<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 23, 1996
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------
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 $344.83
</TABLE>
(1) Estimated solely for the purposes of calculating the registration fee
pursuant to Rule 457.
----------------
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") 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 to be used in the
International Prospectus which differ from those in the U.S. Prospectus. Each of
the pages for the International Prospectus is labeled "Alternate Page for
International 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 JULY 23, 1996
$
CAPITA EQUIPMENT RECEIVABLES TRUST 1996-1 RECEIVABLE-BACKED NOTES
$ % 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, dated as of September , 1996, 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, dated as of September , 1996, 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 and the Equity Certificates and additional
cash held (and invested in certain Eligible Investments) in an Escrow Account,
which amounts 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 will be used on the
Merger Consummation Date to acquire the Contracts. From and after the
consummation of the Merger, it is expected that the Trust Assets will consist of
a pool of approximately equipment leases, installment sale contracts,
promissory notes, loan and security agreements and similar types of receivables
(the "Contracts"), all Scheduled Payments and Prepayments made by the obligors
(the "Obligors") on such Contracts on and after the Cut-Off Date, the interest
of the Depositor in certain equipment related to such Contracts (the
"Equipment"), and amounts on deposit from time to time in the Collection Account
and certain other accounts described herein. TCC will service the Contracts
pursuant to a Transfer and Servicing Agreement, expected to be dated as of
September , 1996, 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
Price to Public and Underwriting Discount will be identical for both offerings.
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, certain amounts derived from the sale
or other disposition of the Equipment related to the Contracts that constitute
Lease Contracts upon expiration or termination (including an early termination
or liquidation) of such Lease 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 and amounts permitted to be withdrawn therefor from a
Cash Collateral Account, in each case subject to prior application to pay
certain fees and expenses) 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 Note, 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 , 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 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.
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."
FOR A DISCUSSION OF CERTAIN FACTORS RELATING TO THIS OFFERING, SEE "RISK
FACTORS" ON PAGE 18 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>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC (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 by the U.S. Underwriters subject to prior sale when,
as and if issued to and accepted by the U.S. Underwriters, subject to approval
of certain legal matters by counsel and certain other conditions. The U.S.
Underwriters reserve the right to withdraw, cancel or modify such offer and to
reject orders in whole or in part. It is expected that the Notes will be
delivered in book-entry form on or about September , 1996 through the
facilities of The Depository Trust Company, Cedel Bank, societe anonyme, and
Morgan Guaranty Trust Company of New York, Brussels Office, as operator of the
Euroclear System, against payment therefor in immediately available funds.
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>
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.
No dealer, salesman or other person has been authorized to give any
information or to make any representation not contained in this Prospectus and,
if given or made, such information or representation must not be relied upon as
having been authorized by the Depositor, the Servicer, the Owner Trust, the U.S.
Underwriters or the International Managers. This Prospectus does not constitute
an offer to sell or a solicitation of an offer to buy any of the securities
offered hereby in any jurisdiction to any person to whom it is unlawful to make
such offer or solicitation in such jurisdiction. 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 hereof.
Until , 1996 (90 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 to deliver a Prospectus when acting as Underwriters
and with respect to their unsold allotments or subscriptions.
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 Notes may not be offered or sold in the United Kingdom by means of any
document except in circumstances which do not constitute an offer to the public
within the meaning of the Public Offers of Securities Regulations 1995. All
applicable provisions of the Financial Services Act 1986 must be complied with
in connection with anything done in relation to the Notes in, from or otherwise
involving the United Kingdom. See "Underwriting."
<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 and to be a part hereof from the date of filing
of such documents.
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 Paying Agent in Luxembourg. 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.............................................................................................. 15
Limited Liquidity....................................................................................... 15
Subordination; Limited Assets........................................................................... 15
Yield and Prepayment Considerations..................................................................... 15
Bankruptcy or Insolvency Risks.......................................................................... 16
Certain Legal Aspects................................................................................... 17
No Gross-Up for Withholding Tax......................................................................... 18
THE MERGER................................................................................................ 18
THE DEPOSITOR AND THE OWNER TRUST......................................................................... 19
The Depositor........................................................................................... 19
The Owner Trust......................................................................................... 20
Capitalization of the Owner Trust.......................................................................
The Owner Trustee.......................................................................................
AT&T CAPITAL CORPORATION................................................................................ 21
THE ORIGINATORS........................................................................................... 22
AT&T Capital Leasing Services, Inc...................................................................... 22
AT&T Credit Corporation and NCR Credit Corp............................................................. 23
AT&T Commercial Finance Corporation..................................................................... 23
Underwriting and Servicing.............................................................................. 24
THE CONTRACTS............................................................................................. 27
Description of the Contracts............................................................................ 27
Representations and Warranties Made by TCC.............................................................. 30
Certain Statistics Relating to the Initial Contract Pool................................................ 33
Certain Statistics Relating to Delinquencies and Defaults............................................... 35
DESCRIPTION OF THE NOTES.................................................................................. 37
General................................................................................................. 37
Distributions........................................................................................... 37
Class A Interest........................................................................................ 38
Class B Interest........................................................................................ 38
Class C Interest........................................................................................ 39
Principal............................................................................................... 39
Special Redemption of the Notes......................................................................... 40
Subordination of Class B and Class C Notes and Equity Certificates...................................... 40
Cash Collateral Account................................................................................. 41
Contract Defaults.......................................................................................
Optional Purchase of Contracts.......................................................................... 41
Trust Accounts.......................................................................................... 41
Reports to Noteholders.................................................................................. 42
Book-Entry Registration................................................................................. 43
Definitive Notes........................................................................................ 46
Modification of Indenture Without Noteholder Consent.................................................... 46
Modification of Indenture With Noteholder Consent....................................................... 47
Events of Default; Rights Upon Event of Default......................................................... 47
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
SECTION PAGE
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<S> <C>
Certain Covenants....................................................................................... 48
Annual Compliance Statement............................................................................. 49
Indenture Trustee's Annual Report....................................................................... 49
Satisfaction and Discharge of Indenture................................................................. 49
The Indenture Trustee................................................................................... 49
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENT....................................................... 50
Transfer and Assignment of Contracts and Equipment...................................................... 50
Collections on Contracts................................................................................ 50
Servicing............................................................................................... 51
Amendment............................................................................................... 53
Termination of the Agreement............................................................................ 53
The Owner Trustee....................................................................................... 54
CERTAIN LEGAL ASPECTS OF THE CONTRACTS.................................................................... 54
Enforcement of Security Interests in the Equipment...................................................... 55
Insolvency Matters...................................................................................... 56
UNITED STATES TAXATION.................................................................................... 58
Treatment of the Notes.................................................................................. 58
Treatment of the Owner Trust............................................................................ 58
Payments of Interest.................................................................................... 58
Original Issue Discount................................................................................. 59
Market Discount......................................................................................... 59
Amortizable Bond Premium................................................................................ 59
Sale, Exchange or Retirement of Notes................................................................... 60
Tax Consequences to United States Alien Holders......................................................... 60
Backup Withholding...................................................................................... 61
ERISA CONSIDERATIONS...................................................................................... 63
RATINGS OF THE NOTES...................................................................................... 63
USE OF PROCEEDS........................................................................................... 64
UNDERWRITING.............................................................................................. 65
LEGAL MATTERS............................................................................................. 67
ADDITIONAL INFORMATION.................................................................................... 67
GLOSSARY.................................................................................................. 68
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.
Some such terms are defined in the "Glossary."
<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."
INDENTURE TRUSTEE... , in its capacity as trustee under an Indenture, dated
as of September , 1996, between the Owner Trust and the
Indenture Trustee (the "Indenture").
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. The Notes and the Certificates
are collectively referred to as the "Securities."
INTEREST............ Interest on the outstanding principal amount 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 from and including the most
recent Payment Date on which interest has been paid, to
but excluding the following 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 the September 1, 1996 to but excluding
October , 1996). See "Description of the Notes."
</TABLE>
1
<PAGE>
<TABLE>
<S> <C>
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 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, a portion 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 second preceding calendar month, and (b) the
Contract Pool Principal Balance as of the last day of
the immediately preceding calendar month (or, in the
case of the first Payment Date, the Cut-Off Date
Contract Pool Principal Balance), plus
(ii) any portion of the Monthly Principal Amount for
the prior Payment Date 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 calendar month 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 calendar month,
discounted monthly at the rate of % per annum; 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 calendar month, whether or not paid.
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
The Contract Principal Balance of any Contract which,
during a calendar month, became a Liquidated Contract or
was purchased by TCC due to a breach of representations
and warranties, will be deemed to be zero on and after
the last day of such calendar month. 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."
STATED MATURITY
DATES.............. If and to the extent not previously paid, the
outstanding principal amount 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
, .
FORM AND
DENOMINATION....... The Notes will be issued in book-entry form 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).
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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."
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 Rating Service ("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..... The proceeds from the offering and sale of the Notes and
the issuance 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.
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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. On
the Merger Consummation Date, the Depositor will deposit
the Contracts and other Trust Assets with the Indenture
Trustee, on behalf of the Owner Trust, and the proceeds
of the Escrow Account (which will include the proceeds
of the Notes and the Equity Certificates) will be
released to, or upon the order of, the Depositor. See
"Use of Proceeds" above. If the Merger is not
consummated, or the Servicer has not executed the
Transfer and Servicing Agreement, 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.
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 on the Merger Consummation Date pursuant to a
Transfer Agreement, expected to be dated as of September
, 1996 (the "Transfer Agreement"), among the
Depositor, TCC and the Originators, and will thereupon
transfer the Contracts 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. 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.
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TRUST ASSETS........ From the Closing Date until the Merger Consummation
Date, the Trust Assets will consist solely of the
proceeds of the issuance of the Notes and the Equity
Certificates and additional cash held (and invested in
certain Eligible Investments) in an Escrow Account held
by the Indenture Trustee, which cash will be sufficient
to redeem all of the Notes at the Special Redemption
Price and the Equity Certificates on the Special
Redemption Date if the Merger is not consummated, or the
Servicer has not executed the Transfer and Servicing
Agreement, by September , 1996. See "Description of
the Notes -- Special Redemption of the Notes." The
proceeds of the issuance of the Notes and the Equity
Certificates will be used as described under "Use of
Proceeds" above.
The Trust Assets, from and after the Merger Consummation
Date, will consist of:
(i) a pool of approximately 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 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 (see "The Contracts -- Description of the
Contracts");
(iii) amounts on deposit in (and Eligible Investments
allocated to) certain Accounts established pursuant to
the Indenture and held by, or in the name of, the
Indenture Trustee, 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.
The aggregate of the Contract Principal Balances of the
Contracts as of the Cut-Off Date (the "Cut-Off Date
Contract Pool Principal Balance," which will include
certain Scheduled Payments due prior to, but not
received as of, the Cut-Off Date) will equal the sum of
the initial principal balances of the Notes and the
Equity Certificates.
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SOURCE OF PAYMENT
AND SECURITY....... Principal of and interest on the Notes will be paid on
each Payment Date solely from, and secured by, the
Amount Available for such Payment Date, which is (1) the
sum of (a) those Pledged Revenues on deposit in the
Collection Account as of the last Business Day preceding
such Payment Date which were (i) received by or on
behalf of the Indenture Trustee during the preceding
calendar month (the "Collection Period"), or (ii) to the
extent necessary to pay interest on the Notes and the
Equity Certificates on such Payment Date, received by or
on behalf of the Indenture Trustee after such Collection
Period, plus (b) amounts permitted to be withdrawn
therefor from the Cash Collateral Account, as described
under "Cash Collateral Account" below, less (2) the
amounts described in clauses (i) and (ii) 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 such 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 (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) and due during the term of the
Contracts (without giving effect to end of term
extensions or renewals thereof); (ii) any voluntary
prepayments ("Prepayments") received on or after the
Cut-Off Date under the Contracts, which, in the case of
a Prepayment received under any Lease Contract, will not
exceed the amount described under "Contract Prepayments"
below; (iii) any amounts paid by TCC to purchase
Contracts due to a breach of representations and
warranties or by the Depositor to purchase the
Contracts, as described under "Optional Purchase of
Contracts" below, (iv) certain of the proceeds derived
from the liquidation of the related Equipment (net of
liquidation expenses) under any defaulted Contracts, as
described under "Contract Defaults" below; and (v) any
earnings on the investment of amounts credited to the
Collection Account.
ORIGINATORS OF THE
CONTRACTS.......... The Contracts that are expected to constitute a portion
of 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 AT&T Commercial Finance Corporation
("CFC") (collectively, the "Originators"). See "AT&T
Capital Corporation" and "The Originators."
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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 "Initial
Determination 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 Initial Determination Date to the Cut-Off Date.
Accordingly, the statistics relating to such pool of
Contracts (the "Initial 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 Initial
Determination Date, (i) the Contract Pool Principal
Balance (the "Initial Determination Date Contract Pool
Principal Balance") was approximately $ ; (ii)
there were approximately Contracts; (iii) the
average Contract Principal Balance was $ ; (iv) of
such Contracts, approximately % (by Initial
Determination Date Contract Pool Principal Balance)
related to Lease Contracts and approximately % (by
Initial Determination Date Contract Pool Principal
Balance) were Loan Contracts; (v) approximately % of
such Contracts (by Initial Determination Date Contract
Pool Principal Balance) were [type of Equipment],
approximately % of such Contracts (by Initial
Determination Date Contract Pool Principal Balance)
related to [type of Equipment] and approximately % of
such Contracts (by Initial Determination Date Contract
Pool Principal Balance) related to [type of Equipment];
(vi) no more than approximately % of such Contracts
(by Initial Determination Date Contract Pool Principal
Balance) were with respect to Obligors [Equipment]
located in any one State; (vii) no more than % of the
Contracts (by Initial Determination Date Contract Pool
Principal Balance) had a Contract Principal Balance
exceeding $ ; (viii) approximately % of the
Contracts (by Initial Determination Date Contract Pool
Principal Balance) 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 Initial Determination Date ranged
from months to months; and (x) the weighted
average remaining term of the Contracts as of the
Initial Determination Date was months. See "The
Contracts -- Certain Statistics Relating to the Initial
Contract Pool."
