<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 11, 2000
REGISTRATION NO. 333-36692
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
POOLED AUTO SECURITIES SHELF LLC
(ORIGINATOR OF THE TRUSTS DESCRIBED HEREIN)
(Exact Name of Registrant as specified in its charter)
------------------------------
<TABLE>
<S> <C>
DELAWARE APPLIED FOR
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification No.)
organization)
</TABLE>
--------------------------
ONE FIRST UNION CENTER, TW-9
CHARLOTTE, NORTH CAROLINA 28288
(704) 374-8437
(Address, including zip code, and telephone number, including area code, or
registrant's principal executive offices)
Bruce Hurwitz
First Union Corporation
707 3rd Street
West Sacramento, CA 95605
(916) 617-2699
(Name, address, including zip code and telephone number, including area code, of
agent for service)
------------------------------
Copies to:
Dale W. Lum
Brown & Wood LLP
555 California Street,
Suite 5000
San Francisco, California 94104
(415) 772-1200
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable on or 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, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
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 earlier effective registration statement
for the same offering. / / ______
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
Asset Backed Notes and Certificates.......... $500,000,000 100% $500,000,000 $132,000(2)
</TABLE>
(1) Estimated solely for purposes of calculating the Registration Fee.
(2) Of this amount, $264.00 has been previously paid.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
INTRODUCTORY NOTE
This Registration Statement contains a form of Prospectus relating to the
offering of series of Asset Backed Notes and/or Asset Backed Certificates by
various trusts created from time to time by Pooled Auto Securities Shelf LLC and
two forms of Prospectus Supplement relating to the offering by a Trust of the
particular series of Asset Backed Notes and Asset Backed Certificates or of
Asset Backed Certificates, as applicable, described therein. Each form of
Prospectus Supplement relates only to the securities described therein and is a
form that may be used by the Registrant to offer Asset Backed Notes and/or Asset
Backed Certificates under this Registration Statement.
<PAGE>
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT IS NOT COMPLETE AND MAY BE
CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS
SUPPLEMENT AND THE ATTACHED PROSPECTUS ARE NOT AN OFFER TO SELL THESE SECURITIES
AND THEY ARE NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE
THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS SUPPLEMENT, DATED , 200
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS, DATED , 200 )
$
TRUST 200 -
POOLED AUTO SECURITIES SHELF LLC
DEPOSITOR
SELLER AND SERVICER
<TABLE>
<S> <C> <C> <C> <C> <C>
BEFORE YOU PURCHASE ANY OF THE TRUST WILL ISSUE THE FOLLOWING SECURITIES:
THESE SECURITIES, BE SURE YOU Class A-1 % Asset Backed Notes;
READ THIS PROSPECTUS SUPPLEMENT Class A-2 % Asset Backed Notes;
AND THE ATTACHED PROSPECTUS, Class A-3 % Asset Backed Notes; and
ESPECIALLY THE RISK FACTORS Class B % Asset Backed Certificates
BEGINNING ON PAGE S- OF THIS - The trust will pay interest and principal on the securities on the
PROSPECTUS SUPPLEMENT AND ON th day of each month. The first payment date will be .
PAGE OF THE PROSPECTUS. - The trust will pay principal sequentially to the earliest maturing
These securities are issued by class of securities then outstanding until paid in full.
the trust. The securities are - The Class B Certificates are subordinated to the notes.
not obligations of Pooled Auto THE UNDERWRITERS ARE OFFERING THE FOLLOWING SECURITIES BY THIS
Securities Shelf LLC or any of PROSPECTUS SUPPLEMENT:
its affiliates.
CLASS CLASS CLASS
A-1 A-2 A-3 CLASS B
NOTES NOTES NOTES CERTIFICATES
---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
No one may use this Principal Amount............ $ $ $ $
prospectus supplement to Interest Rate............... % % % %
offer and sell these Final Scheduled Payment
date........................
securities unless it is Initial Public Offering
Price(1).................... % % % %
accompanied by the Underwriting Discount....... % % % %
prospectus. Proceeds to Seller(1)(2).... % % % %
--------------
(1) The price of the securities will also include accrued interest, if
any, from .
(2) Before deducting expenses payable by the depositor estimated to be
$ .
</TABLE>
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS SUPPLEMENT OR THE ATTACHED PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
FIRST UNION SECURITIES, INC.
The date of this prospectus supplement is .
