... 55
Amendment............................................................................................... 57
Termination of the Agreement............................................................................ 58
CERTAIN LEGAL ASPECTS OF THE CONTRACTS.................................................................... 58
Enforcement of Security Interests in the Equipment...................................................... 58
Insolvency Matters...................................................................................... 59
UNITED STATES TAXATION.................................................................................... 61
Treatment of the Notes.................................................................................. 61
Treatment of the Owner Trust............................................................................ 61
Payments of Interest.................................................................................... 61
Original Issue Discount................................................................................. 62
Market Discount......................................................................................... 62
Amortizable Bond Premium................................................................................ 62
Sale, Exchange or Retirement of Notes................................................................... 63
Tax Consequences to United States Alien Holders......................................................... 63
Backup Withholding...................................................................................... 64
ERISA CONSIDERATIONS...................................................................................... 65
RATINGS OF THE NOTES...................................................................................... 66
USE OF PROCEEDS........................................................................................... 66
UNDERWRITING.............................................................................................. 67
LEGAL MATTERS............................................................................................. 69
ADDITIONAL INFORMATION.................................................................................... 69
INDEX OF PRINCIPAL TERMS.................................................................................. 70
APPENDIX A:
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES............................................. A-1
Initial Settlement...................................................................................... A-1
Secondary Market Trading................................................................................ A-1
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS................................................ A-3
</TABLE>
iii
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus. Certain capitalized
terms used in this Prospectus Summary are defined elsewhere in this Prospectus
on the pages indicated in the "Index of Principal Terms."
<TABLE>
<S> <C>
ISSUER.............. A trust, referred to as the "Capita Equipment
Receivables Trust 1996-1" (the "Owner Trust"), will be
formed by the Depositor pursuant to a Trust Agreement
(the "Trust Agreement"), dated as of September , 1996,
among the Depositor and , as
Owner Trustee. See "The Depositor and the Owner Trust --
The Owner Trust."
DEPOSITOR........... Antigua Funding Corporation (the "Depositor"), which
will be a wholly owned subsidiary of AT&T Capital
Corporation ("TCC") following the consummation of the
Merger. The Depositor is expected to acquire the
Contracts and the Originators' interest in the related
Equipment on the Merger Consummation Date pursuant to a
Purchase and Sale Agreement (the "Purchase Agreement"),
expected to be dated as of September , 1996, among the
Depositor, TCC and the Originators, and will thereupon
transfer the Contracts and the Depositor's interest in
the related Equipment to the Owner Trust pursuant to a
Transfer and Servicing Agreement (the "Transfer and
Servicing Agreement"), expected to be dated as of
September , 1996, among the Depositor, TCC, as
Servicer, the Indenture Trustee and the Owner Trust. See
"The Depositor and the Owner Trust -- The Depositor."
SERVICER............ TCC will, pursuant to the Transfer and Servicing
Agreement, act as Servicer of the Contracts following
their transfer to the Owner Trust. See "Description of
the Transfer and Servicing Agreement -- Servicing." TCC
is a full-service, diversified equipment leasing and
finance company that operates principally in the United
States. See "AT&T Capital Corporation."
INDENTURE TRUSTEE... , in its capacity as trustee under an Indenture (the
"Indenture"), dated as of September , 1996, between
the Owner Trust and the Indenture Trustee.
OWNER TRUSTEE....... , in its capacity as trustee under the Trust Agreement.
THE NOTES........... The Owner Trust will issue $ aggregate principal
amount of % Receivable-Backed Notes, Class A (the
"Class A Notes"), $ aggregate principal amount of %
Receivable-Backed Notes, Class B (the "Class B Notes"),
and $ aggregate principal amount of %
Receivable-Backed Notes, Class C (the "Class C Notes")
(collectively, the "Notes"), pursuant to the Indenture.
The Owner Trust will also issue the Equity Certificates
and the Equipment Certificate (collectively, the
"Certificates") to the Depositor. The Certificates are
not being offered hereby. See "Description of the
Notes."
</TABLE>
1
<PAGE>
<TABLE>
<S> <C>
INTEREST............ Interest on the outstanding principal balance of the
Notes of each Class will accrue at the interest rate for
such Class specified on the cover page of this
Prospectus (the "Interest Rate" for such Class) from and
including September , 1996, to but excluding
October , 1996 (in the case of the first interest
period), and thereafter for each successive Payment Date
from and including the most recent prior Payment Date to
which interest has been paid, to but excluding such
Payment Date. To the extent the Amount Available is
sufficient therefor, the amount of interest to be paid
on the Notes on each Payment Date will equal 30 days'
interest (or, in the case of the first interest period,
interest accrued from and including September , 1996
to but excluding October , 1996). See "Description of
the Notes."
PRINCIPAL........... To the extent the Amount Available is sufficient
therefor after payment of interest on the Notes and the
Equity Certificates, the aggregate amount of principal
to be paid on the Notes and the Equity Certificates on
each Payment Date will equal the Monthly Principal
Amount. Principal payable on the Notes will be paid in
respect of the Class A Notes on each Payment Date until
the Class A Principal Balance has been reduced to zero,
then in respect of principal on the Class B Notes until
the Class B Principal Balance has been reduced to zero,
and then in respect of principal on the Class C Notes
until the Class C Principal Balance has been reduced to
zero. Commencing on the first Payment Date, however,
% of the Monthly Principal Amount will be payable on
the Equity Certificates until the aggregate amount so
paid equals $ . See "Description of the Notes --
Principal."
The "Monthly Principal Amount" for any Payment Date will
equal:
(i) the difference between (a) the aggregate of the
Contract Principal Balances of the Contracts (the
"Contract Pool Principal Balance") as of the last day
of the Collection Period relating to the prior Payment
Date (or, in the case of the first Payment Date, the
Cut-Off Date Contract Pool Principal Balance), and (b)
the Contract Pool Principal Balance as of the last day
of the Collection Period relating to such Payment
Date, plus
(ii) any portion of the Monthly Principal Amount for
the prior Payment Date that was not distributed in
respect of principal on the Notes or the Equity
Certificates, as appropriate, on such prior Payment
Date.
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
The "Contract Principal Balance" of any Contract as of
the last day of any Collection Period is:
(1) in the case of a Lease Contract, the present
value of the unpaid Scheduled Payments due on such
Lease Contract after such last day of the Collection
Period (excluding all Scheduled Payments due on or
prior to, but not received as of, such last day, as
well as any Scheduled Payments due after such last day
and received on or prior thereto), discounted monthly
at the rate of % per annum (and assuming that each
Scheduled Payment is due on the last day of the
applicable Collection Period); and
(2) in the case of a Loan Contract, the outstanding
principal balance of such Loan Contract after giving
effect to Scheduled Payments due on or prior to such
last day of the Collection Period, whether or not
paid, as well as any Scheduled Payments due after such
last day and received on or prior thereto.
The Contract Principal Balance of any Contract which,
during a Collection Period, became a Liquidated Contract
or was required to be purchased by TCC as of the end of
such Collection Period due to a breach of
representations and warranties, will, for purposes of
computing the Monthly Principal Amount for the related
Payment Date, be deemed to be zero on and after the last
day of such Collection Period. A "Liquidated Contract"
is any Contract (a) with respect to which the Servicer
has repossessed and disposed of the related Equipment,
or otherwise collected all proceeds which, in the
Servicer's judgment, can be collected under such
Contract, or (b) which is delinquent 180 days or more.
See "Description of the Notes -- Principal."
The "Collection Period" for any Payment Date will be the
calendar month preceding the month in which such Payment
Date occurs.
The "Cut-Off Date Contract Pool Principal Balance" will
equal:
(I) the aggregate of the Contract Principal Balances
of the Contracts as of the Cut-Off Date, plus
(II) the aggregate amount of Scheduled Payments on
the Contracts due prior to, but not received as of,
the Cut-Off Date.
The aggregate of the initial principal balances of the
Notes and the Equity Certificates will be equal to or
less than the Cut-Off Date Contract Pool Principal
Balance.
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STATED MATURITY
DATES.............. If and to the extent not previously paid, the
outstanding principal balance of each Class of Notes
will be payable on the Stated Maturity Date of such
Class. The Class A Stated Maturity Date will be
, ; the Class B Stated Maturity
Date will be , ; and the Class C
Stated Maturity Date will be , .
DENOMINATIONS....... The Notes will be available for purchase in
denominations of $1,000 and integral multiples thereof.
CLOSING DATE........ On or about September , 1996.
CUT-OFF DATE........ September 1, 1996.
PAYMENT DATES AND
RECORD DATES....... Interest and principal on the Notes will be paid on the
day of each month (or, if such day is not a Business
Day, the next succeeding Business Day), commencing in
October 1996, to Holders of record on the Business Day
immediately preceding such Payment Date (so long as the
Notes are held in book-entry form), or to Holders of
record on the last day of the preceding calendar month
(if Definitive Notes have been issued).
SUBORDINATION....... The likelihood of payment of interest on each Class of
Notes will be enhanced by the application of the Amount
Available to the payment of such interest prior to the
payment of principal on any of the Notes or the Equity
Certificates, as well as by the preferential right of
the Holders of Notes of each such Class to receive such
interest (1) in the case of the Class A Notes, prior to
the payment of any interest on the Class B Notes, the
Class C Notes or the Equity Certificates, (2) in the
case of the Class B Notes, prior to the payment of any
interest on the Class C Notes or the Equity
Certificates, and (3) in the case of the Class C Notes,
prior to the payment of any interest on the Equity
Certificates. Likewise, the likelihood of payment of
principal on each Class of Notes will be enhanced by the
preferential right of the Holders of Notes of each such
Class to receive such principal, to the extent of the
Amount Available after payment of interest on the Notes
and the Equity Certificates as aforesaid, (i) in the
case of the Class A Notes, prior to the payment of any
principal on the Class B Notes, the Class C Notes or
(except as described herein) the Equity Certificates,
(ii) in the case of the Class B Notes, prior to the
payment of any principal on the Class C Notes or (except
as described herein) the Equity Certificates, and (iii)
in the case of the Class C Notes, prior to the payment
of any principal on the Equity Certificates, except as
described herein. See "Description of the Notes."
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RATINGS............. It is a condition of issuance of the Notes that each of
Moody's Investors Service, Inc. ("Moody's"), Standard &
Poor's Ratings Services ("S&P"), Fitch Investors
Service, L.P. ("Fitch") and Duff and Phelps Credit
Rating Co. ("Duff & Phelps" and, together with Moody's,
S&P and Fitch, the "Rating Agencies") rate (i) the Class
A Notes in its highest rating category, (ii) the Class B
Notes " ," " ," " " and
" ," respectively, and (iii) the Class C
Notes " ," " ," " " and
" ," respectively. 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
assigning Rating Agency. See "Ratings of the Notes."
USE OF PROCEEDS..... If the Merger is consummated on or prior to September
, 1996, the proceeds from the offering and sale of the
Notes, together with the proceeds derived by the
Depositor from its disposition of the Equity
Certificates, will be used by the Depositor to acquire
the Contracts and the Originators' interest in the
Equipment and to pay expenses payable by the Depositor
in connection with the issuance of the Notes and the
Equity Certificates. See "The Merger."
THE MERGER.......... It is expected that TCC will be merged with Antigua
Acquisition Corporation, a wholly owned subsidiary of
Hercules Limited, on the Merger Consummation Date. As a
result of the Merger, the Depositor (which currently is
a wholly owned subsidiary of Antigua Acquisition
Corporation) will become a wholly owned subsidiary of
TCC (which will be the surviving company in the Merger).
On the Merger Consummation Date, the Depositor will
transfer the Contracts, its interest in the Equipment
and the other Trust Assets to the Owner Trust, and the
proceeds of the Escrow Account (which will include the
proceeds of the sale of the Notes) will be released to,
or upon the order of, the Depositor. See "Use of
Proceeds" above. If the Merger is not consummated by
September , 1996, all of the Notes will be redeemed at
the Special Redemption Price on the Special Redemption
Date. See "Special Redemption" below. Consummation of
the Merger is subject to certain regulatory approvals
and other preconditions. See "The Merger."
MERGER CONSUMMATION
DATE............... The date on which the Merger is consummated, currently
anticipated to be September 17, 1996.
SPECIAL
REDEMPTION......... If the Merger has not been consummated by September ,
1996, all of the Notes shall be redeemed and paid in
full on September , 1996, or on such earlier date as
the Depositor may elect upon giving the Indenture
Trustee written notice thereof at least five Business
Days prior to such date (the "Special Redemption Date"),
at a redemption price (the "Special Redemption Price")
which is equal to (i) in respect of any Class of Notes,
the initial offering price of such Class of Notes as
shown on the cover page of this Prospectus, plus
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(ii) interest on such offering price, from (and
including) the Closing Date to (but excluding) such
Special Redemption Date, at the rate of 10% per annum
(calculated on the basis of a 360-day year comprised of
twelve 30-day months). The Special Redemption Price in
respect of the Notes will be paid from the amounts on
deposit in the Escrow Account as described under "Trust
Assets" below, which amounts will be sufficient (without
regard to any proceeds of the investment thereof) to so
pay such Special Redemption Price on the Special
Redemption Date. A public notice of the Special
Redemption, if any, will be provided by publication in
Luxembourg. See "Description of the Notes -- Special
Redemption of the Notes."
TRUST ASSETS........ From the Closing Date until the Merger Consummation
Date, the Trust Assets will consist solely of the
proceeds of the Notes, plus additional cash, which will
be deposited and held (and invested in certain Eligible
Investments at the direction of the Depositor) in the
Escrow Account maintained by the Indenture Trustee
pursuant to the Indenture until (i) applied by the
Indenture Trustee to the special redemption of the Notes
as described under "Special Redemption" above, or (ii)
paid over to the Depositor and used as described under
"Use of Proceeds" above. See "Description of the Notes
-- Special Redemption of the Notes."
The Trust Assets, from and after the Merger Consummation
Date, will consist of:
(i) a pool of equipment lease contracts (each, a
"Lease Contract") and installment sale contracts,
promissory notes, loan and security agreements and
other similar types of receivables (each, a "Loan
Contract") (all such Lease Contracts and Loan
Contracts being referred to herein as the "Contracts")
with various lessees, borrowers or other obligors
thereunder (each, an "Obligor"), including the right
to receive all Scheduled Payments and Prepayments
received thereon from and after the Cut-Off Date
(including all Scheduled Payments due prior to, but
not received as of, the Cut-Off Date, but excluding
any Scheduled Payments due on or after, but received
prior to, the Cut-Off Date);
(ii) the interest of the Depositor in the equipment
subject to such Contracts (the "Equipment"), which
interest is either an ownership interest or a security
interest;
(iii) amounts on deposit in (and Eligible
Investments allocated to) certain accounts established
pursuant to the Indenture and the Transfer and
Servicing Agreement, including the Collection Account;
and
(iv) certain other property and assets as herein
described.
A portion of the Trust Assets will secure payment of the
Notes. See "Source of Payment and Security" below and
"The Depositor and the Owner Trust -- The Owner Trust."
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SOURCE OF PAYMENT
AND SECURITY....... Principal of and interest on the Notes and the Equity
Certificates will be paid on each Payment Date solely
from, and secured by, the "Amount Available" for such
Payment Date, which is equal to:
(1) the sum of (a) those Pledged Revenues on deposit
in the Collection Account as of the last Business Day
preceding the related Determination Date (the "Deposit
Date") (i) which were received by the Servicer during
the related Collection Period or which represent
amounts paid by TCC or the Depositor to purchase
Contracts and related Equipment as of the end of such
Collection Period ("Related Collection Period Pledged
Revenues"), or (ii) to the extent necessary to pay
interest on the Notes and the Equity Certificates on
such Payment Date, which were received by the Servicer
during the current Collection Period ("Current
Collection Period Pledged Revenues"), plus (b) amounts
permitted to be withdrawn therefor from the Cash
Collateral Account, as described under "Cash
Collateral Account" below, less
(2) the related Servicing Fee as described in clause
(i) under "Priority of Payments" below.
"Pledged Revenues" will consist of:
(i) "Scheduled Payments" on the Contracts (which
will consist of all payments under the Contracts other
than those portions of such payments which, under the
Contracts, are to be (A) applied by the Servicer to
the payment of insurance premiums, maintenance, taxes
and other similar obligations, or (B) retained by the
Servicer in payment of Administrative Fees) received
on or after the Cut-Off Date and due during the term
of the Contracts, without giving effect to end-of-term
extensions or renewals thereof (including all
Scheduled Payments due prior to, but not received as
of, the Cut-Off Date, but excluding any Scheduled
Payments due on or after, but received prior to, the
Cut-Off Date);
(ii) any voluntary prepayments ("Prepayments")
received on or after the Cut-Off Date under the
Contracts, provided that the amount, if any, by which
any such Prepayment exceeds the Required Payoff Amount
of the related Contract will not constitute Pledged
Revenues;
(iii) any amounts paid by TCC to purchase Contracts
and the related Equipment due to a breach of
representations and warranties with respect thereto as
described under "Mandatory Purchase of Certain
Contracts" below or by the Depositor to purchase the
Contracts and the related Equipment as described under
"Optional Purchase of Contracts" below, in each case
excluding those portions thereof attributable to the
Book Value of the Equipment;
(iv) certain of the proceeds derived from the
liquidation of the Contracts and the related
Equipment, as described under "Liquidated Contracts"
below; and
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(v) any earnings on the investment of amounts
credited to the Collection Account.
ORIGINATORS OF THE
CONTRACTS.......... The Contracts that are expected to be included in the
Trust Assets on and after the Merger Consummation Date
have been originated or, in some cases, acquired by four
wholly owned subsidiaries of TCC: AT&T Capital Leasing
Services, Inc. ("Leasing Services"), AT&T Credit
Corporation ("Credit Corp."), NCR Credit Corp. ("NCR
Credit"), and the Portland division of AT&T Commercial
Finance Corporation (such division is referred to herein
as "CFC") (collectively, the "Originators"). See "AT&T
Capital Corporation" and "The Originators."
THE CONTRACTS....... The aggregate of the Contracts and the related Equipment
expected to be held by the Owner Trust as part of the
Trust Assets, as of any particular date, is referred to
as the "Contract Pool," and the Contract Pool, as of the
Cut-Off Date, is referred to as the "Final Contract
Pool." The Depositor has prepared certain statistics
relating to the pool of Contracts which, subject to the
exception noted below, will constitute the Final
Contract Pool. These statistics are based on such
Contracts as of August 1, 1996 (the "Preliminary Cut-Off
Date"). The Final Contract Pool will consist of such
Contracts, less that portion of the Contract Principal
Balances which are paid or prepaid from the Preliminary
Cut-Off Date to the Cut-Off Date. Accordingly, the
statistics relating to such pool of Contracts as of the
Preliminary Cut-Off Date (the "Preliminary Contract
Pool") will differ somewhat from the Final Contract
Pool; however, the statistics relating to the Final
Contract Pool will be included in the final Prospectus.
As of the Preliminary Cut-Off Date, the Preliminary
Contract Pool had the following characteristics
(percentages are by Contract Pool Principal Balance as
of such date (the "Preliminary Cut-Off Date Contract
Pool Principal Balance"), determined for this purpose
using an assumed discount rate of %):
(i) the Preliminary Cut-Off Date Contract Pool
Principal Balance was approximately $ ;
(ii) there were approximately Contracts;
(iii) the average Contract Principal Balance was
$ ;
(iv) of such Contracts, approximately % were Lease
Contracts and approximately % were Loan Contracts;
(v) approximately % of such Contracts related to
[type of Equipment], approximately % of such
Contracts related to [type of Equipment] and
approximately % of such Contracts related to [type
of Equipment];
(vi) no more than approximately % of such Contracts
were with Obligors located in any one State;
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(vii) no more than % of the Contracts had a Contract
Principal Balance exceeding $ ;
(viii) approximately % of the Contracts had been
originated by the Originators with the remaining %
of the Contracts having been originated by third
parties and purchased by one of the Originators;
(ix) the remaining term of the Contracts as of the
Preliminary Cut-Off Date ranged from months to
months;
(x) the weighted average remaining term of the
Contracts was months; and
(xi) no more than approximately % of the Contracts
related to the ten Obligors having the greatest
aggregate Contract Principal Balances. See "The
Contracts -- Certain Statistics Relating to the
Preliminary Contract Pool."
TCC will make certain representations and warranties
regarding each Contract, and will be obligated to
purchase any Contract in the event of a breach of any
such representation or warranty that materially and
adversely affects the value of such Contract. See
"Mandatory Purchase of Certain Contracts" below.
CONTRACT
PREPAYMENTS........ TCC will represent and warrant that none of the Lease
Contracts permit the Obligor thereunder to prepay the
amounts due under such Lease Contract or otherwise
terminate the Lease Contract prior to its scheduled
expiration date (except for a de minimis number of Lease
Contracts which allow for a prepayment or early
termination upon payment of an amount which is not less
than the Required Payoff Amount). Under the Transfer and
Servicing Agreement, the Servicer will be permitted to
allow Prepayments of any of the Lease Contracts to the
extent that the amount of the prepayment on such Lease
Contract is at least equal to the Required Payoff Amount
for such Lease Contract.
The Loan Contracts permit the Obligor thereunder to
prepay the Loan Contract, in whole or in part, at any
time at par plus accrued interest. Approximately % of
the Contracts (by Preliminary Cut-Off Date Contract Pool
Principal Balance) were Loan Contracts.
The "Required Payoff Amount," with respect to any
Collection Period for any Contract, is equal to the sum
of:
(i) the Scheduled Payment due in such Collection
Period, together with any Scheduled Payments due in
prior Collection Periods and not yet received, plus
(ii) the Contract Principal Balance of such Contract
as of the last day of such Collection Period (after
taking into account the Scheduled Payment due in such
Collection Period).
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In no event will Pledged Revenues include (nor will the
Notes or the Equity Certificates otherwise be payable
from) any portion of a Prepayment on a Contract which
exceeds the Required Payoff Amount for such Contract.
LIQUIDATED
CONTRACTS.......... Liquidation Proceeds received with respect to a
Liquidated Contract and the related Equipment (which
will be reduced by any related liquidation expenses)
will be allocated as follows: (i) with respect to any
Loan Contract, all such Liquidation Proceeds will be
allocated to the Notes and the Equity Certificates; and
(ii) with respect to any Lease Contract, such
Liquidation Proceeds will be allocated on a pro rata
basis between the Equipment Certificate, on the one
hand, and the Notes and the Equity Certificates, on the
other, based respectively on (a) the "Book Value" of the
Equipment (which is a fixed amount equal to the value of
the Equipment as shown on the accounting books and
records of TCC as of the Cut-Off Date) and (b) the
Required Payoff Amount for such Lease Contract; provided
that in no event will the amount of Liquidation Proceeds
allocated to the Notes and the Equity Certificates
exceed the Required Payoff Amount.
All Liquidation Proceeds which are so allocable to the
Notes and the Equity Certificates will be deposited in
the Collection Account and constitute Pledged Revenues
to be applied to the payment of interest and principal
on the Notes and the Equity Certificates in accordance
with the priorities described under "Priority of
Payments" below.
NO SUBSTITUTION..... Under the Trust Agreement, the Owner Trustee is not
permitted to accept (from the Depositor, TCC or any
other party) any lease, contract or other asset or
property in substitution for any part of the Trust
Assets, including any of the Contracts.
SERVICING........... The Servicer will be responsible for managing,
administering, servicing and making collections on the
Contracts. Compensation to the Servicer will include a
monthly fee (the "Servicing Fee"), which will be payable
to the Servicer from the Amount Available on each
Payment Date, in an amount equal to the product of
one-twelfth of % per annum multiplied by the Contract
Pool Principal Balance determined as of the last day of
the second preceding Collection Period (or, in the case
of the Servicing Fee with respect to the Collection
Period commencing on the Cut-Off Date, the Contract Pool
Principal Balance as of the Cut-Off Date), plus any late
fees, documentation fees, insurance administration
charges and other administrative charges (the
"Administrative Fees") collected with respect to the
Contracts during the related Collection Period. The
Servicer may be terminated as Servicer under certain
circumstances, in which event a successor Servicer would
be appointed to service the Contracts. See
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"AT&T Capital Corporation" and "Description of the
Transfer and Servicing Agreement -- Servicing -- Events
of Servicing Termination."
MANDATORY PURCHASE
OF CERTAIN
CONTRACTS.......... TCC will make certain representations and warranties
with respect to each Contract and the related Equipment,
as more fully described in "The Contracts --
Representations and Warranties Made by TCC." The
Indenture Trustee will be entitled to require TCC to
purchase any Contract and the related Equipment, at a
price equal to (i) the Required Payoff Amount, plus (ii)
the Book Value of the related Equipment (which Book
Value amount will be allocated to the Equipment
Certificate), if the value of the Contract is materially
and adversely affected by a breach of any such
representation or warranty which is not cured within a
specified period.
EQUITY
CERTIFICATES....... The Owner Trust will issue the Equity Certificates,
representing a beneficial ownership interest in the
Owner Trust, to the Depositor. The Equity Certificates
will be transferred by the Depositor in a separate
transaction. The Equity Certificates will be payable
from Pledged Revenues in the priority described under
"Priority of Payments" below. It is expected that the
Equity Certificates initially will represent the right
to receive principal in an amount equal to approximately
4% of the Cut-Off Date Contract Pool Principal Balance,
together with interest thereon at an interest rate of
% per annum. Commencing on the first Payment Date,
% of the Monthly Principal Amount will be payable on
the Equity Certificates until the aggregate amount so
paid equals $ .
EQUIPMENT
CERTIFICATE........ The Owner Trust will issue the Equipment Certificate,
representing a beneficial ownership interest in the
Owner Trust, to the Depositor. The Equipment Certificate
will represent an undivided interest in:
(i) all related Equipment or the proceeds thereof upon
the expiration of the initial term of any Lease
Contracts;
(ii) any amount in excess of the amounts described under
"Contract Prepayments" above which are paid by a
Lessee in connection with the prepayment or early
termination of a Lease Contract and are allocated to
the Notes and the Equity Certificates, which excess is
intended to represent the value of the Equipment
related thereto;
(iii) a portion of the Liquidation Proceeds derived from
the liquidation of the Contracts and the related
Equipment, as described under "Liquidated Contracts"
above; and
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(iv) that portion of the purchase price allocable to the
Book Value of the related Equipment (a) paid by TCC to
purchase any Contract and the related Equipment due to
a breach of any of TCC's representations and
warranties with respect thereto (as described under
"Mandatory Purchase of Certain Contracts" above), or
(b) paid by the Depositor pursuant to its option to
repurchase all of the outstanding Contracts and the
related Equipment (as described under "Optional
Purchase of Contracts" below).
Amounts payable in respect of the Equipment Certificate
are not available to pay, and will not provide security
for the payment of, interest or principal on the Notes
or the Equity Certificates.
COLLECTION
ACCOUNT............ The Indenture Trustee will establish and maintain one or
more separate accounts (collectively, the "Collection
Account"). All Scheduled Payments and Prepayments from
Obligors that are received by the Servicer on behalf of
the Owner Trust will be deposited in the Collection
Account no later than five Business Days following
receipt thereof by the Servicer. The Servicer will be
permitted to use any alternative remittance schedule
which is acceptable to the Rating Agencies if the effect
thereof will not result in a qualification, reduction or
withdrawal of any of the ratings then applicable to the
Notes. See "Description of the Transfer and Servicing
Agreement -- Collections on Contracts."
CASH COLLATERAL
ACCOUNT............ A "Cash Collateral Account" will be established on or
prior to the Merger Consummation Date and will
thereafter be available to the Indenture Trustee. The
Cash Collateral Account will initially be funded in an
amount equal to % of the Contract Pool Principal
Balance as of the Cut-Off Date (approximately $ ).
Amounts on deposit from time to time in the Cash
Collateral Account (up to, but not in excess of, the
Requisite Amount described below, and not including any
investment earnings on such funds) shall be used to fund
the amounts specified below in the following order of
priority (to the extent that amounts on deposit in the
Collection Account as of any Deposit Date are
insufficient therefor and provided that any such
insufficiency has resulted, directly or indirectly, from
delinquencies and/or defaults on the Contracts):
(i) to pay interest on the Notes and the Equity
Certificates in the following order of priority:
(a) interest on the Class A Notes (including any overdue
interest and interest thereon),
(b) interest on the Class B Notes (including any overdue
interest and interest thereon),
(c) interest on the Class C Notes (including any overdue
interest and interest thereon), and
(d) interest on the Equity Certificates (including any
overdue interest and interest thereon);
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(ii) to pay any Principal Deficiency Amount (equal to
the lesser of:
(a) the Current Realized Losses on Liquidated Contracts
for the related Collection Period or
(b) the excess, if any, of (A) the aggregate principal
balance of the Notes and the Equity Certificates
(after giving effect to all other distributions of
principal on such Payment Date), over (B) the
aggregate of the Required Payoff Amounts for all
Contracts as of the last day of the related
Collection Period); and
(iii) to pay principal on the Notes and Equity
Certificates at the applicable Stated Maturity Date
thereof.
If and to the extent that the amount on deposit in the
Cash Collateral Account as of any Payment Date is less
than the Requisite Amount (which is defined as being an
amount equal to approximately $ , subject to
certain adjustments), then such deficiency is to be
restored from the remaining Amount Available, after
payment of interest and principal on the Notes and the
Equity Certificates as described under "Priority of
Payments" below. Any amount on deposit in the Cash
Collateral Account in excess of the Requisite Amount,
and all investment earnings on funds in the Cash
Collateral Account, will be released from the Cash
Collateral Account and paid to or upon the order of the
Depositor, and will not be available to make payments on
the Notes or the Equity Certificates. See "Description
of the Notes -- Cash Collateral Account."
PRIORITY OF
PAYMENTS........... On each Payment Date, the Indenture Trustee will be
required to make the following payments, first, from the
Related Collection Period Pledged Revenues, second, to
the extent the Related Collection Period Pledged
Revenues are insufficient to pay interest on the Notes
and the Equity Certificates on such Payment Date, the
amount necessary to cure such insufficiency from the
Current Collection Period Pledged Revenues, and third
(but only as to amounts described in clause (ii) and
certain amounts included in clause (iii)), from amounts
permitted to be withdrawn from the Cash Collateral
Account as described under "Cash Collateral Account"
above, in the following order of priority:
(i) the Servicing Fee to the Servicer;
(ii) interest on the Notes and the Equity Certificates
in the following order of priority:
(a) interest on the Class A Notes (including any overdue
interest and interest thereon),
(b) interest on the Class B Notes (including any overdue
interest and interest thereon),
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(c) interest on the Class C Notes (including any overdue
interest and interest thereon), and
(d) interest on the Equity Certificates (including any
overdue interest and interest thereon);
(iii) an amount equal to the Monthly Principal Amount as
of such Payment Date in respect of principal on the
Notes and the Equity Certificates in the priority
described under "Principal" above; and
(iv) the remainder, if any, to the Cash Collateral
Account, to be applied in the manner described under
"Cash Collateral Account" above.
OPTIONAL PURCHASE OF
CONTRACTS.......... The Depositor may purchase all of the Contracts and the
related Equipment on any Payment Date following the date
on which the unpaid principal balance of the Notes and
the Equity Certificates is equal to 10% or less of the
Cut-Off Date Contract Pool Principal Balance, subject to
certain provisions as described herein under
"Description of the Notes -- Optional Purchase of
Contracts." The purchase price to be paid in connection
with such purchase shall be at least equal to the unpaid
principal balance of the Notes and the Equity
Certificates as of such Payment Date plus interest to be
paid on the Notes and the Equity Certificates on such
Payment Date, plus the Book Value of the Equipment. The
proceeds of such purchase shall be applied on such
Payment Date (i) as to such proceeds in an amount
necessary to pay the principal and interest on the Notes
and the Equity Certificates, to the payment of the
remaining principal balance on the Notes and the Equity
Certificates, together with interest thereon, and (2) as
to the balance of such proceeds, to the payment of
amounts on the Equipment Certificate.
U.S. TAXATION....... In the opinion of counsel to the Depositor and the
opinion of counsel to the Underwriters, the Notes will
be characterized as indebtedness and the Owner Trust
will not be characterized as an "association" or
"publicly traded partnership" taxable as a corporation
for federal income tax purposes. Each Noteholder, by its
acceptance of a Note, will agree to treat the Notes as
indebtedness for federal, state and local income tax
purposes. Prospective investors are advised to consult
their own tax advisors regarding the federal income tax
consequences of the purchase, ownership and disposition
of Notes, and the tax consequences arising under the
laws of any state or other taxing jurisdiction. See
"United States Taxation."