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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 "The
Contracts -- Representations and Warranties Made by
TCC."
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 Contract Principal Balance). Under the Transfer
and Servicing Agreement, the Servicer will be permitted
to allow Prepayments of the Lease Contracts to the exent
that, the amount of the prepayment on any Lease Contract
is at least equal to the Contract Principal Balance of
such Lease Contract (after application of the current
month's Scheduled Payment), plus the current month's
Scheduled Payment and any delinquent payments. 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 Initial Determination Date Contract Pool
Principal Balance) were Loan Contracts. In no event will
the Notes or the Equity Certificates be entitled to
receive more than the Contract Principal Balance (after
application of the current month's Scheduled Payment),
plus the current month's Scheduled Payment and any
delinquent Scheduled Payments.
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CONTRACT DEFAULTS... Proceeds from disposition of the Equipment subject to
Lease Contracts will not be available to make payments
on the Notes or the Equity Certificates, except in the
event of a default thereunder. In the event of a default
under a Lease Contract, the proceeds derived from the
sale or other disposition of the related Equipment (net
of liquidation expenses) 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 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 Contract Principal
Balance of the related Lease Contract (after application
of the current month's Scheduled Payment), plus the
current month's Scheduled Payment and any delinquent
payments, all determined as of the month of liquidation.
In no event will the Notes or the Equity Certificates be
entitled to receive more than the Contract Principal
Balance (plus the current and any delinquent Scheduled
Payments) from the proceeds of a defaulted Lease
Contract. All such liquidation proceeds from a defaulted
Lease Contract and allocable to the Notes and the Equity
Certificates, together with all proceeds of the
liquidation of a defaulted Loan Contract (net of
liquidation expenses), will be deposited in the
Collection Account and constitute part of the Amount
Available 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.
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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 greater
of (a) the Contract Pool Principal Balance or (b) the
aggregate principal amount of the Notes and the Equity
Certificates, both as of the last day of the second
preceding calendar month, plus any late fees,
documentation fees, insurance administration charges and
other administrative charges (the "Administrative Fees")
collected with respect to the Contracts during the prior
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 "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 the Contract Principal Balance (after
application of the current month's Scheduled Payment),
plus the current month's Scheduled Payment and any
delinquent payments, plus the Book Value of the
Equipment (which amount will be payable on 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 (a "Repurchase Event").
EQUITY
CERTIFICATES....... The Owner Trust will issue the Equity Certificates,
representing a beneficial ownership interest in the
Owner Trust, to the Depositor and transferred by it in a
separate transaction. The Equity Certificates will
represent an undivided interest in all Pledged Revenues,
and will be paid 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, a
portion of the Monthly Principal Amount will be payable
on the Equity Certificates until the aggregate amount so
paid equals $ .
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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 (without giving any
effect to end of term extensions or renewals) of any
Lease Contracts;
(ii) any amount in excess of the amounts described under
"Contract Prepayments" above paid by a Lessee in
connection with the prepayment or early termination of
a Lease Contract, which excess is intended to
represent the value of the Equipment related thereto;
(iii) a portion of the proceeds (net of liquidation
expenses) derived from the sale or other disposition of
the related Equipment following a default under a
Lease Contract, as described under "Contract Defaults"
above; and
(iv) that portion of the purchase price allocable to the
Book Value of the related Equipment (a) paid by TCC to
purchase any Contract due to a breach of any of TCC's
representations and warranties regarding such
Contract, or (b) paid by the Depositor pursuant to its
option to repurchase all the outstanding Contracts.
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 reduction or withdrawal of
any of the ratings then applicable to the Notes. See
"Description of the Transfer and Servicing Agreement --
Collections on Contracts."
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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 be funded in an amount
equal to % of the Cut-Off Date Contract Pool
Principal Balance ($ ). 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 the extent that amounts on deposit in
the Collection Account as of any Payment Date are
insufficient to do so, (and provided that any such
deficiency 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), then
(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 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 the Contract
Pool Principal Balance as of the last day of the
related Collection Period plus all delinquent
Scheduled Payments in respect of principal); 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 $ , 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."
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PRIORITY OF
PAYMENTS........... On each Payment Date, the Indenture Trustee will be
required to make the following payments, first, from
Pledged Revenues on deposit in the Collection Account as
of the last Business Day preceding such Payment Date
which were received by or on behalf of the Indenture
Trustee during the preceding Collection Period, second,
to the extent the foregoing Pledged Revenues are
insufficient to pay interest on the Notes and the Equity
Certificates on such Payment Date, the amount necessary
to cure such deficiency from the Pledged Revenues on
deposit in the Collection Account as of the last
Business Day preceding such Payment Date which were
received by or on behalf of the Indenture Trustee after
the preceding Collection Period, and, thereafter (but
only as to amounts described in clause (iii) and certain
amounts included in clause (iv)), 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 and any other amounts then due and
payable under the Transfer and Servicing Agreement in
connection with servicing the Contracts;
(ii) the fees and expenses of the Indenture Trustee and
the Owner Trustee then due and payable;
(iii) 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), then
(d) interest on the Equity Certificates (including any
overdue interest and interest thereon);
(iv) 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
(v) the remainder to the Cash Collateral Account, to be
applied in the manner described under "Cash Collateral
Account" above.
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OPTIONAL PURCHASE OF
CONTRACTS.......... The Depositor may purchase all of the Contracts 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 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
respect of 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.
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 (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 offering price, from (and including)
the Closing Date to (but excluding) such Special
Redemption Date, at the rate of 10% per annum. The
Special Redemption Price in respect of the Notes will be
paid from the proceeds of the issuance of the Notes and
the Equity Certificates and additional cash on deposit
in the Escrow Account held by the Indenture Trustee
pursuant to the Indenture, which will be funded on the
Closing Date in an amount equal to the aggregate Special
Redemption Price. A public notice of the Special
Redemption, if any, will be provided by publication in
Luxembourg. If the Merger is consummated on or prior to
September , 1996, the Trust Assets will be deposited
by the Depositor with the Indenture Trustee, on behalf
of the Owner Trust, on the Merger Consummation Date and
the amounts on deposit in the Escrow Account will be
paid over to the Depositor. See "Description of the
Notes -- Special Redemption of the Notes."
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U.S. TAXATION....... In the opinion of counsel to the Depositor and 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."
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."
</TABLE>
16
<PAGE>
<TABLE>
<S> <C>
REGISTRATION,
CLEARANCE AND
SETTLEMENT OF
NOTES.............. Each of the Notes will be registered in the name of Cede
& Co., as the nominee of 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 Transfer Agreement, the Indenture and the
Notes will be governed by the laws of the State of New
York.
</TABLE>
17
<PAGE>
RISK FACTORS
Prospective Noteholders should consider the following factors in connection
with the purchase of the Notes:
LIMITED LIQUIDITY
There is currently no market for the Notes. Goldman, Sachs & Co. expects,
but will not be obligated, to make a market for the Notes in the United States;
and Nomura International plc expects, 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 DTC and will not be
registered in the names of the beneficial owners or their nominees. As a result
of this, unless and until definitive, fully registered 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," 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, and payments of interest and
principal, respectively, on the Class C Notes will be similarly subordinated in
priority of payment to interest and principal on the Class A Notes and the Class
B 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 defaulted 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 and amounts on deposit from
time to time in the Collection Account and the accounts established pursuant to
the Transfer and Servicing Agreement. 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 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 incur losses on their investment as a result.
18
<PAGE>
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 as a
result of certain uncured breaches of the representations and warranties made by
it with respect to the Contracts and the Equipment (see "The Depositor --
Representations and Warranties Made by TCC") or the Depositor exercising its
option to purchase all of the remaining Contracts and 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 a Lessee at any time so long as the amount paid thereon is
at least equal to the Contract Principal Balance of such Lease Contract (after
application of the current month's Scheduled Payment), plus the current month's
Scheduled Payment and any delinquent payments. Approximately % of the
Contracts (by Initial Determination 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 the Contract Principal
Balance and current and delinquent Scheduled Payments are to be added to the
Amount Available and applied in the priority described in "Description of the
Notes -- Distributions." 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), there can be no assurances that the Merger will in
fact be consummated by September , 1996.
BANKRUPTCY OR 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 or otherwise to
interfere with the timely transfer to the Owner Trust 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. This position,
if presented to or accepted by a court, could cause, among other things, the
Owner Trust to experience a delay in or reduction of collections on the
Contracts.
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 could experience a
delay in or reduction of collections on the Contracts.
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
19
<PAGE>
than those set forth in the Transfer and Servicing Agreement. See "The Depositor
and the Owner Trust -- The Depositor." 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.
The Depositor has also taken steps to minimize the likelihood that, in the
event of a bankruptcy of TCC, the bankruptcy court would order the consolidation
of the assets and liabilities of the Depositor with the assets and liabilities
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 assets and liabilities be consolidated with those of TCC or
such Originator. Any such order would adversely affect the Owner Trust's ability
to receive payments on the Contracts.
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 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
Contract Principal Balance of such Contract (after application of the current
month's Scheduled Payment), plus the current month's Scheduled Payment and any
delinquent payments, plus (ii) the Book Value of the related 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 would 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 security 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.
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 or 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 Cut-Off-Date Contract Pool Principal Balance) will
relate to Equipment as to which no UCC financing statement has been filed. With
respect to such Contracts, 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 would have priority over the interest of the
applicable Originator in such Equipment. Any such purchaser or creditor 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.
20
<PAGE>
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 and
the Owner Trust's interests therein. While failure to file such assignments does
not affect the perfection of the Owner Trust's interest in such Contracts
(including the related Originator's security interest in the related Equipment),
it does expose the Owner Trust to the risk that the Originator could release its
security interest in the Equipment of record, and it could complicate the Owner
Trustee'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 State
of New Jersey) where the Equipment is located. In the absence of such filings,
the Owner Trust 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 Owner Trust in such Equipment and a subsequent
secured party or other lienholder might obtain an interest in the Equipment
superior to that of the Owner Trust. These risks should not affect the
perfection or priority of the interest of the Owner Trust in the Contracts or
rights to payment
thereunder. 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 Owner Trustee in the Equipment.
The Servicer will hold the Contract Files (as defined below) on behalf of
the Owner Trust under a custodian agreement with the Owner 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, and the Servicer's accounting records and computer
systems will also reflect such sale and assignment. The Contracts will not,
however, be stamped or otherwise marked to reflect that such Contracts and
Equipment have been sold to the Depositor. 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
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
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
21
<PAGE>
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 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, or the
Servicer has not executed the Transfer and Servicing Agreement, by September ,
1996, all of the Notes will be redeemed and prepaid on September , 1996 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
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<PAGE>
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 Indenture Trustee, on behalf of the Owner Trust, all of the Contracts and
its interest in the Equipment related thereto in consideration for (i) the net
proceeds received from the offering and sale of the Notes and the Equity
Certificates and (ii) the Equipment Certificate. All of the Notes will be sold
to third parties pursuant to this Prospectus, the Equity Certificates will be
issued to the Depositor and transferred 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, or the
Servicer has not executed and delivered the Transfer and Servicing Agreement, 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 interest in the Equipment to the Owner Trust, (iii) executing
and performing its obligations under the Transfer 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 and
the Equity Certificates and additional cash held (and invested in certain
Eligible Investments) in the Escrow Account (which amounts will be sufficient to
pay the Special Redemption Price in respect of the Notes and to redeem the
Equity Certificates on the Special Redemption Date if the Merger is not
consummated by September , 1996).
From and after the Merger Consummation Date, the Trust Assets will consist
of (i) a pool of approximately equipment lease contracts, installment sale
contracts, promissory notes, loan and security agreements and other similar
types of receivables (each, a "Contract"), 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.
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<PAGE>
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.
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.
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
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 AT&T
Commercial Finance Corporation ("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
and 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 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 in
favor of the applicable lessee upon expiration of the applicable lease. The
balance of the leases contain fixed price or nominal purchase options. All of
its leases are noncancelable obligations and all are "triple net" leases, under
which the lessee is responsible for all maintenance, insurance, and taxes. 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 accounts 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 accounts 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. Lucent manufactures
and distributes telecommunications and related equipment, and NCR manufactures
and distributes information technology (including retail point-of sale systems,
automatic 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 %.
Transactions generated from the sales of Lucent equipment historically are
small ticket transactions ( accounts; average transaction size of $ ;
% of the combined portfolio) and middle market transactions ( accounts;
average transaction size of $ ; % of the combined portfolio).
Transactions generated from the sales of NCR equipment historically are middle
market transactions ( accounts; 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, in New Jersey Credit Corp. had approximately members 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., Lucent or NCR, small ticket or middle market, geographic). 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
The Portland division of 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.
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 collections activity.
At June 30, 1996, the CFC portfolio 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
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applicable lessee upon expiration of the applicable lease. The balance of the
lease contracts contain fixed price or nominal options. The leases are
noncancelable obligations and are net leases in which the lessee is responsible
for all maintenance, insurance and taxes.
CFC's retail portfolio, consisting of over accounts 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 customer accounts comprised %
of the aggregate portfolio. The CFC portfolio is also diversified geographically
with six 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 credit
applications, 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. 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. 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 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 $3.0
million in the case of NCR Credit and up to $2.0 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; the level of credit
authority required to approve incremental transaction must be sufficient to
approve the customer's total credit exposure. 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
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$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. The 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 bureaux. In the case of larger
sized transactions (generally over $100,000), TCC's credit officers will attempt
to obtain and analyze financial statements from the customer. The financial
analysis would typically involve a review of the potential customer's leverage,
profitability, liquidity and cash flow among other factors. TCC also requires
the credit personnel of each SBU to rate the creditworthiness of each of such
unit's customer account 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 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. 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. 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 Leasing Services and Credit Corp. 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.
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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 monthly for each major portfolio segment and
calculated 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 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 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. 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 collections 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
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.