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
READING THESE DOCUMENTS..................................... 3
SUMMARY OF TERMS OF THE SECURITIES.......................... 4
RISK FACTORS................................................ 9
THE TRUST................................................... 10
Limited Purpose and Limited Assets........................ 10
Capitalization of the Trust............................... 11
The Owner Trustee......................................... 11
THE RECEIVABLES POOL........................................ 12
Criteria Applicable to Selection of Receivables........... 12
Weighted Average Life of the Securities................... 15
Delinquency, Credit Loss and Recovery Information......... 19
THE SELLER.................................................. 20
THE DEPOSITOR............................................... 20
THE SERVICER................................................ 21
General................................................... 21
Collection and Repossession Procedures.................... 21
Insurance................................................. 21
Extensions................................................ 21
Methods of Vehicle Disposal............................... 21
HOW YOU CAN COMPUTE YOUR PORTION OF THE AMOUNT OUTSTANDING
ON THE NOTES OR CERTIFICATES.............................. 21
MATURITY AND PREPAYMENT CONSIDERATIONS...................... 21
DESCRIPTION OF THE NOTES.................................... 22
Payments of Interest...................................... 22
Payments of Principal..................................... 23
Optional Prepayment....................................... 23
DESCRIPTION OF THE CERTIFICATES............................. 23
Distributions............................................. 24
Subordination of Class B Certificates..................... 24
Optional Prepayment....................................... 24
APPLICATION OF AVAILABLE FUNDS.............................. 25
Sources of Funds of Distributions......................... 25
Priority of Distributions................................. 25
DESCRIPTION OF THE RECEIVABLES TRANSFER AND SERVICING
AGREEMENTS................................................ 26
Accounts.................................................. 26
Servicing Compensation and Expenses....................... 26
Rights Upon Event of Servicing Termination................ 27
Waiver of Past Events of Servicing Termination............ 27
Deposits to the Collection Account........................ 27
Reserve Fund.............................................. 28
MATERIAL FEDERAL INCOME TAX CONSEQUENCES.................... 30
MATERIAL STATE TAX CONSEQUENCES............................. 30
ERISA CONSIDERATIONS........................................ 30
The Notes................................................. 30
The Class B Certificates.................................. 30
UNDERWRITING................................................ 31
LEGAL OPINIONS.............................................. 33
GLOSSARY OF TERMS........................................... 34
</TABLE>
S1-2
<PAGE>
READING THESE DOCUMENTS
We provide information on the securities in two documents that offer varying
levels of detail:
1. Prospectus--provides general information, some of which may not apply
to the securities.
2. Prospectus Supplement--provides a summary of the specific terms of
the securities.
We suggest you read this prospectus supplement and the prospectus in their
entirety. The prospectus supplement pages begin with "S". If the terms of the
offered securities described in this prospectus supplement vary with the
accompanying prospectus, you should rely on the information in this prospectus
supplement.
We include cross-references to sections in these documents where you can
find further related discussions. Refer to the table of contents on page S1-2 in
this document and on page 2 in the prospectus to locate the referenced sections.
The Glossary of Terms on page S1- of this prospectus supplement and the
Glossary of Terms on page in the prospectus list certain definitions of
certain terms used in this prospectus supplement or the prospectus.
You should rely only on information on the securities provided in this
prospectus supplement and the prospectus. We have not authorized anyone to
provide you with different information.
S1-3
<PAGE>
SUMMARY OF TERMS OF THE SECURITIES
THE FOLLOWING SUMMARY IS A SHORT DESCRIPTION OF THE MAIN TERMS OF THE
OFFERING OF THE SECURITIES. FOR THAT REASON, THIS SUMMARY DOES NOT CONTAIN ALL
OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. TO FULLY UNDERSTAND THE TERMS
OF THE OFFERING OF THE SECURITIES, YOU WILL NEED TO READ BOTH THIS PROSPECTUS
SUPPLEMENT AND THE ATTACHED PROSPECTUS IN THEIR ENTIRETY.
ISSUER
Trust 200 - will be formed pursuant a trust agreement dated as of
1, 2000, between the depositor and the owner trustee. The trust will use
the proceeds from the issuance and sale of the securities to purchase from the
depositor a pool of motor vehicle installment loans which constitute the
receivables. The trust will rely upon collections on the receivables and the
funds on deposit in certain accounts to make payments on the securities. The
trust will be solely liable for the payment of the securities.