</TABLE>
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<TABLE>
<S> <C>
In the opinion of counsel, under United States federal
income tax law in effect as of the date hereof, payments
of principal and interest on the Notes to a United
States Alien Holder will not be subject to United States
federal withholding tax (subject to the exceptions noted
in "United States Taxation -- Tax Consequences to United
States Alien Holders"). If such law were to change and,
as a result thereof, United States withholding tax were
imposed on such payments, a United States Alien Holder
would receive such payments net of such withholding tax,
and neither the Owner Trust, the Depositor, TCC nor any
other party would have any obligation to "gross-up" such
payments to compensate for such withholding tax.
ERISA
CONSIDERATIONS..... If the Notes are considered to be indebtedness without
substantial equity features under a regulation issued by
the United States Department of Labor, the acquisition
or holding of Notes by or on behalf of a Benefit Plan
will not cause the assets of the Owner Trust to become
plan assets, thereby generally preventing the
application of certain prohibited transaction rules of
the Employee Retirement Income Security Act of 1974, as
amended, and the Internal Revenue Code of 1986, as
amended, that otherwise could possibly be applicable.
The Depositor believes that the Notes should be treated
as indebtedness without substantial equity features for
purposes of such regulation. See "ERISA Considerations."
REGISTRATION,
CLEARANCE AND
SETTLEMENT OF
NOTES.............. Each of the Notes will be registered in the name of Cede
& Co., as the nominee of The Depository Trust Company
("DTC"), and will be available for purchase only in
book-entry form on the records of DTC and participating
members thereof. Notes will be issued in definitive form
only under the limited circumstances described under
"Description of the Notes -- Definitive Notes." All
references herein to "Holders" or "Noteholders" shall
reflect the rights of beneficial owners of Notes (the
"Note Owners"), as they may indirectly exercise such
rights through DTC and participating members thereof,
except as otherwise specified herein. See "Description
of the Notes -- Book-Entry Registration." Noteholders
may elect to hold their Notes through DTC (in the United
States) or Cedel Bank or Euroclear (in Europe).
Transfers will be made in accordance with the rules and
operating procedures described in Appendix A hereto.
LISTING............. Application has been made to list the Notes on the
Luxembourg Stock Exchange.
GOVERNING LAW....... The Transfer and Servicing Agreement, the Trust
Agreement, the Purchase Agreement, the Indenture and the
Notes will be governed by the laws of the State of New
York.
</TABLE>
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RISK FACTORS
Prospective Noteholders should consider the following factors in connection
with the purchase of the Notes:
LIMITED LIQUIDITY; BOOK-ENTRY REGISTRATION
There is currently no market for the Notes. The U.S. Underwriters expect,
but will not be obligated, to make a market for the Notes in the United States;
and the International Managers expect, but will not be obligated, to make a
market for the Notes outside the United States. There can be no assurance that a
secondary market for the Notes will develop or, if it does develop, that it will
provide the Holders of such Notes with liquidity of investment or will continue
for the life of such Notes. Although it is expected that the Notes will be
listed on the Luxembourg Stock Exchange, there can be no assurances that such
listing will increase the liquidity of the Notes.
The Notes will be issued in book-entry, rather than physical, form and, as a
result, in certain circumstances, the liquidity of the Notes in the secondary
market and the ability of the Noteholders to pledge them may be adversely
affected. See "Underwriting" and "Description of the Notes -- Book-Entry
Registration." The Notes will be registered in the name of a nominee of DTC and
will not be registered in the names of the beneficial owners or their nominees.
As a result, unless and until Definitive Notes are issued in the limited
circumstances described under "Description of the Notes -- Definitive Notes,"
beneficial owners will not be recognized by the Indenture Trustee as
Noteholders, as that term is used in the Indenture. Hence, until such time,
beneficial owners will only be able to exercise the rights of Noteholders
indirectly through DTC and its participating organizations. In addition, the
laws of some states require that certain purchasers of securities take physical
delivery of such securities in certificated form. Such limits and such laws may
impair the ability to transfer beneficial interests in the Notes.
SUBORDINATION; LIMITED ASSETS
To the extent described herein under "Description of the Notes --
Distributions" and "-- Subordination," (i) payments of interest and principal on
the Class B Notes will be subordinated in priority of payment to interest and
principal, respectively, on the Class A Notes, (ii) payments of interest and
principal on the Class C Notes will be subordinated in priority of payment to
interest and principal, respectively, on the Class A Notes and the Class B Notes
and (iii) payments of interest and principal on the Equity Certificates will be
subordinated in priority of payment to interest and principal, respectively, on
the Class A Notes, the Class B Notes and the Class C Notes. In addition,
payments of principal on the Notes will be subordinated in priority of payment
to payments of interest on the Notes and the Equity Certificates. The Equity
Certificates initially will represent the right to receive principal in an
amount equal to 4% of the Cut-Off Date Contract Pool Principal Balance, but such
amount will be reduced as a result of principal payments made on the Equity
Certificates (see "Description of the Notes -- Principal"), which will reduce
the benefit to the Notes of the subordination of the Equity Certificates.
The Notes are secured by the payments to be derived from the Contracts but
not any payments constituting proceeds from the disposition of Equipment (except
in the case of a Liquidated Contract), which amounts will be paid solely to the
holder of the Equipment Certificate. Moreover, from and after the Merger
Consummation Date, the Owner Trust will have no assets other than the Contracts,
the Equipment, amounts on deposit from time to time in the Collection Account
and the accounts established pursuant to the Transfer and Servicing Agreement
and the right to certain amounts in the Cash Collateral Account. The Notes will
represent obligations solely of the Owner Trust, and none of the Notes will be
insured or guaranteed, directly or indirectly, by TCC, the Depositor, the
Indenture Trustee or the Owner Trustee (or any affiliate of any of them) or any
other person or entity. Consequently, Holders of the Notes must rely for payment
of interest and principal thereon on a given Payment Date on the Amount
Available for such Payment Date.
Delinquencies and defaults on the Contracts could eliminate the protection
afforded the Class C Noteholders by the Cash Collateral Account and the
subordination of the Equity Certificates, and the Class C Noteholders could
incur losses on their investment as a result. Further delinquencies and
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<PAGE>
defaults on the Contracts could eliminate the protection offered to the Class B
Noteholders by the subordination of the Class C Notes, and could eliminate the
protection afforded the Class A Noteholders by the subordination of the Class B
Notes, and such Noteholders could also incur losses on their investment as a
result.
YIELD AND PREPAYMENT CONSIDERATIONS
The weighted average life of the Notes will be reduced by prepayments and
early terminations of the Contracts. Prepayments may result from payments by
Obligors, certain amounts received as a result of default or early termination
of a Contract, the receipt of proceeds from the physical damage to the Equipment
to the extent described herein under "The Contracts," purchases by TCC of
Contracts and the related Equipment as a result of certain uncured breaches of
the representations and warranties made by it with respect thereto (see "The
Contracts -- Representations and Warranties Made by TCC") or the Depositor
exercising its option to purchase all of the remaining Contracts and related
Equipment (see "Description of the Notes -- Optional Purchase of Contracts").
Generally, none of the Lease Contracts permit a prepayment or early termination
thereof. Nevertheless, TCC historically has permitted lessees to terminate
leases early, either in connection with the execution of a new lease of
replacement equipment or upon payment of a negotiated prepayment premium, or
both. The Transfer and Servicing Agreement will permit the Servicer to allow a
voluntary prepayment of a Lease Contract by an Obligor at any time so long as
the amount paid thereon is at least equal to the Required Payoff Amount for such
Lease Contract. Approximately % of the Contracts (by Preliminary Cut-Off-Date
Contract Pool Principal Balance) were Loan Contracts, which permit the Obligor
to prepay the Contract, in whole or in part, at any time. The amounts so
received in respect of such prepayments are to be added to the Amount Available
and applied in the priority described in "Description of the Notes --
Distributions." TCC does not maintain records of the historical prepayment
experience of its portfolio. No assurance can be given as to the rate of
prepayments or as to whether there will be a substantial amount of prepayments,
nor can any assurance be given as to the level or timing of any prepayments that
do occur. As the rate of payment of principal of the Notes will depend on the
rate of payment (including prepayments) on the Contracts, final payment of a
Class of Notes could occur significantly earlier than the Stated Maturity Date
of such Class. The Noteholders will bear all reinvestment risk resulting from
the timing of payments of principal on the Notes.
If the Merger is not consummated (see "The Merger") by September , 1996,
all of the Notes will be redeemed on the Special Redemption Date at a price
equal to the Special Redemption Price. While the Depositor has no reason to
believe that the regulatory approvals which are a precondition to the
consummation of the Merger will not be obtained on or prior to its scheduled
date (September 17, 1996) or that any of the other conditions will not be
satisfied, there can be no assurances that the Merger will in fact be
consummated by September , 1996.
BANKRUPTCY AND INSOLVENCY RISKS
The Depositor believes that the transfer of the Contracts and the Equipment
from the Originators to the Depositor constitutes a sale or absolute assignment,
rather than a pledge to secure indebtedness of TCC or the Originators; and that
in the event that TCC or any of the Originators were to become bankrupt or
otherwise insolvent, a trustee in bankruptcy would be unable to successfully
challenge the transfer of the Contracts and the Equipment to the Depositor or
the Owner Trust or otherwise to interfere with the timely transfer to the
Depositor, the Owner Trust or the Indenture Trustee of payments received with
respect to the Contracts. However, if TCC or any of the Originators were to
become a debtor under the federal bankruptcy code or similar applicable state
laws (collectively, "Insolvency Laws"), a creditor or trustee in bankruptcy of
TCC or such Originator, or TCC or such Originator or either of them as
debtor-in-possession, might argue that such transfer of the Contracts and the
Equipment from the Originators to the Depositor was (or should be
recharacterized as) a pledge of such assets rather than a sale. If this position
were accepted by a court, any Lease Contracts considered to be "true" leases
under the applicable Insolvency Laws, and any other Contract considered to be
executory under such Insolvency Laws, could be rejected by such trustee in
bankruptcy or by TCC or such Originator as debtor-in-possession, which would
result in the termination of Scheduled Payments under any such Contracts and
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<PAGE>
reductions in distributions to Noteholders. Even if such Contracts were not so
rejected, the Owner Trust and the Indenture Trustee could experience a delay in
or reduction of collections on all of the Contracts. In addition, in the event
of an insolvency of an originator other than one of the Originators, a court
could attempt to recharacterize the sale of the Contracts by such third-party
originator to the applicable Originator as a borrowing from the Originator,
secured by a pledge of such Contracts and the rights in the Equipment.
A case decided by the United States Court of Appeals for the Tenth Circuit
contains language to the effect that accounts sold by an entity that
subsequently became bankrupt remained property of the debtor's bankruptcy
estate. Although the Contracts constitute chattel paper or general intangibles
rather than accounts under the Uniform Commercial Code (the "UCC"), sales of
chattel paper, like sales of accounts, are governed by Article 9 of the UCC. If
TCC or any of the Originators were to become a debtor under any Insolvency Law
and a court were to follow the reasoning of the Tenth Circuit Court of Appeals
and apply such reasoning to chattel paper, the Owner Trust (and thus the
Indenture Trustee) could experience a delay in or reduction of collections on
the Contracts.
If any of the Originators or TCC were to become debtors in a bankruptcy case
and a creditor or trustee-in-bankruptcy or TCC itself were to request a
bankruptcy court to order that the Depositor be substantively consolidated with
TCC, delays in and reductions in the amount of distributions to Noteholders
could occur. However, the Depositor has taken steps in structuring the
transactions described herein that are intended to prevent the voluntary or
involuntary application for relief by TCC under any Insolvency Law from
resulting in the consolidation of the assets and liabilities of the Depositor
with those of TCC. Such steps include the maintenance of separate books and
records and the insistence on arm's-length terms in all agreements with TCC, the
Originators and affiliates thereof. Nevertheless, there can be no assurance
that, in the event of a bankruptcy or insolvency of TCC or any Originator, a
court would not order that the Depositor's or Owner Trust's assets and
liabilities be consolidated with those of TCC or such Originator. Any such order
would adversely affect the Owner Trust's and Noteholders' ability to receive
payments on the Contracts.
Under federal or state fraudulent transfer laws, a court could, among other
things, subordinate the rights of the Noteholders in the Contracts and Equipment
to the rights of creditors of TCC or the Originators, if a court were to find,
among other things, that TCC or the Originators received less than reasonably
equivalent value or fair consideration for the Contracts and the Equipment and,
at the time of any transfers, was insolvent.
While TCC is the Servicer, cash collections held by TCC may, subject to
certain conditions, be commingled and used for the benefit of TCC prior to the
date on which such collections are required to be deposited in a Collection
Account as described under "Description of the Transfer and Servicing Agreement
- -- Collections on Contracts" and, in the event of the insolvency or receivership
of TCC or, in certain circumstances, the lapse of certain time periods, the
Owner Trust may not have a perfected ownership or security interest in such
collections.
The Depositor has taken certain steps to minimize the likelihood that it
will become bankrupt or otherwise insolvent. The Depositor is prohibited by its
organizational documents and the Transfer and Servicing Agreement from engaging
in activities (including the incurrence or guaranty of debt) other than those
set forth in the Transfer and Servicing Agreement. See "The Depositor and the
Owner Trust -- The Depositor." Its certificate of incorporation also contains
restrictions on the Depositor's ability to commence a voluntary case or
proceeding under any Insolvency Law without the affirmative vote of all its
directors, including its independent directors. The Indenture Trustee, on behalf
of the Noteholders, will covenant not to subject the Depositor to bankruptcy
proceedings until the Notes have been paid in full and one year and one day has
elapsed. The Depositor believes that such actions substantially mitigate the
risk of an involuntary bankruptcy petition being filed against it.
TCC will make certain representations and warranties regarding the
Contracts, the Equipment and certain other matters (see "The Contracts --
Representations and Warranties Made by TCC"). In the event that any such
representation or warranty with regard to a specific Contract is breached, is
not
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<PAGE>
cured within a specified period of time, and the value of such Contract is
materially and adversely affected by such breach, TCC shall be required to
purchase the Contract and the related Equipment at a price equal to (i) the
Required Payoff Amount of such Contract, plus (ii) the Book Value of such
Equipment. In the event of a bankruptcy or insolvency of TCC, the Indenture
Trustee's right to compel a purchase would both be impaired and have to be
satisfied out of the available assets, if any, of TCC's bankruptcy estate.
From and after the Merger Consummation Date, substantially all of the equity
capital of TCC will be owned by HoldCo., and the capitalization of TCC will
differ from the capitalization of TCC prior to the Merger. See "The Merger."
CERTAIN LEGAL ASPECTS
The transfer of the Contracts by the Originators to the Depositor and by the
Depositor to the Owner Trust, the perfection of the interest of the Owner Trust
in the Contracts and the right to receive payments thereon, and the Owner
Trust's and the Indenture Trustee's interest in such Contracts and in the
Equipment are subject to the requirements of the UCC as in effect in New York
and the states where the various Originators are located and, with respect to
certain of the Equipment, in the various states in which the Equipment subject
to the applicable Contract is located from time to time. The Depositor will take
or cause to be taken such actions as are required to perfect the transfer to the
Owner Trust of the Depositor's rights in the Contracts and the right to receive
payments thereunder and to perfect the security interest of the Indenture
Trustee in the Owner Trust's rights in the Contracts and the right to receive
payments thereunder.
It has been the general policy of TCC, depending on the dollar amount and
type of the particular Contract, the perceived credit quality of the particular
Obligor and the estimated repossession value of the particular related
Equipment, not to file or (in certain cases) not to obtain or file UCC financing
statements with respect to the Equipment relating to certain Contracts. See "The
Originators -- Underwriting and Servicing." It is estimated that approximately
% of the Contracts (by Preliminary Cut-Off-Date Contract Pool Principal
Balance) relate to Equipment as to which no UCC financing statement has been
filed. With respect to any such Contracts that were deemed to be loans or leases
intended for security, a purchaser from the applicable Obligor of the related
Equipment would acquire such Equipment free and clear of the interest of the
applicable Originator in such Equipment, and a creditor of the Obligor which has
taken a security interest in such Equipment and filed a UCC financing statement
with respect thereto or a trustee in the bankruptcy of such Obligor would have
priority over the interest of the applicable Originator in such Equipment. Any
such purchaser, creditor or trustee would have an interest superior to the
interest of the Owner Trust in such Equipment, which interest is derived from
the transfer and conveyance of a security interest in the Equipment by the
Depositor to the Owner Trust. All of the Contracts prohibit the Obligor from
selling or pledging the related Equipment to third parties.
Due to the administrative burden and expense, no assignments of the UCC
financing statements evidencing the security interest of the Originators in the
Equipment (to the extent that such financing statements have been filed against
the Obligor, as discussed above) will be filed to reflect the Depositor's, the
Owner Trust's or the Indenture Trustee's interests therein. While failure to
file such assignments does not affect the Owner Trust's interest in the
Contracts or perfection of the Indenture Trustee's interest in such Contracts
(including the related Originator's security interest in the related Equipment),
it does expose the Owner Trust (and thus Noteholders) to the risk that the
Originator could release its ownership or security interest in the Equipment of
record, and it could complicate the Owner Trust's enforcement, as assignee, of
the Originator's security interest in the Equipment. In addition, also due to
the administrative burden and expense, no UCC financing statement reflecting the
security interest of the Owner Trust or the Indenture Trustee in the related
Equipment will be filed in the jurisdictions (other than the States of
Massachusetts, New Jersey and Oregon) where the Equipment is located. In the
absence of such filings, the Owner Trust and the Indenture Trustee may not have
a perfected security interest in such Equipment. As a result, if the Originator
were to sell or grant a security interest in any Equipment to a third party,
such third party might acquire such Equipment free and clear of the interest of
the Indenture Trustee in such
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Equipment and a subsequent secured party or other lienholder might obtain an
interest in the Equipment superior to that of the Indenture Trustee. While these
risks should not affect the perfection or priority of the interest of the
Indenture Trustee in the Contracts or rights to payment thereunder, they may
adversely affect the right of the Indenture Trustee to receive proceeds of
disposition of the Equipment subject to a Liquidated Contract, which are to be
allocated to the payment of the Notes and the Equity Certificates, as described
under "Description of the Notes -- Contract Defaults." Additionally, statutory
liens for repairs or unpaid taxes and other liens arising by operation of law
may have priority even over prior perfected security interests in the name of
the Indenture Trustee in the Equipment.
The Servicer will hold the Contracts and certain related documents on behalf
of the Owner Trust and Indenture Trustee. To facilitate servicing and save
administrative costs, the documents will not be physically segregated from other
similar documents that are in the Servicer's possession. UCC financing
statements will be filed in the appropriate jurisdictions reflecting the sale
and assignment of the Contracts by the Originators to the Depositor, by the
transfer and assignment by the Depositor to the Owner Trust and the pledge by
the Owner Trust to the Indenture Trustee, and the Servicer's accounting records
and computer systems will also reflect such sale, assignment, transfer and
pledge. The Contracts will not, however, be stamped or otherwise marked to
reflect that such Contracts and Equipment have been sold to the Depositor,
transferred to the Owner Trust or pledged to the Indenture Trustee. If, through
inadvertence or otherwise, any of the Contracts were sold to another party (or a
security interest therein were granted to another party) that purchased (or took
a security interest in) any of such Contracts in the ordinary course of business
and took possession of such Contracts, the purchaser (or secured party) would
acquire an interest in the Contracts superior to the interest of the Owner Trust
and Indenture Trustee if the purchaser (or secured party) acquired (or took a
security interest in) the Contracts for new value and without actual knowledge
of the Owner Trust's or Indenture Trustee's interest.
NO GROSS-UP FOR WITHHOLDING TAX
In the opinion of counsel, under current United States federal income tax
law in effect as of the date hereof, payments of principal and interest on the
Notes to a United States Alien Holder will not be subject to United States
federal withholding tax (subject to the exceptions noted in "United States
Taxation -- Tax Consequences to United States Alien Holders"). If such law were
to change and, as a result thereof, United States withholding tax was imposed on
such payments, a United States Alien Holder would receive such payments net of
such withholding tax; and neither the Owner Trust, the Depositor, TCC nor any
other party has any obligation to gross up such payments to account for such
withholding tax.
THE MERGER
On June 5, 1996, Antigua Acquisition Corporation, a newly formed Delaware
corporation ("MergerCo."), executed an Agreement and Plan of Merger (the "Merger
Agreement") with Hercules Limited, a newly formed Cayman Islands corporation
("HoldCo."), TCC and AT&T Corp. ("AT&T"), which provides for the merger (the
"Merger") of MergerCo. with and into TCC and pursuant to which each outstanding
share of common stock, par value $0.01 per share ("Common Stock"), of TCC (other
than shares owned by TCC, HoldCo., MergerCo., or their respective wholly owned
subsidiaries or by any stockholders properly exercising their appraisal rights
under Delaware law ("Excluded Shares")) will be converted into the right to
receive $45 in cash per share, without interest thereon (the "Merger
Consideration"). In addition, pursuant to the terms of the Merger Agreement,
each outstanding option on shares of Common Stock (the "Options"), other than
those management options (the "Management Options") held by certain members of
management of TCC (the "Management Offerees") which may be exchanged for new
options to purchase common stock of the surviving corporation, will be canceled
upon consummation of the Merger in exchange for cash in an amount equal to the
excess of the Merger Consideration over the Option exercise price per share. The
Merger is subject to certain regulatory approvals and other conditions precedent
(set out below). Upon consummation of the Merger, the current stockholders of
TCC will cease to be stockholders of TCC, except that the Management Offerees
will be offered the opportunity to maintain all or a portion of their current
equity investment in TCC and may be granted new options for common stock of the
surviving corporation. All of the outstanding equity
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capital of MergerCo. will, save for the Management Offerees, be owned by HoldCo.
All of the outstanding equity capital of HoldCo. is owned by a group of
companies led by GRS Holding Company Limited. The Depositor is a wholly owned
subsidiary of MergerCo. and will, upon consummation of the Merger, be a wholly
owned subsidiary of TCC (see "The Depositor and the Owner Trust -- The
Depositor").
Under the Merger Agreement, the respective obligations of HoldCo.,
MergerCo., AT&T and TCC to consummate the Merger are subject to the fulfillment
or waiver, where permissible, of the following conditions at or prior to
September 17, 1996: (i) the expiration or termination of the waiting period
applicable to the Merger under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended; (ii) the receipt of all required consents, registrations,
approvals, permits and authorizations in full force and effect; and (iii) no
court or governmental entity of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
judgment, decree, injunction or other order that is in effect and restrains,
enjoins or otherwise prohibits consummation of the Merger Agreement.
The obligation of HoldCo. to consummate the Merger is further conditioned
on: (i) the truth and accuracy in all material respects of the representations
and warranties made by TCC and AT&T in the Merger Agreement; (ii) the
performance in all material respects of all obligations of TCC and AT&T under
the Merger Agreement; (iii) the receipt by TCC and AT&T of the consent or
approval of each person whose consent or approval is required, except for those
for which the failure to obtain such consent or approval is not reasonably
likely to have a material adverse effect on TCC; (iv) the receipt by HoldCo. of
the resignations of each director of TCC; and (v) AT&T and TCC having entered
into a transitional services agreement.
The obligations of TCC and AT&T to consummate the Merger are further
conditioned on: (i) the truth and accuracy in all material respects of the
representations and warranties made by HoldCo. and MergerCo.; (ii) the
performance in all material respects of all obligations of HoldCo. and
MergerCo.; and (iii) the receipt by HoldCo. of the consent or approval of each
person whose consent or approval is required, except for those consents for
which the failure to obtain such consent or approval is not reasonably likely to
have a material adverse effect on the ability of HoldCo. or MergerCo. to
consummate the Merger. HoldCo. has received an unconditional and irrevocable
undertaking from Nomura International plc to underwrite an international capital
markets issue on behalf of HoldCo. to satisfy its obligations under the Merger
Agreement.
The consummation of the Merger is currently scheduled for September 17,
1996. It is currently anticipated that all regulatory approvals will be obtained
on or around September 17, 1996. If the Merger is not consummated by September
, 1996, all of the Notes will be redeemed and prepaid on the Special
Redemption Date as described under "Description of the Notes -- Special
Redemption."
THE DEPOSITOR AND THE OWNER TRUST
THE DEPOSITOR
Antigua Funding Corporation is incorporated under the laws of the State of
Delaware. Prior to the Merger Consummation Date, all of the equity capital of
the Depositor will be owned by MergerCo. All of the initial equity capital of
MergerCo. will be owned by HoldCo. See "The Merger." On the Merger Consummation
Date, MergerCo. and TCC will merge, the corporate entity resulting from, and
surviving, such merger will be TCC, and the Depositor will then be a wholly
owned subsidiary of TCC. On the Merger Consummation Date, all of the Contracts
and the interests of the Originators in the related Equipment will be
transferred by the Originators to the Depositor in consideration for which the
Depositor shall pay to the Originators the net proceeds received from the
offering and sale of the Notes and the Equity Certificates.
On the Merger Consummation Date, the Depositor will transfer and convey to
the Owner Trust all of the Contracts and the Depositor's interest in the
Equipment related thereto in consideration for (i) all amounts at the time on
deposit in the Escrow Account (including any investment earnings thereon), and
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(ii) the proceeds derived by the Depositor from the disposition of the Equity
Certificates. All of the Notes will be sold to third parties pursuant to this
Prospectus, the Equity Certificates will be issued to the Depositor and disposed
of by it in a separate transaction, and the Equipment Certificate will be issued
to and retained by the Depositor. On the Closing Date, the Depositor and the
Owner Trustee will execute and deliver the Trust Agreement (with effect from
such date), and the Owner Trust and the Indenture Trustee will execute and
deliver the Indenture (with effect from such date), and on the Merger
Consummation Date, the Depositor and the Servicer shall execute and deliver the
Transfer and Servicing Agreement (with effect from such date). If for any
reason, the Merger Consummation Date has not occurred by September , 1996,
then the Notes shall be redeemed at the Special Redemption Price on the Special
Redemption Date.
The Depositor has been formed solely for the purposes of the transactions
described in this Prospectus; and under its incorporation documents and the
Transfer and Servicing Agreement, the Depositor is not permitted to engage in
any activity other than (i) acquiring the Contracts and interests of the
Originators in the Equipment related thereto, (ii) transferring and conveying
such Contracts and interests in the Equipment to the Owner Trust, (iii)
executing and performing its obligations under the Purchase Agreement and the
Transfer and Servicing Agreement, (iv) holding or transferring the Equity
Certificates and the Equipment Certificate, and (v) engaging in other
transactions, including entering into agreements, that are necessary, suitable
or convenient to accomplish the foregoing or are incidental thereto or connected
therewith. The Depositor is prohibited from incurring any debt, issuing any
obligations or incurring any liabilities, except in connection with the
formation of the Owner Trust and the issuance of the Notes. The Depositor is not
liable, responsible or obligated, directly or indirectly, for payment of any
principal, interest or any other amount in respect of any of the Notes.
THE OWNER TRUST
The Owner Trust will be created pursuant to the Trust Agreement. Prior to
the Closing Date, the Owner Trust will have no assets, property or obligations.
From the Closing Date to the Merger Consummation Date, the assets of the Owner
Trust (the "Trust Assets") will consist solely of the proceeds of the Notes,
plus additional cash, which will be deposited and held (and invested in certain
Eligible Investments at the direction of the Depositor) in the Escrow Account
maintained by the Indenture Trustee pursuant to the Indenture until (i) applied
by the Indenture Trustee to the special redemption of the Notes as described
under "Description of the Notes -- Special Redemption of the Notes," or (ii)
paid over to the Depositor and used to acquire the Contracts, the Originators'
interest in the Equipment and the other property described below.
From and after the Merger Consummation Date, the Trust Assets will consist
of (i) a pool of equipment lease contracts (the "Lease Contracts") and
installment sale contracts, promissory notes, loan and security agreements and
other similar types of receivables (the "Loan Contracts" and, together with the
Lease Contracts, the "Contracts"), with various lessees or other obligors
thereunder (each, an "Obligor"), including the right to receive all Scheduled
Payments received thereon from and after the Cut-Off Date (including all
payments due prior to, but not received as of, the Cut-Off Date, but excluding
any payments due on or after, but received prior to, the Cut-Off Date), (ii) the
interest of the Depositor in the equipment subject to each such Contract (the
"Equipment"), which interest is either an ownership interest or a security
interest, (iii) amounts on deposit in (and Eligible Investments allocated to)
certain accounts established pursuant to the Indenture and the Transfer and
Servicing Agreement, including the Collection Account, and (iv) certain other
property and assets as herein described.
The Owner Trust will not engage in any business activity other than (i)
issuing the Notes and the Certificates, (ii) holding and dealing with (including
disposing of) the Owner Trust Assets, (iii) making payments on the Notes and the
Certificates, (iv) entering into and performing the duties, responsibilities and
functions required under the Transfer and Servicing Agreement, the Indenture,
the Contracts, and related documents, and (v) matters related to the foregoing.
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CAPITALIZATION OF THE OWNER TRUST
The following table illustrates the capitalization of the Owner Trust as of
the Cut-Off Date, as if the issuance and sale of the Notes and the Equity
Certificates offered hereby had taken place on such date:
<TABLE>
<S> <C>
Class A Receivable-Backed Notes................................. $
Class B Receivable-Backed Notes................................. $
Class C Receivable-Backed Notes................................. $
Equity Certificates............................................. $
---------
Total....................................................... $
</TABLE>
THE OWNER TRUSTEE
will be the Owner Trustee under the Trust Agreement. The
Owner Trustee is a banking corporation and its principal offices
are located at , , . The Owner Trustee's liability in
connection with the issuance and sale of the Notes and the Equity Certificates
is limited solely to the express obligations of the Owner Trustee set forth in
the Trust Agreement and the Indenture.
The Owner Trustee may resign at any time, in which event the Depositor will
be obligated to appoint a successor Owner Trustee. The Depositor may also remove
the Owner Trustee if the Owner Trustee ceases to be eligible to continue as such
under the Trust Agreement or if the Owner Trustee becomes insolvent. Any
resignation or removal of the Owner Trustee and appointment of a successor Owner
Trustee will not become effective until acceptance of the appointment of a
successor Owner Trustee.
AT&T CAPITAL CORPORATION
AT&T Capital Corporation ("TCC") is a full-service, diversified equipment
leasing and finance company that operates principally in the United States and
also has operations in Europe, Canada, the Asia/Pacific region, Mexico and South
America. TCC is one of the largest equipment leasing and finance companies in
the United States, based on the aggregate value of equipment leased or financed,
and is the largest lessor of telecommunications equipment in the United States.
TCC, through its various subsidiaries, leases and finances a wide variety of
equipment, including general office, manufacturing and medical equipment,
telecommunications equipment (such as private branch exchanges, telephone
systems and voice processing units), information technology equipment (such as
personal computers, retail point of sale systems and automatic teller machines)
and transportation equipment (primarily vehicles). In addition, TCC provides
inventory financing for equipment dealers, franchise financing for franchisees
and financing collateralized by real estate. TCC's leasing and financing
services are marketed to (i) customers of equipment manufacturers, distributors
and dealers with which TCC has a marketing relationship for financing services
and (ii) directly to end-users of equipment. TCC's approximately 500,000
customers include large global companies, small and mid-sized businesses and
federal, state and local governments and their agencies.
During its 10 year history, TCC has achieved significant growth in assets,
finance volume (aggregate dollar amount of equipment and other items financed),
revenues and net income. At December 31, 1995, TCC's total assets were
approximately $9.5 billion, an increase of 18.9% over the prior year-end;
finance volume for 1995 was $4.6 billion, an increase of 7.4% over 1994; total
revenues for 1995 were $1.6 billion, an increase of 13.9% over 1994; and net
income of $127.6 million for 1995 was 27.1% greater than the net income for
1994. Total assets at the end of the second quarter of 1996 were approximately
$ billion representing a % increase over total assets at the end of the
second quarter of 1995, and net income of $31.0 million for the first six months
of 1996 represented an increase of 47.7% over the net income for the
corresponding period in 1995.
TCC's predecessor was founded in 1985 by AT&T as a captive finance company
to assist its equipment marketing and sales efforts by providing AT&T's
customers with sophisticated financing. In 1993, AT&T sold 14% of TCC's common
stock in an initial public offering. TCC's common stock has
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traded on the New York Stock Exchange under the symbol "TCC." While it is
anticipated that TCC's common stock will be delisted upon the consummation of
the Merger (see "The Merger"), TCC will, from time to time, continue to issue
securities in the public market and, accordingly, will continue to be subject to
the informational requirements of the Exchange Act and, in accordance therewith,
will file reports and other information with the Commission.