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NON-ACCRUAL AND WRITE-OFF POLICY
TCC maintains non-accrual and write-off policies which are followed by all
SBU's. 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.
THE CONTRACTS
DESCRIPTION OF THE CONTRACTS
THE FORMS OF CONTRACTS
The Contracts which are included in the Initial Contract Pool (as defined
under "--Certain Statistics Relating to the Initial Contract Pool"), as of the
Initial Determination Date (as defined under "--Certain Statistics Relating to
the Initial Contract Pool"), consist primarily of the following types of
instruments: approximately % of such instruments are Lease Contacts, 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 uses a Master Form Lease for certain vendor customers. In
certain cases, the Originators document a Lease Contract on other forms, which
have been created by one of them or a customer or are leases that they have
purchased from vendors or other lessors. 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 Initial 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 Initial Determination
Date Contract Pool Principal Balance, is not material) provide for semi-annual
or annual payments. The payments under all of the Contracts in the Initial
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
All of the Contracts included in the Initial 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 Initial Determination 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
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requirement is, from time to time, waived by the Originator for a small number
of transactions and for some Lease Contracts, the Lessee is permitted to
self-insure the Equipment under the Lessee'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 Lessor with satisfactory evidence of its own
insurance coverage. The Lessee is given a specified time period in which to
provide such evidence. Proper 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 Contract Principal Balance,
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) to either 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 Initial 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 Lease Contracts which require notice to, or prior
approval by, the Obligor of such assignment to the Obligors (and TCC will
represent and warrant in the Transfer and Servicing Agreement that such notices
have been given, or such approvals have been received, prior to the Merger
Consummation Date). None of the Contracts in the Initial 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 in accordance with the 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 Initial 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.
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EVENTS OF DEFAULT AND REMEDIES
Events of default under the Contracts in the Existing Contract Pools
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 may be) whole plus costs and expenses (including legal fees)
incurred by the lessor 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 Contract Principal
Balance. 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 is at least equal to the
Contract Principal Balance (plus any delinquent payments). All or substantially
all of the Loan Contracts permit the Obligors, at their option, to prepay such
Loans at any time at a price equal to the then outstanding principal amount 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 Initial Contract Pool contains
provisions whereby 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 Leases, 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 Initial 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 Transfer and Servicing Agreement, TCC will make the following
representations and warranties regarding each Contract (and 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
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under the Transfer 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 were utilized in
selecting the Contracts from those lease and loan contracts owned by the
Originators on the Cut-Off Date;
(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 payment delinquencies (in excess of 10% of
the periodic payment due) of not more than 59 days), and (except for
administrative extensions in the case of certain Contracts which, in proportion
to the aggregate of all Contracts, is not material) 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 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, the
Originators, TCC or any subsidiaries 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 from an Originator to the
Depositor under the Transfer 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;
33
<PAGE>
(M)The Contracts constitute chattel paper within the meaning of the UCC as
in effect in the States of New Jersey and Massachusetts (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
aggregate of all of the Contracts, 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, the Originators or the
Depositor 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;
(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 Lease Contract has a payment delinquency (in excess of 10% of the
periodic 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 later than 30 days following the Merger
Consummation Date and (ii) Contracts which require the consent of the Obligor,
which consent has been obtained prior to 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 lender (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 in
accordance with the 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 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 Contract
Principal Balance, or (iii) in some cases, replace such damaged or destroyed
Equipment with other equipment of comparable use and value;
34
<PAGE>
(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
Contract Principal Balance (plus any delinquent payments and the next Scheduled
Payment);
(Y)Each Loan Contract permits the prepayment of the amount due thereunder,
at the option of the Obligor, but any such prepayment 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.
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 economic 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 Contract Principal
Balance applicable to such Contract (plus any delinquent payments). This
purchase obligation may be enforced by the Indenture Trustee on behalf of the
holders of the Securities, and will constitute the sole remedy available to the
Securityholders 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 Trustee
will convey such Contract and the related Equipment to TCC.
CERTAIN STATISTICS RELATING TO THE INITIAL 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 "Initial Determination 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 Initial Determination Date to September 1, 1996 (the
"Cut-Off Date"). Accordingly, the statistics relating to such pool of Contracts
(the "Initial 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 Scheduled Payments on the
Contracts included in the Initial Contract Pool from and after the Initial
Determination Date have been discounted monthly at an assumed rate of % per
annum to calculate an "Imputed Principal Amount." The Imputed Principal Amount
of the Initial Contract Pool, as of the Initial Determination Date, was $ ,
and the total number of Contracts in the Initial Contract Pool was .
Accordingly, the average Imputed Principal Amount of the Contracts in the
Initial Contract Pool, as of the Initial Determination Date, was $ . Within
the Initial Contract Pool, % of the Contracts (by Imputed Principal Amount)
were originated by the Originators (or by other affiliates of TCC) and % of
such Contracts (by Imputed Principal Amount) were purchased by the Originators
(or by other affiliates of TCC) from unrelated third parties.
35
<PAGE>
FORM OF CONTRACTS
The following table shows the form of Contracts included in the Initial
Contract Pool by indicating the number of Contracts, the Imputed Principal
Amount of such Contracts, and the percentage (by number of Contracts and by
Imputed Principal Amount) of such Contracts which are true Lease Contracts,
finance Lease Contracts and Loan Contracts:
<TABLE>
<CAPTION>
% OF TOTAL % OF
NUMBER OF NUMBER OF IMPUTED AGGREGATE IMPUTED
TYPE OF CONTRACT CONTRACTS CONTRACTS PRINCIPAL AMOUNT PRINCIPAL AMOUNT
- ----------------------------------------------- ------------- ------------- ------------------- ---------------------
<S> <C> <C> <C> <C>
True Leases....................................
Finance Leases.................................
Loans..........................................
</TABLE>
GEOGRAPHICAL DIVERSITY
The following table shows the geographical diversity of the Initial Contract
Pool, by indicating the number of Contracts, the Imputed Principal Amount of
such Contracts and the percentage (by number of Contracts and by Imputed
Principal Amount) of such Contracts relative to the total number, and the
aggregate Imputed Principal Amount, of all of the Contracts in the Initial
Contract Pool by reference to the State in which the Equipment relating to such
Contracts is located:
<TABLE>
<CAPTION>
% OF AGGREGATE
% OF TOTAL IMPUTED IMPUTED % OF TOTAL IMPUTED
NUMBER OF NUMBER OF PRINCIPAL PRINCIPAL NUMBER OF NUMBER OF PRINCIPAL
STATE CONTRACTS CONTRACTS AMOUNT AMOUNT STATE CONTRACTS CONTRACTS AMOUNT
- ------------ ------------- -------------- ------------ -------------- ------------ ------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<CAPTION>
% OF AGGREGATE
IMPUTED
PRINCIPAL
STATE AMOUNT
- ------------ --------------
<S> <C>
</TABLE>
CONTRACTS BY EQUIPMENT TYPE
The following table shows the type of Equipment securing or otherwise
related to the Contracts in the Initial Contract Pool, by the number of
Contracts, the Imputed Principal Amount of such Contracts, and the percentage
(by number of Contracts and by percentage of Imputed Principal Amount) of such
Contracts relative to the total number, and the aggregate Imputed Principal
Amount, of all of the Contracts in the Initial Contract Pool:
<TABLE>
<CAPTION>
% OF AGGREGATE
% OF TOTAL IMPUTED PRINCIPAL IMPUTED PRINCIPAL
TYPE OF EQUIPMENT NUMBER OF CONTRACTS NUMBER OF CONTRACTS AMOUNT AMOUNT
- ------------------------------- --------------------- ---------------------- ------------------- -----------------
<S> <C> <C> <C> <C>
</TABLE>
36
<PAGE>
IMPUTED PRINCIPAL AMOUNT AND NUMBER OF CONTRACTS
The following table shows the Imputed Principal Amount of Contracts in
various ranges in the Initial Contract Pool by the number of Contracts and the
Imputed Principal Amount, and the percentage (by number of Contracts and by
Imputed Principal Amount) of such Contracts relative to the total number, and
the aggregate Imputed Principal Amount, of all of the Contracts in the Initial
Contract Pool:
<TABLE>
<CAPTION>
% OF AGGREGATE
IMPUTED PRINCIPAL AMOUNT OF % OF TOTAL IMPUTED PRINCIPAL IMPUTED PRINCIPAL
CONTRACTS NUMBER OF CONTRACTS NUMBER OF CONTRACTS AMOUNT AMOUNT
- ------------------------------- --------------------- ---------------------- ------------------- -----------------
<S> <C> <C> <C> <C>
$ to $ ..............
$ to $ ..............
$ to $ ..............
</TABLE>
TERMS OF CONTRACTS
The following table shows the remaining term of the Contracts in the Initial
Contract Pool from the Initial Determination Date to the scheduled expiration
date of such Contracts, by indicating the number of Contracts, the Imputed
Principal Amount of such Contracts, and the percentage (by number of Contracts
and by Imputed Principal Amount) of such Contracts relative to the total number,
and the aggregate Imputed Principal Amount, of all of the Contracts in the
Initial Contract Pool:
<TABLE>
<CAPTION>
NUMBER % OF AGGREGATE
OF % OF TOTAL IMPUTED PRINCIPAL IMPUTED PRINCIPAL
REMAINING TERM OF CONTRACTS CONTRACTS NUMBER OF CONTRACTS AMOUNT AMOUNT
- ------------------------------------------ ----------- ---------------------- ------------------- -----------------
<S> <C> <C> <C> <C>
One Month to Months....................
Months to Months......................
Months to Months......................
Months to Months......................
Over Months.............................
</TABLE>
37
<PAGE>
TYPES OF CONTRACTS
The following table shows the types of Obligor which have executed Contracts
within the Initial Contract Pool, by the number of Contracts, the Imputed
Principal Amount of such Contracts, and the percentage (by number of Contracts
and by Imputed Principal Amount) of such Contracts relative to the total number,
and the aggregate Imputed Principal Amount, of all of the Contracts in the
Initial Contract Pool:
<TABLE>
<CAPTION>
% OF AGGREGATE
% OF TOTAL IMPUTED PRINCIPAL IMPUTED PRINCIPAL
TYPE OF OBLIGOR NUMBER OF CONTRACTS NUMBER OF CONTRACTS AMOUNT AMOUNT
- ------------------------------- --------------------- ---------------------- ------------------- -----------------
<S> <C> <C> <C> <C>
</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 payment in an amount equal to at least 90% of the required amount on
the date required and for a specified period thereafter (which period is set
forth below). 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 Initial 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. 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
- --------------------------------------------- ---------------- ------------ ------------ ------------ ------------
<S> <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,
38
<PAGE>
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
amount for at least 90 days beyond the date required, or commenced bankruptcy or
insolvency proceeding, and 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 Initial 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 Initial 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]
39
<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, certain amounts derived from the sale or other disposition
of the Equipment related to the Contracts that constitute Lease Contracts upon
expiration or termination (including an early termination or liquidation) of
such Lease 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.
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, London and are open for regular
business.
Each Class of Notes initially will be represented by 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 will be paid on each Payment Date
solely from, and secured by, the Amount Available for such Payment Date, which
is (1) the sum of (a) those Pledged Revenues on deposit in the Collection
Account as of the last Business Day preceding such Payment Date which were
40
<PAGE>
(i) received by or on behalf of the Indenture Trustee during the preceding
calendar month (the "Collection Period"), or (ii) to the extent necessary to pay
interest on the Notes and the Equity Certificates on such Payment Date, received
by or on behalf of the Indenture Trustee after such Collection Period, plus (b)
amounts permitted to be withdrawn therefor from the Cash Collateral Account, as
described under "-- Cash Collateral Account" below, less (2) the amounts
described in clauses (i) and (ii) of the following 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 such 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 (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) and due during the term of
the Contracts (without giving effect to extensions or renewals thereof); (ii)
any voluntary prepayments ("Prepayments") received on or after the Cut-Off Date
under the Contracts, which, in the case of Prepayments received under Lease
Contracts, will not exceed the Contract Principal Balance of such Lease
Contracts (after application of the current month's Scheduled Payment), plus the
current month's Scheduled Payment and any delinquent Scheduled Payments; (iii)
any amounts paid by TCC to purchase Contracts due to a breach of representations
and warranties or by the Depositor to purchase the Contracts, as described under
"-- Optional Purchase of Contracts" below, (iv) certain of the proceeds derived
from the liquidation of the related Equipment (net of liquidation expenses)
under any defaulted Contracts, as described under "-- Contract Defaults" 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 Pledged Revenues on deposit in the Collection
Account as of the last Business Day preceding such Payment Date which were
received by or on behalf of the Trustee during the preceding Collection Period,
second, to the extent the foregoing Pledged Revenues are insufficient to pay
interest on the Notes and the Equity Certificiates on such Payment Date, the
amount necessary to cure such deficiency from Pledged Revenues on deposit in the
Collection Account as of the last Business Day preceding such Payment Date which
were received by or on behalf of the Trustee after the preceding Collection
Period, and, thereafter (but only as to amounts described in clause (iii) and
certain amounts included in clause (iv)), 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 and any other amounts then due and payable under the
Transfer and Servicing Agreement in connection with servicing the
Contracts;
(ii)
the fees and expenses of the Indenture Trustee and the Owner Trustee then
due and payable;
(iii)
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),
(d) interest on the Equity Certificates (including any overdue interest
and interest thereon);
(iv)
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
(v)
the remainder to the Cash Collateral Account, to be applied in the manner
described under "-- Cash Collateral Account" below.
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 (after taking into account any prior
applications described under "-- Distributions"
41
<PAGE>
above) 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 from and including the most recent Payment Date on which interest
has been paid, to but excluding the following 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 from and including the most recent
Payment Date on which interest has been paid, to but excluding the following
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 from and including the most recent
Payment Date on which interest has been paid, to but excluding the following
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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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 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
second preceding calendar month, and (b) the Contract Pool Principal Balance as
of the last day of the immediately preceding calendar month (or, in the case of
the first Payment Date, the Cut-Off Date Contract Pool Principal Balance), plus
(ii) any portion of the Monthly Principal Amount for the prior Payment Date 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 calendar month 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 calendar month, discounted monthly at the
rate of % per annum, and (2) in the case of any other Contract, the remaining
scheduled principal balance of such Contract after giving effect to Scheduled
Payments due on or prior to such last day of the calendar month. The Contract
Principal Balance of any Contract which, during a calendar month, became a
Liquidated Contract or was purchased by TCC due to a breach of representations
and warranties, will be deemed to be zero on and after the last day of such
calendar month. 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.
SPECIAL REDEMPTION OF THE NOTES
If the Merger has not been consummated, or the Servicer has not executed the
Transfer and Servicing Agreement, by September , 1996, all of the Notes shall
be redeemed and paid in full on September , 1996 (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. The
Special Redemption Price will be paid from the proceeds of the issuance of the
Notes and the Equity Certificates and additional cash on deposit in the Escrow
Account held by the Indenture Trustee pursuant to the Indenture, which will be
funded on the Closing Date in an amount at least equal to the aggregate Special
Redemption Price. If the Merger is consummated on or prior to September ,
1996, the Trust Assets will be deposited by the Depositor with the Indenture
Trustee, on behalf of the Owner Trust, on the Merger Consummation Date and the
amounts on deposit in the Escrow Account will be paid over to the Depositor.
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
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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 be funded in an amount equal to % of the Cut-Off
Date Contract Pool Principal Balance ($ ). Amounts on deposit from time to
time in the Cash Collateral Account (up to, but not in then excess of) the
Requisite Amount described below, and not including any investment earnings on
such funds) shall be used, to the extent that amounts on deposit in the
Collection Account as of any Payment Date are insufficient to do so (and
provided that any such deficiency 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, then (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 the aggregate Principal Balance of the Notes and the Equity
Certificates, over the Contract Pool Principal Balance as of the last day of the
related Collection Period plus all delinquent Scheduled Payments in respect of
principal), and (iii) to pay principal on the Notes and Equity Certificates at
the applicable Stated Maturity Date thereof. "Current Realized Losses" means, as
to any Liquidated Contract, the excess, if any, of (1) the Contract Principal
Balance of such Contract (after application of the current month's Scheduled
Payment), plus the current month's Scheduled Payment and all delinquent
payments, all determined as of the month in which such Contract became a
Liquidated Contract, over (2) the proceeds (net of liquidation expenses) of the
liquidation of such Contract (which, as to such proceeds received upoon
disposition of the related Equipment under a Lease Contract, will include only
that portion thereof allocable to the Notes and the Equity Certificates as
described under "-- Contract Defaults" below).
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 $ , 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).
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CONTRACT DEFAULTS
Proceeds from the disposition of the Equipment subject to Lease Contracts
will not be available to make payments on the Notes or the Equity Certificates,
except in the event of a default thereunder. In the event of a default under a
Lease Contract, the proceeds derived from the sale or other disposition of the
related Equipment (net of liquidation expenses) 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 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 Contract
Principal Balance of the related Lease Contract (after application of the
current month's Scheduled Payment), plus the current month's Scheduled Payment
and any delinquent payments, all determined as of the month of liquidation. In
no event will the Notes or the Equity Certificates be entitled to receive more
than the Contract Principal Balance (plus the current and any delinquent
Scheduled Payments) from the proceeds of a defaulted Lease Contract. All such
liquidation proceeds from a defaulted Lease Contract and allocable to the Notes
and the Equity Certificates, together with all proceeds of the liquidation of a
defaulted Loan Contract (net of liquidation expenses), will be deposited in the
Collection Account and constitute part of the Amount Available 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 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 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 respect of 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 "Collection Account" and the
"Escrow Account." 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 capital and surplus of the bank holding company) 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 a credit rating from each of Moody's, S&P (if rated by S&P), Fitch
(if rated by Fitch) and Duff & Phelps (if rated by Duff & Phelps) in one of its
generic credit rating categories which signifies investment grade; or (iv) an
account that will not cause Moody's, S&P, Fitch or Duff & Phelps to downgrade or
withdraw its then-current rating assigned to the Notes, as confirmed in writing
by Moody's, S&P, Fitch and Duff & Phelps. "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), whole short-term deposits have been rated P-1 by Moody's, A-1 by
S&P, F-1 by Fitch (if rated by Fitch) and
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by Duff & Phelps (if rated by Duff & Phelps), or in one of the two highest
rating categories by Moody's, S&P, Fitch (if rated by Fitch) and Duff & Phelps
(if rated by Duff & Phelps) in the case of unsecured long-term debt, 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; corporate securities assigned at least an Aa rating by Moody's,
the highest rating by S&P, in one of the two highest rating categories by Fitch
(if rated by Fitch) and by Duff & Phelps (if rated by Duff & Phelps), not in
excess of 10% of amounts in such Trust Account at the time of such investment;
commercial paper assigned at least a P-1 rating by Moody's, an A-1 rating by
S&P, an F-1+ rating by Fitch (if rated by Fitch) and a
rating by Duff & Phelps (if rated by Duff & Phelps) at the time of such
investment; and shares of a registered investment company, whose shares are
registered under the Securities Act of 1933 and which are rated by Moody's, by
S&P, by Fitch (if rated by Fitch) and by Duff & Phelps (if rated by Duff &
Phelps) in their respective highest rating category.
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).
The Notes will be registered in the name of DTC and will not be registered
in the names of the beneficial owners or their nominees. As a result, unless and
until definitive, fully registered 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.
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BOOK-ENTRY REGISTRATION
With respect to each Class of Notes in book-entry form, 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.
Cede & Co., as nominee for DTC, will hold the global Notes. 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 limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, 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 Notes. 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, will be
effected in 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 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.
Purchases of Notes under the DTC system must be made by or through
Participants, which will receive a credit for the Notes on DTC's records. The
ownership interest of each actual Note Owner is in turn to be recorded on the
Participants' and Indirect Participants' records. Note Owners will not receive
written confirmation from DTC of their purchase, but Note Owners are expected to
receive written confirmations providing details of the transaction, as well as
periodic statements of their holdings, from
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the Participant or Indirect Participant through which the Note Owner entered
into the transaction. Transfers of ownership interests in the Notes are to be
accomplished by entries made on the books of Participants acting on behalf of
Note Owners. Note Owners will not receive certificates representing their
ownership interest in Notes, except in the event that use of the book-entry
system for the Notes is discontinued.
To facilitate subsequent transfers, all Notes deposited by Participants with
DTC are registered in the name of DTC's partnership nominee, Cede & Co. The
deposit of Notes with DTC and their registration in the name of Cede & Co.
effects no change in beneficial ownership. DTC has no knowledge of the actual
Owners of the Notes; DTC's records reflect only the identity of the Participants
to whose accounts such Notes are credited, which may or may not be the Note
Owners. The Participants will remain responsible for keeping account of their
holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants, and by Participants and Indirect
Participants to Note Owners will be governed by arrangements among them, subject
to any statutory or regulatory requirements as may be in effect from time to
time.
Neither DTC nor Cede & Co. will consent or vote with respect to Notes. Under
its usual procedures, DTC mails an omnibus proxy to the issuer as soon as
possible after the record date, which assigns Cede & Co.'s consenting or voting
rights to those Participants to whose accounts the Notes are credited on the
record date (identified in a listing attached thereto).
Principal and interest payments on the Notes will be made to DTC. DTC's
practice is to credit Participants' accounts on the Payment Date in accordance
with their respective holdings shown on DTC's records unless DTC has reason to
believe that it will not receive payment on the Payment Date. Payments by
Participants to Note Owners will be governed by standing instructions and
customary practices, as is the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of such Participant and not of DTC, the Indenture Trustee or the
Depositor, subject to any statutory or regulatory requirements as may be in
effect from time to time. Payment of principal and interest to DTC is the
responsibility of the Indenture Trustee, disbursement of such payments to
Participants shall be the responsibility of DTC, and disbursement of such
payments to the Note Owners shall be the responsibility of Participants and
Indirect Participants.
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.
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 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 Notes. Transactions may be settled
by Cedel Bank in any of 28 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, including
underwriters, securities brokers and dealers, banks, trust companies, clearing
corporations
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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 any of 32 currencies, including United States dollars. The Euroclear System
includes various other services, including securities lending and borrowing and
interfaces with domestic markets in several countries generally similar to the
arrangements for cross-market transfers with DTC 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 of the Notes. 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. shall
be appointed transfer agent in Luxembourg, with respect to the Notes, in case
the global Notes are replaced by Definitive Notes.
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. has been appointed as the initial
Luxembourg Paying Agent.
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DEFINITIVE NOTES
The Notes of each Class will be issued in such 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 Holders of such Definitive Notes as Noteholders under
the Indenture.
Distribution 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 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 (on behalf of the Trust) 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 Note and the Indenture obligations by a permitted
successor to the Owner Trust; (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; (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 which may be inconsistent with any other provision of the 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;
(viii) to avoid a reduction or withdrawal of any rating of the Notes; and (ix)
to add any provisions to, change in any manner, or eliminate any of the
provisions of, the Indenture or modify in any
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manner the rights of Noteholders under such Indenture; provided that any action
specified in this clause (ix) shall not result in a reduction or withdrawal of
the rating of any Class of Notes, as confirmed in writing by each Rating Agency,
unless Noteholder consent is otherwise obtained as described below.
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 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.
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 any interest 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
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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 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
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continuing immediately after such merger or consolidation, (iv) the Owner
Trustee has been advised that the then current rating of the Notes and
Certificates (if any) then in effect would not be reduced or withdrawn by 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 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 Transfer Agreement all of their right, title and
interest in the Contracts, including all security interests created thereby, 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 Transfer Agreement, to the Owner Trust.
The Transfer and Servicing Agreement will designate the Servicer as
custodian to maintain possession, as the Indenture 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, and the
transfer by the Depositor to the Owner Trust, and the Originators' accounting
records and computer systems will also reflect such assignments. 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."
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 Contract Principal
Balance plus the current Scheduled Payment and any delinquent Scheduled
Payments;
(iii)
all amounts (a) recovered from an Obligor (other than through the
sale or other disposition of the related Equipment) from and after
the date of termination of such Contract by the Servicer, on behalf of the
Owner Trust, as a result of a default by the Obligor thereunder, or (b)
realized from the sale or other disposition of the Equipment which
constituted security for any Loan Contract following a default by the
Obligor under such Loan Contract, and that portion of any amounts realized
from the sale or other disposition of the Equipment related to any Lease
Contract following a default by the Obligor under such Lease Contract and
allocable to the Notes and Equity Certificates as described under
"Description of the Notes -- Contract Defaults";
(iv)any and all payments made by TCC pursuant to the Transfer and
Servicing Agreement in connection with the purchase of any Contract
as a result of a breach of a representation or warranty made therein; and
(v) any amounts received as insurance proceeds in connection with the
destruction of Equipment related to any Loan Contract, to the extent
not applied to the replacement of such Equipment as described below.
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.
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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
party under a Contract (unless such payments are made directly by the Obligor to
the applicable insurance company), (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 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). 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 (a) if the applicable Contract
was a Loan Contract, transfer such amount from the Insurance and Tax Account to
the Collection Account, and (b) if the applicable Contract was a Lease Contract,
transfer that portion of such amount which would be allocable to the Notes and
the Equity Certificates in respect of the liquidation of the Equipment under a
defaulted Lease Contract (as referred to in clause (iii) of the first paragraph
of this section) from the Insurance and Tax Account to the Collection Account.
The Servicer will deposit in the Residual Payment Account, no later than the
fifth business day after receipt, all proceeds from the disposition of Equipment
allocable to the Equipment Certificate, include amounts paid by Lessees to
exercise purchase options under True Leases and the allocable portion of
proceeds realized following a default under a True Lease.
On or before the Business Day of each month (the "Determination Date"),
the Servicer is required to determine the amount of Pledged Revenues on deposit
in the Collection Account as of the last Business Day preceding the Payment Date
ocurring in such month and received by or on behalf of the Indenture Trustee
during the prior Collection Period, 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 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 Pledged Revenues on deposit in the Collection Account as of the Business Day
preceding such Payment Date which were received by or on behalf of the Trustee
after the preceding Collection Period, and to apply such 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
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 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
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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.
The Servicer is generally obligated to act in a commercially reasonable
manner with respect to the disposition of Equipment following a Contract
default, and to attempt to realize at least the Book Value of such Equipment.
The Servicer is permitted, in its discretion, to dispose of Equipment in a
manner that may not be commercially reasonable and realizes less than the fair
market value or the Book Value of such Equipment (whichever is less), provided
that the Servicer remits any such deficiency to the Collection Account.
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 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; and repossession and
remarketing of Equipment following Obligor defaults.
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 Lessee is at
least equal to the Contract Principal Balance of such Contract (after
application of the current month's Scheduled Payment), plus the current month's
Scheduled Payment and any delinquent payments.
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 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 calendar
month, plus any late fees and other administrative fees and the expenses or
similar charges collected with respect to the Contracts during the prior
Collection Period.
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; (b) the Servicer fails to perform or observe
in any material respect any other covenant or agreement in the Transfer and
Servicing Agreement that continues unremedied for thirty days; (c) the Servicer
conveys, assigns, delegates its duties or rights
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under the Transfer and Servicing Agreement, except as specifically permitted
under the Transfer and Servicing Agreement, or attempts to make such a
conveyance, delegation or assignment; (d) a court having jurisdiction in the
premises enters a decree or order for relief in respect of the Servicer in an
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or appoints a receiver, liquidator, assignee,
custodian, trustee, or sequestrator (or similar official) of the Servicer, as
the case may be, or enters a decree or order for any substantial liquidation of
its affairs; or (e) the Servicer commences a voluntary case under any applicable
bankruptcy, insolvency or other similar law, or consents to the entry of an
order for relief in an involuntary case under any such law, or consents to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian or its creditors, or fails to, or admits in writing its inability to,
pay its debts as they become due, or takes any corporate action in furtherance
of the foregoing. The Servicer is required under the Transfer and Servicing
Agreement to give the Indenture Trustee and the Noteholders notice of an Event
of Termination promptly upon the occurrence 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
Noteholders representing more than 25% of the aggregate Principal Balance of the
Notes must, 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 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. The Transfer and Servicing Agreement may also be
amended by the parties thereto with the consent of a Note Majority and the
holders of at least 51% in the aggregate of the outstanding principal amount of
the Equity Certificates 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
that reduces in any manner the amount of, or delays the timing of, any payment
received on or with respect to Contracts that are required to be distributed on
any Note may be effective with the consent of the Holder of each such Note.