On September 20, 1995, AT&T announced plans to separate itself into three
publicly traded companies (AT&T, Lucent Technologies Inc. ("Lucent") and NCR
Corporation ("NCR")) and to sell its remaining equity interest in TCC in a
public or private sale. See "The Merger."
TCC has an experienced management team; its six executive officers have been
in management positions with TCC for an average of 10 years and, on a combined
basis, have more than 100 years experience in the equipment leasing and finance
industry. At June 30, 1996, TCC and its subsidiaries had approximately 2,850
members (employees). The principal executive offices of TCC are located at 44
Whippany Road, Morristown, New Jersey 07962.
The Contracts comprising the Trust Assets have been originated or, in some
cases, purchased from third parties by four wholly owned subsidiaries of TCC:
AT&T Capital Leasing Services, Inc. ("Leasing Services"), AT&T Credit
Corporation ("Credit Corp."), NCR Credit Corp. ("NCR Credit") and the Portland
division of AT&T Commercial Finance Corporation (such division is referred to as
"CFC") (collectively, the "Originators").
THE ORIGINATORS
AT&T CAPITAL LEASING SERVICES, INC.
Leasing Services provides leasing and financing programs for manufacturers
and distributors as well as leasing and financing to existing customers. Leasing
Services (formerly known as Eaton Financial Corporation) was acquired by a
predecessor of Credit Corp. in March 1989, and became a wholly owned subsidiary
of a predecessor of TCC in connection with TCC's reorganization in March 1990.
It thereafter became a wholly owned subsidiary of TCC in connection with TCC's
restructuring in March 1993.
Leasing Services is headquartered in Framingham, Massachusetts and employed,
as of June 30, 1996, approximately 425 people in a network of four full service
offices throughout the United States and a support office in Framingham. Its
portfolio includes office automation and general-purpose business equipment such
as copiers and computers, as well as industry-specific equipment such as
printing, machine tools and medical/dental equipment. At June 30, 1996, the
Leasing Services portfolio (which includes both contracts owned by Leasing
Services and contracts serviced on behalf of others) was comprised of the
following equipment types: computers %, copiers %, machine tool
manufacturing equipment %, medical/dental equipment %, printing equipment
%, automobile test/repair equipment % and other %.
At June 30, 1996, % of Leasing Services' portfolio consisted of leases.
Approximately % of such leases include fair market value purchase options
exercisable by the applicable lessee upon expiration of the applicable lease.
The balance of the leases contain fixed price or nominal purchase options. At
June 30, 1996, % of Leasing Services' portfolio consisted of loans, which are
prepayable, in whole or in part, at any time, and under which the obligor is
responsible for all maintenance, insurance and taxes.
Leasing Services' total portfolio, consisting of over customers as of
June 30, 1996, is comprised mainly of small and medium-sized companies. In
addition to a large customer base, the portfolio is broadly diversified; as of
June 30, 1996, the ten largest customers comprised only % of the aggregate
portfolio. As of June 30, 1996, the average exposure per customer for the entire
portfolio was approximately $ . In terms of geographical distribution, five
states (California %, Florida %, New York %, Texas % and New Jersey
%) accounted for approximately % of outstanding receivables as of June 30,
1996.
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Leasing Services' credit and collections operations are decentralized within
its network of four full-service offices located in the Atlanta, Georgia;
Dallas, Texas; San Francisco, California; and Boston, Massachusetts metropolitan
areas. As of June 30, 1996, Leasing Services had members responsible for
credit and contract approval and collections activities.
AT&T CREDIT CORPORATION AND NCR CREDIT CORP.
Credit Corp. supports the sales of AT&T, Lucent and NCR equipment by
providing leasing and financing options to customers who have selected equipment
manufactured or supplied by these vendors. Credit Corp.'s predecessor was
established as a captive finance company of AT&T in 1985. The predecessor of NCR
Credit, which is a wholly owned subsidiary of Credit Corp., was established as a
captive finance company of NCR in 1980. In 1992, when AT&T acquired NCR,
ownership of NCR Credit was transferred to TCC. At that time Credit Corp. and
NCR Credit operated as separate business units of TCC. In 1995, TCC consolidated
the operations of NCR Credit and Credit Corp.; relocated the credit and
collections operations supporting NCR Credit from Dayton, Ohio, to Credit
Corp.'s executive offices in Parsippany, New Jersey; ceased using NCR Credit to
originate new financings; and began using Credit Corp. to originate business in
that market segment. As of June 30, 1996, Credit Corp. employed approximately
members.
Substantially all of Credit Corp.'s transactions are generated through
Lucent and NCR, which currently are subsidiaries of AT&T. See "AT&T Capital
Corporation". Lucent manufactures and distributes telecommunications and related
equipment, and NCR manufactures and distributes information technology
(including retail point-of sale systems, automated teller machines ("ATMs") and
computers). At June 30, 1996, the combined portfolio of Credit Corp. and NCR
Credit was comprised of the following equipment types: telecommunications
equipment %, computer equipment %, retail point-of-sale systems %, ATMs
%, and other %.
At June 30, 1996, % of Credit Corp.'s portfolio consisted of leases.
Approximately % of such leases include fair market value purchase options in
favor of the applicable lessee upon expiration of the applicable lease. The
balance of the leases contain fixed price or nominal purchase options. At June
30, 1996, % of Credit Corp.'s portfolio consisted of loans, which are
prepayable, in whole or in part, at any time, and under which the obligor is
responsible for all maintenance, insurance and taxes.
Transactions generated from the sales of Lucent equipment historically are
small ticket transactions ( customers; average transaction size of $ ;
% of the combined portfolio) and middle market transactions ( customers;
average transaction size of $ ; % of the combined portfolio).
Transactions generated from the sales of NCR equipment historically are middle
market transactions ( customers; average transaction size of $ ; %
of the combined portfolio). In terms of geographical distribution, the top five
states ( ) accounted for approximately % of the outstanding receivables
as of June 30, 1996.
Credit Corp.'s credit and collection operations are handled on a centralized
basis through its executive offices in Parsipanny, New Jersey. As of June 30,
1996, Credit Corp. had approximately members in New Jersey responsible for
credit and contract approvals, documentation and collections. Substantially all
of these members work in teams that are focused on distinct market segments
(e.g., by vendor (Lucent or NCR), by size of transaction (small ticket or middle
market) or by geographic region). Other members provide company-wide oversight
of the credit, contract and collections processes associated with the portfolio
originated by Credit Corp. and NCR Credit. In addition, as of June 30, 1996
Credit Corp. had approximately account managers located in Lucent offices
throughout the United States to help process credit applications and
documentation packages.
AT&T COMMERCIAL FINANCE CORPORATION
CFC provides financing and leasing programs for manufacturers and
distributors of material handling and construction equipment. CFC was formed in
1990 in connection with the acquisition of substantially all the assets of two
divisions of Pacificorp Credit, Inc.
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CFC is headquartered in Portland, Oregon and employed as of June 30, 1996,
members, including regionally deployed sales representatives. CFC's credit
and collection operations are located in Portland, Oregon. As of June 30, 1996,
CFC had members responsible for credit and collections activity.
At June 30, 1996, the CFC portfolio (which includes both contracts owned by
CFC and contracts serviced on behalf of others) was comprised of the following
equipment types: . At June 30, 1996, % of CFC's portfolio consisted of
lease contracts and % consisted of loan contracts. Approximately % of the
lease contracts include fair market value purchase options in favor of the
applicable lessee upon expiration of the applicable lease. The balance of the
lease contracts contain fixed price or nominal options. The loan contracts
included within CFC's portfolio are prepayable, in whole or in part, at any
time, and require the obligor to pay for all maintenance, insurance and taxes.
CFC's retail portfolio, consisting of over customers as of June 30,
1996, is comprised of businesses of varying sizes in a wide variety of
industries. As of June 30, 1996, the average exposure per end user customer was
approximately $ . The ten largest end user customers comprised % of the
aggregate portfolio. The CFC portfolio is also diversified geographically with
five states ( , , , and )
accounting for approximately % of outstanding receivables as of June 30, 1996.
UNDERWRITING AND SERVICING
CREDIT MANAGEMENT PHILOSOPHY
TCC undertakes certain risks in connection with the management of its assets
and business, including credit risk and residual value risk. The management of
these risks is critical to each strategic business unit within TCC (an "SBU").
As such, TCC has in place policies, controls and procedures (including
sophisticated credit scoring systems in several of its SBUs which support the
credit approval process, credit limit assignment and collections) intended to
manage and limit such risks, promote early problem recognition and corrective
action as well as facilitate consistent portfolio performance measurements. Such
policies, controls and procedures are subject to periodic review by TCC's Risk
Management Department, which includes legal, credit and asset management
personnel, by TCC's internal auditors and TCC's Audit Committee. In addition,
TCC's executive officers, acting as a committee (the "CLT"), regularly monitors
TCC's overall risk profile.
The control of credit losses is an important element of TCC's business. TCC
seeks to minimize its credit risk through diversification of its portfolio by
customer, industry segment, equipment type, geographic location and transaction
maturity. TCC's financing activities have been spread across a wide range of
equipment types (E.G., general equipment, telecommunications equipment, office
equipment, information technology and transportation equipment) and real estate
and a large number of end-users located throughout the United States and, to a
lesser extent, abroad.
Each SBU has a senior credit officer and a Credit Committee that together
are responsible for overseeing the quality, integrity and performance of their
respective credit portfolios. Before any transaction can be committed to, it
must first be credit approved by one of TCC's proprietary credit scoring models
or by a duly authorized credit officer. Portfolio quality is monitored regularly
to assess the overall condition of the portfolio and identify the major
exposures within the portfolio. Each SBU Credit Committee is charged with the
responsibility of establishing credit policies appropriate for its business and
periodically reviewing its credit personnel's exercise of credit authority for
adherence to the established credit policies. Credit authorities are an
important tool that TCC uses to manage and control its portfolio risk. Credit
authorities are set in order to enable individual credit officers (and SBUs) to
handle approximately 80-85% of the transactions flowing to them. This approach
results in approximately 15-20% of the transactions being reviewed by higher
credit authorities. This ensures oversight of an individual's judgment, credit
skills and compliance with credit policy by more senior credit officials. Each
SBU Credit Committee is empowered to establish credit authorities for qualified
members of their credit staff for up to $250,000. Approval of new credit
authorities up to $1,000,000 require the approval of TCC's Chief Credit Officer
or its Chief Risk Management Officer in addition to the approval of the SBU
Credit
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Committee. Approval of new credit authorities in excess of $1,000,000 also
require the approval of the CLT or TCC's Chief Executive Officer. The existing
credit authorities allow the SBU senior credit officer to approve transactions
up to $4.5 million in the case of Credit Corp., up to $2.0 million in the case
of Leasing Services, up to $2.0 million in the case of NCR Credit and up to $1.5
million in the case of CFC. In addition, approval by TCC's Chief Credit Officer,
Chief Risk Management Officer, Corporate Business Leader or CLT is required for
transactions in excess of the SBU's credit authority and for certain other
matters. The credit authority granted to approve transactions may not be
delegated. TCC utilizes the "one obligor concept" in computing total credit
exposure; this means that the level of credit authority required to approve an
incremental transaction must be sufficient to approve the customer's total
credit exposure. TCC tracks credit exposure in an automated fashion aggregating
all SBUs' exposure to each customer including its subsidiaries, affiliates and
commonly controlled companies. Unless otherwise specifically approved, credit
approvals are valid for up to 180 days.
UNDERWRITING -- GENERAL
TCC's underwriting standards are intended to evaluate a prospective
customer's credit standing and repayment ability. Credit decisions are made
based upon the credit characteristics of the applicant, loss experience with
comparable customers, the amount and terms and conditions of the proposed
transaction and the type of equipment to be leased or financed. For almost all
transactions under $50,000 originated by Leasing Services and Credit Corp.,
sophisticated credit scoring systems (where a computer makes the initial credit
decision after consideration of many variables from the credit application data
and credit bureau information, based on a statistical model of TCC's prior loss
experience) are utilized to make credit decisions. TCC's credit scoring system,
which was first developed in 1989 and has been subsequently upgraded with the
development of new models, is designed to improve credit decisions on new lease
applications, expedite response times to customers and increase business volume
and portfolio profitability while maintaining credit quality. With respect to
credit decisions for those transactions which are not credit scored, TCC's
credit officers conduct various credit investigations including reference
calling and the procurement and analysis of data from credit reporting agencies
such as Dun & Bradstreet, TRW and other credit bureaus. In the case of larger
sized transactions (generally over $100,000), TCC's credit officers will obtain
and analyze financial statements from the customer. Analysis will be conducted
to determine the reliability of the financial statements and to ascertain the
financial condition and operating performance of the potential customer. Asset
quality is carefully reviewed and stated liabilities are compared to the
information obtained from reference checking and credit reports. Cash flow is
checked for reliability and adequacy to service funded debt maturities and other
fixed charges. The financial analysis would typically involve a review of the
potential customer's leverage, profitability, liquidity and cash flow utilizing
a variety of financial ratios and comparing the company to other companies its
size in similar businesses. In this connection, various reference sources are
utilized such as Robert Morris Associates Financial Ratio Guide. Additionally,
information may be obtained from rating agencies, securities firms, Bloomberg
and numerous other sources. A written analysis is then prepared by the credit
officer summarizing the amount and terms of the credit request and setting forth
the credit officer's recommendation for disposition including detailed
supporting rationale. Alternative exit strategies including an analysis of the
value of the equipment as well as its essentiality of use are also considered in
the event the customer fails to honor its payment obligations. The credit
approval will also set forth any conditions of approval such as personal or
corporate guarantees, shorter lease terms, more advance payments or other credit
enhancements, and it will dictate the necessary documentation. Any subsequent
modification of approval terms or required documentation must be re-approved by
one of TCC's authorized credit officers. TCC also requires the credit personnel
of each SBU to rate the creditworthiness of each of such unit's customer
accounts over $100,000 and, in connection therewith, to take into account
certain other factors affecting the credit risk of a particular transaction,
such as collateral value, credit enhancement and duration of the credit.
UNDERWRITING -- ADVANCED CREDIT SCORING SYSTEMS
In 1992, TCC commissioned the Bell Laboratories Operations Research
Department ("Bell Labs") to design decision support systems and associated
strategies for credit risk management throughout
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the customer's financing life cycle. This life cycle approach, while commonplace
in the consumer credit field, is not common in commercial leasing. Three sets of
decision support systems were developed and implemented, covering each stage of
the small ticket leasing life cycle; front-end credit decisions, credit line
management, and delinquent account collections. Leasing Services utilized this
methodology initially, followed by Credit Corp., which had previously worked
with commercial credit scoring vendors and consultants since 1989. Credit Corp.
is now installing the behavioral collection scoring technology company-wide,
which it has been using on a limited test basis in several of its operating
units for most of 1996. Each system is comprised of a suite of statistically
derived risk prediction models, a sequential decision strategy which determines
the model to be used in each instance, and a risk based strategy which
determines the optimal decision based upon the model results.
Front-end credit decisioning systems improve the accuracy, speed and cost
effectiveness of the credit evaluation of new credit applications. The system
follows a series of steps including the selection and electronic retrieval of
credit bureau information, the quantification of credit risk and the decision to
accept, reject or manually review the credit applicant. While both Leasing
Services and Credit Corp. have been using credit application scoring models
since 1991 and 1989, respectively, Leasing Services implemented an improved
decisioning system in March 1993, while Credit Corp. implemented such system in
May 1995. Separate credit line management models have been developed and
implemented within Credit Corp. in May 1995 and are currently being implemented
within Leasing Services. The credit scoring systems are monitored using various
reporting mechanisms and have been continually upgraded over time to incorporate
the value of more recent data and to take advantage of improved statistical
techniques. Overrides of credit scoring decisions by authorized credit officers
are permitted, but are discouraged unless additional information is uncovered
which materially strengthens the transaction or if sufficient credit
enhancements can be obtained to mitigate the risk. Overrides are carefully
tracked by operating unit by month, and are more common at Credit Corp. than
they are at Leasing Services. Such advanced credit scoring systems are not used
by CFC and NCR Credit because the Contracts originated by each of them have
larger original balances.
DOCUMENTATION
Prior to funding leasing and financing transactions, a complete
documentation package (including generally a credit application, signed
lease/installment sale or financing agreement, vendor invoice, initial
lease/advance payment, proof of insurance (where relevant), delivery and
acceptance acknowledgements and appropriate UCC financing statements) is
required. Filing of UCC financing statements typically is required by Leasing
Services unless the underlying equipment has a cost of less than $10,000 (or
$30,000 in the case of a lease contract with a fair market value purchase
option); by Credit Corp. unless the underlying equipment has a cost of less than
$20,000 (or $50,000 in the case of a lease contract with a fair market value
purchase option); by NCR Credit unless the underlying equipment has a cost of
less than $25,000; and by CFC in all transactions.
BILLING
Billing for the Originators is handled by third parties, which prepare and
mail monthly invoices. All customers are assigned a billing cycle and invoices
are sent either 19 days before the due date in the case of Credit Corp., 30 days
before the due date in the case of Leasing Services, 20 days before the due date
in the case of CFC, or 25 days before the due date in the case of NCR Credit.
From time to time to facilitate customer needs, the Originators will provide
manual invoices. Monthly invoices include the scheduled payment, taxes,
insurance and late charges, if any. The vast majority of contracts provide for
level payments throughout their term. Substantially all customers forward
payments to lockboxes with certain financial institutions.
PORTFOLIO MONITORING
Delinquency is tracked and calculated monthly for each major portfolio
segment, including segmentation by classification of days past due. In addition,
non-accruals are tracked monthly, including the portion which is deemed to be at
risk by the SBU credit officials. Similarly, credit losses are monitored each
month and are compared with credit losses for the previous months and the
corresponding month in the prior years. TCC also employs sophisticated
techniques in the analysis and oversight of its
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portfolio. For that portion of the portfolio assets consisting of transactions
under $25,000, roll rate analysis (a type of portfolio analysis examining the
rate at which accounts in various stages of delinquency become, or "roll" into,
losses) and a type of vintage analysis (another type of portfolio analysis in
which TCC's assets are classified by age and then compared across different
years (e.g., comparing loss experience for two-year-old portfolio in 1996 with
that in 1995)) are used together with other types of analyses (such as
historical experience and various industry indices) which are used broadly in
evaluating TCC's portfolio.
In addition to providing an initial credit review, the credit review
procedures are designed to identify at an early stage those customers that may
be experiencing financial difficulty. Once identified, these customers are
monitored by credit personnel, who periodically make recommendations to the SBU
Credit Committee and/or the CLT about what remedial actions should be taken,
what portion, if any, of total credit exposures should be written off or whether
a specific allocation of TCC's loss reserves should be made.
In establishing allowances for credit losses, TCC's management reviews,
among other things, the aging of TCC's portfolio, all non-performing leases and
receivables and prior collection experience, as well as TCC's overall exposure
and changes in credit risk.
COLLECTIONS
TCC collects overdue payments using several different methods. At Credit
Corp. and Leasing Services, sophisticated computerized collection management
systems have been developed and deployed. Credit Corp. utilizes sophisticated
technology in its collection activities with the exception of behavioral
scoring, which is now being implemented company-wide following a testing period
in several of Credit Corp.'s units for most of 1996. The collection management
systems prioritize delinquent accounts into automated queues using delinquent
account scoring systems (also referred to as behavioral scoring). Telephone
calls to delinquent accounts are automatically dialed by the system eliminating
no answer and busy line calls (which are automatically rescheduled).
Accounts are ranked using a suite of statistically derived risk prediction
indicators for handling in order of risk weighted exposure. The collection
management systems will entail different account collection strategies as a
function of risk level and account balance. Accounts with low balances and/or
low risk would be assigned to a low impact collection strategy which will
involve fewer letters and telephone calls. Also, the number of days between
actions would be greater for a low risk account than in the case of a high risk
account. A high impact collection strategy would be assigned to accounts with
high balances and/or high risk scores. In this case, telephone calls would be
commenced sooner in the collection process and collection actions would be more
closely spaced.
At NCR Credit and CFC, account collections are undertaken in a more manual
fashion with prioritization being principally driven by the number of days past
due. Accounts are typically assigned to individuals or groups who will be
responsible to ensure appropriate collection activities are undertaken to
effectuate customer payment. The collection process is undertaken using computer
generated reminder notices which are generally sent once an account is 10-15
days past due, individually tailored collection letters and telephone contact,
as appropriate.
Outside collection agencies and attorneys are frequently used to supplement
collection activity. Typically an account is placed with an outside collection
agency or attorney when it is 180 days or more past due. However, accounts past
due less than 180 days may be placed with a collection agency or attorney
depending upon the circumstances of its delinquency. Equipment may be
repossessed at any time after the contracted default but repossession typically
is not made until the account is past due between 70 and 180 days.
NON-ACCRUAL AND WRITE-OFF POLICY
TCC maintains non-accrual and write-off policies which are followed by all
SBUs. The policies require that all accounts which are 90 days past due (or
sooner in the event of a bankruptcy or other appropriate evidence of impairment)
be placed on non-accrual, and be written off or specifically reserved at 180
days past due. Larger transactions will utilize specific reserves to
appropriately reduce the carrying value of the equipment to an amount which may
be "covered" by collateral value.
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THE CONTRACTS
DESCRIPTION OF THE CONTRACTS
THE FORMS OF CONTRACTS
The Contracts which are included in the Preliminary Contract Pool (as
defined under "--Certain Statistics Relating to the Preliminary Contract Pool"),
as of the Preliminary Cut-Off Date (as defined under "--Certain Statistics
Relating to the Preliminary Contract Pool"), consist primarily of the following
types of instruments: approximately % of such instruments are Lease
Contracts, and approximately % of such instruments are Loan Contracts. All of
the Contracts are commercial, rather than consumer, leases or loans.
The Lease Contracts are generally in one of two forms: (a) a master lease
agreement containing all of the general terms and conditions of the lease
transaction or transactions, with schedules setting forth the specific terms of
each lease transaction with that particular Obligor (a "Master Form Lease"), and
(b) specific lease agreement forms containing all of the terms and conditions of
the lease transaction (a "Specific Lease Form"). Credit Corp. generally uses the
Master Form Lease for lease transactions in excess of $100,000 and in connection
with smaller transactions in which the Obligor has previously executed a Master
Form Lease; NCR Credit uses the Master Form Lease for substantially all of its
transactions; CFC uses both a Specific Lease Form and a Master Form Lease; and
Leasing Services generally uses a Specific Lease Form but uses a Master Form
Lease for certain vendor customers. In certain cases, the Lease Contract may be
written on another form which was created by one of the Originators, by a
customer or by a third-party originator. The Loan Contracts are documented on
installment sale contract, promissory note, chattel mortgage or loan and
security agreement forms.
PAYMENTS GENERALLY
Generally, the Contracts included in the Preliminary Contract Pool require
that the Obligor make periodic payments on either a monthly or a quarterly
basis, while a number of Contracts (which, in relation to the Preliminary
Cut-Off Date Contract Pool Principal Balance, is not material) provide for semi-
annual or annual payments. The payments under all of the Contracts in the
Preliminary Contract Pool are required to be made in United States dollars and
are fixed and specified payments, rather than payments which are tied to a
formula or are otherwise at a floating rate. Payments under the Contracts are
ordinarily payable in advance, although a small percentage (including most of
those originated by NCR Credit) provide for payments in arrears.
EXPENSES RELATING TO EQUIPMENT
All of the Contracts included in the Preliminary Contract Pool require the
Obligor to assume the responsibility for payment of all expenses of the
Equipment including (without limitation) any expenses in connection with the
maintenance and repair of the Equipment, the payment of any and all premiums for
casualty and liability insurance and the payment of all taxes relating to the
Equipment.
INSURANCE; REPAIR AND REPLACEMENT
Each Lease Contract (except for a small number of Contracts which, in
relation to the Preliminary Cut-Off Date Contract Pool Principal Balance, is not
material) requires the Obligor to maintain liability insurance which must name
the lessor as additional insured. Lease Contracts and Loan Contracts require
Obligors to procure property insurance against the loss, theft or destruction
of, or damage to, the Equipment for its full replacement value, naming the
lessor (or lender) as loss payee. This requirement is, from time to time, waived
by the Originator for a small number of transactions and, for some Lease
Contracts, the Obligor is permitted to self-insure the Equipment under the
Obligor's already existing self-insurance program.
For transactions involving leased Equipment with a cost of $100,000 or less,
the Lessee is generally provided with written information concerning its
property insurance obligations under the Lease Contract and the Originator's own
property insurance coverage that will be provided at the expense of the Lessee
if the Lessee does not provide the Originator with satisfactory evidence of its
own insurance coverage. The Lessee is given a specified time period in which to
provide such evidence. Proper
30
<PAGE>
evidence of coverage is verified independently and tracked by a third party
tracking company and licensed broker. If the Originator provides the insurance
coverage, the Lessee is charged a monthly fee covering the insurance premium and
other related administrative charges. If, at any time, the Lessee provides
evidence of its own coverage, such monthly charges cease. The Lessee has the
ability to "opt out" of the program by providing evidence of its own coverage.
For transactions involving Equipment with a cost of more than $100,000,
insurance coverage generally is verified and tracked by the respective
Originator and the failure to maintain such insurance constitutes an event of
default under the applicable Lease Contract. Generally, either pursuant to the
Specific Lease Form or the Master Form Lease, the Obligor also agrees to
indemnify the Originator for all liability and expenses arising from the use,
condition or ownership of the Equipment.
Under each Lease Contract, if the Equipment is damaged or destroyed, the
Obligor is required to (i) repair such Equipment, (ii) make a termination
payment to the lessor in an amount not less than the Required Payoff Amount, or
(iii) in some cases, replace such damaged or destroyed Equipment with other
equipment of comparable use and value. Under the Transfer and Servicing
Agreement, the Servicer is permitted (in the case of the destruction of the
Equipment related to a particular Lease Contract) either to allow the Lessee to
replace such Equipment (provided that the replacement equipment is, in the
judgment of the Servicer, of comparable use and at least equivalent value to the
value of the Equipment which was destroyed) or to accept the termination payment
referred to above.
ASSIGNMENT OF CONTRACTS
All of the Contracts in the Preliminary Contract Pool permit the assignment
of the Contract by the lessor or secured party without the consent of the
Obligor, except for a small number of Contracts which require notification of
the assignment to, or the consent of, the Obligor (and TCC will represent and
warrant in the Purchase Agreement that such notices have been given, or such
approvals will have been received, not more than ten days following the Merger
Consummation Date). None of the Contracts in the Preliminary Contract Pool
permit the assignment of the Contract (or the Equipment related thereto) by the
Obligor without the prior consent of the lessor or secured party, other than
Contracts which (i) may permit assignments to a parent, subsidiary or affiliate,
(ii) permit the assignment to a third party, provided the Obligor remains liable
under the Contract, or (iii) permit assignment to a third party with a credit
standing (determined by TCC in accordance with its underwriting policy and
practice at the time for an equivalent contract type, term and amount) equal to
or better than the original Obligor. Under the Transfer and Servicing Agreement,
the Servicer may permit an assignment of a particular Contract from an Obligor
to a third party only if the Servicer (utilizing the current underwriting
criteria for its contract origination activities generally) determines that such
third party is of sufficient credit quality that the Servicer would permit such
third party to become an obligor with respect to a lease or loan contract
originated by the Servicer generally.
HELL-OR-HIGH-WATER LEASE CONTRACTS
All of the Lease Contracts in the Preliminary Contract Pool are
"hell-or-high-water" contracts which require all payments thereunder to be made
regardless of the condition or suitability of the related Equipment and
notwithstanding any defense, set-off or counterclaim that the Obligor may have
against the lessor.
EVENTS OF DEFAULT AND REMEDIES
Events of default under the Contracts generally include the failure to pay
all amounts required by the Contract when due, the failure of the Obligor to
perform its agreements and covenants under the applicable Contract, material
misrepresentations made by the Obligor, the bankruptcy or insolvency of the
Obligor or the appointment of a receiver for the Obligor and, in some cases,
default by the Obligor under other contracts or agreements. Some of these
default provisions are, in some instances, subject to notice provisions and cure
periods. Remedies available to the lessor or secured party upon the occurrence
of an event of default by the Obligor include the right to cancel or terminate
in the case of a Lease Contract, or to accelerate payments in the case of a Loan
Contract, to recover possession of the related Equipment, and to receive an
amount intended to make the lessor or secured party (as the case
31
<PAGE>
may be) whole plus costs and expenses (including legal fees) incurred by the
lessor or secured party as a result of such default. Notwithstanding such events
of default and remedies, under the Transfer and Servicing Agreement, the
Servicer is permitted to take such actions, with respect to delinquent and
defaulted Contracts, as a reasonably prudent creditor would do under similar
circumstances. See "Description of the Transfer and Servicing Agreement --
Servicing."
PREPAYMENTS AND EARLY TERMINATION
None of the Lease Contracts permit the prepayment or early termination of
the Lease, except in a de minimis number of cases which allow for a prepayment
or early termination upon payment of an amount which is calculated in accordance
with a formula which results in an amount not less than the Required Payoff
Amount. Notwithstanding that fact, the Servicer is permitted under the Transfer
and Servicing Agreement to accept a prepayment as part of an early termination
of the applicable Lease Contract if the amount paid by or on behalf of the
Obligor is at least equal to the Required Payoff Amount for such Lease Contract.
All or substantially all of the Loan Contracts permit the Obligors, at their
option, to prepay such Loans at any time in an amount equal to the then
outstanding principal balance plus accrued interest to the date of such
prepayment plus any applicable unpaid charges. See "Description of the Notes --
Application of Prepayments."
DISCLAIMER OF WARRANTIES
Each of the Lease Contracts included in the Preliminary Contract Pool
contains provisions whereby the lessor (or the Originator, as assignee of the
lessor) disclaims all warranties with respect to the Equipment and, in the
majority of cases, the lessor assigns the manufacturer's warranties to the
Lessee for the term of the Lease. Under the Lease Contracts, the Obligor
"accepts" the Equipment under the applicable Lease Contract following delivery
and an opportunity to inspect the related Equipment.
ADDITIONAL EQUIPMENT
Some of the Lease Contracts in the Preliminary Contract Pool constitute
leases of "additional equipment" with existing Obligors. Pursuant to the terms
of the original Lease Contract between the lessor and the Obligor, these leases
for "additional equipment" (generally costing $25,000 or less) are documented on
a written form prepared by the lessor and delivered to (but not executed by) the
Obligor, which written form describes all of the terms of the lease. Under the
terms of the Lease Contract, the Obligor agrees that unless it objects in
writing within a specified period of time, it is deemed to have accepted the
lease of such "additional equipment."