TERMINATION OF THE 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
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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.
THE OWNER TRUSTEE
will act as Owner Trustee under the Trust Agreement. 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.
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 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 Seller's and the
Trust's interests therein. While failure to file such assignments does not
affect the perfection of the Trust's interest in such Financing Leases
(including the related Originator's security interest in the related Equipment),
it does expose the Owner Trust to the risk that the Originator could release its
security interest in the Equipment of record, and it could complicate the
Trust's enforcement, as assignee, of the Originator 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 New Jersey)
where the Equipment is located. In the absence of such filings, the Owner Trust
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. These risks
should not affect the perfection or priority of the interest of the Owner Trust
in the Contracts or rights to payment thereunder. 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 Owner
Trust in the Equipment.
In the event of a default by the Obligor under a Contract, the Servicer on
behalf of the applicable 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.
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 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.
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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 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, provide a Obligor 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 collateral or obtain a deficiency judgment. In the event of
the bankruptcy or reorganization of a Lessee or the Depositor, various
provisions of the Bankruptcy Code of 1978 (the "Bankruptcy Code") and related
laws may interfere with or eliminate the ability of the Trustee or the Servicer
on its behalf to enforce the Trust's rights under the Contracts. For example,
although the bankruptcy or reorganization of a Lessee would constitute an event
of default under such Contracts, 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 proceedings were instituted in respect of an
Obligor under a Contract, the Owner Trust could be prevented from continuing to
collect payments due from or on behalf of such Lessee or exercising any remedies
assigned to the Owner Trust without the approval of the bankruptcy court, and
the bankruptcy court could permit the Lessee, 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
addition, in the event of an insolvency of an originator other than the
Originator,
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a court could attempt to recharacterize the sale of the Contracts by such
third-party originator to the Originator as a borrowing from the Originator,
secured by a pledge of such Contracts and the rights in the Equipment.
In the case of a Lease Contract that is not 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 as more fully
described herein. Upon the bankruptcy of a Lessee, if the bankruptcy trustee or
debtor-in-possession elected to reject a Lease Contract, the flow of scheduled
payments to Noteholders would cease. Similarly, upon the bankruptcy of the
Depositor, if the bankruptcy trustee or debtor-in-possession elected to reject a
Lease Contract, the flow of Contract payments to the Depositor and the
Noteholders would cease. As noted above, however, the Depositor has been
structured so that the filing of a bankruptcy petition with respect to it is
unlikely. See "The Depositor and the Owner Trust -- The Depositor."
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 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 collateral 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 specifically
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
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 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 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 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
described in this paragraph is effective only with respect to payments of
interest made to the certifying United States Alien
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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 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.
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ERISA CONSIDERATIONS
Section 406 of 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, the owner of collateral, 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.
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
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<PAGE>
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
The proceeds from the offering and sale of the Notes and the issuance 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.
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<PAGE>
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, and
(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>
The U.S. Underwriting Agreement provides that the obligations of the U.S.
Underwriters are subject to certain conditions precedent and that the U.S.
Underwriters will 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 to offer the U.S. Notes to the public at the initial 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 $ per $1,000
Initial Principal Amount of Notes. The U.S. Underwriters may allow, and such
dealers may reallow, a concession not in excess of $ per $1,000 Initial
Principal Amount of Notes to certain other dealers. After the initial public
offering, the offering price and other selling terms may be changed by the U.S.
Representatives.
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 (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 Among 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
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<PAGE>
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, directly or indirectly, only in the United States and (b)
the International Managers will offer and sell International Notes, directly or
indirectly, only outside the United States. For these purposes, an offer or sale
is considered to be made in country if it is made to any individual resident in
such country or to any corporation, partnership, pension, profit-sharing or
other trust or other entity (including any such entity constituting an
investment advisor acting with discretionary authority) 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.
Each U.S. Underwriter and International Manager has represented and agreed
that: (i) it has not offered or sold and, prior to the completion of the period
of six months from the closing date, will not offer or sell any Notes to persons
in the United Kingdom except to persons whose ordinary activities involve them
in acquiring, holding, managing or disposing of investments (as principal or
agent) for the purposes of their businesses or otherwise in circumstances 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
(the "Regulations"); (ii) 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 (iii) 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 issue of the
Notes to a person who is of a kind described in Article 11(3) of the Financial
Services Act 1986 (Investments Advertisements) (Exemptions) Order 1995 or is a
person to whom such document may otherwise lawfully be issued or passed on.
The U.S. Underwriting Agreement contains covenants of indemnity among the
U.S. Underwriters and the Depositor against certain civil liabilities, including
liability under the United States Securities Act of 1933, as amended.
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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<PAGE>
LEGAL MATTERS
Certain legal matters with respect to the Notes will be passed upon for TCC
and its affiliates (including the Depositor) by Dorsey & Whitney LLP. Cadwalder,
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 Transfer 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. It is expected that listing
of the Notes on the Luxembourg Stock Exchange will be granted on
, 1996, subject only to the issue of the Notes. The
listing of the Notes will be canceled if such Notes are not issued.
3. As long as the Notes are outstanding, copies of the Registration
Statement and 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
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. The Common Code for
the Notes is ; the International Securities
Identification Number for the Notes is ; and the CUSIP
number for the Notes is .
70
<PAGE>
GLOSSARY
[TO COME]
71
<PAGE>
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 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.
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 purchase 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 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
A-1
<PAGE>
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 or Euroclear and that purchase Global
Notes from DTC participants for delivery to CEDEL 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 or Euroclear for one day (until the purchase side
of the day trade is reflected in their CEDEL 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 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 participant or
Euroclear participant.
CERTAIN U.S. FEDERAL INCOME TAX
DOCUMENTATION REQUIREMENTS
A holder of Global Notes holding securities through CEDEL 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 S-8 and Form 1001 are effective for three calendar years and Form 4224 is
effective for one calendar year.
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>
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 JULY 23, 1996
$
CAPITA EQUIPMENT RECEIVABLES TRUST 1996-1 RECEIVABLE-BACKED NOTES
$ % 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, dated as of [September 1], 1996, between Antigua
Funding Corporation (the "Depositor"), which is to be a wholly owned subsidiary
of AT&T Capital Corporation ("TCC"), and ,
as Owner Trustee (the "Owner Trustee"). The Receivable-Backed Notes (the
"Notes") will be issued by the Owner Trust pursuant to an Indenture, dated as of
[September 1], 1996, 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 and the Equity Certificates and additional cash held
(and invested in certain Eligible Investments) in an Escrow Account, which
amounts 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 will be used on the Merger
Consummation Date to acquire the Contracts. From and after the consummation of
the Merger, the Trust Assets will consist of a pool of approximately
equipment leases, installment sale contracts, promissory notes, loan and
security agreements and similar types of receivables (the "Contracts"), all
Scheduled Payments and Prepayments made by the obligors (the "Obligors") on such
Contracts on and after the Cut-Off Date, the interest of the Depositor in
certain equipment related to such Contracts (the "Equipment"), and amounts on
deposit from time to time in the Collection Account and certain other accounts
described herein. TCC will service the Contracts pursuant to a Transfer and
Servicing Agreement, expected to be dated as of [September 1], 1996, 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 Price to
Public and Underwriting Discount will be identical for both offerings.
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, certain amounts derived from the sale
or other disposition of the Equipment related to the Contracts that constitute
Lease Contracts upon expiration or termination (including an early termination
or liquidation) of such Lease 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 and amounts permitted to be withdrawn therefor from a
Cash Collateral Account, in each case subject to prior application to pay
certain fees and expenses) 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 Note, 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 , 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 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.
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."
FOR A DISCUSSION OF CERTAIN FACTORS RELATING TO THIS OFFERING, SEE "RISK
FACTORS" ON PAGE 18 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>
PRICE TO PUBLIC (1) UNDERWRITING DISCOUNT (2)
------------------------------------ ------------------------------------
<S> <C> <C>
Per Class A Note.................... % %
Per Class B Note.................... % %
Per Class C Note.................... % %
Total............................... $ $
<CAPTION>
PROCEEDS TO THE DEPOSITOR (1)(3)
------------------------------------
<S> <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 by the International Managers subject to prior sale
when, as and if issued to and accepted by the International Managers subject to
approval of certain legal matters by counsel and certain other conditions. The
International Managers reserve the right to withdraw, cancel or modify such
offer and to reject orders in whole or in part. It is expected that the Notes
will be delivered in book-entry form on or about September __, 1996 through the
facilities of The Depository Trust Company, Cedel Bank, societe anonyme and
Morgan Guaranty Trust Company of New York, Brussels Office, as operator of the
Euroclear System, against payment therefor in immediately available funds.
Application has been made to list the Notes on the Luxembourg Stock
Exchange.
------------------------
NOMURA INTERNATIONAL
-----------
THE DATE OF THIS PROSPECTUS IS SEPTEMBER , 1996
<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.
No dealer, salesman or other person has been authorized to give any
information or to make any representation not contained in this Prospectus and,
if given or made, such information or representation must not be relied upon as
having been authorized by the Depositor, the Servicer, the Owner Trust, the U.S.
Underwriters or the International Managers. This Prospectus does not constitute
an offer to sell or a solicitation of an offer to buy any of the securities
offered hereby in any jurisdiction to any person to whom it is unlawful to make
such offer or solicitation in such jurisdiction. 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 hereof.
Until , 1996 (90 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 to deliver a Prospectus when acting as Underwriters
and with respect to their unsold allotments or subscriptions.
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 Notes may not be offered or sold in the United Kingdom by means of any
document except in circumstances which do not constitute an offer to the public
within the meaning of the Public Offers of Securities Regulations 1995. All
applicable provisions of the Financial Services Act 1986 must be complied with
in connection with anything done in relation to the Notes in, from or otherwise
involving the United Kingdom. See "Underwriting."
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>
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 representative[s], Nomura
International, plc. [and ] (the "International
Representatives"), have severally agreed to purchase from the Depositor the
following respective Initial Certificate Balances 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>
The International Underwriting Agreement provides that the obligations of
the International Managers are subject to certain conditions precedent and that
the International Managers will purchase all of the International Notes offered
hereby if any of such 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 initial 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 $ per $1,000 Initial Principal Amount of Notes. The International
Managers may allow, and such dealers may reallow, a concession not in excess of
$ per $1,000 Initial Principal Amount of Notes to certain other dealers.
After the initial public offering, the offering price and other selling terms
may be changed by the International Representatives.
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 and the Owner Trust (on behalf of the Trust) have 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,
and (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 Offered Certificate 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 Among U.S.
Underwriters and International Managers (the "Intersyndicate Agreement") which
provides, among other things, that the U.S. Underwriters and the
65
<PAGE>
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, directly or indirectly, only in the United States and (b)
the International Managers will offer and sell International Notes, directly or
indirectly, only outside the United States. For these purposes, an offer or sale
is considered to be made in a country if it is made to any individual resident
in such country or to any corporation, partnership, pension, profit-sharing or
other trust or other entity (including any such entity constituting an
investment advisor acting with discretionary authority) 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.
Each [U.S. Underwriter and] International Manager has represented and agreed
that: (i) it has not offered or sold and, prior to the completion of the period
of six months from the closing date, will not offer or sell any Notes to persons
in the United Kingdom except to persons whose ordinary activities involve them
in acquiring, holding, managing or disposing of investments (as principal or
agent) for the purposes of their businesses or otherwise in circumstances 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
(the "Regulations"); (ii) 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 (iii) 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 issue of the
Notes to a person who is of a kind described in Article 11(3) of the Financial
Services Act 1986 (Investments Advertisements) (Exemptions) Order 1995 or is a
person to whom such document may otherwise lawfully be issued or passed on.
The International Underwriting Agreement contains covenants of indemnity
among the International Managers and the Depositor against certain civil
liabilities, including liability under the U. S. Securities Act of 1933, as
amended.
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 for trading on the Luxembourg
Stock Exchange.
66
<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 Transfer 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.
* 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).
* 24.1 -- Power of Attorney (included on page II-3).
* 25.1 -- Statement of eligibility of Indenture Trustee.
</TABLE>
- ------------------------
* To be filed by amendment
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 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 23rd day of July,
1996.
ANTIGUA FUNDING CORPORATION
By ___________/s/ GUY HANDS___________
Guy Hands
PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated. Each person whose signature to this Registration Statement
appears below hereby constitutes and appoints James Elton as his/her true and
lawful attorney-in-fact and agent, with full power of substitution, to sign on
his behalf individually and in the capacity stated below and to perform any acts
necessary to be done in order to file all amendments and post-effective
amendments to this Registration Statement, and any and all instruments or
documents filed as part of or in connection with this Registration Statement or
the amendments thereto and each of the undersigned does hereby ratify and
confirm all that said attorney-in-fact and agent, or his substitutes, shall do
or cause to be done by virtue hereof.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------------------------- ----------------------------------------------- ----------------
<C> <S> <C>
/s/ GUY HANDS President (Principal Executive Officer) and July 23, 1996
Guy Hands Director
/s/ JEFF NASH Vice President (Principal Financial and July 23, 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 Transfer 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.
* 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).
* 24.1 Power of Attorney (included on page II-3).
* 25.1 Statement of eligibility of Indenture Trustee.
</TABLE>
- ------------------------
* To be filed by amendment
<PAGE>
CERTIFICATE OF INCORPORATION
OF
ANTIGUA FUNDING CORPORATION
Article I. NAME. The name of the Corporation is Antigua Funding
Corporation (the "Corporation").
Article II. REGISTERED OFFICE. The address of the Corporation's
registered office in the State of Delaware is Corporation Trust Center, 1209
Orange Street in the City of Wilmington, County of New Castle. The name of its
registered agent at such address is The Corporation Trust Company.
Article III. PURPOSE. The nature of the business or purpose to
be conducted or promoted by the Corporation is to engage exclusively in the
following business and financial activities:
(a) to acquire from AT&T Capital Corporation and wholly owned
subsidiaries thereof (collectively, "ATTC") and to hold, sell, transfer or
pledge pools of lease, installment sale and loan contracts and the related
equipment (the "Leases");
(b) to enter into any agreement providing for the sale, transfer
or pledge of Leases to trusts (the "Trusts");
(c) to enter into any agreement relating to any Leases that
provides for the administration, servicing and collection of amounts due on
such Leases;
(d) to sell any class of asset-backed certificates or other
securities issued by the Trusts;
(e) to engage in any lawful act or activity and to exercise any
powers permitted to corporations organized under the General Corporation Law
of the State of Delaware that are incidental to and necessary, suitable or
convenient for the accomplishment of the purposes specified in clauses (a)
through (d) above.
Article IV. DURATION. The Corporation is to have perpetual
existence.
<PAGE>
Article V. NUMBER OF SHARES. The aggregate number of shares of
all classes of capital stock that the Corporation shall have authority to issue
is one hundred (100) shares of Common Stock, par value of $0.01 per share.
Article VI. REPURCHASE OF SHARES. The Corporation, through its
Board of Directors, shall have the right and power to repurchase any of its
outstanding stock at such price and upon such terms as may be agreed upon
between the Corporation and the selling stockholder or stockholders.
Article VII. INCORPORATOR. The name and mailing address of the
incorporator is as follows:
Name Mailing Address
---- ---------------
Deborah L. Vigdal 220 South Sixth Street
Minneapolis, Minnesota 55402
Article VIII. NUMBER OF DIRECTORS; INITIAL DIRECTORS. The
number of directors of the Corporation will not be less than two nor more than
seven. The exact number of directors is to be fixed in the Bylaws. The number
of directors constituting the initial Board of Directors is two, and the names
and addresses of the persons who are to serve as directors until the first
annual meeting of shareholders or until their respective successors are elected
and qualified are:
Name Address
---- -------
Guy Hands 1 St. Martin's-le-Grand
London EC1A 4NP
Jeff Nash 1 St. Martin's-le-Grand
London EC1A 4NP
The list above setting forth the names and addresses of the initial directors of
the Corporation does not include additional persons who may otherwise be elected
and qualified to serve as directors in accordance with the Bylaws.
Article IX. INDEPENDENT DIRECTORS. At all times after October
1, 1996, at least one director of the Corporation must be an Independent
Director. "Independent Director" means a director of the Corporation who may at
no time be, or have been, a director or officer of, be employed by, be retained
by, provide consulting services for or hold any beneficial economic interest in
the Corporation or any Affiliate. "Affiliate" means any entity other than the
Corporation (i) which owns beneficially, directly or indirectly, 10% or more of
the outstanding shares of Common Stock of the Corporation, or (ii) of which 10%
or more of the outstanding shares of its Common Stock is owned beneficially,
directly or indirectly, by any entity
-2-
<PAGE>
described in clause (i) above, or (iii) which is controlled by an entity
described in clause (i) above, as the term "control" is defined under Section
230.405 of the Rules and Regulations of the Securities and Exchange Commission,
17 C.F.R. Section 230.405.
Article X. DIRECTORS' POWERS. With the consent in writing of
the Independent Director or the Independent Directors, as the case may be (as
that term is defined in Article IX), the directors shall have power to make and
to alter or amend the Bylaws, to fix the amount to be reserved as working
capital, and to authorize and cause to be executed, mortgages and liens without
limit as to the amount, upon the property and franchise of this Corporation or
to issue guarantees on behalf of the Corporation.
With the consent in writing of the Independent Director or the
Independent Directors, as the case may be (as that term is defined in Article
IX), and pursuant to a vote of the holders of all of the capital stock issued
and outstanding, the directors shall have authority to dispose, in any manner,
of the whole property of this Corporation.
The Bylaws shall determine whether and to what extent the
accounts and books of this Corporation, or any of them, shall be open to the
inspection of the stockholders; and no stockholder shall have any right of
inspecting any account, or book, or document of this Corporation, except as
conferred by law or the Bylaws or by resolution of the stockholders.
The stockholders and directors shall have power to hold their
meetings and keep the books, documents and papers of the Corporation outside the
State of Delaware, at such places as may be from time to time designated by the
Bylaws or by resolution of the stockholders or directors, except as otherwise
required by the laws of Delaware.
Article XI. WRITTEN ACTION BY DIRECTORS. An action required or
permitted to be taken at a meeting of the Board of Directors of the Corporation
may be taken by written action signed, or counterparts of a written action
signed, in the aggregate by all of the directors.
Article XII. RELIANCE ON BOOKS AND RECORDS, ETC. A director
shall, in the performance of his duties, be fully protected in relying in good
faith upon the records of the Corporation and upon such information, opinions,
reports or statements presented to the Corporation by any of the Corporation's
officers or employees, or committees of the Board of Directors, or by any other
person as to matters the director reasonably believes are within such other
person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Corporation.
-3-
<PAGE>
Article XIII. LIABILITY OF DIRECTORS. To the fullest extent
permitted by the General Corporation Law of the State of Delaware as the same
exists or may hereafter be amended, a director of the Corporation shall not be
liable to the Corporation or its stockholders for monetary damages for a breach
of fiduciary duty as a director, except (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law or (iv) for any transaction from which the director derived an improper
personal benefit. Any repeal or modification of this Article XIII shall not
adversely affect any right or protection of a director of the Corporation
existing at the time of such repeal or modification.
Article XIV. INTERNAL AFFAIRS. The Corporation will conduct its
affairs in accordance with the following provisions:
(a) the Corporation will establish an office through which its
business will be conducted, which office will be separate and apart from
that of any Affiliate;
(b) the Corporation will maintain separate corporate records and
books of account from those of any Affiliate;
(c) the Corporation's assets will not be commingled with those
of any other corporation; and
(d) The Corporation's Board of Directors will hold regular
meetings, not less frequently than once every calendar quarter, to review
the actions of the officers of the Corporation and to authorize and approve
(i) all transactions outside the ordinary course of the Corporation's
business that are incidental, necessary, suitable or convenient for the
accomplishment of the purposes set forth in Article III, and (ii) such
other transactions, agreements and actions of the Corporation as the Board
of Directors deems appropriate in connection with its review and
supervision of the Corporation's actions.
Article XV. MEETINGS OF STOCKHOLDERS. Meetings of stockholders
shall be held at such place, within or without the State of Delaware, as may be
designated by or in the manner provided in the Bylaws or, if not so designated
or provided, at the registered office of the Corporation in the State of
Delaware. Elections of directors need not be by ballot unless and except to the
extent that the Bylaws so provide. The books of the Corporation may be kept
(subject to any provision contained in any applicable statute) outside the State
of Delaware at such place or places as may be designated from time to time by
the Board of Directors or in the Bylaws of the Corporation.
-4-
<PAGE>
Article XVI. LIMITATIONS ON ACTIONS. Notwithstanding any other
provision of this Certificate of Incorporation, the Bylaws or any provision of
law that otherwise so empowers the Corporation, the Corporation shall not,
without (i) the affirmative vote of 100% of the members of the Board of
Directors of the Corporation, including the affirmative vote of the Independent
Director or Independent Directors required by Article IX on or after the date on
which the Independent Director or Independent Directors required by such Article
IX have been appointed and qualified, and (ii) the affirmative vote of
stockholders holding at least two-thirds (2/3) of the total number of
outstanding shares of Common Stock of the Corporation:
(a) make an assignment for the benefit of creditors, file a
petition in bankruptcy, petition or apply to any tribunal for the
appointment of a custodian, receiver or any trustee for it or for a
substantial part of its property, commence any proceeding under any
bankruptcy, reorganization, arrangement, readjustment of debt, dissolution
or liquidation law or statute of any jurisdiction, whether now or
hereinafter in effect, consent or acquiesce in the filing of any such
petition, application, proceeding or appointment of or taking possession by
the custodian, receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of the Corporation or any substantial part of its
property, or admit its inability to pay its debts generally as they become
due or authorize any of the foregoing to be done or taken on behalf of the
Corporation; provided, that if there is not an Independent Director as
required by Article IX of this Certificate of Incorporation then in office
and acting, a vote upon any matter set forth in this paragraph (a) of this
Article XVI may not be taken unless and until an Independent Director
meeting the requirements of Article IX of this Certificate of Incorporation
has been appointed and qualified;
(b) amend, alter, change or repeal any of the following articles
of this Certificate of Incorporation: Article III, Article IX, Article XIV
or this Article XVI; or
(c) (i) engage in any business or activity other than as
authorized by Article III hereof, (ii) dissolve or liquidate, in whole or in
part or (iii) consolidate with or merge into any other entity or convey,
transfer or lease its properties and assets substantially as an entirety to
any entity, or permit any entity to merge into it or convey, transfer or
lease its properties and assets substantially as an entirety to it.
Article XVII. AMENDMENT, ALTERATION OR REPEAL. The Corporation
reserves the right to amend, alter, or repeal any other provision contained in
this Certificate of Incorporation in the manner now or hereafter prescribed by
statute,
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and all rights of stockholders herein are subject to this reservation;
PROVIDED, HOWEVER, that Article III, Article IX, Article XIV and Article XVI may
be amended only in accordance with Article XVI of this Certificate of
Incorporation.
I, the undersigned, being the incorporator hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation Law
of the State of Delaware, as amended, do make this certificate, hereby declaring
and certifying that this is my act and deed and that the facts herein stated are
true and that I have accordingly hereunto signed my signature this 17th day of
July, 1996.
/s/ Deborah L. Vigdal
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Deborah L. Vigdal
Incorporator
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<PAGE>
BYLAWS
OF
ANTIGUA FUNDING CORPORATION
ARTICLE I.
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MEETINGS OF STOCKHOLDERS
Section 1. ANNUAL MEETINGS. The annual meeting of the
stockholders for the election of directors and for the transaction of such other
business as may properly come before the meeting shall be held each year at such
time, on such day and at such place, within or without the State of Delaware as
shall be designated by the Board of Directors.
Section 2. SPECIAL MEETINGS. A special meeting of the
stockholders for any purpose or purposes, unless otherwise prescribed by
statute, may be called at any time by the President or by the Secretary at the
request in writing of a majority of either the members of the Board of Directors
or the stockholders entitled to vote.
Section 3. TIME AND PLACE OF MEETINGS. All meetings of the
stockholders shall be held at such times and places, within or without the State
of Delaware, as may from time to time be fixed by the Board of Directors or by
the President with respect to special meetings, or as shall be specified or
fixed in the respective notices or waivers of notice thereof.
Section 4. NOTICE OF MEETINGS. Except as otherwise expressly
required by law, notice of each meeting of the stockholders shall be given, at
least fifteen (15) days in the case of an annual meeting, and ten (10) days in
the case of a special meeting, before the day on which the meeting is to be
held, to each stockholder of record entitled to vote at such meeting by mailing
such notice in a postage prepaid envelope addressed to the stockholder at the
stockholder's last postoffice address appearing on the stock records of the
Company. Except as otherwise expressly required by law, no publication of any
notice of a meeting of the stockholders shall be required. At special meetings
of stockholders no business other than that specified in the notice of the
meeting or germane thereto shall be transacted at such meeting. Except as
otherwise expressly required by law, notice of any adjourned meeting of the
stockholders need not be given. Notice of any meeting of stockholders may be
waived in writing by a majority of the stockholders entitled to vote thereat.
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Section 5. QUORUM. At each meeting of the stockholders, except as
otherwise expressly required by law, stockholders holding a majority of the
shares of stock of the Company, issued and outstanding, and entitled to be voted
thereat, shall be present in person or by proxy to constitute a quorum for the
transaction of business. In the absence of a quorum at any such meeting or any
adjournment or adjournments thereof, a majority in voting interest of those
present in person or by proxy and entitled to vote thereat, or in the absence
therefrom of all the stockholders, any officer entitled to preside at, or to act
as secretary of, such meeting may adjourn such meeting from time to time until
stockholders holding the amount of stock requisite for a quorum shall be present
or represented. At any such adjourned meeting at which a quorum may be present
any business may be transacted which might have been transacted at the meeting
as originally called.
Section 6. ORGANIZATION. At each meeting of the stockholders, one
of the following shall act as chairman of the meeting and preside thereat, in
the following order of precedence:
(a) the President;
(b) the Vice President designated by the Board of Directors to act as
chairman of said meetings and to preside thereat;
(c) a stockholder of record of the Company who shall be chosen
chairman of such meeting by a majority in voting interest of the
stockholders present in person or by proxy and entitled to vote
thereat.
The Secretary, or, if he shall be absent from such meeting, the person (who
shall be an Assistant Secretary, if an Assistant Secretary shall be present
thereat) whom the chairman of such meeting shall appoint, shall act as secretary
of such meeting and keep the minutes thereof.
Section 7. ORDER OF BUSINESS. The order of business at each
meeting of the stockholders shall be determined by the chairman of such meeting,
but such order of business at any meeting at which a quorum is present may be
changed by the vote of a majority in voting interest of those present in person
or by proxy at such meeting and entitled to vote thereat, provided that at
special meetings of stockholders no business other than that specified in the
notice of the meeting or germane thereto shall be transacted.
Section 8. VOTING. Each stockholder shall, at each meeting of the
stockholders, be entitled to one vote in person or by proxy for each share of
stock of the Company held by the stockholder and registered in the stockholder's
name on the books of the Company on the date fixed or determined pursuant to the
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provisions of Section 5 of Article V of these Bylaws as the record date for the
determination of stockholders who shall be entitled to receive notice of and to
vote at such meeting.