REPRESENTATIONS AND WARRANTIES MADE BY TCC
Under the Purchase Agreement, TCC will make the following representations
and warranties regarding each Contract (and the related Equipment) included in
the Final Contract Pool as of the Cut-Off Date:
(A)Each Contract (i) constitutes a valid, binding and enforceable payment
obligation of the Obligor in accordance with its terms (except as may be
limited by applicable bankruptcy, insolvency or other similar laws affecting the
enforceability of creditors' rights generally and the availability of equitable
remedies), (ii) has been duly and properly sold, assigned and conveyed by the
applicable Originator under the Purchase Agreement to the Depositor and has been
duly and properly transferred and conveyed by the Depositor to the Owner Trust
pursuant to the Transfer and Servicing Agreement, (iii) was originated by one of
the Originators in the ordinary course of such Originator's business, or (in the
case of any Contract purchased by one of the Originators) was acquired by such
Originator for proper consideration and was validly assigned to such Originator
by the seller of such Contract, and (iv) contains customary and enforceable
provisions adequate to enable realization against the Obligor and/or the related
Equipment (although no representation or warranty is made with respect to the
perfection or priority of any security interest in such related Equipment);
(B)No selection procedures adverse to the Noteholders or Equity
Certificateholders were utilized in selecting the Contracts from those
lease and loan contracts owned by the Originators on the Cut-Off Date;
32
<PAGE>
(C)All requirements of applicable Federal, state and local laws, and
regulations thereunder, in respect of all of the Contracts, have been
complied with in all material respects;
(D)There is no known default, breach, violation or event permitting
cancellation or termination of the Contract by the lessor (in the case of
Lease Contracts) or by the secured party (in the case of Loan Contracts) under
the terms of any Contract (other than Scheduled Payment delinquencies (in excess
of 10% of the Scheduled Payment due) of not more than 59 days), and (except for
payment extensions and waivers of Administrative Fees in accordance with TCC's
servicing policies) there has been no waiver of any of the foregoing; and as of
the Cut-Off Date, no related Equipment had been repossessed;
(E)Immediately prior to the sale, assignment and conveyance of each Contract
by an Originator to the Depositor, such Originator had good title to such
Contract conveyed to the Depositor and was the sole owner thereof, free of any
Lien; and immediately prior to the transfer and conveyance of the Contracts to
the Owner Trust, the Depositor had good title thereto and was the sole owner
thereof, free of any Lien created by the applicable Originator;
(F)No person has a participation in or other right to receive Scheduled
Payments under any Contract, and neither the Depositor nor any of the
Originators nor TCC has taken any action to convey any right to any person that
would result in such person having a right to Scheduled Payments received with
respect to any Contract;
(G)Each Contract was originated or purchased by an Originator and was sold
by such Originator to the Depositor without any fraud or
misrepresentation on the part of such Originator;
(H)Each Obligor (i) is located in the United States, and (ii) is not (a) the
United States of America or any State or local government or any agency,
department, subdivision or instrumentality thereof or (b) the Depositor, an
Originator, TCC or any subsidiary thereof;
(I)No Contract was originated in, or is subject to the laws of, any
jurisdiction the laws of which would make unlawful, void or voidable the
sale, transfer and assignment of such Contract to the Depositor under the
Purchase Agreement or the transfer and conveyance from the Depositor to the
Owner Trust under the Transfer and Servicing Agreement;
(J)All filings and other actions required to be made, taken or performed by
any person in any jurisdiction to give the Owner Trust a first priority
perfected lien or ownership interest in the Contracts will have been made, taken
or performed;
(K)There exists a Contract File pertaining to each Contract, and such
Contract File contains the Contract or a facsimile copy thereof;
(L)There is only one original executed copy of each Contract or, if there
are multiple originals, all such originals are in the possession of the
Originator or the signed original in the possession of the Originator is noted
thereon as being the only copy that constitutes chattel paper;
(M)The Contracts constitute chattel paper within the meaning of the UCC as
in effect in the States of New Jersey, Massachusetts and Oregon (other
than those Contracts in which the lessor is financing the Obligor's software
license or maintenance contract for leased Equipment, which Contracts, in
proportion to the Cut-Off Date Contract Pool Principal Balance, are not
material);
(N)Each Contract was entered into by an Obligor who, at the Cut-Off Date,
had not been identified on the records of TCC or the Originators as being
the subject of a current bankruptcy proceeding;
(O)The computer tape containing information with respect to the Contracts
that was made available by the Depositor to the Owner Trustee and the
Indenture Trustee on the Closing Date and was used to select the Contracts (the
"Computer Tape") was complete and accurate in all material respects as of the
Cut-Off Date and includes a description of the same Contracts that are described
in the Schedule of Contracts to the Transfer and Servicing Agreement;
33
<PAGE>
(P)By the Merger Consummation Date, the portions of the electronic master
record of TCC and the Depositor (the "Electronic Ledger") relating to the
Contracts will have been clearly and unambiguously marked to show that the
Contracts constitute part of the Trust Assets and are owned by the Owner Trust
in accordance with the terms of the Transfer and Servicing Agreement;
(Q)No Contract has a Scheduled Payment delinquency (in excess of 10% of the
Scheduled Payment due) of more than 59 days past due as of the Cut-Off
Date;
(R)Each Contract may be sold, assigned and transferred by the Originator to
the Depositor, and may be assigned and transferred by the Depositor to
the Owner Trust without the consent of, or prior approval from, or any
notification to, the applicable Obligor, other than (i) certain Contracts
(which, in proportion to the aggregate of all of the Contracts, is not material)
that require notification of the assignment to the Obligor, which notification
will have been given by the Servicer not more than 10 days following the Merger
Consummation Date and (ii) Contracts which require the consent of the Obligor,
which consent will have been obtained not more than 10 days following the Merger
Consummation Date;
(S)Each Contract prohibits the sale, assignment or transfer of the Obligor's
interest therein, the assumption of the Contract by another person in a
manner that would release the Obligor thereof from the Obligor's obligation, or
any sale, assignment or transfer of the related Equipment, without the prior
consent of the lessor (in the case of Lease Contracts) or the secured party (in
the case of Loan Contracts), other than Contracts which may (i) permit
assignment to a subsidiary, corporate parent or other affiliate, (ii) permit the
assignment to a third party, provided the Obligor remains liable under the
Contract, or (iii) permit assignment to a third party with a credit standing
(determined by TCC in accordance with its underwriting policy and practice at
the time for an equivalent contract type, term and amount) equal to or better
than the original Obligor;
(T)The Obligor under each Contract is required to make payments thereunder
(i) in United States dollars, and (ii) in fixed amounts and on fixed and
predetermined dates;
(U)Each Contract requires the Obligor to assume responsibility for payment
of all expenses in connection with the maintenance and repair of the
related Equipment, the payment of all premiums for insurance of such Equipment
and the payment of all taxes (including sales taxes) relating to such Equipment;
(V)Each Contract requires the Obligor thereunder to make all scheduled
payments thereon under all circumstances and regardless of the condition
or suitability of the related Equipment and notwithstanding any defense, set-off
or counterclaim that the Obligor may have against the manufacturer, lessor or
lender (as the case may be);
(W)Under each Lease Contract, if the Equipment is damaged or destroyed, the
Obligor is required to either (i) repair such Equipment, (ii) make a
termination payment to the lessor in an amount not less than the Required Payoff
Amount, or (iii) in some cases, replace such damaged or destroyed Equipment with
other equipment of comparable use and value;
(X)None of the Lease Contracts permit the Lessee to terminate the Lease
Contract prior to the Final Scheduled Payment Date or to otherwise prepay
the amounts due and payable thereunder, other than certain Lease Contracts which
do permit an early termination or prepayment, but in such cases the amount to be
paid in connection with such termination or prepayment is not less than the
Required Payoff Amount;
(Y)Each Loan Contract permits the prepayment of the amount due thereunder,
at the option of the Obligor, but any prepayment in full must be in an
amount not less than the principal amount then outstanding plus accrued interest
thereon to the date of such prepayment; and
(Z)It is not a precondition to the valid transfer or assignment of the
Depositor's interest in any of the Equipment related to any Contract that
title to such Equipment be transferred on the records of any governmental or
quasi-governmental agency, body or authority.
34
<PAGE>
The above-described representations and warranties of TCC will be made as of
the Merger Consummation Date and will survive the transfer and assignment of the
related Contracts and other Trust Assets to the Owner Trust but will speak only
as of the date made.
In the event of a breach of any such representation or warranty with respect
to a Contract that materially and adversely affects the value of such Contract
(any such breach being a "Repurchase Event"), TCC, unless it cures the breach by
the 60th day after the date on which TCC or the Depositor becomes aware of or
receives written notice from the Indenture Trustee or the Servicer of such
breach, will be obligated to purchase the Contract from the Owner Trust. Any
such purchase shall be made on the Business Day preceding the Payment Date
immediately following such 60th day at a price equal to the Required Payoff
Amount applicable to such Contract. This purchase obligation may be enforced by
the Indenture Trustee on behalf of the holders of the Notes and the Equity
Certificates, and will constitute the sole remedy available to the Noteholders
and the Equity Certificateholders against TCC for any such uncured breach,
except that pursuant to the Transfer and Servicing Agreement, TCC will indemnify
the Indenture Trustee, the Owner Trustee, the Owner Trust and the
Securityholders against losses, damages, liabilities and claims which may be
asserted against any of them as a result of third-party claims arising out of
the facts giving rise to such breach.
Upon the purchase by TCC of a Contract (and related Equipment), the
Indenture Trustee will release its liens thereon and the Owner Trust will convey
such Contract and the related Equipment to TCC.
CERTAIN STATISTICS RELATING TO THE PRELIMINARY CONTRACT POOL
GENERAL
The Depositor has prepared certain statistics relating to the pool of
Contracts which, subject to the exception noted below, will constitute the Final
Contract Pool. These statistics are based on such Contracts as of August 1, 1996
(the "Preliminary Cut-Off Date"), and the Final Contract Pool will consist of
such Contracts, less that portion of the Contract Principal Balances which are
paid or prepaid from the Preliminary Cut-Off Date to September 1, 1996 (the
"Cut-Off Date"). Accordingly, the statistics relating to such pool of Contracts
as of the Preliminary Cut-Off Date (the "Preliminary Contract Pool") will differ
somewhat from the Final Contract Pool; however, the statistics relating to the
Final Contract Pool will be included in the final Prospectus.
For purpose of the tables presented below, all unpaid Scheduled Payments due
on the Contracts included in the Preliminary Contract Pool from and after the
Preliminary Cut-Off Date (including all Scheduled Payments due prior to, but not
received as of, the Preliminary Cut-Off Date, but excluding any Scheduled
Payments due on or after, but received prior to, the Preliminary Cut-Off Date)
have been discounted monthly at an assumed rate of % per annum to calculate a
"Preliminary Cut-Off Date Contract Pool Principal Balance." The Preliminary
Cut-Off Date Contract Pool Principal Balance, was $ , and the total number
of Contracts in the Preliminary Contract Pool was . Accordingly, the
average Contract Pool Principal Balance of the Contracts in the Preliminary
Contract Pool, as of the Preliminary Cut-Off Date, was $ . Within the
Preliminary Contract Pool, % of the Contracts (by Preliminary Cut-Off Date
Contract Pool Principal Balance) were originated by the Originators (or by other
affiliates of TCC) and % of such Contracts (by Preliminary Cut-Off Date
Contract Pool Principal Balance) were purchased by the Originators (or by other
affiliates of TCC) from unrelated third parties.
COMPOSITION OF THE PRELIMINARY CONTRACT POOL
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED AVERAGE
PRELIMINARY AVERAGE AVERAGE CONTRACT
CUT-OFF DATE ORIGINAL REMAINING PRINCIPAL
CONTRACT POOL TERM TERM BALANCE
NUMBER OF CONTRACTS PRINCIPAL BALANCE (RANGE) (RANGE) (RANGE)
- ------------------------- --------------------- --------------------- --------------------- -----------------
<S> <C> <C> <C> <C>
months months $
( to months) ( to months) ($ to $)
</TABLE>
35
<PAGE>
TYPE OF CONTRACTS
The following table shows the distribution of the Preliminary Contract Pool
between true leases (defined for purposes of this table as a Contract under
which the Obligor has a right to purchase the related Equipment only upon
payment of the fair market value thereof) and all other Contracts (comprising
both Loan Contracts and Lease Contracts with fixed price or nominal purchase
options) by indicating the number of Contracts in each category, the aggregate
Contract Principal Balance of such Contracts, and the percentage (by number of
Contracts and by aggregate Contract Principal Balance) of such Contracts
relative to all of the Contracts in the Preliminary Contract Pool:
<TABLE>
<CAPTION>
% OF
PRELIMINARY
% OF TOTAL CUT-OFF DATE
NUMBER OF NUMBER OF AGGREGATE CONTRACT CONTRACT POOL
TYPE OF CONTRACT CONTRACTS CONTRACTS PRINCIPAL BALANCE PRINCIPAL BALANCE
- ------------------------------------------------- ------------- ------------- ------------------- -------------------
<S> <C> <C> <C> <C>
True Leases......................................
All Other Contracts..............................
Total......................................
</TABLE>
GEOGRAPHICAL DIVERSITY
The following table shows the geographical diversity of the Preliminary
Contract Pool, by indicating the number of Contracts, the aggregate Contract
Principal Balance of such Contracts and the percentage (by number of Contracts
and by aggregate Contract Principal Balance) of such Contracts relative to all
of the Contracts in the Preliminary Contract Pool by reference to the State in
which the Obligors to such Contracts are located:
<TABLE>
<CAPTION>
% OF PRELIMINARY
AGGREGATE CUT-OFF DATE
% OF TOTAL CONTRACT CONTRACT POOL % OF TOTAL
NUMBER OF NUMBER OF PRINCIPAL PRINCIPAL NUMBER OF NUMBER OF
STATE CONTRACTS CONTRACTS BALANCE BALANCE STATE CONTRACTS CONTRACTS
- ---------------- -------------- -------------- -------------- ---------------- ---------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total. . . .
<CAPTION>
% OF PRELIMINARY
AGGREGATE CUT-OFF DATE
CONTRACT CONTRACT POOL
PRINCIPAL PRINCIPAL
STATE BALANCE BALANCE
- ---------------- -------------- ----------------
<S> <C> <C>
</TABLE>
36
<PAGE>
CONTRACTS BY EQUIPMENT TYPE
The following table shows the type of Equipment securing or otherwise
related to the Contracts in the Preliminary Contract Pool, by the number of
Contracts, the aggregate Contract Principal Balance of such Contracts, and the
percentage (by number of Contracts and by aggregate Contract Principal Balance)
of such Contracts relative to all of the Contracts in the Preliminary Contract
Pool:
<TABLE>
<CAPTION>
% OF PRELIMINARY
CUT-OFF DATE
% OF TOTAL AGGREGATE CONTRACT CONTRACT POOL
TYPE OF EQUIPMENT NUMBER OF CONTRACTS NUMBER OF CONTRACTS PRINCIPAL BALANCE PRINCIPAL BALANCE
- ------------------------------- --------------------- ---------------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Total....................
</TABLE>
CONTRACT PRINCIPAL BALANCES
The following table shows the distribution of the Preliminary Contract Pool
by Contract Principal Balance by indicating the number of Contracts which have a
Contract Principal Balance within a defined range and the aggregate Contract
Principal Balance of such Contracts, and the percentage (by number of Contracts
and by aggregate Contract Principal Balance) of such Contracts relative to all
of the Contracts in the Preliminary Contract Pool:
<TABLE>
<CAPTION>
% OF PRELIMINARY
CUT-OFF DATE
CONTRACT
% OF TOTAL AGGREGATE CONTRACT POOL PRINCIPAL
CONTRACT PRINCIPAL BALANCE NUMBER OF CONTRACTS NUMBER OF CONTRACTS PRINCIPAL BALANCE BALANCE
- ---------------------------- --------------------- ---------------------- --------------------- -----------------
<S> <C> <C> <C> <C>
$ to $ ...........
$ to $ ...........
$ to $ ...........
Total.................
</TABLE>
REMAINING TERMS OF CONTRACTS
The following table shows the remaining term of the Contracts in the
Preliminary Contract Pool from the Preliminary Cut-Off Date to the scheduled
expiration date of such Contracts, by indicating the number of Contracts, the
aggregate Contract Principal Balance of such Contracts, and the percentage (by
number of Contracts and by aggregate Contract Principal Balance) of such
Contracts relative to all of the Contracts in the Preliminary Contract Pool:
<TABLE>
<CAPTION>
% OF PRELIMINARY
CUT-OFF DATE
NUMBER CONTRACT POOL
OF % OF TOTAL AGGREGATE CONTRACT PRINCIPAL
REMAINING TERM OF CONTRACTS CONTRACTS NUMBER OF CONTRACTS PRINCIPAL BALANCE BALANCE
- --------------------------------------- ----------- ---------------------- --------------------- -----------------
<S> <C> <C> <C> <C>
One Month to Months.................
Months to Months...................
Months to Months...................
Months to Months...................
Over Months..........................
Total............................
</TABLE>
37
<PAGE>
TYPES OF OBLIGOR
The Contracts with a single Obligor (or group of affiliated Obligors) having
the largest aggregate Contract Principal Balance as of the Preliminary Cut-Off
Date represented approximately__% of the Preliminary Cut-Off Date Contract Pool
Principal Balance, and the ten groups of Contracts with single Obligors (or
affiliated Obligors) having the largest aggregate Contract Principal Balance
represented approximately __% of the Preliminary Cut-Off Date Contract Pool
Principal Balance. The following table shows the types of Obligor on Contracts
within the Preliminary Contract Pool, by the number of Contracts, the aggregate
Contract Principal Balance of such Contracts, and the percentage (by number of
Contracts and by aggregate Contract Principal Balance) of such Contracts
relative to all of the Contracts in the Preliminary Contract Pool:
<TABLE>
<CAPTION>
% OF PRELIMINARY
CUT-OFF DATE
CONTRACT POOL
% OF TOTAL AGGREGATE CONTRACT PRINCIPAL
TYPE OF OBLIGOR NUMBER OF CONTRACTS NUMBER OF CONTRACTS PRINCIPAL BALANCE BALANCE
- ---------------------------- --------------------- ---------------------- --------------------- -----------------
<S> <C> <C> <C> <C>
Total.................
</TABLE>
CERTAIN STATISTICS RELATING TO DELINQUENCIES AND DEFAULTS
DELINQUENCIES
The following table sets forth statistics relating to Delinquencies on lease
and/or loan contracts within the Originators' portfolios (on an aggregate basis)
as of December 31, 1991, December 31, 1992, December 31, 1993, December 31,
1994, December 31, 1995 and June 30, 1996. For these purposes, a "Delinquency"
means that the obligor on the lease or loan contract has failed to make a
required Scheduled Payment in an amount equal to at least 90% of the required
Scheduled Payment on the date required and for a specified period thereafter
(which period is set forth below under "Defaults"). For these purposes, any
payment made by the obligor on a lease or loan contract subsequent to the
required payment date is applied to the earliest payment which was unpaid. The
statistics set forth below relate to the entire portfolio of lease and loan
contracts serviced by the Originators as of the date specified, and not to the
Contracts in either the Preliminary Contract Pool or the Final Contract Pool;
and, accordingly, such statistics should not necessarily be considered
indicative of the future performance of
38
<PAGE>
the Contracts in the Final Contract Pool. The following table is based, where
indicated, on the book value of the lease and loan contracts, as it appears on
the accounting records of TCC as of the date set forth below.
<TABLE>
<CAPTION>
PERCENTAGE OF AGGREGATE BOOK VALUE OF CONTRACTS WHICH
WERE DELINQUENT
AGGREGATE BOOK ------------------------------------------------------
VALUE OF 31 TO 60 61 TO 90 91 TO 120 OVER 120
DATE OF CALCULATION CONTRACTS DAYS DAYS DAYS DAYS TOTAL
- ---------------------------------- ---------------- ------------ ------------ ------------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
12/31/91.......................... $ % % % %
12/31/92.......................... $ % % % %
12/31/93.......................... $ % % % %
12/31/94.......................... $ % % % %
12/31/95.......................... $ % % % %
6/30/96.......................... $ % % % %
</TABLE>
DEFAULTS
The following table sets forth statistics relating to Defaults on lease
and/or loan contracts within the Originators' portfolios (on an aggregate basis)
as of, and for the 12-month periods ending, December 31, 1991, December 31,
1992, December 31, 1993, December 31, 1994, December 31, 1995 and as of, and for
the six-month period ending, June 30, 1996. For these purposes, a "Default"
means that, (i) during such 12-month period, the obligor on the relevant lease
or loan contract failed to make payments in an amount at least equal to 90% of
the required Scheduled Payment for at least 90 days beyond the date required, or
commenced a bankruptcy or insolvency proceeding, and (ii) in either event that
the applicable Originator or TCC declared a default under such lease or loan
contract and pursued one or more remedies thereunder. The statistics set forth
below relate to the portfolio of lease and/or loan contracts serviced by the
Originators for the period specified and not to the Contracts in either the
Preliminary Contract Pool or the Final Contract Pool; and, accordingly, such
statistics should not necessarily be considered as indicative of the future
performance of the Contracts in the Final Contract Pool. The following table is
based, where indicated, on the book value of the lease and loan contracts as it
appears on the records of TCC as of the date specified below:
<TABLE>
<CAPTION>
AGGREGATE BOOK PERCENTAGE OF
VALUE OF CONTRACTS IN AGGREGATE BOOK VALUE OF
ORIGINATORS' CONTRACTS WHICH WERE
DATE OF CALCULATION PORTFOLIO DEFAULTED
- ------------------------------------------------------------------- --------------------- -----------------------
<S> <C> <C>
12/31/91........................................................... $ %
12/31/92........................................................... $ %
12/31/93........................................................... $ %
12/31/94........................................................... $ %
12/31/95........................................................... $ %
6/30/96........................................................... $ %
</TABLE>
LOSSES AND RECOVERIES
The following table sets forth statistics relating to gross losses and
losses net of recoveries on Defaulted lease and loan contracts within the
Originators' portfolios (on an aggregate basis) during the 12-month period
ending December 31, 1991, December 31, 1992, December 31, 1993, December 31,
1994 and December 31, 1995 and during the six-month period ending June 30, 1996.
For these purposes, "gross losses" means , and "losses net of
recoveries" means . The statistics set forth below relate to the
portfolio of lease and loan contracts serviced by the Originators during the
period indicated and not to the Contracts in either the Preliminary Contract
Pool or the Final Contract Pool; and, accordingly, such statistics should not
necessarily be considered indicative of the future performance of the Contracts
in the Final Contract Pool.
[TABLE TO FOLLOW]
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<PAGE>
DESCRIPTION OF THE NOTES
GENERAL
The Notes will be issued pursuant to the terms of the Indenture, a form of
which has been filed as an exhibit to the Registration Statement. A copy of the
Indenture will be filed with the Commission following the issuance of the Notes.
The following summary describes certain terms of the Notes and the Indenture.
The summary does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, all the provisions of the Notes and the
Indenture. , a national banking association headquartered in
, will be the Indenture Trustee.
The Owner Trust will issue $ aggregate principal amount of %
Receivable-Backed Notes, Class A (the "Class A Notes"), $ aggregate
principal amount of % Receivable-Backed Notes, Class B (the "Class B Notes"),
and $ aggregate principal amount of % Receivable-Backed Notes, Class C
(the "Class C Notes"), pursuant to the Indenture. The Class A Notes will be
senior in right of payment to the Class B and Class C Notes, and the Class B
Notes will be senior in right of payment to the Class C Notes. The Owner Trust
will also issue two classes of certificates of beneficial interest, the Equity
Certificates and the Equipment Certificate, which are not being offered hereby.
The Equipment Certificate will represent an undivided interest in, and be
payable solely from, the Equipment and certain amounts derived from the sale or
other disposition of the Equipment upon expiration or termination (including an
early termination or liquidation) of the related Contracts and certain other
amounts as described herein. Amounts payable on the Equipment Certificate will
not be available for payment of interest and principal on the Notes. It is
expected that the Equity Certificates will initially represent the right to
receive principal in an amount equal to approximately 4% of the Cut-Off Date
Contract Pool Principal Balance, together with interest thereon at % per
annum, payable from Pledged Revenues in the priority described under "--
Distributions" below.
Payments on the Notes will be made by the Indenture Trustee on each Payment
Date to persons in whose names the Notes are registered as of the related Record
Date (the "Holders" or "Noteholders"). The Payment Date for the Notes will be
the day of each month (or if such day is not a Business Day, the next
succeeding Business Day), commencing in October 1996. The Record Date for any
Payment Date will be the Business Day immediately preceding the Payment Date (so
long as the Notes are held in the book-entry form), or the last day of the prior
calendar month (if Definitive Notes have been issued).
A "Business Day" is any day (other than a Saturday and Sunday) on which
commercial banks in New York City and are open for regular business.
Each Class of Notes initially will be represented by one or more global
Notes (the "Global Notes") registered in the name of the nominee of DTC
(together with any successor depository selected by the Indenture Trustee, the
"Depository"), except as set forth below. Beneficial interests in each Class of
Notes will be available for purchase in minimum denominations of $1,000 and
integral multiples of $1,000 in excess thereof in book-entry form only. The
Depositor has been informed by DTC that DTC's nominee will be Cede & Co.
Accordingly, Cede & Co. is expected to be the Holder of record of the Notes.
Unless and until Definitive Notes are issued under the limited circumstances
described herein, no Note Owner acquiring an interest in any Class of Notes will
be entitled to receive a certificate representing such Note Owner's interest in
such Notes. Until such time, all references herein to actions by Noteholders of
any Class of Notes will refer to actions taken by the Depository upon
instructions from its participating organizations and all references herein to
distributions, notices, reports and statements to Noteholders of any Class of
Notes will refer to distributions, notices, reports and statements to the
Depository or its nominee, as the registered Holder of the Notes of such Class,
for distribution to Note Owners of such Class in accordance with the
Depository's procedures. See "-- Book-Entry Registration" and "-- Definitive
Notes."
DISTRIBUTIONS
Principal of and interest on the Notes and the Equity Certificates will be
paid on each Payment Date solely from, and secured by, the Amount Available for
such Payment Date, which is equal to: (1) the sum
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<PAGE>
of (a) those Pledged Revenues on deposit in the Collection Account as of the
last Business Day preceding the related Determination Date (the "Deposit Date")
(i) which were received by the Servicer during the preceding calendar month (the
"Collection Period") or which represent amounts paid by TCC or the Depositor to
purchase Contracts and related Equipment as of the end of such Collection Period
("Related Collection Period Pledged Revenues"), or (ii) to the extent necessary
to pay interest on the Notes and the Equity Certificates on such Payment Date,
which were received by the Servicer after such Collection Period ("Current
Collection Period Pledged Revenues" and, together with the Related Collection
Period Pledged Revenues, the "Available Pledged Revenues"), plus (b) amounts
permitted to be withdrawn therefor from the Cash Collateral Account, as
described under "-- Cash Collateral Account" below, less (2) the related
Servicing Fee as described in clause (i) of the second succeeding paragraph.
"Pledged Revenues" will consist of (i) "Scheduled Payments" on the Contracts
(which will consist of all payments under the Contracts other than those
portions of such payments which, under the Contracts, are to be (A) applied by
the Servicer to the payment of insurance premiums, maintenance, taxes and other
similar obligations, or (B) retained by the Servicer in payment of
Administrative Fees) received on or after the Cut-Off Date and due during the
term of the Contracts, without giving effect to end-of-term extensions or
renewals thereof (including all Scheduled Payments due prior to, but not
received as of, the Cut-Off Date, but excluding any Scheduled Payments due on or
after, but received prior to, the Cut-Off Date); (ii) any voluntary prepayments
("Prepayments") received on or after the Cut-Off Date under the Contracts,
provided that the amount, if any, by which any such Prepayment exceeds the
Required Payoff Amount of the related Contract will not constitute Pledged
Revenues; (iii) any amounts paid by TCC to purchase Contracts and the related
Equipment due to a breach of representations and warranties with respect
thereto, as described under "The Contracts -- Representations and Warranties
Made by TCC," or by the Depositor to purchase the Contracts and the related
Equipment, as described under "-- Optional Purchase of Contracts" below, in each
case excluding those portions thereof attributable to the Book Value of the
Equipment, (iv) certain of the proceeds derived from the liquidation of the
Contracts and the related Equipment, as described under "-- Liquidated
Contracts" below; and (v) any earnings on the investment of amounts credited to
the Collection Account.
On each Payment Date, the Indenture Trustee will be required to make the
following payments, first, from Related Collection Period Pledged Revenues,
second, to the extent the Related Collection Period Pledged Revenues are
insufficient to pay interest on the Notes and the Equity Certificiates on such
Payment Date, the amount necessary to cure such insufficiency from Current
Collection Period Pledged Revenues and third (but only as to amounts described
in clause (ii) and certain amounts included in clause (iii)), from amounts
permitted to be withdrawn from the Cash Collateral Account as described under
"-- Cash Collateral Account" below, in the following order of priority:
(i)
the Servicing Fee to the Servicer;
(ii)
interest on the Notes and the Equity Certificates in the following order
of priority:
(a) interest on the Class A Notes (including any overdue interest and
interest thereon),
(b) interest on the Class B Notes (including any overdue interest and
interest thereon),
(c) interest on the Class C Notes (including any overdue interest and
interest thereon), and
(d) interest on the Equity Certificates (including any overdue interest
and interest thereon);
(iii)
an amount equal to the Monthly Principal Amount, as of such Payment Date,
in respect of principal on the Notes and the Equity Certificates in the
priority described under "-- Principal" below; and
(iv)
the remainder, if any, to the Cash Collateral Account, to be applied in
the manner described under "-- Cash Collateral Account" below.
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<PAGE>
CLASS A INTEREST
Interest will be paid to the Holders of the Class A Notes on each Payment
Date, to the extent the Amount Available is sufficient therefor, at the Class A
Interest Rate on the then outstanding Class A Principal Balance, and will be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
Such interest so paid on such Payment Date will be equal to one-twelfth of the
product of (i) the Class A Interest Rate and (ii) the related Class A Principal
Balance as of the immediately preceding Payment Date (after giving effect to
reductions in the related Class A Principal Balance on such immediately
preceding Payment Date). Interest on the Class A Notes will accrue from and
including September , 1996, to but excluding October , 1996 (in the case of
the first interest period), and thereafter for each successive Payment Date from
and including the most recent prior Payment Date to which interest has been
paid, to but excluding such Payment Date.
In the event that, on a particular Payment Date, the Amount Available is not
sufficient to make a full distribution of interest to the Holders of the Class A
Notes, the amount of such deficiency, together with interest thereon at the
Class A Interest Rate, to the extent permitted by law, will be added to the
amount such Holders will be entitled to receive as interest on the next Payment
Date.
CLASS B INTEREST
Interest will be paid to the Holders of the Class B Notes on each Payment
Date, to the extent the remaining Amount Available (after taking into account
any prior applications described under "-- Distributions" above) is sufficient
therefor, at the Class B Interest Rate on the then outstanding Class B Principal
Balance, and will be calculated on the basis of a 360-day year consisting of
twelve 30-day months. Such interest so paid on such Payment Date will be equal
to one-twelfth of the product of (i) the Class B Interest Rate and (ii) the
Class B Principal Balance as of the immediately preceding Payment Date (after
giving effect to reductions in the Class B Principal Balance on such immediately
preceding Payment Date). Interest on the Class B Notes will accrue from and
including September , 1996, to but excluding October , 1996 (in the case of
the first interest period), and thereafter for each successive Payment Date from
and including the most recent prior Payment Date to which interest has been
paid, to but excluding such Payment Date.
In the event that, on a particular Payment Date, the remaining Amount
Available is not sufficient to make a full distribution of interest to the
Holders of Class B Notes, the amount of such deficiency, together with interest
thereon at the Class B Interest Rate, to the extent permitted by law, will be
carried forward and added to the amount such Holders will be entitled to receive
as interest on the next Payment Date.
CLASS C INTEREST
Interest will be paid to the Holders of the Class C Notes on each Payment
Date, to the extent the remaining Amount Available (after taking into account
any prior applications described under "-- Distributions" above) is sufficient
therefor, at the Class C Interest Rate on the then outstanding Class C Principal
Balance, and will be calculated on the basis of a 360-day year consisting of
twelve 30-day months. Such interest so paid on such Payment Date will be equal
to one-twelfth of the product of (i) the Class C Interest Rate, and (ii) the
Class C Principal Balance as of the immediately preceding Payment Date (after
giving effect to reductions in the Class C Principal Balance on such immediately
preceding Payment Date). Interest on the Class C Notes will accrue from and
including September , 1996 to but excluding October , 1996 (in the case of the
first interest period), and thereafter for each successive Payment Date from and
including the most recent prior Payment Date to which interest has been paid, to
but excluding such Payment Date.
In the event that, on a particular Payment Date, the remaining Amount
Available is not sufficient to make a full distribution of interest to the
Holders of Class C Notes, the amount of such deficiency, together with interest
thereon at the Class C Interest Rate, to the extent permitted by law, will be
carried forward and added to the amount such Holders will be entitled to receive
as interest on the next Payment Date.
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<PAGE>
PRINCIPAL
To the extent the remaining Amount Available (after taking into account any
prior applications described under "-- Distributions" above) is sufficient
therefor, the amount of principal to be paid on the Notes and the Equity
Certificates on each Payment Date will equal the Monthly Principal Amount.
Principal payable on the Notes will be paid in respect of the Class A Notes on
each Payment Date until the Class A Principal Balance has been reduced to zero,
then in respect of principal on the Class B Notes until the Class B Principal
Balance has been reduced to zero, and then in respect of principal on the Class
C Notes until the Class C Principal Balance has been reduced to zero. Commencing
on the first Payment Date, however, % of the Monthly Principal Amount will be
payable on the Equity Certificates until the aggregate amount so paid equals
$ .
The "Monthly Principal Amount" for any Payment Date will equal (i) the
difference between (a) the aggregate of the Contract Principal Balances of the
Contracts (the "Contract Pool Principal Balance") as of the last day of the
Collection Period relating to the prior Payment Date (or, in the case of the
first Payment Date, the Cut-Off Date Contract Pool Principal Balance), and (b)
the Contract Pool Principal Balance as of the last day of the Collection Period
relating to such Payment Date, plus (ii) any portion of the Monthly Principal
Amount for the prior Payment Date that was not distributed in respect of
principal on the Notes or the Equity Certificates, as appropriate, on such prior
Payment Date.