Shares of its own stock belonging to the Company shall not be voted
directly or indirectly. Any vote on stock of the Company may be given at any
meeting of the stockholders by the stockholder entitled thereto in person or by
the stockholder's proxy appointed by an instrument in writing delivered to the
Secretary or an Assistant Secretary of the Company or to the secretary of the
meeting. The attendance at any meeting of a stockholder who may theretofore
have given a proxy shall not have the effect of revoking the same unless the
stockholder shall in writing so notify the secretary of the meeting prior to the
voting of the proxy. At all meetings of the stockholders all matters, except as
otherwise provided in these Bylaws or by law, shall be decided by the vote of a
majority in voting interest of the stockholders present in person or by proxy
and entitled to vote thereat, a quorum being present. Subject to Article II,
Section 3, the vote at any meeting of the stockholders on any question need not
be by ballot, unless so directed by the chairman of the meeting. On a vote by
ballot each ballot shall be signed by the stockholder voting, or by the
stockholder's proxy, if there be such proxy.
Section 9. LIST OF STOCKHOLDERS. It shall be the duty of the
Secretary or other officer of the Company who shall have charge of its stock
ledger to prepare and make, at least ten (10) days before every meeting of the
stockholders, a complete list of the stockholders entitled to vote thereat,
arranged in alphabetical order and showing the address of each stockholder and
the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least ten (10)
days prior to said meeting either at a place within the city where said meeting
is to be held and which place shall be specified in the notice of said meeting,
or, if not so specified, at the place where said meeting is to be held, and such
list shall be produced and kept at the time and place of said meeting during the
whole time thereof, and may be inspected by any stockholder who is present. The
stock ledger shall be the only evidence as to who are the stockholders entitled
to examine the stock ledger or such list or the books of the Company, or to vote
in person or by proxy at any meeting of stockholders.
Section 10. INSPECTORS OR JUDGES. The Board of Directors, in
advance of any meeting of stockholders, may appoint one or more inspectors or
judges to act at such meeting or any adjournment thereof. If the inspectors or
judges shall not be so appointed, or if any of them shall fail to appear or act,
the chairman of such meeting shall appoint the inspectors or judges, or such
replacement or replacements therefor, as the case may be. Such inspectors or
judges, before entering on the discharge of their duties, shall take and sign an
oath or affirmation faithfully to execute the duties of inspectors or judges at
meetings for which they are appointed.
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At such meeting, the inspectors or judges shall receive and take in charge the
proxies and ballots and decide all questions touching the qualification of
voters and the validity of proxies and the acceptance or rejection of votes. An
inspector or judge need not be a stockholder of the Company, and any officer of
the Company may be an inspector or judge on any question other than a vote for
or against his election to any position with the Company.
Section 11. ACTION WITHOUT A MEETING. Except as otherwise provided by
law or by the Certificate of Incorporation of the Company, any action which may
be taken at any annual or special meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing.
ARTICLE II.
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BOARD OF DIRECTORS
Section 1. GENERAL POWERS. Subject to the provisions of the
Certificate of Incorporation of the Company, the business, properties and
affairs of the Company shall be managed by the Board of Directors, which,
without limiting the generality of the foregoing, shall have power to elect and
appoint officers of the Company, to appoint and direct agents, to grant general
or limited authority to officers, employees and agents of the Company, to make,
execute and deliver contracts and other instruments and documents in the name
and on behalf of the Company and over its seal, without specific authority in
each case, and, by resolution adopted by a majority of the whole Board of
Directors, to appoint committees of the Board of Directors, the membership of
which may consist of one or more directors, and which may, except as limited by
the Certificate of Incorporation of the Company, advise the Board of Directors
with respect to any matters relating to the conduct of the Company's business.
In addition, the Board of Directors may exercise all the powers of the Company
and do all lawful acts and things which are not reserved to the stockholders by
law or by the Certificate of Incorporation of the Company or by these Bylaws.
Section 2. NUMBER AND TERM. Subject to the requirements of the
laws of the State of Delaware, the number of directors shall be no less than two
(2) and no more than seven (7). Subject to Article IX of the Certificate of
Incorporation of the Company, each of the directors of the Company shall hold
office until the expiration of his term and until his successor shall be elected
or until their earlier
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death, resignation, retirement, disqualification or removal. Directors need not
be stockholders.
Section 3. ELECTION OF DIRECTORS. Subject to the requirements of
Article IX of the Certificate of Incorporation of the Company, at each meeting
of the stockholders for the election of directors, at which a quorum is present,
the persons receiving the greatest number of votes, up to the number of
directors to be elected, shall be the directors. Such election shall be by
ballot, provided, however, a nomination shall be accepted and votes cast for a
nominee shall be counted by the inspectors or judges of the election, only if
the Secretary of the Company has received at least 24 hours prior to the meeting
a statement over the signature of the nominee that he consents to being a
nominee and, if elected, intends to serve as a director.
Section 4. ORGANIZATION AND ORDER OF BUSINESS. At each meeting of
the Board, one of the following shall act as chairman of the meeting and preside
thereat, in the following order of precedence:
(a) the President;
(b) any Vice President designated by the Board of Directors; or
(c) any director chosen by a majority of the directors present
thereat.
The Secretary, or in case of his absence any Assistant Secretary (who shall be
present thereat) or the person (who shall be present thereat) whom the chairman
of such meeting shall appoint, shall act as secretary of such meeting and keep
the minutes thereof. The order of business at each meeting of the Board of
Directors shall be determined by the chairman of such meeting.
Section 5. RESIGNATIONS. Subject to the requirements of Article
IX of the Certificate of Incorporation of the Company, any director may resign
at any time by giving written notice of his resignation to the President or the
Secretary of the Company. Any such resignation shall take effect at the time
specified therein, or, if the time when it shall become effective shall not be
specified therein, then it shall take effect when accepted by action of the
Board of Directors. Except as aforesaid, the acceptance of such resignation
shall not be necessary to make it effective.
Section 6. VACANCIES, ETC. Subject to the requirements of Article
IX of the Certificate of Incorporation of the Company, in case of any vacancy on
the Board, a director to fill the vacancy for the unexpired portion of the term
being filled may be elected by the holders of shares of stock of the Company
entitled to vote in respect thereof at an annual or special meeting of said
holders or by a majority of the directors of the Company then in office though
less than a quorum.
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Section 7. REMOVAL. Subject to the requirements of Article IX of
the Certificate of Incorporation of the Company, any director or directors may
be removed either for or without cause at any time by the affirmative vote of
the holders of a majority of all the shares of stock outstanding and entitled to
vote, at a special meeting of the stockholders called for that purpose, and the
vacancies thus created may be filled, at the meeting held for the purpose of
removal, by the affirmative vote of a majority in interest of the stockholders
entitled to vote.
Section 8. INCREASE OF NUMBER. Subject to the requirements of
Article IX of the Certificate of Incorporation of the Company, the number of
directors may be increased by amendment of these Bylaws by the affirmative vote
of a majority of the directors, though less than a quorum, or, by the
affirmative vote of a majority in interest of the stockholders, at the annual
meeting or at a special meeting called for that purpose, and by like vote the
additional directors may be chosen at such meeting to hold office until the next
annual election and until their successors are elected and qualified.
Section 9. PLACE OF MEETING. The Board may hold its meetings at
such place or places within or without the State of Delaware as the Board may
from time to time by resolution determine or as shall be specified or fixed in
the respective notices or waivers of notice thereof.
Section 10. FIRST MEETING. As soon as practicable after each
annual election of directors, the Board shall meet for the purpose of
organization, the election of officers and the transaction of other business;
provided that a quorum of the whole Board of Directors and the director or
directors elected pursuant to Article IX of the Certificate of Incorporation of
the Company shall be present at such meeting. Such meeting shall be held at the
time and place theretofore fixed by the Board for the next regular meeting of
the Board and no notice thereof need be given; provided, however, that the Board
may determine that such meeting shall be held at a different place and time but
notice thereof shall be given in the manner hereinafter provided for special
meetings of the Board.
Section 11. REGULAR MEETINGS. Regular meetings of the Board shall
be held at such times as the Board shall from time to time determine. Notices
of regular meetings need not be given. If any day fixed for a regular meeting
shall be a legal holiday at the place where the meeting is to be held, then the
meeting which would otherwise be held on that day shall be postponed until the
same hour on the same day of the next succeeding week in which such day shall
not be a legal holiday at such place, or at such other time and place as the
Board shall determine in which event notice thereof shall be given.
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Section 12. SPECIAL MEETINGS: NOTICE. Special meetings of the
Board shall be held whenever called by the President or by one of the directors
at the time in office. The Secretary shall give notice to each director as
hereinafter in this Section provided of each such special meeting, in which
shall be stated the time and place of such meeting. Notice of each such meeting
shall be mailed to each director, addressed to the director at his residence or
usual place of business, at least ten (10) days before the day on which such
meeting is to be held, or shall be sent addressed to him at such place by
facsimile, telegraph, cable, wireless or other form of recorded communication,
or be delivered personally or by telephone not later than the day before the day
on which such meeting is to be held. Notice of any meeting of the Board need
not, however, be given to any director, if waived by him in writing or by
facsimile, telegraph, cable, wireless or other form of recorded communication,
before, during or after such meeting, or if he shall be present at such meeting,
and any meeting of the Board shall be a legal meeting without any notice thereof
having been given if all the directors of the Company then in office shall be
present thereat.
Section 13. QUORUM AND MANNER OF ACTING. Subject to the
requirements of the Certificate of Incorporation of the Company, and except as
otherwise provided in these Bylaws, the Certificate of Incorporation of the
Company, or by law, a majority of the members of the Board of Directors at the
time in office and the director or directors required by Article IX of the
Certificate of Incorporation of the Company shall be present in person at any
meeting of the Board of Directors in order to constitute a quorum for the
transaction of business at such meeting, and the affirmative vote of a majority
of directors present at any such meeting, at which a quorum is present, shall be
necessary for the adoption of any resolution or act of the Board. In the
absence of a quorum, a majority of the Board of Directors may adjourn any
meeting, from time to time, until a quorum is present. No notice of any
adjourned meeting need be given other than by announcement at the meeting that
is being adjourned.
Section 14. ACTION BY CONSENT. Unless otherwise restricted by the
Certificate of Incorporation, any action required or permitted to be taken at
any meeting of the Board of Directors, or of any committee thereof, may be taken
without a meeting, if prior to such action a written consent thereto is signed
by all members of the Board or of such committee, as the case may be, and such
written consent is filed with the minutes of proceedings of the Board or
committee.
Section 15. COMMITTEES. The Board of Directors may appoint
standing committees of its members. Unless otherwise restricted by the
Certificate of Incorporation of the Company, such committees shall have such
powers as are conferred by the Bylaws or authorized by the Board of Directors.
The members of all standing committees shall be appointed annually at the first
meeting of the Board of Directors after the annual meeting of the stockholders
and shall continue as members until their successors are appointed, subject to
the power of the Board to
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remove any member of a committee at any time and to appoint a successor. At
least one Independent Director, as defined in Article IX of the Certificate of
Incorporation, shall be a member of each such committee.
Section 16. MEETING BY COMMUNICATIONS EQUIPMENT. Members of the
Board of Directors or any committee appointed by the Board of Directors, may
participate in a meeting of the Board of Directors or of such committee by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at such meeting.
ARTICLE III.
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OFFICERS
Section 1. ELECTION. APPOINTMENT. TERM OF OFFICE. The Executive
Officers of the Company shall consist of a President and such number of Vice
Presidents, if any, as the Board of Directors may determine from time to time.
There shall also be a Chief Financial Officer, who may also be the President or
a Vice President. There shall also be a Secretary.
Any officer may hold two or more offices, the duties of which can be
consistently performed by the same person.
The Board of Directors may also appoint such other officers and agents
as it may deem necessary, who shall have such authority and perform such duties
as may be prescribed by the Board.
All Executive Officers and other officers of the Company shall be
regularly elected or appointed by the majority vote of the whole Board of
Directors at its first meeting after the annual meeting of the stockholders and
shall hold office until the first meeting of the Board after the next annual
meeting of the stockholders, and until their successors are elected or
appointed.
If additional officers are elected or appointed during the year, they
shall hold office until the next annual meeting of the Board of Directors at
which officers are regularly elected or appointed and until their successors are
elected or appointed.
A vacancy in any office may be filled for the unexpired portion of the
term in the same manner as provided for election or appointment to such office.
All officers and agents elected or appointed by the Board of Directors
shall be subject to removal at any time by the Board of Directors, either for or
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without cause, by an affirmative vote of a majority of the entire Board of
Directors, at any regular meeting or at any special meeting.
Section 2. PRESIDENT. The President shall be the chief executive
officer of the Company, and shall have the powers and perform the duties
incident to that position. Subject to the Board of Directors, he shall be in
general and active charge of the entire business and all the affairs of the
Company and shall be its chief policy-making officer. He shall have the primary
responsibility for continuing the separate status of the Company from any
affiliated corporation and the proper segregation of corporate assets from the
assets of third parties who may have possession of assets of the Company. He
shall have general authority to execute bonds, deeds and contracts in the name
and on behalf of the Company and responsibility for the employment or
appointment of such employees, agents and officers (except officers to be
elected by the Board of Directors pursuant to Section 1 of this Article III) as
may be required to carry on the operations of the business, and he shall have
authority to fix the compensation of such agents and officers. He shall have
such other powers and perform such other duties as may be prescribed by the
Board of Directors or provided herein.
Section 3. VICE PRESIDENTS. Each Vice President shall have such
powers and duties as shall be prescribed by the Board of Directors at the time
of his election and such other powers and duties as may be assigned to him from
time to time by the President or the Board of Directors.
Section 4. CHIEF FINANCIAL OFFICER. The Chief Financial Officer
shall be responsible for safeguarding the cash and securities of the Company and
the formulation of the investment and financial policies of the Company. He
shall keep a full and accurate account of all monies received and paid on
account of the corporation and shall render a statement of his accounts whenever
the Board of Directors shall require. He shall have such other powers and
duties as may be assigned to him by the President or the Board of Directors. In
the absence of the Chief Financial Officer, the President or such person as
shall be designated by the President shall perform the duties of the Chief
Financial Officer.
Section 5. SECRETARY. The Secretary shall attend to the giving of
notice of all meetings of stockholders and of the Board of Directors and
committees thereof, and as provided in Section 6 of Article I and Section 4 of
Article II, shall keep the minutes of all proceedings at meetings of the
stockholders and of the Board of Directors at which he is present, as well as of
all proceedings at all meetings of committees of the Board of Directors on which
he has served as secretary and, where some other person has served as secretary
thereto, the Secretary shall maintain custody of the minutes of such
proceedings. He shall perform such other duties as may be assigned to him from
time to time by the President or the Board of Directors.
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ARTICLE IV.
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CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
Section 1. EXECUTION OF DOCUMENTS BY OFFICERS. All of the
Executive Officers of the Company elected as provided in Section 1 of Article
III of the Bylaws, shall have power to execute and deliver any deeds, contracts,
mortgages, bonds, debentures and other documents for and in the name of the
Company.
All appointed officers shall have such powers with respect to
execution and delivery of deeds, contracts, mortgages, bonds, debentures and
other documents as may be assigned to them by the Board of Directors.
Section 2. DEPOSITS. All funds of the Company not otherwise
employed shall be deposited from time to time to the credit of the Company or
otherwise as the Board of Directors, the President or the Chief Financial
Officer shall direct in such banks, trust companies or other depositories as the
Board of Directors may select or as may be selected by any officer or officers
or agent or agents of the Company to whom power in that respect shall have been
delegated by the Board of Directors. For the purpose of deposit and for the
purpose of collection for the account of the Company, checks, drafts and other
orders for the payment of money which are payable to the order of the Company
may be endorsed, assigned and delivered by any officer or agent of the Company.
ARTICLE V.
SHARES AND THEIR TRANSFER;
EXAMINATION OF BOOKS
Section 1. CERTIFICATES FOR STOCK. Every holder of stock of the
Company shall be entitled to have a certificate or certificates, in such form as
the Board shall prescribe, certifying the number of shares of stock of the
Company owned by the stockholder. The certificates representing shares of such
stock shall be numbered in the order in which they shall be issued and shall be
signed in the name of the Company by the person who was at the time of signing
the President or a Vice President and by the person who was at the time of
signing the Chief Financial Officer and its seal shall be affixed thereto;
provided, however, that the signature of such Executive Officer of the Company
and of such Chief Financial Officer and the seal of the Company may be
facsimile. In case any officer or officers of the Company who shall have
signed, or whose facsimile signature or signatures shall have been used on, any
such certificate or certificates shall cease to be such officer or officers,
whether because of death, resignation or otherwise, before such
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certificate or certificates shall have been delivered by the Company, such
certificate or certificates may nevertheless be adopted by the Company and be
issued and delivered as though the person or persons who signed such certificate
or certificates, or whose facsimile signature or signatures shall have been used
thereon, had not ceased to be such officer or officers. A record shall be kept
of the respective names of the persons, firms or corporations owning the stock
represented by certificates for stock of the Company, the number of shares
represented by such certificates, respectively, and the respective dates
thereof, and in case of cancellation, the respective dates of cancellation.
Every certificate surrendered to the Company for exchange or transfer shall be
canceled and a new certificate or certificates shall not be issued in exchange
for any existing certificate until such existing certificate shall have been so
canceled except in cases provided for in Section 4 of this Article VI.
Section 2. TRANSFERS OF STOCK. Transfers of shares of the stock
of the Company shall be made only on the books of the Company by the registered
holder thereof, or by his attorney thereunto authorized by power of attorney
duly executed and filed with the Secretary of the Company, or with a transfer
clerk or a transfer agent appointed as in Section 3 of this Article V provided,
and upon surrender of the certificate or certificates for such shares properly
endorsed and payment of all taxes thereon. The person in whose name shares of
stock stand on the books of the Company shall be deemed the owner thereof for
all purposes as regards the Company.
Section 3. REGULATIONS. The Board may make such rules and
regulations as it may deem expedient, not inconsistent with these Bylaws,
concerning the issue, transfer and registration of certificates for stock of the
Company. The Board may appoint or authorize any officer or officers to appoint
one or more transfer clerks, any of whom may be employees of the Company, or one
or more transfer agents and one or more registrars, and may require all
certificates for stock to bear the signature or signatures of any of them;
provided, however, that the signature of any transfer clerk, transfer agent, or
registrar may be facsimile. In case any transfer clerk, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such transfer clerk, transfer agent, or
registrar before such certificate is issued, it may be issued by the Company
with the same effect as if he were such transfer clerk, transfer agent, or
registrar at the date of issue.
Section 4. LOST, STOLEN, DESTROYED AND MUTILATED CERTIFICATES.
The owner of any stock of the Company shall immediately notify the Company of
any loss, theft, destruction or mutilation of the certificate therefor, and the
Company may issue a new certificate of stock in the place of any certificate
theretofore issued by the Company, which is delivered to the Company, in the
case of a mutilated certificate, or alleged to have been lost, stolen or
destroyed, and the Board may, in its discretion, require the owner of the lost,
stolen or destroyed certificate, or his legal
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representatives, to furnish evidence to the Company, which it shall in its
discretion determine is satisfactory, of the loss, theft or destruction of such
certificate and of the ownership thereof, and to give the Company a bond in such
sum, limited or unlimited, and in such form and with such surety or sureties, as
the Board shall in its uncontrolled discretion determine, to indemnify the
Company against any claim that may be made against it on account of the alleged
loss or destruction of any such certificate, or the issuance of such new
certificate.
Section 5. RECORD DATE. To determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date, which shall
not be more than sixty (60) nor less than ten (10) days before the date of such
meeting, nor more than sixty (60) days prior to any other action. If no record
date is fixed by the Board of Directors:
(a) The record date for determining stockholders entitled to notice
of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given.
(b) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting unless the Board
of Directors shall fix a new record date for the adjourned meeting.
Section 6. EXAMINATION OF BOOKS BY STOCKHOLDERS. The Board may
determine, from time to time, whether and to what extent, at what times and
places, and under what conditions and regulations, the accounts and books of the
Company, or any of them, shall be open to the inspection of the stockholders,
and no stockholder shall have any right to inspect any account or book or
document of the Company, except as conferred by the laws of the State of
Delaware or as authorized by resolution adopted by the Board or by the
stockholders of the Company entitled to vote in respect thereof.
<PAGE>
ARTICLE VI.
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OFFICES, ETC.
Section 1. REGISTERED OFFICE. The registered office of the
Company in the State of Delaware shall be in the City of Wilmington, County of
New Castle, and the name of the resident agent in charge thereof shall be The
Corporation Trust Company.
Section 2. OTHER OFFICES. The Company also may have an office or
offices other than said office in Section 1 of this Article VI at such place or
places, either within or without the State of Delaware, as provided in these
Bylaws or as the Board may from time to time appoint or as the business of the
Company may require.
Section 3. BOOKS AND RECORDS. Except as otherwise required by
law, the Certificate of Incorporation or these Bylaws, the Company may keep the
books and records of the Company in such place or places within or without the
State of Delaware as the Board may from time to time by resolution determine or
the business of the Company may require.
ARTICLE VII.
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DIVIDENDS
Subject to the provisions of law, of the Certificate of Incorporation
of the Company and of these Bylaws, the Board may declare and pay dividends upon
the shares of the stock of the Company either (a) out of its net assets in
excess of its capital as computed in accordance with the provisions of the laws
of the State of Delaware or (b) in case there shall be no such excess, out of
its net profits for the fiscal year then current and/or the preceding fiscal
year, whenever and in such amounts as, in the opinion of the Board, the
condition of the affairs of the Company shall render it advisable. Dividends
upon the shares of stock of the Company may be declared at any regular meeting
of the Board of Directors and also at a special meeting, if notice of such
proposed action is given as provided in Section 10 of Article II of these
Bylaws.
ARTICLE VIII.
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SEAL
The corporate seal, if one is adopted by the Board of Directors, shall
be in the form as prescribed by the Board of Directors and shall have inscribed
thereon the name of the Corporation and the words "Corporate Seal" and
"Incorporated 1996
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<PAGE>
Delaware." If the Board of Directors adopts a corporate seal, such seal or a
facsimile thereof may be impressed or affixed or reproduced or other use made
thereof by the Secretary or any Assistant Secretary or any other officer
authorized by the Board.
ARTICLE IX.
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FISCAL YEAR
The fiscal year of the Company shall end on the 31st day of December in each
year.
ARTICLE X.
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WAIVER OF NOTICES
Whenever any notice whatever is required to be given pursuant to these
Bylaws or by the Certificate of Incorporation of the Company or by the Delaware
General Corporation Law, a waiver thereof in writing, signed by the person or
persons entitled to said notice, or by facsimile, telegraph, cable, wireless or
other form of recorded communication, whether before or after the time stated
therein, or if such person shall attend a meeting, except when that person
attends such meeting for the express purpose of objections at the beginning of
the meeting, to the transaction of any business because the meeting is not
lawfully called or convened, shall be deemed equivalent thereto. Neither the
business to be transacted at, nor the purpose of, any meeting need be specified
in any notice or written notice of waiver unless so required by the Certificate
of Incorporation of the Company or by these Bylaws.
ARTICLE XI.
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INDEMNIFICATION
Section 1. COVERAGE. Each person who was or is made a party or is
threatened to be made a party to or is otherwise involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
("proceeding"), by reason of the fact that he is or was a director, officer or
agent of the Company (which term shall include any predecessor corporation of
the Company) or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with respect to employee
benefit plans ("indemnitee"), whether the basis of such proceeding is alleged
action in an official capacity as a director, officer, employee or agent or in
any other capacity while serving as a director, officer, employee or agent,
shall be indemnified and held harmless by the Company to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to
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<PAGE>
the extent that such amendment permits the Company to provide broader
indemnification rights than said law permitted the Company to provide prior to
such amendment), against all expenses, liability and loss (including attorneys'
fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) reasonably incurred or suffered by such indemnitee in connection
therewith and such indemnification shall continue as to an indemnitee who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the indemnitee's heirs, executors and administrators; provided,
however, that, except as provided in Section 2 of this Article XI with respect
to proceedings to enforce rights to indemnification, the Company shall indemnify
any such indemnitee in connection with a proceeding (or part thereof) initiated
by such indemnitee only if such proceeding (or part thereof) was authorized by
the Board of Directors. The right to indemnification conferred in this Article
XI shall be a contract right and shall include the right to be paid by the
Company the expenses incurred in defending any such proceeding in advance of its
final disposition; provided, however, that, if the Delaware General Corporation
Law requires, the payment of such expenses incurred by a director or officer in
his capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such indemnitee, including, without limitation,
service to an employee benefit plan) shall be made in advance of the final
disposition of a proceeding only upon delivery to the Company of an undertaking,
by or on behalf of such indemnitee, to repay all amounts so advanced if it
ultimately be determined by final judicial decision from which there is no
further right to appeal that such indemnitee is not entitled to be indemnified
for such expenses under this Article XI or otherwise. Expenses incurred by
agents in defending in any action, suit or proceeding, whether civil, criminal,
administrative or investigative may be paid by the Company upon such terms and
conditions, if any, as the Board of Directors deems appropriate.
Section 2. CLAIMS. If a claim under Section 1 of this Article XI
is not paid in full by the Company within sixty (60) days after a written claim
has been received by the Company, except in the case of a claim for expenses
incurred in defending a proceeding in advance of its final disposition, in which
case the applicable period shall be twenty (20) days, the indemnitee may at any
time thereafter bring suit against the Company to recover the unpaid amount of
the claim. If successful in whole or in part in any such suit or in a suit
brought by the Company to recover payments by the Company of expenses incurred
by an indemnitee in defending in his capacity as a director or officer, a
proceeding in advance of its final disposition, the indemnitee shall be
entitled to be paid also for the expense of prosecuting or defending such
claim. In any action brought by the indemnitee to enforce a right to
indemnification hereunder (other than an action brought to enforce a claim
for expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any, has been tendered to the
Company) or by the Company to recover payments by the Company of expenses
incurred by an indemnitee in defending, in his capacity as a director or
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<PAGE>
officer, a proceeding in advance of its final disposition, the burden of proving
that the indemnitee is not entitled to be indemnified under this Article XI or
otherwise shall be on the Company. Neither the failure of the Company
(including the Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the Delaware General Corporation Law, nor an actual determination by the Company
(including the Board of Directors, independent legal counsel or its
stockholders) that the indemnitee has not met such applicable standard of
conduct, shall be a presumpton that the indemnitee has not met the applicable
standard of conduct, or in the case of such an action brought by the indemnitee,
be a defense to the action.
Section 3. RIGHTS NOT EXCLUSIVE. The rights conferred on any
person by Sections 1 and 2 of this Article XI shall not be exclusive of any
other right which such person may have or hereafter acquire under any statute,
the Certificate of Incorporation of the Company, these Bylaws, and any
agreement, vote of stockholders or disinterested directors or otherwise.
Section 4. INSURANCE. The Company may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Company or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the Company
would have the power to indemnify such person against such expense, liability or
loss under the Delaware General Corporation Law.
Section 5. EMPLOYEES. Persons who are not included as indemnitees
under Section 1 of this Article XI but are employees of the Company or any
subsidiary may be indemnified to the extent authorized at any time or from time
to time by the Board of Directors.
ARTICLE XII.
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MISCELLANEOUS
Section 1. AMENDMENTS. These Bylaws, as they shall be at any
time, may be amended, altered or repealed by the Board of Directors at any
regular meeting of the Board of Directors or at any special meeting if the
proposed amendment, alteration or repeal is stated in the notice of the special
meeting; provided that in no event shall any amendment, alteration or repeal of
any Bylaw in any manner impair, or impair the intent of, or be inconsistent
with, the Certificate of Incorporation of the Company.
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