The "Contract Principal Balance" of any Contract as of the last day of any
Collection Period is (1) in the case of a Lease Contract, the present value of
the unpaid Scheduled Payments due on such Lease Contract after such last day of
the Collection Period (excluding all Scheduled Payments due on or prior to, but
not received as of, such last day, as well as any Scheduled Payments due after
such last day and received on or prior thereto) discounted monthly at the rate
of % per annum (and assuming that each Scheduled Payment is due on the last
day of the applicable Collection Period), and (2) in the case of a Loan
Contract, the remaining scheduled principal balance of such Loan Contract after
giving effect to Scheduled Payments due on or prior to such last day of the
Collection Period, whether or not paid, as well as any Scheduled Payments due
after such last day and received on or prior thereto. The Contract Principal
Balance of any Contract which, during a Collection Period, became a Liquidated
Contract or was required to be purchased by TCC as of the end of such Collection
Period due to a breach of representations and warranties, will, for purposes of
computing the Monthly Principal Amount for the related Payment Date, be deemed
to be zero on and after the last day of such Collection Period.
A "Liquidated Contract" is any Contract (a) with respect to which the
Servicer has repossessed and disposed of the related Equipment, or otherwise
collected all proceeds which, in the Servicer's judgment, can be collected under
such Contract, or (b) which is delinquent 180 days or more.
The "Collection Period" for any Payment Date will be the calendar month
preceding the month in which such Payment Date occurs.
The "Cut-Off Date Contract Pool Principal Balance" will equal: (I) the
aggregate of the Contract Principal Balances of the Contracts as of the Cut-Off
Date, plus (II) the aggregate amount of Scheduled Payments on the Contracts due
prior to, but not received as of, the Cut-Off Date. The aggregate of the initial
principal balances of the Notes and the Equity Certificates will be equal to or
less than the Cut-Off Date Contract Pool Principal Balance.
SPECIAL REDEMPTION OF THE NOTES
If the Merger has not been consummated by September , 1996, all of the
Notes shall be redeemed and paid in full on September , 1996, or on such
earlier date as the Depositor may elect upon giving the Indenture Trustee
written notice thereof at least five Business Days prior to such date (the
"Special Redemption Date"), at a redemption price (the "Special Redemption
Price") which is equal to (i) in respect of any Class of Notes, the initial
offering price of such Class of Notes as shown on the cover page of this
Prospectus plus (ii) interest on such initial offering price from (and
including) the Closing Date to (but excluding) the Special Redemption Date, at
the rate of 10% per annum (calculated on the basis of a 360-day year comprised
of twelve 30-day months). The Special Redemption Price in
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<PAGE>
respect of the Notes will be paid from the amounts on deposit in the Escrow
Account as described under "The Depositor and the Owner Trust -- The Owner
Trust," which amounts will be sufficient (without regard to any proceeds of the
investment thereof) to so pay the Special Redemption Price on the Special
Redemption Date.
If the Merger is consummated on or prior to September , 1996, the
Contracts, the Depositor's interest in the related Equipment and the other Trust
Assets will be transferred by the Depositor to the Owner Trust on the Merger
Consummation Date and the amounts on deposit in the Escrow Account will be paid
over to the Depositor as described under "Use of Proceeds."
In the event of a Special Redemption, for so long as the Notes are listed on
the Luxembourg Stock Exchange, the Servicer shall provide public notice of such
redemption in Luxembourg by publication in a newspaper of general publication in
Luxembourg, expected to be the "Luxembourg Wort," as soon as practicable
following the Special Redemption Date but in no event more than five Business
Days thereafter.
SUBORDINATION OF CLASS B AND CLASS C NOTES AND EQUITY CERTIFICATES
The likelihood of payment of interest on each Class of Notes will be
enhanced by the application of the Amount Available to the payment of such
interest prior to the payment of principal on any of the Notes or the Equity
Certificates, as well as by the preferential right of the Holders of Notes of
each such Class to receive such interest (1) in the case of the Class A Notes,
prior to the payment of any interest on the Class B Notes, the Class C Notes or
the Equity Certificates, (2) in the case of the Class B Notes, prior to the
payment of any interest on the Class C Notes or the Equity Certificates, and (3)
in the case of the Class C Notes, prior to the payment of any interest on the
Equity Certificates. Likewise, the likelihood of payment of principal on each
Class of Notes will be enhanced by the preferential right of the Holders of
Notes of each such Class to receive such principal, to the extent of the Amount
Available after payment of interest on the Notes and the Equity Certificates as
aforesaid, (i) in the case of the Class A Notes, prior to the payment of any
principal on the Class B Notes, the Class C Notes or (except as described under
"-- Principal" above) the Equity Certificates, (ii) in the case of the Class B
Notes, prior to the payment of any principal on the Class C Notes or (except as
described under "-- Principal" above) the Equity Certificates, and (iii) in the
case of the Class C Notes, prior to the payment of any principal on the Equity
Certificates, except as described under "-- Principal" above.
CASH COLLATERAL ACCOUNT
The Cash Collateral Account will be established on or prior to the Merger
Consummation Date and will thereafter be available to the Indenture Trustee. The
Cash Collateral Account will initially be funded in an amount equal to % of
the Contract Pool Principal Balance as of the Cut-Off Date (approximately
$ ). Amounts on deposit from time to time in the Cash Collateral Account
(up to, but not in excess of, the Requisite Amount described below, and not
including any investment earnings on such funds) shall be used to fund the
following amounts in the following order of priority (to the extent that amounts
on deposit in the Collection Account as of any Deposit Date are insufficient
therefor and provided that any such insufficiency has resulted, directly or
indirectly, from delinquencies and/or defaults on the Contracts): (i) to pay
interest on the Notes and the Equity Certificates in the following order of
priority: (a) interest on the Class A Notes (including any overdue interest and
interest thereon), (b) interest on the Class B Notes (including any overdue
interest and interest thereon), (c) interest on the Class C Notes (including any
overdue interest and interest thereon), and (d) interest on the Equity
Certificates (including any overdue interest and interest thereon); (ii) to pay
any Principal Deficiency Amount (equal to the lesser of (a) the Current Realized
Losses on Liquidated Contracts for the related Collection Period or (b) the
excess, if any, of (A) the aggregate principal balance of the Notes and the
Equity Certificates (after giving effect to all other distributions of principal
on such Payment Date), over (B) the aggregate of the Required Payoff Amounts for
all Contracts as of the last day of the related Collection Period), and (iii) to
pay principal on the Notes and Equity Certificates at the applicable Stated
Maturity Date thereof.
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<PAGE>
"Current Realized Losses" means, as to any Liquidated Contract, the excess,
if any, of (1) the Required Payoff Amount of such Contract as of the month in
which such Contract became a Liquidated Contract, over (2) that portion of the
Liquidation Proceeds for such Liquidated Contract allocated to the Notes and the
Equity Certificates as described under "-- Liquidated Contracts" below).
The "Required Payoff Amount," with respect to any Collection Period for any
Contract, is equal to the sum of: (i) the Scheduled Payment due in such
Collection Period, together with any Scheduled Payments due in prior Collection
Periods and not yet received, plus (ii) the Contract Principal Balance of such
Contract as of the last day of such Collection Period (after taking into account
the Scheduled Payment due in such Collection Period).
If and to the extent that the amount on deposit in the Cash Collateral
Account as of any Payment Date is less than the Requisite Amount (which is
defined as being an amount equal to approximately $ , subject to certain
adjustments), then such deficiency is to be restored from the remaining Amount
Available, after payment of interest and principal on the Notes and the Equity
Certificates as described under "-- Distributions" above. Any amount on deposit
in the Cash Collateral Account in excess of the Requisite Amount, and all
investment earnings on funds in the Cash Collateral Account, will be released
from the Cash Collateral Account and paid to or upon the order of the Depositor,
and will not be available to make payments on the Notes or the Equity
Certificates.
The Cash Collateral Account must be an Eligible Account, and funds on
deposit in the Cash Collateral Account will be invested in Eligible Investments
(each as defined under "-- Trust Accounts" below).
LIQUIDATED CONTRACTS
Liquidation Proceeds received with respect to a Liquidated Contract and the
related Equipment (which will be reduced by any related liquidation expenses)
will be allocated as follows: (i) with respect to any Loan Contract, all such
Liquidation Proceeds will be allocated to the Notes and the Equity Certificates;
and (ii) with respect to any Lease Contract, such Liquidation Proceeds will be
allocated on a pro rata basis between the Equipment Certificate, on the one
hand, and the Notes and the Equity Certificates, on the other, based
respectively on (a) the "Book Value" of the Equipment (which is a fixed amount
equal to the value of the Equipment as shown on the accounting books and records
of TCC as of the Cut-Off Date) and (b) the Required Payoff Amount for such Lease
Contract; provided that in no event will the amount of Liquidation Proceeds
allocated to the Notes and the Equity Certificates exceed the Required Payoff
Amount. All Liquidation Proceeds which are so allocable to the Notes and the
Equity Certificates will be deposited in the Collection Account and constitute
Pledged Revenues to be applied to the payment of interest and principal on the
Notes and the Equity Certificates in accordance with the priorities described
under "-- Distributions" above.
OPTIONAL PURCHASE OF CONTRACTS
The Depositor may purchase all of the Contracts and the related Equipment on
any Payment Date following the date on which the unpaid principal balance of the
Notes and the Equity Certificates is equal to 10% or less of the Cut-Off Date
Contract Pool Principal Balance. The purchase price to be paid in connection
with such purchase shall be at least equal to the unpaid principal balance of
the Notes and the Equity Certificates as of such Payment Date plus interest to
be paid on the Notes and the Equity Certificates on such Payment Date, plus the
Book Value of the Equipment. The proceeds of such purchase shall be applied on
such Payment Date (1) as to such proceeds in an amount necessary to pay the
principal and interest on the Notes and the Equity Certificates, to the payment
of the remaining principal balance on the Notes and the Equity Certificates,
together with interest thereon, and (2) as to the balance of such proceeds, to
the payment of amounts on the Equipment Certificate.
TRUST ACCOUNTS
The Indenture Trustee will establish and maintain under the Indenture
segregated trust accounts (which need not be deposit accounts, but which shall
constitute "Eligible Accounts"), consisting of the
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<PAGE>
"Collection Account" and the "Escrow Account" (collectively, the "Trust
Accounts"). An "Eligible Account" means any account which is (i) an account
maintained with an Eligible Institution (as defined below); (ii) an account or
accounts the deposits in which are fully insured by either the Bank Insurance
Fund or the Savings Association Insurance Fund of the FDIC; (iii) a "segregated
trust account" maintained with the corporate trust department of a federal or
state chartered depository institution or trust company with trust powers and
acting in its fiduciary capacity for the benefit of the Indenture Trustee, which
depository institution or trust company has capital and surplus (or, if such
depository institution or trust company is a subsidiary of a bank holding
company system, the bank holding company has capital and surplus) of not less
than $50,000,000 and the securities of such depository institution or trust
company (or, if such depository institution or trust company is a subsidiary of
a bank holding company system and such depository institution's or trust
company's securities are not rated, the securities of the bank holding company)
have an acceptable credit rating from each of the Rating Agencies (if rated by
such Rating Agency); or (iv) an account that will not cause any Rating Agency to
downgrade or withdraw its then-current rating assigned to the Notes or Equity
Certificates, as confirmed in writing by such Rating Agency. "Eligible
Institution" means any depository institution organized under the laws of the
United States or any state, the deposits of which are insured to the full extent
permitted by law by the Bank Insurance Fund (currently administered by the
Federal Deposit Insurance Corporation), whose short-term deposits or unsecured
long-term debt have an acceptable credit rating from each of the Rating Agencies
(if rated by such Rating Agency), and which is subject to supervision and
examination by federal or state authorities.
The Servicer, as agent for the Indenture Trustee, may designate, or
otherwise arrange for the purchase by the Indenture Trustee of, investments to
be made with funds in the Trust Accounts, which investments shall be Eligible
Investments (as defined in the Indenture) that will mature not later than the
business day preceding the applicable monthly Payment Date. "Eligible
Investments" include, among other investments, obligations of the United States
or of any agency thereof backed by the full faith and credit of the United
States; federal funds, certificates of deposit, time deposits and bankers'
acceptances sold by eligible financial institutions; certain repurchase
agreements with eligible institutions and other investments which would not
result in the downgrading or withdrawal of any rating of the Notes or Equity
Certificates by any Rating Agency.
REPORTS TO NOTEHOLDERS
The Servicer will furnish to the Indenture Trustee, and the Indenture
Trustee will include with each distribution to a Noteholder, a statement in
respect of the related Payment Date setting forth, among other things:
(i)
the amount of interest paid on the Class A Notes, including any
unpaid interest from the prior Payment Date, and any remaining unpaid
interest on the Class A Notes;
(ii)
the amount of interest paid on the Class B Notes, including any
unpaid interest from the prior Payment Date, and any remaining unpaid
interest on the Class B Notes;
(iii)
the amount of interest paid on the Class C Notes, including any
unpaid interest from the prior Payment Date, and any remaining unpaid
interest on the Class C Notes;
(iv)
the amount of principal paid on the Class A Notes;
(v)
the amount of principal paid on the Class B Notes;
(vi)
the amount of principal paid on the Class C Notes;
(vii)
the Principal Deficiency Amount, if any, for such Payment Date;
(viii)
the amount of interest and principal (if any) paid on the Equity
Certificates; and
(ix)
the Requisite Amount of the Cash Collateral Account and the amount on
deposit in the Cash Collateral Account (after giving effect to any
deposits and withdrawals to be made on the Payment Date).
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The Notes will be registered in the name of a nominee of DTC and will not be
registered in the names of the beneficial owners or their nominees. As a result,
unless and until Definitive Notes are issued in the limited circumstances
described under "-- Definitive Notes" below, beneficial owners will not be
recognized by the Indenture Trustee as Noteholders, as that term is used in the
Indenture. Hence, until such time, beneficial owners will receive reports and
other information provided for under the Indenture only if, when and to the
extent provided by DTC and its participating organizations.
BOOK-ENTRY REGISTRATION
Each Class of Notes will initially be represented by one or more Global
Notes registered in the name of the nominee of DTC. The Depositor has been
informed by DTC that DTC's nominee will be Cede & Co. Noteholders may hold their
Notes through DTC (in the United States) or Cedel Bank or Euroclear (in Europe),
which in turn hold through DTC, if they are participants of such systems
("Participants"), or indirectly through organizations that are participants in
such systems. Cedel Bank and Euroclear will hold omnibus positions on behalf of
the Cedel Bank Participants and the Euroclear Participants, respectively,
through customers' securities accounts in Cedel Bank's and Euroclear's names on
the books of their respective depositories (collectively, the "Depositories")
which in turn will hold such positions in customers' securities accounts in the
Depositories' names on the books of DTC.
DTC is a New York-chartered limited-purpose trust company, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the UCC
in effect in the State of New York, and a "clearing agency" registered pursuant
to the provisions of Section 17A of the Exchange Act. DTC holds securities for
its Participants ("DTC Participants") and facilitates the clearance and
settlement among Participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities. Participants include securities brokers and dealers, banks, trust
companies, clearing corporations, and certain other organizations. Indirect
access to the DTC system is also available to others such as securities brokers
and dealers, banks, and trust companies that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its Participants are
on file with the Commission.
Transfers between DTC Participants will occur in accordance with DTC rules.
Transfers between Cedel Bank Participants and Euroclear Participants will occur
in the ordinary way in accordance with their applicable rules and operating
procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC in the United States, on the one hand, and directly or indirectly
through Cedel Bank Participants or Euroclear Participants on the other hand,
will be effected through DTC in accordance with DTC rules on behalf of the
relevant European international clearing system by its Depository; however, such
cross-market transactions will require delivery of instructions to the relevant
European international clearing system by the counterparty in such 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
Depository to take action to effect final settlement on its behalf by delivering
or receiving securities in DTC, and making or receiving payment in accordance
with normal procedures for same-day funds settlement applicable to DTC. Cedel
Bank Participants and Euroclear Participants may not deliver instructions
directly to the Depositaries.
Because of time-zone differences, credits of securities received in Cedel
Bank or Euroclear as a result of a transaction with a DTC Participant will be
made during the subsequent securities settlement processing, dated the business
day following the DTC settlement date, and such credits or any transactions in
such securities settled during such processing will be reported to the relevant
Cedel Bank Participant or Euroclear Participant on such business day. Cash
received in Cedel Bank or Euroclear as a result of sales of securities by or
through a Cedel Bank 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 Cedel Bank or Euroclear cash account only as of the business day
following settlement in DTC. For
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additional information regarding clearance and settlement procedures and with
respect to tax documentation procedures, see "Global Clearance, Settlement and
Tax Documentation Procedures" and "Certain U.S. Federal Income Tax Documentation
Requirements" in Appendix A.
Note Owners that are not Participants or Indirect Participants but desire to
purchase, sell or otherwise transfer ownership of, or other interests in, Notes
may do so only through Participants and Indirect Participants. Note Owners will
receive all distributions from the Indenture Trustee through Participants and
Indirect Participants. Note Owners may experience some delay in their receipt of
payments, since such payments will be forwarded by the Indenture Trustee to
DTC's nominee. DTC will forward such payments to its Participants, which
thereafter will forward them to Indirect Participants or Note Owners. Note
Owners will not be recognized by the Indenture Trustee as Noteholders and Note
Owners will be permitted to exercise the rights of Noteholders only indirectly
through DTC and its Participants.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of
Notes among Participants on whose behalf it acts with respect to the Notes and
to receive and transmit distributions of amounts payable on the Notes.
Participants and Indirect Participants with which Note Owners have accounts
similarly are required to make book-entry transfers and receive and transmit
such payments on behalf of their respective Note Owners. Accordingly, although
Note Owners will not possess Notes, the Rules provide a mechanism by which
Participants will receive payments and will be able to transfer their interests.
Because DTC can act only on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a Note Owner
to pledge Notes to persons or entities that do not participate in the DTC
system, or to otherwise act with respect to such Notes, may be limited due to
the lack of a physical certificate for such Notes.
DTC has advised the Depositor that it will take any action permitted to be
taken by a Noteholder under the Indenture, only at the direction of one or more
Participants to whose accounts with DTC the Notes are credited. DTC may take
conflicting actions with respect to other undivided interests to the extent that
such actions are taken on behalf of Participants whose holdings include such
undivided interests.
Except as required by law, the Depositor, the Owner Trust, and the Indenture
Trustee will not have any liability for any aspect of the records relating to or
payments made on account of beneficial ownership interest of the Notes held by
DTC's nominee, or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.
DTC may discontinue providing its services as securities depository with
respect to the Notes at any time by giving reasonable notice to the Indenture
Trustee. Under such circumstances, in the event that a successor securities
depository is not obtained, Definitive Notes are required to be printed and
delivered. See "-- Definitive Notes."
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Depositor believes to be reliable, but
the Depositor takes no responsibility for the accuracy or completeness thereof.
Cedel Bank, societe anonyme ("Cedel Bank") is incorporated under the laws of
Luxembourg as a professional depository. Cedel Bank holds securities for its
Participants ("Cedel Bank Participants") and facilitates the clearance and
settlement of securities transactions between Cedel Bank Participants through
electronic book-entry changes in accounts of Cedel Bank Participants, thereby
eliminating the need for physical movement of securities. Transactions may be
settled by Cedel Bank in numerous currencies, including United States dollars.
Cedel Bank provides to its Cedel Bank Participants, among other things, services
for safekeeping, administration, clearance and settlement of internationally
traded securities and securities lending and borrowing. Cedel Bank interfaces
with domestic markets in several countries. As a professional depository, Cedel
Bank is subject to regulations by the Luxembourg Monetary Institute. Cedel Bank
Participants are recognized financial institutions around the world,
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including underwriters, securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations and may include the
Underwriters of the Notes. Indirect access to Cedel Bank is also available to
others, such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a Cedel Bank Participant, either
directly or indirectly.
The Euroclear System (the "Euroclear System") was created in 1968 to hold
securities for participants of the Euroclear System ("Euroclear Participants")
and to clear and settle transactions between Euroclear Participants through
simultaneous electronic book-entry delivery against payment, thereby eliminating
the need for physical movement of securities and any risk from lack of
simultaneous transfers of securities and cash. Transactions may now be settled
in numerous currencies, including United States dollars. The Euroclear System
includes various other services, including securities lending and borrowing and
interfaces with domestic markets in several countries generally similar to the
arrangements for cross-market transfers with DTC described above. The Euroclear
System is operated by Morgan Guaranty Trust Company of New York, Brussels,
Belgium office (the "Euroclear Operator" or "Euroclear"), under contract with
Euroclear Clearance System, S.C., a Belgian cooperative corporation (the
"Cooperative"). All operations are conducted by the Euroclear Operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for the Euroclear system on behalf of Euroclear Participants. Euroclear
Participants include banks (including central banks), securities brokers and
dealers and other professional financial intermediaries and may include the
Underwriters. Indirect access to the Euroclear System is also available to other
firms that clear through or maintain a custodial relationship with a Euroclear
Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
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
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawal of
securities and cash from the Euroclear System, and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific 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.
Distributions with respect to Notes held through Cedel Bank or Euroclear
will be credited to the cash accounts of Cedel Bank Participants or Euroclear
Participants in accordance with the relevant system's rules and procedures, to
the extent received by its Depository. Such distributions will be subject to tax
reporting in accordance with relevant United States tax laws and regulations.
Cedel Bank or the Euroclear Operator, as the case may be, will take any other
action permitted to be taken by a Noteholder under the Indenture on behalf of a
Cedel Bank Participant or a Euroclear Participant only in accordance with its
relevant rules and procedures and subject to its Depository's ability to effect
such actions on its behalf through DTC.
Although DTC, Cedel Bank and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Notes among participants of DTC,
Cedel Bank and Euroclear, they are under no obligation to perform or continue to
perform such procedures and such procedures may be discontinued at any time.
A paying agent shall be maintained in respect of the Notes in Luxembourg
(the "Luxembourg Paying Agent") for so long as the Notes are listed on the
Luxembourg Stock Exchange.
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has been appointed as the initial Luxembourg Paying Agent. shall be
appointed transfer agent in Luxembourg, with respect to the Notes, in case the
Global Notes are replaced by Definitive Notes.
DEFINITIVE NOTES
The Notes of each Class will be issued in registered, certificated form to
the Note Owners of such Class or their nominees ("Definitive Notes"), rather
than to the Depository or its nominee, only if (i) the Depository advises the
Indenture Trustee in writing that it is no longer willing or able to discharge
properly its responsibilities as Depository with respect to the Notes of such
Class, and the Indenture Trustee is unable to locate a qualified successor, or
(ii) Note Owners representing not less than 50% of the principal balance of such
Class advise the Indenture Trustee and the Depository through Participants in
writing that the continuation of a book-entry system through the Depository is
no longer in the best interest of the Note Owners of such Class.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Depository is required to notify all Participants of
the availability through the Depository of Definitive Notes. Upon surrender by
the Depository of the definitive certificate representing the Notes of the
affected Class and instructions for registration, the Indenture Trustee will
issue the Notes of such Class as Definitive Notes, and thereafter the Indenture
Trustee will recognize the Note Owners of such Definitive Notes as Noteholders
under the Indenture.
Distributions of principal and interest on the Notes will be made by the
Indenture Trustee directly to Noteholders in accordance with the procedures set
forth herein and in the Indenture. Interest payments and any principal payments
on each Payment Date will be made to Noteholders in whose names the Definitive
Notes were registered at the close of business on the related Record Date.
Distributions will be made by check mailed to the address of such Noteholder as
it appears on the register maintained by the Indenture Trustee. The final
payment on any Note, however, will be made only upon presentation and surrender
of such Note at the office or agency specified in the notice of final
distribution to Noteholders. The Indenture Trustee will provide such notice to
registered Noteholders mailed not later than the fifth day of the month of such
final distributions.
Definitive Notes will be transferable and exchangeable at the offices of the
transfer agent and registrar, which initially will be the Indenture Trustee (in
such capacity, the "Transfer Agent and Registrar") and the offices of
which shall be appointed as transfer agent in Luxembourg in respect
of such Definitive Notes (the "Luxembourg Transfer Agent"). No service charge
will be imposed for any registration of transfer or exchange, but the Transfer
Agent and Registrar may require payment of a sum sufficient to cover any tax or
other governmental charge imposed in connection therewith. The Transfer Agent
and Registrar will not be required to register the transfer or exchange of
Definitive Notes for the period from the Record Date preceding the due date for
any payment to the Payment Date with respect to such Definitive Notes.
MODIFICATION OF INDENTURE WITHOUT NOTEHOLDER CONSENT
The Owner Trust and the Indenture Trustee may, without consent of the
Noteholders, enter into one or more supplemental indentures for any of the
following purposes: (i) to correct or amplify the description of the collateral
or add additional collateral; (ii) to provide for the assumption of the Notes
and the Indenture obligations by a permitted successor to the Owner Trust (as
described under "-- Certain Covenants"); (iii) to add additional covenants for
the benefit of the Noteholders, or to surrender any rights or power conferred
upon the Owner Trust; (iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee; (v) to cure any ambiguity or correct
or supplement any provision in the Indenture or in any supplemental indenture
which may be inconsistent with any other provision of the Indenture; (vi) to
provide for the acceptance of the appointment of a successor Indenture Trustee
or to add to or change any of the provisions of the Indenture or in any
supplemental indenture as shall be necessary and permitted to facilitate the
administration by more than one trustee; (vii) to modify, eliminate or add to
the provisions of the Indenture in order to comply with the Trust Indenture Act
of 1939, as amended; and (viii) to avoid a reduction or withdrawal of any rating
of the Notes.
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MODIFICATION OF INDENTURE WITH NOTEHOLDER CONSENT
With the consent of the Holders representing a majority of the principal
balance of each Class of the Notes then outstanding (a "Note Majority"), the
Owner Trustee and the Indenture Trustee may execute a supplemental indenture to
add provisions to change in any manner or eliminate any provisions of, the
Indenture, or modify in any manner the rights of the Noteholders.
Without the consent of the Holder of each outstanding Note affected thereby,
however, no supplemental indenture may: (i) change the due date of any
installment of principal of or interest on any Note or reduce the principal
amount thereof, the interest rate specified thereon or the redemption price with
respect thereto or change the manner of calculating any such payment or any
place of payment where, or the coin or currency in which, any Note or any
interest thereon is payable; (ii) impair the right to institute suit for the
enforcement of certain provisions of the Indenture regarding payment; (iii)
reduce the percentage of each Class of the Notes then outstanding the consent of
the Holders of which is required for any such supplemental indenture or for any
waiver of compliance with certain provisions of the Indenture or of certain
defaults thereunder and their consequences; (iv) modify or alter the provisions
of the Indenture regarding the voting of Notes held by the Owner Trust, any
other obligor on the Notes, the Depositor or an affiliate of any of them; (v)
reduce the percentage of the Notes the consent of the Holders of which is
required to direct the Indenture Trustee to sell or liquidate the Pledged
Revenues if the proceeds of such sale would be insufficient to pay the principal
amount and accrued but unpaid interest on the outstanding Notes; (vi) reduce the
percentage of each Class of the Notes then outstanding required to amend the
sections of the Indenture which specify the applicable percentage of each Class
of the Notes then outstanding necessary to amend the Indenture or certain other
related agreements; (vii) permit the creation of any lien ranking prior to or on
a parity with the lien of the Indenture with respect to any of the collateral
for the Notes or, except as otherwise permitted or contemplated in the
Indenture, terminate the lien of the Indenture on any such collateral or deprive
the Holder of any Note of the security afforded by the lien of the Indenture; or
(viii) result in a reduction or withdrawal of the rating of any Class of Notes
by a Rating Agency, as confirmed in writing by each Rating Agency.
EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT
"Events of Default" under the Indenture will consist of: (i) a default for
five days or more in the payment of interest due on any Note; (ii) failure to
pay the unpaid principal amount of any Class of Notes on the Stated Maturity
Date for such Class; (iii) a default in the observance or performance in any
material respect of any covenant or agreement of the Owner Trust made in the
Indenture, or any representation or warranty made by the Owner Trust in the
Indenture or in any certificate delivered pursuant thereto or in connection
therewith having been incorrect as of the time made, and the continuation of any
such default or the failure to cure such breach of a representation or warranty
for a period of 30 days after notice thereof is given to the Owner Trust by the
Indenture Trustee or to the Owner Trust and the Indenture Trustee by the Holders
of at least 25% in principal amount of the Notes then outstanding; or (iv)
certain events of bankruptcy, insolvency, receivership or liquidation of the
Owner Trust.
If an Event of Default should occur and be continuing with respect to the
Notes, the Indenture Trustee or a Note Majority may declare the principal of the
Notes to be immediately due and payable. Such declaration may, under certain
circumstances, be rescinded by a Note Majority.
If the Notes have been declared due and payable following an Event of
Default, the Indenture Trustee may institute proceedings to collect amounts due
or foreclose on Pledged Revenues, exercise remedies as a secured party, sell the
related Pledged Revenues or elect to have the Owner Trust maintain possession of
the Pledged Revenues and continue to apply collections on the Pledged Revenues
as if there had been no declaration of acceleration. The Indenture Trustee,
however, will be prohibited from selling the Pledged Revenues following an Event
of Default, unless (i) the Holders of all the outstanding Notes consent to such
sale; (ii) the proceeds of such sale are sufficient to pay in full the principal
of and the accrued interest on all the outstanding Notes at the date of such
sale; or (iii) the Indenture Trustee determines that the proceeds of the Pledged
Revenues would not be sufficient on an
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ongoing basis to make all payments on the Notes as such payments would have
become due if such obligations had not been declared due and payable, and the
Indenture Trustee obtains the consent of the Holders of 66 2/3% of the aggregate
outstanding amount of the Notes. Following a declaration upon an Event of
Default that the Notes are immediately due and payable, (i) Class A Noteholders
will be entitled to payment of all outstanding principal and accrued but unpaid
interest from any proceeds of liquidation of the Pledged Revenues, followed by
(ii) payment of interest and principal on the Class B Notes, followed by (iii)
payment of interest and principal on the Class C Notes, followed by (iv) payment
of interest and principal on the Equity Certificates.
Subject to the provisions of the Indenture relating to the duties of the
Indenture Trustee, if an Event of Default occurs and is continuing, the
Indenture Trustee will be under no obligation to exercise any of the rights or
powers under the Indenture at the request or direction of any of the Holders of
the Notes, if the Indenture Trustee reasonably believes it will not be
adequately indemnified against the costs, expenses and liabilities which might
be incurred by it in complying with such request. Subject to the provisions for
indemnification and certain limitations contained in the Indenture, a Note
Majority will have the right to direct the time, method and place of conducting
any proceeding or any remedy available to the Indenture Trustee, and a Note
Majority may, in certain cases, waive any default with respect thereto, except a
default in the payment of principal or interest or a default in respect of a
covenant or provision of the Indenture that cannot be modified without the
waiver or consent of all of the Holders of such outstanding Notes.
No Holder of a Note will have the right to institute any proceeding with
respect to the Indenture, unless (i) such Holder previously has given to the
Indenture Trustee written notice of a continuing Event of Default, (ii) the
Holders of not less than 25% in principal amount of the outstanding Notes have
made written request of the Indenture Trustee to institute such proceeding in
its own name as Indenture Trustee, (iii) such Holder or Holders have offered the
Indenture Trustee reasonable indemnity, (iv) the Indenture Trustee has for 60
days failed to institute such proceeding, and (v) no direction inconsistent with
such written request has been given to the Indenture Trustee during such 60-day
period by the Holders of a majority in principal amount of such outstanding
Notes.
If an Event of Default occurs and is continuing and if it is known to the
Indenture Trustee, the Indenture Trustee will mail to each Noteholder notice of
the Event of Default within 90 days after it occurs. Except in the case of a
failure to pay principal of or interest on any Note, the Indenture Trustee may
withhold the notice if and so long as it determines in good faith that
withholding the notice is in the interests of the Noteholders.
In addition, the Indenture Trustee and the Noteholders, by accepting the
Notes, will covenant that they will not at any time institute against the
Depositor or the Owner Trust any bankruptcy, reorganization or other proceeding
under any federal or state bankruptcy or similar law.
Neither the Indenture Trustee nor the Owner Trustee in its individual
capacity, nor any Holder of a Note including, without limitation, the Depositor,
nor any of their respective owners, beneficiaries, agents, officers, directors,
employees, affiliates, successors or assigns will, in the absence of an express
agreement to the contrary, be personally liable for the payment of the Notes or
for any agreement or covenant of the Owner Trust contained in the Indenture.
CERTAIN COVENANTS
The Indenture will provide that the Owner Trust may not consolidate with or
merge into any other entity, unless (i) the entity formed by or surviving such
consolidation or merger is organized under the laws of the United States or any
state, (ii) such entity expressly assumes the Trust's obligation to make due and
punctual payments upon the Notes and the performance or observance of every
agreement and covenant of the Owner Trust under the Indenture, (iii) no Event of
Default shall have occurred and be continuing immediately after such merger or
consolidation, (iv) the Owner Trustee has been advised that the rating of the
Notes and the Equity Certificates then in effect would not be reduced or
withdrawn by
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the Rating Agencies as a result of such merger or consolidation, (v) the Owner
Trustee has received an opinion of counsel to the effect that such consolidation
or merger would have no material adverse tax consequence to the Owner Trust or
to any Noteholder or Equity Certificateholder.
The Owner Trust will not, among other things, (i) except as expressly
permitted by the Indenture or the Trust Agreement, sell, transfer, exchange or
otherwise dispose of any of the assets of the Owner Trust, (ii) claim any credit
on or make any deduction from the principal and interest payable in respect of
the related Notes (other than amounts withheld under the Code or applicable
state law) or assert any claim against any present or former Holder of such
Notes because of the payment of taxes levied or assessed upon the Owner Trust,
(iii) dissolve or liquidate in whole or in part, (iv) permit the validity or
effectiveness of the Indenture to be impaired 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 thereby, or (v) except as
expressly permitted by the Indenture, the Transfer and Servicing Agreement or
the Trust Agreement, permit any lien, charge, excise, claim, security interest,
mortgage or other encumbrance to be created on or extend to or otherwise arise
upon or burden the assets of the Owner Trust or any part thereof, or any
interest therein or proceeds thereof.
The Owner Trust may not engage in any activity other than as specified under
"The Depositor and the Owner Trust -- The Owner Trust." The Owner Trust will not
incur, assume or guarantee any indebtedness other than indebtedness incurred
pursuant to the Notes and the Indenture or otherwise in accordance with the
Indenture, the Trust Agreement and the Transfer and Servicing Agreement.
ANNUAL COMPLIANCE STATEMENT
The Owner Trust will be required to file annually with the Indenture Trustee
a written statement as to the fulfillment of its obligations under the
Indenture.
INDENTURE TRUSTEE'S ANNUAL REPORT
The Indenture Trustee will be required to mail each year to all Noteholders
a brief report relating to its eligibility and qualification to continue as
Indenture Trustee under the related Indenture, any amounts advanced by it under
the Indenture, the amount, interest rate and maturity date of certain
indebtedness owing by the Owner Trust to the Indenture Trustee in its individual
capacity, the property and funds physically held by the Indenture Trustee as
such and any action taken by it that materially affects the Notes and that has
not been previously reported.
SATISFACTION AND DISCHARGE OF INDENTURE
The Indenture will be discharged with respect to the collateral securing the
Notes upon the delivery to the related Indenture Trustee for cancellation of all
such Notes or, with certain limitations, upon deposit with the Indenture Trustee
of funds sufficient for the payment in full of all of such Notes.
THE INDENTURE TRUSTEE
will be the Indenture Trustee. The Indenture Trustee may resign at
any time, in which event the Depositor will be obligated to appoint a successor
trustee. The Depositor may also remove the Indenture Trustee if the Indenture
Trustee ceases to be eligible to continue as such under the Indenture or if the
Indenture Trustee becomes insolvent. In such circumstances, the Depositor will
be obligated to appoint a successor trustee. Any resignation or removal of the
Indenture Trustee and appointment of a successor trustee will not become
effective until acceptance of the appointment by a successor trustee.
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DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENT
TRANSFER AND ASSIGNMENT OF CONTRACTS AND EQUIPMENT
On the Merger Consummation Date, the Originators will transfer to the
Depositor pursuant to the Purchase Agreement all of their right, title and
interest in the Contracts and the related Equipment, including all security
interests created thereby and therein, the right to receive all Scheduled
Payments and Prepayments received on the Contracts on or after the Cut-Off Date
(including all Scheduled Payments due prior to, but not received as of, the
Cut-Off Date, but excluding any Scheduled Payments due on or after, but received
prior to, the Cut-Off Date), all rights under insurance policies maintained on
the Equipment pursuant to the Contracts, all documents contained in the Contract
Files and all proceeds derived from any of the foregoing. Pursuant to the
Transfer and Servicing Agreement, on the Merger Consummation Date, the Depositor
will transfer all of the foregoing, together with all its rights under the
Purchase Agreement, to the Owner Trust.
The Transfer and Servicing Agreement will designate the Servicer as
custodian to maintain possession, as the Owner Trustee's agent, of the Contracts
and all documents related thereto. To facilitate servicing and save
administrative costs, the documents will not be physically segregated from other
similar documents that are in TCC's possession. UCC financing statements will be
filed on the Merger Consummation Date in the applicable jurisdictions reflecting
the assignment of the Contracts by the Originators to the Depositor, the
transfer by the Depositor to the Owner Trust, and the pledge by the Owner Trust
to the Indenture Trustee, and the Originators' accounting records and computer
systems will also reflect such assignments and pledge. The Contracts will not,
however, be stamped or otherwise physically marked to reflect their assignment
to the Owner Trust. If, through fraud, negligence or otherwise, a subsequent
purchaser were able to take physical possession of the Contracts without
knowledge of the assignment, the Trust's interest in the Contracts could be
defeated. See "Risk Factors -- Certain Legal Aspects" and "Certain Legal Aspects
of the Contracts."
COLLECTIONS ON CONTRACTS
The Servicer will deposit in the Collection Account on a daily basis, no
later than the fifth Business Day after receipt thereof, the following payments
or collections received by it after the Cut-Off Date:
(i) all Scheduled Payments made by on or behalf of Obligors under the
Contracts;
(ii)all amounts paid by an Obligor in connection with the prepayment or
early termination of a Contract in respect of the Required Payoff
Amount thereof;
(iii)
all amounts constituting Liquidation Proceeds on Liquidated Contracts
to the extent allocable to the Notes and the Equity Certificates as
described under "Description of the Notes -- Liquidated Contracts";
(iv)any and all payments made by TCC pursuant to the Transfer and
Servicing Agreement in connection with the purchase of any Contracts
and the related Equipment as a result of a breach of a representation or
warranty with respect thereto, as described under "The Contracts --
Representations and Warranties Made by TCC," excluding those portions
thereof allocable to the Book Value of the related Equipment; and
(v) the amount paid by the Depositor to purchase the Contracts and the
related Equipment, as described under "Description of the Notes --
Optional Purchase of Contracts," excluding that portion thereof allocable to
the Book Value of Equipment.
The Servicer will be entitled to withdraw from the Collection Account any
amounts deposited therein in error or required to be repaid to an Obligor, based
on the Servicer's good-faith determination that such amount was deposited in
error or must be returned to the Obligor.
Under the Transfer and Servicing Agreement, the Servicer is required to
establish in its own name one or more "Insurance and Tax Accounts," into which
are to be deposited any payments made by or on behalf of Obligors which
constitute (a) insurance premiums paid by an Obligor to the lessor or secured
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party under a Contract (unless such payments are made directly by the Obligor to
the applicable insurance company, or TCC or the Originator has previously paid
such premiums), (b) any insurance payments or recoveries paid by an insurance
company or comparable third party and related to the damage to, or destruction
of, the Equipment related to such Contract (unless paid directly by such
insurance company or comparable third party directly to the Obligor), and (c)
taxes paid by the Obligor and related to the applicable Contract or the
Equipment related thereto (unless such payment is made directly by the Obligor
to the applicable taxing authority or authorities, or TCC or the Originator has
previously paid such taxes). The Servicer is required to withdraw amounts from
the Insurance and Tax Accounts, when and if appropriate, to pay when due (1) all
insurance premiums in the amounts received under clause (a) above, and (2) all
taxes in the amounts received under clause (c) above. Amounts on deposit in the
Insurance and Tax Accounts which represent amounts received by the Servicer
pursuant to clause (b) above shall be applied by the Servicer as follows: if the
Obligor purchases equipment to replace the Equipment that was damaged or
destroyed, and such replacement equipment is (in the reasonable opinion of the
Servicer) of comparable use and equivalent value to the Equipment that was
damaged or destroyed, the Servicer shall release such amount so received from
the insurance company or comparable third party to or at the instructions of the
Obligor; and if this replacement option is not to be exercised by the Obligor,
then the Servicer shall treat such amount as Liquidation Proceeds and transfer
that portion thereof which would be allocable to the Notes and the Equity
Certificates (as described in "Description of the Notes -- Liquidated
Contracts") from the Insurance and Tax Account to the Collection Account.
The Servicer will deposit in the Equipment Account, no later than the fifth
business day after receipt, all proceeds from the disposition of Equipment, to
the extent allocable to the Equipment Certificate, including amounts paid by
Obligors to exercise purchase options under Lease Contracts and the allocable
portion of Liquidation Proceeds (as described under "Description of the Notes --
Liquidated Contracts").
On or before the Business Day of each month (the "Determination Date"),
the Servicer is required to determine the amount of Related Collection Period
Pledged Revenues for the Payment Date occurring in such month, the amount of
interest payable on the Notes and the Equity Certificates on such Payment Date,
the Monthly Principal Amount for such Payment Date, the Principal Deficiency
Amount (if any) for such Payment Date, and the amount, if any, by which such
Related Collection Period Pledged Revenues, when applied in accordance with the
priorities described under "Description of the Notes -- Distributions," are
insufficient to pay the interest payable on the Notes and the Equity
Certificates on such Payment Date (an "Interest Shortfall"). If the Servicer
determines that there is an Interest Shortfall for such Payment Date, the
Servicer shall instruct the Indenture Trustee to determine the total amount of
Current Collection Period Pledged Revenues and to apply such Current Collection
Period Pledged Revenues to the payment of interest on the Notes and the Equity
Certificates to the extent necessary to cure such Interest Shortfall. The
Servicer shall further instruct the Indenture Trustee to withdraw from the Cash
Collateral Account (1) any remaining Interest Shortfall (after giving effect to
the previous application of Available Pledged Revenues as aforesaid), (2) the
Principal Deficiency Amount (if any), and (3) if such Payment Date is the Stated
Maturity Date for any Class of Notes or the Equity Certificates, the remaining
unpaid principal balance of such Class of Notes or the Equity Certificates
(after giving effect to previous application of Available Pledged Revenues as
aforesaid).
SERVICING
Pursuant to the Transfer and Servicing Agreement, TCC will be engaged to act
as Servicer on behalf of the Owner Trust. The Servicer is generally obligated
under the Transfer and Servicing Agreement to take such actions with respect to
enforcement of the Contracts as a reasonably prudent creditor would take. The
Servicer is further obligated to service the Contracts in a manner consistent
with its servicing of other similar receivables which it owns or services for
third parties. The Servicer may delegate certain of its servicing
responsibilities with respect to the Contracts to third parties, provided that
the Servicer will remain obligated to the Owner Trust for the proper performance
of all such servicing responsibilities.
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The Servicer is generally obligated to act in a commercially reasonable
manner with respect to the disposition of Equipment following a Contract default
with a view to realizing proceeds at least equal to the fair market value
thereof. The Servicer may, in its discretion, choose to dispose of Equipment
through a new lease or in some other manner which does not result in the
immediate receipt of Liquidation Proceeds equal to the fair market value
thereof. However, in the event that the Liquidation Proceeds (together with
liquidation expenses retained by the Servicer) derived by the Servicer with
respect to any Equipment, as of the last day of the Collection Period in which
the related Contract became a Liquidated Contract, is less than the fair market
value thereof, the Servicer will be required to pay an amount equal to such
deficiency from its own funds. Any such amounts so paid by the Servicer will be
deemed to constitute additional Liquidation Proceeds with respect to the related
Contract and Equipment and will be allocated as described under "Description of
the Notes -- Liquidated Contracts."
Under the Transfer and Servicing Agreement, the Servicer is responsible for,
among other things: reviewing and certifying that the Contract Files are
complete; monitoring and tracking any property and sales taxes to be paid by
Obligors; billing, collection and recording of payments from Obligors;
communicating with and providing billing records to Obligors; deposit of funds
into the Collection Account; receiving payments as the Owner Trust's agent on
the insurance policies maintained by the Obligors and communicating with
insurers with respect thereto; issuance of reports to the Indenture Trustee
specified in the Indenture and in the Transfer and Servicing Agreement;
repossession and remarketing of Equipment following Obligor defaults; and paying
the fees and ordinary expenses of the Indenture Trustee and the Owner Trustee.
PREPAYMENTS. In the case of any Lease Contract, a Prepayment may only be
allowed by the Servicer if the amount paid by or on behalf of the Obligor is at
least equal to the Required Payoff Amount of such Contract.
EVIDENCE AS TO COMPLIANCE. On or before March 31 of each year, the Servicer
must deliver to the Indenture Trustee a report of a nationally recognized
accounting firm stating that such firm has examined certain documents and
records relating to the servicing of equipment leases and loans serviced by the
Servicer and stating that, on the basis of such procedures, such servicing has
been conducted in compliance with the Transfer and Servicing Agreement, except
for any exceptions set forth in such report.
CERTAIN MATTERS REGARDING THE SERVICER. The Servicer may not resign from
its obligations under the Transfer and Servicing Agreement except upon a
determination that its duties thereunder are no longer permissible under
applicable law. No such resignation will become effective until a successor
servicer has assumed the Servicer's obligations and duties under the Transfer
and Servicing Agreement. The Servicer can be removed as Servicer only upon the
occurrence of an Event of Termination as discussed below.
The Servicer must keep in place throughout the term of the Transfer and
Servicing Agreement (i) a policy or policies of insurance covering errors and
omissions by the Servicer, and (ii) a fidelity bond. Such policy or policies and
such fidelity bond shall be in such form and amount as is generally customary
among persons that service a portfolio of equipment leases having an unpaid
balance of at least $100 million and which are generally regarded as servicers
acceptable to institutional investors.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES. Compensation to the
Servicer will include a monthly fee (the "Servicing Fee"), which will be payable
to the Servicer from the Amount Available on each Payment Date, in an amount
equal to the product of one-twelfth of % per annum multiplied by the Contract
Pool Principal Balance as of the last day of the second preceding Collection
Period (or, in the case of the Servicing Fee with respect to the Collection
Period commencing on the Cut-Off Date, the Contract Pool Principal Balance as of
the Cut-Off Date), plus any late fees, documentation fees, insurance
administration charges and other administrative fees and charges
("Administrative Fees") and other expenses or similar charges collected with
respect to the Contracts during the prior Collection Period. Up to % of such
% Servicing Fee will be used by the Servicer to pay certain expenses relating
to the Contracts and the Owner Trust.
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EVENTS OF TERMINATION. An Event of Termination under the Transfer and
Servicing Agreement will occur if (a) the Servicer fails to make any payment or
deposit required under the Transfer and Servicing Agreement and such failure
continues for four business days after notice from the Indenture Trustee or
after discovery by the Servicer; (b) the Servicer fails to deliver to the
Indenture Trustee and the Owner Trustee the Servicer's Certificate by the
Business Day prior to the related Payment Date; (c) the Servicer fails to
observe or perform in any material respect any other covenants or agreements of
the Servicer set forth in the Transfer and Servicing Agreement (and, if TCC is
the Servicer, the Purchase Agreement), and such failure (i) materially and
adversely affects the rights of the Owner Trust, Noteholders or Equity
Certificateholders, and (ii) continues unremedied for 30 days after written
notice thereof has been given to the Servicer by the Owner Trustee, the
Indenture Trustee or any Equity Certificateholder or Noteholder; (d) certain
events of bankruptcy or insolvency occur with respect to the Servicer; or (e)
any representation, warranty or statement of the Servicer made in the Transfer
and Servicing Agreement or any certificate, report or other writing delivered
pursuant thereto proves to be incorrect in any material respect, and such
incorrectness (i) has a material adverse effect on the Owner Trust, Noteholders
or Equity Certificateholders, and (ii) continues uncured for 30 days after
written notice thereof has been given to the Servicer by the Owner Trustee, the
Indenture Trustee or any Equity Certificateholder or Noteholder. The Servicer is
required under the Transfer and Servicing Agreement to give the Indenture
Trustee, the Owner Trustee and each Rating Agency notice of an Event of
Termination promptly after having obtained knowledge of such event.
Federal bankruptcy laws limit the termination of contracts solely by reason
of the fact that the party obligated to provide such performance is subject to
federal bankruptcy proceedings. In such a circumstance, the bankruptcy trustee
of the Servicer might successfully object to the exercise of a right to
terminate the Servicer unless the Indenture Trustee could demonstrate that
independent grounds (whether or not arising from the same facts causing the
Servicer to be subject to bankruptcy proceedings) exist to declare an Event of
Termination.
RIGHTS UPON EVENT OF TERMINATION. So long as an Event of Termination
remains unremedied, the Indenture Trustee may, and at the written direction of
(i) Noteholders representing a majority of the aggregate principal balance of
the Notes (a "Note Majority"), or (ii) at such time as the Notes are no longer
Outstanding, Equity Certificateholders representing a majority of the aggregate
principal balance of the Equity Certificates (an "Equity Certificate Majority"),
shall, terminate all of the rights and obligations of the Servicer under the
Transfer and Servicing Agreement in and to the Contracts, whereupon a successor
servicer (which, unless and until the Indenture Trustee appoints a new servicer,
will be the Indenture Trustee) will succeed to all the responsibilities, duties
and liabilities of the Servicer under the Transfer and Servicing Agreement and
will be entitled to similar compensation arrangements; provided, however, that
any successor servicer will not assume any obligation of TCC to repurchase
Contracts for breaches of representations and warranties, and any successor
servicer will not be liable for any acts or omissions of the prior Servicer
occurring prior to a transfer of the Servicer's servicing and related functions
or for any breach by such Servicer of any of its obligations contained in the
Transfer and Servicing Agreement.
AMENDMENT
The Transfer and Servicing Agreement may be amended by the parties thereto
(i) to cure any ambiguity, (ii) to correct or supplement any provision therein
that may be inconsistent with any other provision therein, or (iii) to make any
other provisions with respect to matters or questions arising under the Transfer
and Servicing Agreement that are not inconsistent with the provisions thereof,
provided that such action will not adversely affect in any material respect the
interests of the Noteholders or the Equity Certificateholders. The Transfer and
Servicing Agreement may also be amended by the parties thereto with the consent
of a Note Majority and an Equity Certificate Majority for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of the Transfer and Servicing Agreement or of modifying in any manner the rights
of the Noteholders or the holders of the Equity Certificates; provided, however,
that no such amendment (a) that reduces in any manner the amount of, or delays
the timing of, any payment received on or with respect to Contracts that are
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required to be distributed on any Note or Equity Certificate may be effective
without the consent of the Holder of each such Note and Equity Certificate, or
(b) will be effective unless each Rating Agency confirms that such amendment
will not result in a withdrawal or reduction of the ratings on the Notes and the
Equity Certificates.
TERMINATION OF THE TRANSFER AND SERVICING AGREEMENT
The obligations created by the Transfer and Servicing Agreement will
terminate (after distribution of all interest and principal then due to
Noteholders and the holders of the Certificates) on the earlier of (i) the
Payment Date next succeeding the later of the final payment or other liquidation
of the last Contract or the disposition of all Equipment acquired upon
termination of any Contract; or (b) the Payment Date on which the Depositor
repurchases the Contracts as described under "Description of the Notes --
Repurchase Option." However, TCC's representations, warranties and indemnities
will survive any termination of the Transfer and Servicing Agreement.
CERTAIN LEGAL ASPECTS OF THE CONTRACTS
ENFORCEMENT OF SECURITY INTERESTS IN THE EQUIPMENT
Due to the administrative burden and expense, no assignments of the UCC
financing statements evidencing the interest of the Originators in the Equipment
(to the extent that such financing statements have been filed against the
Obligor, as discussed above) will be filed to reflect the Depositor's, the Owner
Trust's and the Indenture Trustee's interests therein. While failure to file
such assignments does not affect the Owner Trust's interest in the Contracts
(including the related Originator's interest in the related Equipment), it does
expose the Owner Trust and the Noteholders to the risk that the Originator could
release its ownership or security interest in the Equipment of record, and it
could complicate the Owner Trust's enforcement, as assignee, of the Originator's
security interest in the Equipment. In addition, also due to the administrative
burden and expense, no UCC financing statement reflecting the security interest
of the Owner Trust in the related Equipment will be filed in the jurisdictions
(other than the States of Massachusetts, New Jersey and Oregon) where the
Equipment is located. In the absence of such filings, the Owner Trust and the
Indenture Trustee may not have a perfected security interest in such Equipment.
As a result, a third party purchaser of the Equipment for value from the
Originator may purchase such Equipment free and clear of the interest of the
Owner Trust in such Equipment and a subsequent secured party or other lienholder
may obtain an interest in the Equipment superior to that of the Owner Trust or
the Indenture Trustee. While these risks should not affect the perfection or
priority of the interest of the Indenture Trustee in the Contracts or rights to
payment thereunder, they may adversely affect the right of the Indenture Trustee
to receive proceeds of disposition of the Equipment subject to a Liquidated
Contract, which are to be allocated to the payment of the Notes and the Equity
Certificates, as described under "Description of the Notes--Liquidated
Contracts." Additionally, statutory liens for repairs or unpaid taxes and other
liens arising by operation of law may have priority even over prior perfected
security interests in the name of the Indenture Trustee in the Equipment.
In the event of a default by the Obligor under a Contract, the Servicer on
behalf of the Owner Trust may take action to enforce the Originator's interest
in the related Equipment by repossession and resale or re-lease of the
Equipment. Under the UCC in most states, a creditor can, without prior notice to
the debtor, repossess assets securing a defaulted contract by the Obligor's
voluntary surrender, or by "self-help" repossession that does not involve a
breach of the peace and by judicial process. In the event of bankruptcy or
insolvency of the Obligor these remedies may require the permission of a
bankruptcy court or may otherwise not be immediately available.
In the event of a default by the Obligor, some jurisdictions require that
the Obligor be notified of the default and be given a time period within which
it may cure the default prior to repossession. Generally, this right of
reinstatement may be exercised on a limited number of occasions in any one-year
period.
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The UCC and other state laws place restrictions on repossession sales,
including requirements that the secured party provide the debtor with reasonable
notice of the date, time and place of any public sale and/or the date after
which any private sale of the collateral may be held and that any such sale be
conducted in a commercially reasonable manner.
Under most state laws, an Obligor has the right to redeem collateral for its
obligations prior to actual sale by paying the lessor or secured party the
unpaid balance of the obligation plus reasonable expenses for repossessing,
holding and preparing the collateral for disposition and arranging for its sale,
plus, to the extent provided for in the written agreement of the parties,
reasonable attorneys' fees.
In addition, because the market value of equipment of the type subject to
the Contracts generally declines with age, because of obsolescence, the net
disposition proceeds of Equipment at any time during the term of the Contracts
may not equal or exceed the Contract Principal Balance on the related Contract.
Because of this, and because other creditors may in certain cases have rights in
the related Equipment superior to those of the Owner Trust, the Servicer may not
be able to recover the entire amount due on a defaulted Contract in the event
that the Servicer elects to repossess and dispose of such Equipment at any time.
Under the UCC and laws applicable in most states, a creditor is entitled to
obtain a deficiency judgment from an Obligor for any deficiency on repossession
and resale of the asset securing the unpaid balance of such Obligor's Contract.
However, some states impose prohibitions or limitations on deficiency judgments.
In most jurisdictions, the courts, in interpreting the UCC, would impose upon a
creditor an obligation to repossess the equipment in a commercially reasonable
manner and to "mitigate damages" in the event of an Obligor's failure to cure a
default. The creditor would be required to exercise reasonable judgment and
follow acceptable commercial practice in seizing, selling or re-leasing the
equipment and to offset the net proceeds of such disposition against its claim.
In addition, an Obligor may successfully invoke an election of remedies defense
to a deficiency claim in the event that the Servicer's repossession and sale of
the Equipment is found to be a retention discharging the Obligor from all
further obligations under the UCC. If a deficiency judgment were granted, the
judgment would be a personal judgment against the Obligor for the shortfall, but
a defaulting Obligor may have limited assets or sources of income available
following repossession. Therefore, in many cases, it may not be useful to seek a
deficiency judgment or, if one is obtained, it may be settled at a significant
discount.
Many states have adopted a version of Article 2A of the UCC ("Article 2A").
Article 2A purports to codify many provisions of existing common law. Although
there is little precedental authority regarding how Article 2A will be
interpreted, it may, among other things, limit enforceability of any
"unconscionable" provision in a Lease Contract, provide a Lessee with remedies
including the right to cancel the Lease Contract for any lessor breach or
default, and may add to or modify the terms of "consumer leases" and leases
where the Lessee is a "merchant lessee." However, each Lease Contract contains
an acknowledgement by the Lessee that the Equipment was acquired for business
purposes. Article 2A, moreover, recognizes typical commercial lease "hell or
high water" rental payment clauses and validates reasonable liquidated damages
provisions in the event of lessor or Lessee defaults. Article 2A also recognizes
the concept of freedom of contract and permits the parties in a commercial
context a wide latitude to vary provisions of the law.
INSOLVENCY MATTERS
Certain statutory provisions, including federal and state bankruptcy and
insolvency laws, may also limit the ability of the Servicer to repossess and
resell or re-lease Equipment or obtain a deficiency judgment. In the event of
the bankruptcy or reorganization of an Obligor, various provisions of the
Bankruptcy Code of 1978 (the "Bankruptcy Code") and related laws may interfere
with or eliminate the ability of the Servicer to enforce the Owner Trust's
rights under the Contracts. For example, although the bankruptcy or
reorganization of an Obligor would constitute an event of default under such
Contract, the Bankruptcy Code provides generally that rights and obligations
under an unexpired lease or an executory contract may not be terminated or
modified solely because of a provision in the lease or executory contract
conditioned upon the commencement of a case under the Bankruptcy Code. If
bankruptcy
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proceedings were instituted in respect of an Obligor under such a Contract, the
Owner Trust could be prevented from continuing to collect payments due from or
on behalf of such Obligor or exercising any remedies assigned to the Owner Trust
without the approval of the bankruptcy court, and, with respect to a Loan
Contract or a Lease Contract intended as security, the bankruptcy court could
permit the Obligor, as owner of the Equipment, to use or dispose of the
Equipment and provide the Owner Trust with a lien on substitute collateral, so
long as the court held that such substitute collateral constituted "adequate
protection" within the meaning of the Bankruptcy Code.
In the case of a Lease Contract that is deemed not to be intended as
security, the Bankruptcy Code grants to the bankruptcy trustee or the
debtor-in-possession a right to elect to assume or reject any executory contract
or unexpired lease. Any rejection of such a lease or contract constitutes a
breach of such lease or contract, entitling the non-breaching party to a claim
for breach of contract. The net proceeds from any resulting judgment would be
deposited by the Servicer into the Collection Account and allocated to the
Noteholders and Equity Certificateholders as described under "Description of the
Notes -- Liquidated Contracts."
In the event that, as a result of the bankruptcy or reorganization of an
Obligor, the related Contract becomes a defaulted Contract, the amount available
to be withdrawn from, or drawn on, the Cash Collateral Account has been reduced
to zero and the Contract has become a defaulted Contract without breach of any
representation or warranty of TCC or the Depositor, no recourse would be
available against TCC or the Depositor and the Noteholders and Equity
Certificateholders could suffer a loss with respect to such Contract.
These UCC and bankruptcy provisions, in addition to the possible decrease in
the value of a repossessed item of Equipment, may limit the amount realized on
the sale of Equipment securing the Contracts to less than the amount due
thereunder.
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UNITED STATES TAXATION
The following discussion is a summary of certain United States federal
income tax considerations relevant to the purchase, ownership and disposition of
the Notes by the holders thereof. Dorsey & Whitney LLP, counsel to the
Depositor, and Cadwalader, Wickersham & Taft, counsel to the Underwriters
(collectively, "Counsel"), are each delivering their opinion regarding certain
federal income tax matters discussed below. The opinions of Counsel address only
those issues specifically identified below as being covered by such opinions;
however, the opinions of Counsel also state that the additional discussion set
forth below accurately sets forth Counsel's advice with respect to material tax
issues. The opinions of Counsel are not binding on the Internal Revenue Service
(the "IRS"). There can be no assurance that the IRS will take a similar view of
such issues, and no assurance can be given that the opinions of Counsel would be
sustained if challenged by the IRS. No ruling on any of the issues discussed
below will be sought from the IRS.
This summary does not purport to be a complete analysis of all the potential
federal income tax consequences relating to the purchase, ownership and
disposition of the Notes. Moreover, the discussion does not address all aspects
of taxation that may be relevant to particular purchasers in light of their
individual circumstances (including the effect of any foreign, state or local
tax laws) or to certain types of purchasers (including dealers in securities,
insurance companies, financial institutions and tax-exempt entities) subject to
special treatment under United States federal income tax laws. The discussion
below assumes that the Notes are held as capital assets.
The discussion of the United States federal income tax consequences set
forth below is based upon currently existing provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), judicial decisions, and administrative
interpretations. Because individual circumstances may differ, each prospective
purchaser of the Notes is strongly urged to consult its own tax advisor with
respect to its particular tax situation and the tax effects of any state, local,
foreign, or other tax laws and possible changes in the tax laws.
As used herein, the term "United States Holder" means a beneficial owner of
a Note who or which is for United States federal income tax purposes either (i)
a citizen or resident of the United States, (ii) a corporation, partnership or
other entity created or organized in or under the laws of the United States or
of any political subdivision thereof, or (iii) an estate or trust the income of
which is subject to United States federal income taxation regardless of its
source. The term also includes certain former citizens of the United States
whose income and gain on the Notes will be subject to United States taxation. As
used herein, the term "United States Alien Holder" means a beneficial owner of a
Note that is not a United States Holder.
TREATMENT OF THE NOTES
In the opinion of Counsel, the Notes will be treated as indebtedness for
United States federal income tax purposes. Under the terms of the Notes and the
Indenture, each Noteholder agrees and acknowledges upon its purchase of the
Notes and by acceptance of the Notes that it will also treat the Notes as
indebtedness for such purposes.
TREATMENT OF THE OWNER TRUST
In the opinion of Counsel, the Owner Trust will not be characterized as an
"association" or "publicly traded partnership" taxable as a corporation. If the
Owner Trust were treated as either an association or a publicly traded
partnership taxable as a corporation, the resulting entity would be subject to
federal income taxes at corporate tax rates on its taxable income generated by
ownership of the Contracts, and certain distributions by the entity would not be
deductible in computing the entity's taxable income. Such an entity-level tax
could result in reduced distributions to Noteholders.
PAYMENTS OF INTEREST
Interest paid on a Note will generally be taxable to a United States Holder
as ordinary interest income at the time it accrues or is received in accordance
with the United States Holder's method of accounting for federal income tax
purposes.
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ORIGINAL ISSUE DISCOUNT
Under applicable regulations, a Note will be considered issued with original
issue discount ("OID") if the "stated redemption price at maturity" of the Note
(generally equal to its principal amount as of the date of issuance plus all
interest other than "qualified stated interest" payable prior to or at maturity)
exceeds the original issue price (in this case, the initial offering price at
which a substantial amount of the Notes are sold to the public). Any OID would
be considered DE MINIMIS under the regulations if it does not exceed .25% of the
stated redemption price at maturity of a Note multiplied by the number of full
years until its maturity date. It is anticipated that the Notes will not be
considered issued with more than DE MINIMIS OID. Under the OID regulations, a
holder of a Note issued with a DE MINIMIS amount of OID must include such OID in
income, on a pro rata basis, as principal payments are made on the Note.
While it is not anticipated that the Notes will be issued with more than DE
MINIMIS OID, it is possible that they will be so issued. If the Notes are issued
with more than DE MINIMIS OID, such OID would be includible in the income of
Noteholders as interest over the term of the Notes under a constant yield
method. Any amount included in income as OID would not, however, be includible
again when the amount is actually received. If the yield on a class of Notes is
not materially different from its coupon, this treatment will have no
significant effect on Noteholders using the accrual method of accounting. Cash
method Noteholders, however, may be required to report income with respect to
Notes issued with OID in advance of the receipt of cash attributable to such
income. Each Noteholder should consult its own tax advisor regarding the impact
of the OID rules if the Notes are issued with OID.
MARKET DISCOUNT
If a United States Holder that acquires a Note has a tax basis in the Note
that is less than its "stated redemption price at maturity," the amount of the
difference will be treated as "market discount" for United States federal income
tax purposes, unless such difference is less than a specified DE MINIMIS amount.
Under the market discount rules of the Code, a United States Holder will be
required to treat any principal payment on, and any gain on the sale, exchange,
retirement or other disposition of, a Note as ordinary income to the extent of
any accrued market discount that has not previously been included in income.
Market discount generally accrues on a straight-line basis over the remaining
term of a Note except that, at the election of the United States Holder, market
discount may accrue on a constant yield basis. A United States Holder may not be
allowed to deduct immediately all or a portion of the interest expense on any
indebtedness incurred or continued to purchase or to carry such Note. A United
States Holder may elect to include market discount in income currently as it
accrues (either on a straight-line basis or, if the United States Holder so
elects, on a constant yield basis), in which case the interest deferral rule set
forth in the preceding sentence will not apply. Such an election will apply to
all bonds acquired by the United States Holder 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.
AMORTIZABLE BOND PREMIUM
If a United States Holder purchases a Note for an amount that is greater
than the amount payable at maturity, such holder will be considered to have
purchased such Note with "amortizable bond premium" equal in amount to such
excess, and may elect (in accordance with applicable Code provisions) to
amortize such premium using a constant yield method over the remaining term of
the Note (where such Note is not callable prior to its maturity date). If such
Note may be called prior to maturity after the United States Holder has acquired
it, the amount of amortizable bond premium is determined with reference to
either the amount payable on maturity or, if it results in a smaller premium,
attributable to the period through the earlier call date with reference to the
amount payable on the earlier call date. The amount amortized in any year will
be treated as a reduction of the United States Holder's interest income from the
Note in such year. A United States Holder that elects to amortize bond premium
must reduce its tax basis in the Note by the amount of the premium amortized in
any year. An election to amortize bond premium applies to all taxable debt
obligations then owned or thereafter acquired by the United States Holder and
may be revoked only with the consent of the IRS.
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SALE, EXCHANGE OR RETIREMENT OF NOTES
Upon the sale, exchange or retirement of a Note, a United States Holder will
recognize taxable gain or loss equal to the difference between the amount
realized on the sale, exchange or retirement (not including any amount
attributable to accrued but unpaid interest) and such holder's adjusted tax
basis in the Note. A United States Holder's adjusted tax basis in a Note will
equal the cost of the Note to such holder, increased by the amount of any market
discount previously included in income by such holder with respect to such Note
and reduced by any amortized bond premium and any principal payments received by
such holder.
Subject to the discussion of market discount above, gain or loss realized on
the sale, exchange or retirement of a Note by a United States Holder will be
capital gain or loss, and will be long-term capital gain or loss if at the time
of the sale, exchange or retirement the Note has been held for more than one
year. The excess of net long-term capital gains over net short-term capital
losses is taxed at a lower rate than ordinary income for certain non-corporate
taxpayers, but not for corporate taxpayers. The distinction between capital gain
or loss and ordinary income or loss is also relevant for purposes of, among
other things, limitations on the deductibility of capital losses.
TAX CONSEQUENCES TO UNITED STATES ALIEN HOLDERS
Under present United States federal income and estate tax law, and subject
to the discussion below concerning backup withholding:
(a) payments of principal of and interest on the Notes by the Trustee or
any paying agent to a beneficial owner of a Note that is a United
States Alien Holder, as defined above, will not be subject to United States
federal withholding tax, provided that, in the case of interest, (i) such
holder does not own, actually or constructively, 10 percent or more of the
total combined voting power of all classes of stock of the Depositor or TCC
entitled to vote, (ii) such holder is not, for United States federal income
tax purposes, a controlled foreign corporation related, directly or
indirectly, to the Depositor or TCC through stock ownership, (iii) such
holder is not a bank receiving interest described in Section 881(c)(3)(A) of
the Code, and (iv) the certification requirements under Section 871(h) or
Section 881(c) of the Code and Treasury regulations thereunder (summarized
below) are met;
(b) a United States Alien Holder of a Note will not be subject to United
States federal income tax on gain realized on the sale, exchange or
other disposition of such Note, unless (i) such holder is an individual who
is present in the United States for 183 days or more in the taxable year of
sale, exchange or other disposition, and certain conditions are met or (ii)
such gain is effectively connected with the conduct by such holder of a
trade or business in the United States; and
(c) a Note held by an individual who is not a citizen or resident of the
United States at the time of his death will not be subject to United
States federal estate tax as a result of such individual's death, provided
that, at the time of such individual's death, the individual does not own,
actually or constructively, 10 percent or more of the total combined voting
power of all classes of stock of the Depositor entitled to vote and payments
with respect to such Note would not have been effectively connected to the
conduct by such individual of a trade or business in the United States.
Sections 871(h) and 881(c) of the Code and Treasury Regulations thereunder
require that, in order to obtain the exemption from withholding tax described in
paragraph (a) above, either (i) the beneficial owner of a Note must certify
under penalties of perjury to the Indenture Trustee or the paying agent, as the
case may be, that such owner is a United States Alien Holder and must provide
such owner's name and address, and United States taxpayer identification number,
if any, or (ii) a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business (a "Financial Institution") and holds the Note on behalf of the
beneficial owner thereof must certify under penalties of perjury to the
Indenture Trustee or the paying agent, as the case may be, that such certificate
has been received from the beneficial owner by it or by a Financial Institution
between it and the beneficial owner and must furnish the payor with copy
thereof. A certificate
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described in this paragraph is effective only with respect to payments of
interest made to the certifying United States Alien Holder after issuance of the
Notes in the calendar year of its issuance and the two immediately succeeding
calendar years. Under temporary United States Treasury Regulations, such
requirement will be fulfilled if the beneficial owner of a Note certifies on IRS
Form W-8, under penalties of perjury, that it is a United States Alien Holder
and provides its name and address, and any Financial Institution holding the
Note on behalf of the beneficial owner files a statement with the withholding
agent to the effect that it has received such a statement from the beneficial
owner (and furnishes the withholding agent with a copy thereof).
If a United States Alien Holder of a Note is engaged in a trade or business
in the United States, and if interest on the Note, or gain realized on the sale,
exchange or other disposition of the Note, is effectively connected with the
conduct of such trade or business, the United States Alien Holder, although
exempt from United States withholding tax, will generally be subject to regular
United States income tax on such interest or gain in the same manner as if it
were a United States Holder. In lieu of the certificate described in the
preceding paragraph, such a holder will be required to provide to the Trustee or
the paying agent, as the case may be, a properly executed IRS Form 4224 in order
to claim an exemption from withholding tax. In addition, if such United States
Alien Holder is a foreign corporation, it may be subject to a branch profits tax
equal to 30% (or such lower rate provided by an applicable treaty) of its
effectively connected earnings and profits for the taxable year, subject to
certain adjustments. For purposes of the branch profits tax, interest on and any
gain recognized on the sale, exchange or other disposition of a Note will be
included in the earnings and profits of such United States Alien Holder if such
interest or gain is effectively connected with the conduct by the United States
Alien Holder of a trade or business in the United States.
BACKUP WITHHOLDING
Under current United States federal income tax law, a 31% backup withholding
tax requirement applies to certain payments of interest on, and the proceeds of
a sale, exchange or redemption of, the Notes.
Backup withholding will generally not apply with respect to payments made to
certain exempt recipients such as corporations or other tax-exempt entities. In
the case of a non-corporate United States Holder, backup withholding will apply
only if such holder (i) fails to furnish its taxpayer identification number
("TIN") which, for an individual, would be his social security number, (ii)
furnishes an incorrect TIN, (iii) is notified by the IRS that it has failed to
report properly payments of interest and dividends or (iv) under certain
circumstances, fails to certify under penalties of perjury that it has furnished
a correct TIN and has not been notified by the IRS that it is subject to backup
withholding for failure to report interest and dividend payments.
In the case of a United States Alien Holder, under current Treasury
Regulations, backup withholding will not apply to payments made by the Trustee
or any paying agent thereof on a Note if such holder has provided the required
certificate under penalties of perjury that it is not a United States Holder (as
defined above) or has otherwise established an exemption, provided in each case
that the Indenture Trustee or such paying agent, as the case may be, does not
have actual knowledge that the payee is a United States Holder.
Under current Treasury Regulations, if payments on a Note are made to or
through a foreign office of a custodian, nominee or other agent acting on behalf
of a beneficial owner of a Note, such custodian, nominee or other agent will not
be required to apply backup withholding to such payments made to such beneficial
owner.
Under current Treasury Regulations, payments on the sale, exchange or other
disposition of a Note made to or through a foreign office of a broker generally
will not be subject to backup withholding. Payments to or through the United
States office of a broker will be subject to backup withholding and information
reporting unless the holder certifies under penalties of perjury that it is not
a United States Holder and that certain other conditions are met or otherwise
establishes an exemption.
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Holders of Notes should consult their tax advisors regarding the application
of backup withholding in their particular situations, the availability of an
exemption therefrom and the procedure for obtaining such an exemption, if
available. Any amounts withheld from payment under the backup withholding rules
will be allowed as a credit against a holder's United States federal income tax
liability and may entitle such holder to a refund, provided that the required
information is furnished to the IRS.
THE FOREGOING DISCUSSION IS FOR GENERAL INFORMATION AND IS NOT TAX ADVICE.
ACCORDINGLY, EACH PROSPECTIVE NOTEHOLDER SHOULD CONSULT ITS OWN TAX ADVISOR AS
TO THE PARTICULAR TAX CONSEQUENCES TO THE PROSPECTIVE NOTEHOLDER, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN INCOME TAX LAWS AND ANY
RECENT OR POSSIBLE CHANGES IN APPLICABLE TAX LAWS.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act ("ERISA"), and/or
Section 4975 of the Code, prohibits a pension, profit-sharing or other employee
benefit plan, as well as individual retirement accounts and certain types of
Keogh Plans (each a "Benefit Plan") from engaging in certain transactions with
persons that are "parties in interest" under ERISA or "disqualified persons"
under the Code with respect to such Benefit Plan. A violation of these
"prohibited transaction" rules may result in an excise tax or other penalties
and liabilities under ERISA and the Code for such persons. Title I of ERISA also
requires that fiduciaries of a Benefit Plan subject to ERISA make investments
that are prudent, diversified (except if prudent not to do so) and in accordance
with governing plan documents.
Certain transactions involving the purchase, holding or transfer of the
Notes might be deemed to constitute prohibited transactions under ERISA and the
Code if assets of the Owner Trust were deemed to be assets of a Benefit Plan.
Under a regulation issued by the United States Department of Labor (the "Plan
Assets Regulation"), the assets of the Owner Trust would be treated as plan
assets of a Benefit Plan for the purposes of ERISA and the Code only if the
Benefit Plan acquires an "equity interest" in the Owner Trust and none of the
exceptions contained in the Plan Assets Regulation is applicable. An equity
interest is defined under the Plan Assets Regulation as an interest in an entity
other than an instrument which is treated as indebtedness under applicable local
law and which has no substantial equity features. The Plan Assets Regulation
also provides that a beneficial interest in a trust is an equity interest. The
Depositor believes that the Notes should be treated as indebtedness without
substantial equity features for purposes of the Plan Assets Regulation. The
Depositor also believes that the Notes do not constitute beneficial interests in
the Owner Trust for purposes of the Plan Assets Regulation. However, without
regard to whether the Notes are treated as an equity interest for such purposes,
the acquisition or holding of Notes by or on behalf of a Benefit Plan could be
considered to give rise to a prohibited transaction if the Owner Trust, the
Owner Trustee or the Indenture Trustee, an Obligor, or any of their respective
affiliates is or becomes a party in interest or a disqualified person with
respect to such Benefit Plan. In such case, certain exemptions from the
prohibited transaction rules could be applicable depending on the type and
circumstances of the plan fiduciary making the decision to acquire a Note.
Included among these exemptions are: Prohibited Transaction Class Exemption
("PTCE") 90-1, regarding investments by insurance company pooled separate
accounts; PTCE 91-38 regarding investments by bank collective investment funds;
and PTCE 84-14, regarding transactions effected by "qualified professional asset
managers."
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.
A PLAN FIDUCIARY CONSIDERING THE PURCHASE OF ANY OF THE NOTES SHOULD CONSULT
ITS TAX AND/OR LEGAL ADVISORS REGARDING WHETHER THE ASSETS OF THE OWNER TRUST
WOULD BE CONSIDERED PLAN ASSETS, THE POSSIBILITY OF EXEMPTIVE RELIEF FROM THE
PROHIBITED TRANSACTION RULES AND OTHER ISSUES AND THEIR POTENTIAL CONSEQUENCES.
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RATINGS OF THE NOTES
It is a condition of issuance that each of Duff & Phelps, Fitch, Moody's and
S&P (i) rate the Class A Notes in its highest rating category, (ii) rate the
Class B Notes " ," " ,"
" " and " ," respectively, and
(iii) rate the Class C Notes " ,"
" ," " " and
" ," respectively. The rating of the Notes will be based
primarily upon the Pledged Revenues, the Cash Collateral Account and the
subordination provided by (1) the Class B Notes, the Class C Notes and the
Equity Certificates, in the case of the Class A Notes, (2) the Class C Notes and
the Equity Certificates, in the case of the Class B Notes, and (3) the Equity
Certificates, in the case of the Class C Notes. There is no assurance that any
such rating will not be lowered or withdrawn by the assigning Rating Agency if,
in its judgment, circumstances so warrant. In the event that a rating or ratings
with respect to the Notes is qualified, reduced or withdrawn, no person or
entity will be obligated to provide any additional credit enhancement with
respect to the Notes so qualified, reduced or withdrawn.
The rating of the Notes should be evaluated independently from similar
ratings on other types of securities. A rating is not a recommendation to buy,
sell or hold the Notes, inasmuch as such rating does not comment as to market
price or suitability for a particular investor. The rating of the Notes
addresses the likelihood of the payment of principal of and interest on the
Notes pursuant to their terms.
USE OF PROCEEDS
If the Merger is consummated on or prior to September , 1996, the proceeds
from the offering and sale of the Notes, together with the proceeds derived by
the Depositor from its disposition of the Equity Certificates, will be used by
the Depositor to acquire the Contracts and the Originators' interests in the
Equipment and to pay expenses payable by the Depositor in connection with the
issuance of the Notes and the Equity Certificates. See "The Merger."
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UNDERWRITING
Subject to the terms and conditions of the United States underwriting
agreement (the "U.S. Underwriting Agreement"), the underwriters named below (the
"U.S. Underwriters"), through their representatives, Goldman, Sachs & Co. and
Nomura Securities International, Inc. (the "U.S. Representatives"), have
severally agreed to purchase from the Depositor the following respective Initial
Principal Amount of Notes (the "U.S. Notes") at the initial public offering
price less the underwriting discounts set forth on the cover page of this
Prospectus:
<TABLE>
<CAPTION>
INITIAL INITIAL INITIAL
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT OF CLASS AMOUNT OF CLASS AMOUNT OF CLASS
U.S. UNDERWRITERS A NOTES B NOTES C NOTES
- --------------------------------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C>
--------------- --------------- ---------------
Total
--------------- --------------- ---------------
--------------- --------------- ---------------
</TABLE>
In the U.S. Underwriting Agreement, the U.S. Underwriters have agreed,
subject to the terms and conditions set forth therein, to purchase all of the
U.S. Notes offered hereby if any of such U.S. Notes are purchased. The Depositor
has been advised by the U.S. Representatives that the U.S. Underwriters propose
initially to offer the U.S. Notes to the public at the respective public
offering prices set forth on the cover page of this Prospectus, and to certain
dealers at such price, less a concession not in excess of 0. % per Class A
Note, 0. % per Class B Note and 0. % per Class C Note. The U.S. Underwriters
may allow and such dealers may reallow to other dealers a discount not in excess
of 0. % per Class A Note, 0. % per Class B Note and 0. % per Class C Note.
After the Notes are released for sale to the public, the offering prices and
other selling terms may be varied by the U.S. Representatives.
The Depositor has agreed to indemnify the U.S. Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
The Notes are new issues of securities with no established trading market.
The Depositor has been advised by the U.S. Representatives that the U.S.
Underwriters intend to make a market in the Notes in the United States but are
not obligated to do so and may discontinue market making at any time without
notice. The Depositor has been advised by the International Managers that the
International Managers intend to make a market in the Notes outside of the
United States but are not obligated to do so and may discontinue market making
at any time without notice. No assurance can be given as to the liquidity of the
trading market for the Notes.
Funds in the Cash Collateral Account and the Trust Accounts may, from time
to time, be invested in Eligible Investments acquired from the U.S.
Underwriters.
Each U.S. Underwriter and International Manager has represented and agreed
that (a) it has not offered or sold and will not offer or sell any Notes to any
person in the United Kingdom prior to the expiration of the period of six months
from the issue date of the Notes 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 which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (b) it has complied and will comply with all
applicable provisions of the
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Financial Services Act 1986 with respect to anything done by it in relation to
the Notes in, from or otherwise involving the United Kingdom; and (c) it has
only issued or passed on and will only issue or pass on in the United Kingdom
any document received by it in connection with the issuance of the Notes to a
person who is of a kind described in article 11(3) of the Financial Services Act
1986 (Investment Advertisements) (Exemptions) Order 1995 or who is a person to
whom such document may otherwise lawfully be issued or passed on.
Each U.S. Underwriter and each International Manager has agreed that the
Notes may not be offered or sold directly or indirectly in Japan, and this
Prospectus may not be distributed or circulated in Japan, except in
circumstances that do not constitute an offer to the public within the meaning
of the SEL.
This Prospectus may be used by underwriters and dealers in connection with
offers and sales of the Notes to persons located in the United Sates.
The Depositor and the Owner Trustee (on behalf of the Owner Trust) have
entered into an underwriting agreement (the "International Underwriting
Agreement") with certain managers (the "International Managers," and
collectively with the U.S. Underwriters, the "Underwriters") through their
representatives, Nomura International plc and Goldman, Sachs International (the
"International Representatives"), providing for the concurrent offer and sale of
an aggregate of $ , $ and $ principal amount of Class A
Notes, Class B Notes and Class C Notes, respectively (the "International Notes")
outside the United States. The offering price and aggregate underwriting
discounts and commissions per Note for the U.S. Notes and the International
Notes are identical.
To provide for the coordination of their activities, the U.S. Underwriters
and the International Managers have entered into an Agreement between U.S.
Underwriters and International Managers (the "Intersyndicate Agreement") which
provides, among other things, that the U.S. Underwriters and the International
Managers may purchase and sell among each other such number of Notes as is
mutually agreed upon among the U.S. Representatives and the International
Representatives and as approved by Nomura International plc and Goldman, Sachs &
Co., as Global Coordinators. To the extent there are sales among the U.S.
Underwriters and the International Managers pursuant to the Intersyndicate
Agreement and as approved by the Global Coordinators, the number of U.S. Notes
initially available for sale by the U.S. Underwriters and the number of
International Notes initially available for sale by the International Managers
may be more or less than the numbers appearing on the cover page of this
Prospectus. Except as permitted by the Intersyndicate Agreement and as approved
by the Global Coordinators, the price of any Notes so sold will be the
respective initial public offering price, less an amount not greater than the
selling concession.
Pursuant to the Intersyndicate Agreement, as part of the distribution of the
Notes and subject to certain exceptions, (a) the U.S. Underwriters will offer
and sell U.S. Notes only (i) in the United States (ii) to U.S. Persons (as
defined below) and (b) the International Managers will offer and sell
International Notes only outside the United States to non-U.S. Persons
(including any entity constituting an investment advisor located outside the
United States acting with discretionary authority for a U.S. Person). For these
purposes, U.S. Person means individual residents in the United States or
corporations, partnerships, or other entities organized in or under the laws of
the United States or any political subdivision thereof (including any such
entity constituting an investment advisor acting with discretionary authority
for a non-U.S. Person) whose office most directly involved with the purchase is
located in such country. "United States" means the United States of America, its
territories, its possessions and all areas subject to its jurisdiction.
Nomura International plc has provided acquisition financing and advisory
services to HoldCo. and MergerCo. in connection with the Merger and will, after
the Merger Consummation Date, hold warrants to acquire an indirect majority
interest in the common stock of TCC. See "The Merger."
Application has been made to list the Notes on the Luxembourg Stock
Exchange.
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LEGAL MATTERS
Certain legal matters with respect to the Notes will be passed upon for the
Depositor by Dorsey & Whitney LLP. Cadwalader, Wickersham & Taft will act as
counsel to the U.S. Underwriters and the International Managers. The Indenture,
the Transfer and Servicing Agreement, the Trust Agreement, the Purchase
Agreement and the Notes will be governed by the laws of the State of New York.
ADDITIONAL INFORMATION
1. The issue of the Notes has been authorized pursuant to the Indenture and
a resolution dated , 1996 of the Board of Directors of the
Depositor.
2. An application has been made to list the Notes on the Luxembourg Stock
Exchange. In connection with such application, a legal notice of the
issuance of the Notes and copies of the Indenture and a copy of the Registration
Statement will be deposited with the Chief Registrar of the District of
Luxembourg (Greffier en Chef du Tribunal d'Arrondissement a Luxembourg) where
such documents may be examined and copies obtained.
3. As long as the Notes are outstanding, copies of the Registration
Statement, all amendments and exhibits thereto, the Indenture and any
reports containing information on the Owner Trust prepared by the Servicer will
be available free of charge at the offices of the Indenture Trustee and
, as the listing agent in Luxembourg at the following
address: , and notices of their availability will be
published in a leading newspaper having general circulation in Luxembourg (which
is expected to be Luxemburger Wort).
4. There is no litigation, arbitration or administrative proceeding, actual
or pending, which relates to the Owner Trust and to which the Owner Trust
is a party or of which the Owner Trust has been notified, or threatened that it
will be made a party, which is material in the context of the issue of the
Notes.
5. Upon issuance, the Notes will be accepted for deposit and clearance
through DTC, Euroclear and Cedel Bank, as applicable.
<TABLE>
<CAPTION>
COMMON CODE ISIN CUSIP
--------------- ----------- -----------
<S> <C> <C> <C>
Class A Notes..........................................................
Class B Notes..........................................................
Class C Notes..........................................................
</TABLE>
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INDEX OF PRINCIPAL TERMS
[TO COME]
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APPENDIX A
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the Notes will be available only in
book-entry form (the "Global Notes"). Investors in the Global Notes may hold
such Global Notes through DTC or, if applicable, Cedel Bank or Euroclear. The
Global Notes will be tradeable as home-market instruments in both the European
and United States domestic markets. Initial settlement and all secondary trades
will settle in same-day funds.
Secondary market trading between investors holding Global Notes through
Cedel Bank and Euroclear will be conducted in the ordinary way in accordance
with their normal rules and operating procedures and in accordance with
conventional eurobond practice.
Secondary market trading between investors holding Global Notes through DTC
will be conducted according to the rules and procedures applicable to United
States corporate debt obligations.
Secondary cross-market trading between Cedel Bank or Euroclear participants
and DTC participants holding Notes will be effected on a
delivery-against-payment basis through the respective depositaries of Cedel Bank
and Euroclear and as participants in DTC.
Non-United States holders of Global Notes will be exempt from United States
withholding taxes, provided that such holders meet certain requirements and
deliver appropriate United States tax documents to the securities clearing
organizations or their participants. See "United States Taxation" in the
Prospectus.
INITIAL SETTLEMENT
All Global Notes will be held in book-entry form by DTC in the name of Cede
& Co. as nominee of DTC. Investors' interests in the Global Notes will be
represented through financial institutions acting on their behalf as direct and
indirect participants in DTC. As a result, Cedel Bank and Euroclear will hold
positions on behalf of their participants through their respective depositaries,
which in turn will hold such positions in accounts as participants of DTC.
Investors electing to hold their Global Notes through DTC will follow the
settlement practices applicable to United States corporate debt obligations.
Investor securities custody accounts will be credited with their holdings
against payment in same-day funds on the settlement date.
Investors electing to hold their Global Notes through Cedel Bank 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. Global Notes will be credited to the
securities custody accounts on the settlement date against payment in same-day
funds.
SECONDARY MARKET TRADING
Because the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and the seller's
accounts are located to ensure that settlement can be made on the desired value
date.
TRADING BETWEEN DTC PARTICIPANTS. Secondary market trading between DTC
participants will be settled using the procedures applicable to United States
corporate debt issues in same-day funds.
TRADING BETWEEN CEDEL BANK AND/OR EUROCLEAR PARTICIPANTS. Secondary market
trading between Cedel Bank participants and/or Euroclear participants will be
settled using the procedures applicable to conventional eurobonds in same-day
funds.
TRADING BETWEEN DTC SELLER AND CEDEL BANK OR EUROCLEAR PURCHASER. When
Global Notes are to be transferred from the account of a DTC participant to the
account of a Cedel Bank participant or a
A-1
<PAGE>
Euroclear participant, the purchaser will send instructions to Cedel Bank or
Euroclear through a participant at least one business day prior to settlement.
Cedel Bank or Euroclear will instruct the respective depositary to receive the
Global Notes against payment. Payment will include interest accrued on the
Global Notes from and including the last coupon payment date to and excluding
the settlement date. Payment will then be made by the respective depositary to
the DTC participant's account against delivery of the Global Notes. After
settlement has been completed, the Global Notes will be credited to the
respective clearing system and by the clearing system, in accordance with its
usual procedures, to the Cedel Bank participant's or Euroclear participant's
account. The Global Notes credit will appear the next day (European time) and
the cash debit will be back-valued to, and the interest on the Global Notes 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 Cedel Bank or Euroclear cash debit will be valued
instead as of the actual settlement date.
Cedel Bank participants and Euroclear participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to preposition
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Cedel Bank or Euroclear. Under
this approach, they may take on credit exposure to Cedel Bank or Euroclear until
the Global Notes are credited to their accounts one day later.
As an alternative, if Cedel Bank 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, Cedel Bank
participants or Euroclear participants purchasing Global Notes would incur
overdraft charges for one day, assuming they cleared the overdraft when the
Global Notes were credited to their accounts. However, interest on the Global
Notes would accrue from the value date. Therefore, in many cases the investment
income on the Global Notes earned during the one-day period may substantially
reduce or offset the amount of such 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 Notes to the
respective depositary for the benefit of Cedel Bank participants or Euroclear
participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC participant a cross-market transaction will
settle no differently than a trade between two DTC participants.
TRADING BETWEEN CEDEL BANK OR EUROCLEAR SELLER AND DTC PURCHASER. Due to
time-zone differences in their favor, Cedel Bank participants and Euroclear
participants may employ their customary procedures for transactions in which
Global Notes are to be transferred by the respective clearing system, through
the respective depositary, to a DTC participant. The seller will send
instructions to Cedel Bank or Euroclear through a participant at least one
business day prior to settlement. In this case, Cedel Bank or Euroclear will
instruct the respective depositary to deliver the Notes to the DTC participant's
account against payment. Payment will include interest accrued on the Global
Notes from and including the last coupon payment date to and excluding the
settlement date. The payment will then be reflected in the account of the Cedel
Bank participant or Euroclear participant the following day, and receipt of the
cash proceeds in the Cedel Bank participant's or Euroclear participant's account
would be back-valued to the value date (which would be the preceding day, when
settlement occurred in New York). Should the Cedel Bank participant 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), receipt of the cash proceeds in the Cedel Bank or Euroclear
participant's account would instead be valued as of the actual settlement date.
A-2
<PAGE>
Finally, day traders that use Cedel Bank or Euroclear and that purchase
Global Notes from DTC participants for delivery to Cedel Bank 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:
1. borrowing through Cedel Bank or Euroclear for one day (until the purchase
side of the day trade is reflected in their Cedel Bank or Euroclear
accounts) in accordance with the clearing system's customary procedures;
2. borrowing the Global Notes in the United States from a DTC participant no
later than one day prior to settlement, which would give the Global Notes
sufficient time to be reflected in their Cedel Bank or Euroclear account
in order to settle the sale side of the trade; or
3. 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 Cedel Bank
participant or Euroclear participant.
CERTAIN U.S. FEDERAL INCOME TAX
DOCUMENTATION REQUIREMENTS
A holder of Global Notes holding securities through Cedel Bank or Euroclear
(or through DTC if the holder has an address outside the United States) will be
subject to 30% United States withholding tax that generally applies to payments
of interest (including original interest discount) on registered debt issued by
United States Persons, unless (i) each clearing system, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business in the chain of intermediaries between such beneficial owner and the
United States entity required to withhold tax complies with applicable
certification requirements and (ii) such holder takes one of the following steps
to obtain an exemption or reduced tax rate:
EXEMPTION FOR NON-U.S. PERSON (FORM W-8). Non-United States Persons that
are beneficial owners can obtain a complete exemption from the withholding tax
by filing a signed Form W-8 (Certificate of Foreign Status).
If the information shown on Form W-8 changes, a new Form W-8 must be filed
within 30 days of such change.
EXEMPTION FOR NON-U.S. PERSONS WITH EFFECTIVELY CONNECTED INCOME (FORM
4224). A non-United States Person, including a non-United States corporation or
bank with a United States branch, for which the interest income is effectively
connected with its conduct of a trade or business in the United States, can
obtain an exemption from the withholding tax by filing Form 4224 (Exemption from
Withholding of Tax on Income Effectively Connected with the Conduct of a Trade
or Business in the United States).
EXEMPTION OR REDUCED RATE FOR NON-U.S. PERSONS RESIDENT IN TREATY COUNTRIES
(FORM 1001). Non-United States Persons that are beneficial owners residing in a
country that has a tax treaty with the United States can obtain an exemption or
reduced tax rate (depending on the terms of the treaty) by filing Form 1001
(Ownership, Exemption or Reduced Rate Certificate). If the treaty provides only
for a reduced rate, withholding tax will be imposed at that rate unless the
filer alternatively files Form W-8. Form 1001 may be filed by the beneficial
owner or his agent.
EXEMPTION FOR U.S. PERSONS (FORM W-9). United States Persons can obtain a
complete exemption from the withholding tax by filing Form W-9 (Payer's Request
for Taxpayer Identification Number and Certification).
U.S. FEDERAL INCOME TAX REPORTING PROCEDURE. A holder of Global Notes or,
in the case of a Form 1001 or a Form 4224 filer, his agent, files by submitting
the appropriate form to the person through which he holds (the clearing agency,
in the case of persons holding directly on the books of the clearing agency).
Form W-8 and Form 1001 are effective for three calendar years and Form 4224 is
effective for one calendar year. See "United States Taxation" in the Prospectus.
A-3
<PAGE>
The term "United States Person" means (i) a citizen or resident of the
United States, (ii) a corporation or partnership organized in or under the laws
of the United States or any political subdivision thereof or (iii) an estate or
trust the income of which is includible in gross income for United States
federal income tax purposes, regardless of its source.
THIS SUMMARY DOES NOT DEAL WITH ALL ASPECTS OF UNITED STATES FEDERAL INCOME
TAX WITHHOLDING THAT MAY BE RELEVANT TO FOREIGN HOLDERS OF THE GLOBAL NOTES.
INVESTORS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS FOR SPECIFIC TAX ADVICE
CONCERNING THEIR HOLDING AND DISPOSING OF THE GLOBAL NOTES.
A-4
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE DEPOSITOR, THE SERVICER, THE OWNER TRUST, THE OWNER TRUSTEE,
THE INDENTURE TRUSTEE, THE U.S. UNDERWRITERS OR THE INTERNATIONAL MANAGERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS, NOR ANY SALE MADE HEREUNDER, SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Incorporation by Reference.....................
Available Information..........................
Reports to Noteholders.........................
Table of Contents..............................
Prospectus Summary.............................
Risk Factors...................................
The Merger.....................................
The Depositor and the Owner Trust..............
AT&T Capital Corporation.......................
The Originators................................
The Contracts..................................
Description of the Notes.......................
Description of the Transfer and Servicing
Agreement.....................................
Certain Legal Aspects of the Contracts.........
United States Taxation.........................
ERISA Considerations...........................
Ratings of the Notes...........................
Use of Proceeds................................
Underwriting...................................
Legal Matters..................................
Additional Information.........................
Index of Principal Terms.......................
Appendix A: Global Clearance, Settlement and
Tax Documentation Procedures.................. A-1
</TABLE>
----------------
UNTIL , 1996 (NINETY DAYS AFTER THE DATE OF THIS PROSPECTUS),
ALL DEALERS EFFECTING TRANSACTIONS IN THE NOTES, WHETHER OR NOT PARTICIPATING IN
THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION
TO THE OBLIGATION OF DEALERS ACTING AS UNDERWRITERS TO DELIVER A PROSPECTUS WITH
RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
CAPITA EQUIPMENT RECEIVABLES TRUST 1996-1
$
% RECEIVABLE-BACKED NOTES,
CLASS A
$
% RECEIVABLE-BACKED NOTES, CLASS B
$
% RECEIVABLE-BACKED NOTES, CLASS C
ANTIGUA FUNDING
CORPORATION
DEPOSITOR
AT&T CAPITAL
CORPORATION
SERVICER
---------------------
PROSPECTUS
---------------------
GLOBAL COORDINATORS:
NOMURA INTERNATIONAL
GOLDMAN, SACHS & CO.
-----------
GOLDMAN, SACHS & CO.
U.S. UNDERWRITERS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
[ALTERNATE PAGE FOR MARKET MAKING U.S. PROSPECTUS]
(CONTINUED FROM PRECEDING PAGE)
The Owner Trust will also issue two classes of certificates of beneficial
interest, the Equity Certificates and the Equipment Certificate, which are not
being offered hereby. The Equipment Certificate will represent an undivided
interest in, and be payable solely from, the Equipment and certain amounts
derived from the sale or other disposition of the Equipment upon expiration or
termination (including an early termination or liquidation) of the related
Contracts and certain other amounts as described herein. Amounts payable on the
Equipment Certificate will not be available for payment of interest and
principal on the Notes. It is expected that the Equity Certificates will
initially represent the right to receive principal in an amount equal to
approximately 4% of the Cut-Off Date Contract Pool Principal Balance, together
with interest thereon at % per annum.
The Notes and the Equity Certificates will be payable solely from, and
secured by, the Amount Available on each Payment Date (which will consist
primarily of the Scheduled Payments due under the Contracts, certain amounts
received upon the prepayment or purchase of Contracts or (to the extent not
payable on the Equipment Certificate) liquidation of the related Equipment,
investment earnings on amounts deposited in the Collection Account established
pursuant to the Indenture, in each case subject to prior application to pay
certain fees and expenses, and amounts permitted to be withdrawn therefor from a
Cash Collateral Account) in the order of priority described herein. The
likelihood of payment of interest on each Class of Notes will be enhanced by the
application of the Amount Available to the payment of such interest prior to the
payment of principal on any of the Notes or the Equity Certificates, as well as
by the preferential right of the Holders of Notes of each such Class to receive
such interest (1) in the case of the Class A Notes, prior to the payment of any
interest on the Class B Notes, the Class C Notes or the Equity Certificates, (2)
in the case of the Class B Notes, prior to the payment of any interest on the
Class C Notes or the Equity Certificates, and (3) in the case of the Class C
Notes, prior to the payment of any interest on the Equity Certificates.
Likewise, the likelihood of payment of principal on each Class of Notes will be
enhanced by the preferential right of the Holders of Notes of each such Class to
receive such principal, to the extent of the Amount Available after payment of
interest on the Notes and the Equity Certificates as aforesaid, (i) in the case
of the Class A Notes, prior to the payment of any principal on the Class B
Notes, the Class C Notes or (except as described herein) the Equity
Certificates, (ii) in the case of the Class B Notes, prior to the payment of any
principal on the Class C Notes or (except as described herein) the Equity
Certificates, and (iii) in the case of the Class C Notes, prior to the payment
of any principal on the Equity Certificates, except as described herein. See
"Description of the Notes."
To the extent the Amount Available is sufficient therefor, interest at the
rate per annum noted above for each of the Class A, Class B and Class C Notes
(the applicable "Interest Rate") will be paid to Holders of each Class of Notes,
and principal will be paid on the applicable Class of Notes, on the day of
each month (or, if such day is not a Business Day, on the next succeeding
Business Day), commencing October , 1996 (each, a "Payment Date"). The Stated
Maturity Date for the Class A Notes, the Class B Notes and the Class C Notes is
, , and , respectively.
The Notes are subject to redemption in whole as described herein under
"Description of the Notes -- Special Redemption" and "-- Optional Purchase of
Contracts."
There is currently no secondary market for the Notes and there is no
assurance that one will develop. The U.S. Underwriters expect, but will not be
obligated, to make a market in the Notes in the United States. The International
Managers expect, but will not be obligated, to make a market in the Notes
outside the United States. There is no assurance that either such market will
develop, or if either such market does develop, that such market will continue.
See "Risk Factors."
It is a condition of issuance of the Notes that each of Standard & Poor's
Ratings Services, Moody's Investors Service, Inc., Duff & Phelps Credit Rating
Co. and Fitch Investors Service, L.P. (i) rate the Class A Notes in its highest
rating category, (ii) rate the Class B Notes " ," " ," " " and
" ," respectively, and (iii) rate the Class C Notes " ," " ,"
" " and " ," respectively. See "Ratings of the Notes."
If and to the extent required by applicable law or regulation, this
Prospectus will also be used by Nomura Securities International, Inc. after the
completion of the offering in connection with offers and sales related to
market-making transactions in the Notes in which Nomura Securities
International, Inc. acts as principal. Nomura Securities International, Inc. may
also act as agent in such transactions. Sales will be made at negotiated prices
determined at the time of sale.
IN CONNECTION WITH THIS OFFERING, THE U.S. UNDERWRITERS AND/OR INTERNATIONAL
MANAGERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE
MARKET PRICE OF THE NOTES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
Upon receipt of a request by an investor who has received an electronic
Prospectus from any Underwriter or a request by such investor's representative
within the period during which there is an obligation to deliver a Prospectus,
such Underwriter will promptly deliver, or cause to be delivered, without
charge, to such investor a paper copy of the Prospectus.
The Depositor has not authorized any offer of Notes to the public in the
United Kingdom within the meaning of the Public Offers of Securities Regulations
1995 (the "Regulations"). The Notes may not lawfully be offered or sold to
persons in the United Kingdom except in circumstances which do not result in an
offer to the public in the United Kingdom within the meaning of the Regulations
or otherwise in compliance with all applicable provisions of the Regulations.
The Depositor does not intend to register the Notes under the Securities and
Exchange Law of Japan (the "SEL"). Accordingly, the Notes may not be offered or
sold directly or indirectly in Japan, and this Prospectus may not be distributed
or circulated in Japan, except in circumstances that do not constitute an offer
to the public within the meaning of the SEL.
<PAGE>
[ALTERNATE PAGE FOR MARKET MAKING U.S. PROSPECTUS]
Financial Services Act of 1986 with respect to anything done by it in relation
to the Notes in, from or otherwise involving the United Kingdom; and (c) it has
only issued or passed on and will only issue or pass on in the United Kingdom
any document received by it in connection with the issuance of the Notes to a
person who is of a kind described in article 11(3) of the Financial Services Act
1986 (Investment Advertisements) (Exemptions) Order 1995 or who is a person to
whom such document may otherwise lawfully be issued or passed on.
This Prospectus may be used by underwriters and dealers in connection with
offers and sales of the Notes to persons located in the United Sates.
The Depositor and the Owner Trustee (on behalf of the Owner Trust) have
entered into an underwriting agreement (the "International Underwriting
Agreement") with certain managers (the "International Managers," and
collectively with the U.S. Underwriters, the "Underwriters") through their
representatives, Nomura International plc and Goldman, Sachs International (the
"International Representatives"), providing for the concurrent offer and sale of
an aggregate of $ , $ and $ principal amount of Class A
Notes, Class B Notes and Class C Notes, respectively (the "International Notes")
outside the United States. The offering price and aggregate underwriting
discounts and commissions per Note for the U.S. Notes and the International
Notes are identical.
To provide for the coordination of their activities, the U.S. Underwriters
and the International Managers have entered into an Agreement between U.S.
Underwriters and International Managers (the "Intersyndicate Agreement") which
provides, among other things, that the U.S. Underwriters and the International
Managers may purchase and sell among each other such number of Notes as is
mutually agreed upon among the U.S. Representatives and the International
Representatives and as approved by Nomura International plc and Goldman, Sachs &
Co., as Global Coordinators. To the extent there are sales among the U.S.
Underwriters and the International Managers pursuant to the Intersyndicate
Agreement and as approved by the Global Coordinators, the number of U.S. Notes
initially available for sale by the U.S. Underwriters and the number of
International Notes initially available for sale by the International Managers
may be more or less than the numbers appearing on the cover page of this
Prospectus. Except as permitted by the Intersyndicate Agreement and as approved
by the Global Coordinators, the price of any Notes so sold will be the
respective initial public offering price, less an amount not greater than the
selling concession.
Pursuant to the Intersyndicate Agreement, as part of the distribution of the
Notes and subject to certain exceptions, (a) the U.S. Underwriters will offer
and sell U.S. Notes only (i) in the United States (ii) to U.S. Persons (as
defined below) and (b) the International Managers will offer and sell
International Notes only outside the United States to non-U.S. Persons
(including any entity constituting an investment advisor located outside the
United States acting with discretionary authority for a U.S. Person). For these
purposes, U.S. Person means individual residents in the United States or
corporations, partnerships, or other entities organized in or under the laws of
the United States or any political subdivision thereof (including any such
entity constituting an investment advisor acting with discretionary authority
for a non-U.S. Person) whose office most directly involved with the purchase is
located in such country. "United States" means the United States of America, its
territories, its possessions and all areas subject to its jurisdiction.
Nomura International plc has provided acquisition financing and advisory
services to HoldCo. and MergerCo. in connection with the Merger and will, after
the Merger Consummation Date, hold warrants to acquire an indirect majority
interest in the common stock of TCC. See "The Merger."
Application has been made to list the Notes on the Luxembourg Stock
Exchange.
If and to the extent required by applicable law or regulation, this
Prospectus will be used by Nomura Securities International, Inc. in connection
with offers and sales related to market making transactions in the Notes in
which Nomura Securities International, Inc. acts as a principal. Nomura
Securities International, Inc. may also act as agent in such transactions. Sales
may be made at negotiated prices determined at the time of sale.
68
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
PROSPECTUS
SUBJECT TO COMPLETION, DATED AUGUST 13, 1996
$
CAPITA EQUIPMENT RECEIVABLES TRUST 1996-1
$ % RECEIVABLE-BACKED NOTES, CLASS A, DUE ; ISSUE
PRICE: %
$ % RECEIVABLE-BACKED NOTES, CLASS B, DUE ; ISSUE
PRICE: %
$ % RECEIVABLE-BACKED NOTES, CLASS C, DUE ; ISSUE
PRICE: %
<TABLE>
<S> <C>
ANTIGUA FUNDING CORPORATION AT&T CAPITAL CORPORATION
DEPOSITOR SERVICER
</TABLE>
Capita Equipment Receivables Trust 1996-1 (the "Owner Trust") will be formed
pursuant to a Trust Agreement between Antigua Funding Corporation (the
"Depositor"), which is to be a wholly owned subsidiary of AT&T Capital
Corporation ("TCC") following the consummation of the Merger, and
, as Owner Trustee (the "Owner Trustee"). The Receivable-Backed
Notes (the "Notes") will be issued by the Owner Trust pursuant to an Indenture
(the "Indenture") between the Owner Trust and , as
Indenture Trustee (the "Indenture Trustee"). The property of the Owner Trust
(collectively, the "Trust Assets"), from the date of issuance of the Notes (the
"Closing Date") to the Merger Consummation Date, will consist of the proceeds of
the Notes, plus additional cash, which will be held (and invested in certain
Eligible Investments) in an Escrow Account and will be sufficient to redeem the
Notes at the Special Redemption Price on the Special Redemption Date if the
Merger is not consummated on or before September , 1996. The cash in the
Escrow Account, together with the proceeds of the Equity Certificates to be
issued by the Owner Trust to the Depositor (which will thereafter be disposed of
by the Depositor in a transaction unrelated to the issuance of the Notes), will
be used on the Merger Consummation Date to acquire a pool of equipment leases
(the "Lease Contracts") and installment sale contracts, promissory notes, loan
and security agreements and similar types of receivables (the "Loan Contracts,"
and, together with the Lease Contracts, the "Contracts") and the interest of the
Depositor in certain equipment related to such Contracts (the "Equipment"). TCC
will service the Contracts pursuant to a Transfer and Servicing Agreement,
expected to be entered into among the Depositor, TCC, the Indenture Trustee and
the Owner Trust. Of the Notes being offered, $ , $ and
$ initial principal amount of the Class A Notes, Class B Notes and Class
C Notes, respectively, are being offered initially in the United States by the
U.S. Underwriters and $ , $ and $ , respectively, are
being offered initially outside the United States by the International Managers.
The Initial Public Offering Price and Underwriting Discount will be identical
for both offerings.
(CONTINUED ON FOLLOWING PAGE)
FOR A DISCUSSION OF CERTAIN FACTORS RELATING TO THIS OFFERING, SEE "RISK
FACTORS" ON PAGE 16 HEREIN.
THE NOTES WILL REPRESENT OBLIGATIONS OF THE OWNER TRUST AND WILL NOT
REPRESENT INTERESTS IN OR OBLIGATIONS OF ANTIGUA FUNDING CORPORATION, AT&T
CAPITAL CORPORATION OR ANY OF THEIR RESPECTIVE AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
INITIAL PUBLIC OFFERING UNDERWRITING PROCEEDS TO THE
PRICE (1) DISCOUNT (2) DEPOSITOR (1)(3)
------------------------ ------------------------ ------------------------
<S> <C> <C> <C>
Per Class A Note........ % % %
Per Class B Note........ % % %
Per Class C Note........ % % %
Total................... $ $ $
</TABLE>
- ----------------
(1) Plus accrued interest, if any, at the applicable Interest Rate, from
, 1996.
(2) The Depositor has agreed to indemnify the International Managers against
certain liabilities, including liabilities under the Securities Act of 1933.
See "Underwriting."
(3) Before deducting expenses payable by the Depositor, estimated to be
$ .
GLOBAL COORDINATORS:
NOMURA INTERNATIONAL GOLDMAN, SACHS & CO.
The Notes are offered severally by the International Managers, as specified
herein, subject to prior sale and subject to the International Managers' right
to reject orders in whole or in part. It is expected that the Notes will be
ready for delivery in book-entry form through the facilities of The Depository
Trust Company in New York, New York, Cedel Bank, societe anonyme, and the
Euroclear System against payment therefor in immediately available funds on or
about September , 1996.
Application has been made to list the Notes on the Luxembourg Stock
Exchange.
----------------
NOMURA INTERNATIONAL
-----------
THE DATE OF THIS PROSPECTUS IS SEPTEMBER , 1996
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
The Owner Trust will also issue two classes of certificates of beneficial
interest, the Equity Certificates and the Equipment Certificate, which are not
being offered hereby. The Equipment Certificate will represent an undivided
interest in, and be payable solely from the Equipment and certain amounts
derived from the sale or other disposition of the Equipment upon expiration or
termination (including an early termination or liquidation) of the related
Contracts and certain other amounts as described herein. Amounts payable on the
Equipment Certificate will not be available for payment of interest and
principal on the Notes. It is expected that the Equity Certificates will
initially represent the right to receive principal in an amount equal to
approximately 4% of the Cut-Off Date Contract Pool Principal Balance, together
with interest thereon at % per annum.
The Notes and the Equity Certificates will be payable solely from, and
secured by, the Amount Available on each Payment Date (which will consist
primarily of the Scheduled Payments due under the Contracts, certain amounts
received upon the prepayment or purchase of Contracts or (to the extent not
payable on the Equipment Certificate) liquidation of the related Equipment,
investment earnings on amounts deposited in the Collection Account established
pursuant to the Indenture, in each case subject to prior application to pay
certain fees and expenses, and amounts permitted to be withdrawn therefor from a
Cash Collateral Account) in the order of priority described herein. The
likelihood of payment of interest on each Class of Notes will be enhanced by the
application of the Amount Available to the payment of such interest prior to the
payment of principal on any of the Notes or the Equity Certificates, as well as
by the preferential right of the Holders of Notes of each such Class to receive
such interest (1) in the case of the Class A Notes, prior to the payment of any
interest on the Class B Notes, the Class C Notes or the Equity Certificates, (2)
in the case of the Class B Notes, prior to the payment of any interest on the
Class C Notes or the Equity Certificates, and (3) in the case of the Class C
Notes, prior to the payment of any interest on the Equity Certificates.
Likewise, the likelihood of payment of principal on each Class of Notes will be
enhanced by the preferential right of the Holders of Notes of each such Class to
receive such principal, to the extent of the Amount Available after payment of
interest on the Notes and the Equity Certificates as aforesaid, (i) in the case
of the Class A Notes, prior to the payment of any principal on the Class B
Notes, the Class C Notes or (except as described herein) the Equity
Certificates, (ii) in the case of the Class B Notes, prior to the payment of any
principal on the Class C Notes or (except as described herein) the Equity
Certificates, and (iii) in the case of the Class C Notes, prior to the payment
of any principal on the Equity Certificates, except as described herein. See
"Description of the Notes."
To the extent the Amount Available is sufficient therefor, interest at the
rate per annum noted above for each of the Class A, Class B and Class C Notes
(the applicable "Interest Rate") will be paid to Holders of each Class of Notes,
and principal will be paid on the applicable Class of Notes, on the day of
each month (or, if such day is not a Business Day, on the next succeeding
Business Day), commencing October , 1996 (each, a "Payment Date"). The Stated
Maturity Date for each Class of Notes is as set forth above.
The Notes are subject to redemption in whole as described herein under
"Description of the Notes -- Special Redemption" and "-- Optional Purchase of
Contracts."
There is currently no secondary market for the Notes and there is no
assurance that one will develop. The U.S. Underwriters expect, but will not be
obligated, to make a market in the Notes in the United States. The International
Managers expect, but will not be obligated, to make a market in the Notes
outside the United States. There is no assurance that either such market will
develop, or if either such market does develop, that such market will continue.
See "Risk Factors."
Each prospective purchaser of the Notes must comply with all applicable laws
and regulations in any jurisdiction in which it purchases or sells the Notes or
possesses or distributes this Prospectus and must obtain any consent, approval
or permission required by it for the purchase, offer or sale by it of the Notes
under the laws and regulations in force in any jurisdiction to which it makes
such purchase, offer or sale, and neither the Owner Trust nor any Underwriter
shall have any responsibility therefor.
The distribution of this Prospectus and the offer or sale of Notes may be
restricted by law in certain jurisdictions. Persons to whom possession of this
Prospectus and any of the Notes may come must inform themselves about, and
observe, any such restrictions. See "Underwriting." In particular, there are
restrictions on the distribution of this Prospectus and the offer and sale of
the Notes in the United Kingdom and Japan. None of the Owner Trust, the
Underwriters or any of their respective representatives is making any
representation to any offeree or purchaser of the Notes regarding the legality
of or investment therein by such offeree or purchaser under applicable legal
investment or similar laws.
For so long as the Notes are listed on the Luxembourg Stock Exchange and the
rules of such exchange so require, the notices to Noteholders will be published
in a leading newspaper having general circulation in Luxembourg (which is
expected to be the Luxemburger Wort) and will be made available at the offices
of the Luxembourg Listing Agent). See "Additional Information."
It is a condition of issuance of the Notes that each of Standard & Poor's
Ratings Services, Moody's Investors Service, Inc., Duff & Phelps Credit Rating
Co. and Fitch Investors Service, L.P. (i) rate the Class A Notes in its highest
rating category, (ii) rate the Class B Notes " ," " ," " " and
" ," respectively, and (iii) rate the Class C Notes " ," " ,"
" " and " ," respectively. See "Ratings of the Notes."
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
(CONTINUED FROM PRECEDING PAGE)
IN CONNECTION WITH THIS OFFERING, THE U.S. UNDERWRITERS AND/OR INTERNATIONAL
MANAGERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE
MARKET PRICE OF THE NOTES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
The Depositor has taken all reasonable care to ensure that the information
stated herein is true and accurate in all material respects and is not
misleading as of the date hereof and that there are no material facts omission
of which would make the information contained herein misleading in any material
respect. The Depositor accepts responsibility accordingly.
Upon receipt of a request by an investor who has received an electronic
Prospectus from any Underwriter or a request by such investor's representative
within the period during which there is an obligation to deliver a Prospectus,
such Underwriter will promptly deliver, or cause to be delivered, without
charge, to such investor a paper copy of the Prospectus.
The Depositor has not authorized any offer of Notes to the public in the
United Kingdom within the meaning of the Public Offers of Securities Regulations
1995 (the "Regulations"). The Notes may not lawfully be offered or sold to
persons in the United Kingdom except in circumstances which do not result in an
offer to the public in the United Kingdom within the meaning of the Regulations
or otherwise in compliance with all applicable provisions of the Regulations.
The Depositor does not intend to register the Notes under the Securities and
Exchange Law of Japan (the "SEL"). Accordingly, the Notes may not be offered or
sold directly or indirectly in Japan, and this Prospectus may not be distributed
or circulated in Japan, except in circumstances that do not constitute an offer
to the public within the meaning of the SEL.
In making an investment decision, investors must rely on their own
examination of the Notes, including the merits and risks involved. The contents
of this Prospectus are not to be construed as legal, business or tax advice.
Each prospective purchaser must consult its own accountant, legal advisor and
other advisors as to the business, legal, tax and related aspects of the
purchase of the Notes. As used herein, references to "dollars" or "$" are to
United States dollars.
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
UNDERWRITING
Subject to the terms and conditions of the international underwriting
agreement (the "International Underwriting Agreement"), the managers named below
(the "International Managers"), through their representatives, Nomura
International plc and Goldman, Sachs International (the "International
Representatives"), have severally agreed to purchase from the Depositor the
following respective initial principal amount of Notes (the "International
Notes") at the initial public offering price less the underwriting discounts set
forth on the cover page of this Prospectus:
<TABLE>
<CAPTION>
INITIAL INITIAL INITIAL
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT OF CLASS AMOUNT OF CLASS AMOUNT OF CLASS
INTERNATIONAL MANAGERS A NOTES B NOTES C NOTES
- --------------------------------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C>
--------------- --------------- ---------------
Total....................................................
--------------- --------------- ---------------
--------------- --------------- ---------------
</TABLE>
In the International Underwriting Agreement, the International Managers have
agreed, subject to the terms and conditions set forth therein, to purchase all
of the International Notes offered hereby if any of the International Notes are
purchased. The Depositor has been advised by the International Representatives
that the International Managers propose to offer the International Notes to the
public at the respective public offering prices set forth on the cover page of
this Prospectus, and to certain dealers at such price, less a concession not in
excess of 0. % per Class A Note, 0. % per Class B Note and 0. % per Class C
Note. The International Managers may allow and such dealers may reallow to other
dealers a discount not in excess of 0. % per Class A Note, 0. % per Class B
Note and 0. % per Class C Note. After the Notes are released for sale to the
public, the offering price and other selling terms may be varied by the
International Representatives.
The Notes are new issues of securities with no established trading market.
The Depositor has been advised by the International Managers that the
International Managers intend to make a market in the Notes outside of the
United States but are not obligated to do so and may discontinue market making
at any time without notice. The Depositor has been advised by the U.S.
Representatives that the U.S. Underwriters intend to make a market in the Notes
in the United States but are not obligated to do so and may discontinue market
making at any time without notice. No assurance can be given as to the liquidity
of the trading market for the Notes.
Funds in the Cash Collateral Account and the Trust Accounts may, from time
to time, be invested in Eligible Investments acquired from the U.S.
Underwriters.
Each U.S. Underwriter and International Manager has represented and agreed
that (a) it has not offered or sold and will not offer or sell any Notes to any
person in the United Kingdom prior to the expiration of the period of six months
from the issue date of the Notes 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 which have not resulted and
67
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
will not result in an offer to the public in the United Kingdom within the
meaning of the Public Offers of Securities Regulations 1995; (b) it has complied
and will comply with all applicable provisions of the Financial Services Act
1986 with respect to anything done by it in relation to the Notes in, from or
otherwise involving the United Kingdom; and (c) it has only issued or passed on
and will only issue or pass on in the United Kingdom any document received by it
in connection with the issuance of the Notes to a person who is of a kind
described in article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1995 or who is a person to whom such document
may otherwise lawfully be issued or passed on.
Each International Manager and each U.S. Underwriter has agreed that the
Notes may not be offered or sold directly or indirectly in Japan, and this
Prospectus may not be distributed or circulated in Japan, except in
circumstances that do not constitute an offer to the public within the meaning
of the SEL.
This Prospectus may be used by underwriters and dealers in connection with
offers and sales of the Notes to persons located outside the United Sates.
The Depositor has agreed to indemnify the International Managers against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended.
The Depositor has entered into an underwriting agreement (the "U.S.
Underwriting Agreement") with certain underwriters (the "U.S. Underwriters," and
collectively with the International Managers, the "Underwriters") through their
representatives, Goldman, Sachs & Co. and Nomura Securities International, Inc.
(the "U.S. Representatives"), providing for the concurrent offer and sale of an
aggregate of $ , $ and $ principal amount of Class A
Notes, Class B Notes and Class C Notes, respectively (the "U.S. Notes") in the
United States. The offering price and aggregate underwriting discounts and
commissions per Note for the U.S. Notes and the International Notes are
identical.
To provide for the coordination of their activities, the U.S. Underwriters
and the International Managers have entered into an Agreement between U.S.
Underwriters and International Managers (the "Intersyndicate Agreement") which
provides, among other things, that the U.S. Underwriters and the International
Managers may purchase and sell among each other such number of Notes as is
mutually agreed upon among the U.S. Representatives and the International
Representatives. To the extent there are sales among the U.S. Underwriters and
the International Managers pursuant to the Intersyndicate Agreement and as
approved by the Global Coordinators, the number of U.S. Notes initially
available for sale by the U.S. Underwriters and the number of International
Notes initially available for sale by the International Managers may be more or
less than the numbers appearing on the cover page of this Prospectus. Except as
permitted by the Intersyndicate Agreement, the price of any Notes so sold will
be the respective initial public offering price, less an amount not greater than
the selling concession.
Pursuant to the Intersyndicate Agreement, as part of the distribution of the
Notes and subject to certain exceptions, (a) the U.S. Underwriters will offer
and sell U.S. Notes only (i) in the United States (ii) to U.S. Persons (as
defined below) and (b) the International Managers will offer and sell
International Notes only outside the United States to non-U.S. Persons
(including any entity constituting an investment advisor located outside the
United States acting with discretionary authority for a U.S. Person). For these
purposes, U.S. Person means individual residents in the United States or
Corporations, Partnerships, or other entities organized in or under the laws of
the United States or any political subdivision thereof (including any such
entity constituting an investment advisor acting with discretionary authority
for a non-U.S. Person) whose office most directly involved with the purchase is
located in such country. "United States" means the United States of America, its
territories, its possessions and all areas subject to its jurisdiction.
Nomura International plc has provided acquisition financing and advisory
services to HoldCo. and MergerCo. in connection with the Merger and will, after
the Merger Consummation Date, hold warrants to acquire an indirect majority
interest in the common stock of TCC. See "The Merger."
Application has been made to list the Notes on the Luxembourg Stock
Exchange.
68
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE DEPOSITOR, THE SERVICER, THE OWNER TRUST, THE OWNER TRUSTEE,
THE INDENTURE TRUSTEE, THE U.S. UNDERWRITERS OR THE INTERNATIONAL MANAGERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS, NOR ANY SALE MADE HEREUNDER, SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Incorporation by Reference.....................
Available Information..........................
Reports to Noteholders.........................
Table of Contents..............................
Prospectus Summary.............................
Risk Factors...................................
The Merger.....................................
The Depositor and the Owner Trust..............
AT&T Capital Corporation.......................
The Originators................................
The Contracts..................................
Description of the Notes.......................
Description of the Transfer and Servicing
Agreement.....................................
Certain Legal Aspects of the Contracts.........
United States Taxation.........................
ERISA Considerations...........................
Ratings of the Notes...........................
Use of Proceeds................................
Underwriting...................................
Legal Matters..................................
Additional Information.........................
Index of Principal Terms.......................
Appendix A: Global Clearance, Settlement and
Tax Documentation Procedures.................. A-1
</TABLE>
----------------
UNTIL , 1996 (NINETY DAYS AFTER THE DATE OF THIS PROSPECTUS),
ALL DEALERS EFFECTING TRANSACTIONS IN THE NOTES, WHETHER OR NOT PARTICIPATING IN
THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION
TO THE OBLIGATION OF DEALERS ACTING AS UNDERWRITERS TO DELIVER A PROSPECTUS WITH
RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
CAPITA EQUIPMENT RECEIVABLES TRUST 1996-1
$
% RECEIVABLE-BACKED NOTES,
CLASS A
$
% RECEIVABLE-BACKED NOTES, CLASS B
$
% RECEIVABLE-BACKED NOTES, CLASS C
ANTIGUA FUNDING
CORPORATION
DEPOSITOR
AT&T CAPITAL
CORPORATION
SERVICER
---------------------
PROSPECTUS
---------------------
GLOBAL COORDINATORS:
NOMURA INTERNATIONAL
GOLDMAN, SACHS & CO.
-----------
NOMURA INTERNATIONAL
INTERNATIONAL MANAGERS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses to be incurred in connection
with the offering of the Notes, other than underwriting discounts and
commissions, described in this Registration Statement:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee.................... $ 344.83
Printing and Engraving................................................. *
Legal Fees and Expenses................................................ *
Blue Sky Filing and Counsel Fees....................................... *
Accounting Fees and Expenses........................................... *
Trustee Fees and Expenses.............................................. *
Rating Agencies' Fees.................................................. *
Miscellaneous Expenses................................................. *
----------
Total.............................................................. $ *
----------
----------
</TABLE>
- ------------------------
* To be supplied by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Antigua Funding Corporation is incorporated under the laws of Delaware.
Section 145 of the Delaware General Corporation Law provides that a Delaware
corporation may indemnify any persons, including officers and directors, who
are, or are threatened to be made, parties to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of such corporation, by
reason of the fact that such person was an officer, director, employee or agent
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation or enterprise).
The indemnity may include expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or proceedings, provided such person acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the corporation's best interests and, for criminal proceedings, had no
reasonable cause to believe that his conduct was illegal. A Delaware corporation
may identify officers and directors in an action by or in the right of the
corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation. Where an officer or director is successful on the
merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses which such officer or
director actually and reasonably incurred.
The Certificate of Incorporation and Bylaws of Antigua Funding Corporation
provide, in effect, that, subject to certain limited exceptions, such
corporation will indemnify its officers and directors to the extent permitted by
the Delaware General Corporation Law.
ITEM 16. EXHIBITS.
The Exhibits filed as part of this Registration Statement are:
<TABLE>
<C> <C> <S>
* 1.1 -- Form of Underwriting Agreement.
* *3.1 -- Certificate of Incorporation of Depositor.
* *3.2 -- By-Laws of Depositor.
* 4.1 -- Form of Transfer and Servicing Agreement.
* 4.2 -- Form of Indenture.
* 4.3 -- Form of Trust Agreement.
* 4.4 -- Form of Purchase Agreement.
* 5.1 -- Opinion and consent of Dorsey & Whitney LLP with respect to legality.
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <C> <S>
* 8.1 -- Opinion and consent of Dorsey & Whitney LLP with respect to tax matters.
* 8.2 -- Opinion and consent of Cadwalader, Wickersham & Taft with respect to tax matters.
* 23.1 -- Consent of Dorsey & Whitney LLP (included as part of Exhibit 5.1).
* 23.2 -- Consent of Dorsey & Whitney LLP (included as part of Exhibit 8.1).
* 23.3 -- Consent of Cadwalader, Wickersham & Taft (included as part of Exhibit 8.2).
* 24.1 -- Power of Attorney (included on page II-3).
* 25.1 -- Statement of eligibility of Indenture Trustee.
</TABLE>
- ------------------------
* To be filed by amendment.
** Previously filed.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned registrant hereby undertakes:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on the
12th day of August, 1996.
ANTIGUA FUNDING CORPORATION
By ___________/s/ GUY HANDS___________
Guy Hands
PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- --------------------------------------------- -------------------
<C> <S> <C>
/s/ GUY HANDS President (Principal Executive Officer) and August 12, 1996
Guy Hands Director
/s/ JEFF NASH Vice President (Principal Financial and August 12, 1996
Jeff Nash Accounting Officer) and Director
</TABLE>
II-3
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------
<C> <S> <C>
* 1.1 Form of Underwriting Agreement.
**3.1 Certificate of Incorporation of Depositor.
**3.2 By-laws of Depositor.
* 4.1 Form of Transfer and Servicing Agreement.
* 4.2 Form of Indenture.
* 4.3 Form of Trust Agreement.
* 4.4 Form of Purchase Agreement.
* 5.1 Opinion and consent of Dorsey & Whitney LLP with respect to legality.
* 8.1 Opinion and consent of Dorsey & Whitney LLP with respect to tax matters.
* 8.2 Opinion and consent of Cadwalader, Wickersham & Taft with respect to tax matters.
* 23.1 Consent of Dorsey & Whitney LLP (included as part of Exhibit 5.1).
* 23.2 Consent of Dorsey & Whitney LLP (included as part of Exhibit 8.1).
* 23.3 Consent of Cadwalader, Wickersham & Taft (included as part of Exhibit 8.2).
**24.1 Power of Attorney.
* 25.1 Statement of eligibility of Indenture Trustee.
</TABLE>
- ------------------------
* To be filed by amendment.
** Previously filed.