OFFERED SECURITIES
The following securities are being offered by this prospectus supplement:
- $ Class A-1 % Asset Backed Notes;
- $ Class A-2 % Asset Backed Notes;
- $ Class A-3 % Asset Backed Notes; and
- $ Class B % Asset Backed Certificates
CLOSING DATE
The trust expects to issue the securities on , 2000.
DEPOSITOR
Pooled Auto Securities Shelf LLC
SELLER AND SERVICER
OWNER TRUSTEE
INDENTURE TRUSTEE
PAYMENT DATES
The th day of each month (or if the th day is not a business day, the
next succeeding business day).
FIRST PAYMENT DATE
The first payment date will be , 2000.
RECORD DATES
On each payment date, the trust will pay interest and principal to the
holders of the securities as of the related record date. The record dates for
the securities will be as follows:
<TABLE>
<S> <C>
NOTES The day immediately preceding the
payment date.
CERTIFICATES The last day of the month immediately
preceding the payment date.
</TABLE>
INTEREST RATES
The trust will pay interest on each class of securities at the rates
specified on the cover of this prospectus supplement.
INTEREST ACCRUAL
CLASS A-1 NOTES
"Actual/360", accrued from the prior payment (or the closing date, in the
case of the first payment date) to the current payment date).
CLASS A-2 NOTES; CLASS A-3 NOTES AND CLASS B CERTIFICATES
"30/360", accrued from the 15th day of the previous month (or the closing
date, in the case
S1-4
<PAGE>
of the first payment date) to the 15th day of the current month.
This means that, if there are no outstanding shortfalls in the payment of
interest, the interest due on each payment date will be the product of:
1. the outstanding principal balance;
2. the interest rate; and
3. (i) in the case of the Class A-1 Notes:
the actual number of days in the accrual period divided by 360 and
(ii) in the case of the other classes of notes and the Class B Certificates:
30 (or in the case of the first payment date, ) divided by 360.
FOR A MORE DETAILED DESCRIPTION OF THE PAYMENT OF INTEREST, SEE "DESCRIPTION
OF THE NOTES--PAYMENTS OF INTEREST" AND "DESCRIPTION OF THE
CERTIFICATES--DISTRIBUTIONS".
PRIORITY OF DISTRIBUTIONS
From collections on the receivables received during the prior calendar month
and amounts withdrawn from the reserve fund, the trust will pay the following
amounts on each payment date in the following order of priority, after
reimbursement of advances made in prior months by the servicer for interest
payments due from obligors but not received:
(1) SERVICING FEE--the servicing fee payable to the servicer;
(2) NOTE INTEREST--interest due on all the notes ratably to the holders of each
class of notes;
(3) CLASS B CERTIFICATE INTEREST--interest distributable to the holders of the
Class B Certificates; however, if the notes have been accelerated after an
event of default, this distribution will instead be made after
clause 4(iii);
(4) REGULAR PRINCIPAL PAYMENT--an amount equal to the sum of (i) the principal
collections on the receivables received during the prior calendar month and
(ii) the aggregate principal balance (net of liquidation proceeds applied to
principal) of all receivables designated as "defaulted receivables" in that
month, will be applied to pay principal on the securities in the following
order of priority:
(i) on the Class A-1 Notes until they are paid in full;
(ii) on the Class A-2 Notes until they are paid in full;
(iii) on the Class A-3 Notes until they are paid in full; and
(iv) on the Class B Certificates until they are paid in full;
If payment of the notes is accelerated after an event of default, principal
will be paid PRO RATA on all classes of the notes until they are paid in
full and then on the Class B Certificates until they are paid in full;
(4) FINAL SCHEDULED PAYMENT DATE--if the payment date is a Final Scheduled
Payment date for a class of securities, the amount, if any, necessary to pay
that class in full after giving effect to the payment pursuant to
clause (4) will be paid on that class;
(5) RESERVE FUND DEPOSIT--to the reserve fund, the amount, if any, necessary to
reinstate the balance of the reserve fund up to its required amount and
(7) any amounts remaining after the above distributions will be paid to the
seller.
FOR A MORE DETAILED DESCRIPTION OF THE PRIORITY OF DISTRIBUTIONS AND THE
ALLOCATION OF FUNDS ON EACH PAYMENT DATE, SEE "APPLICATION OF AVAILABLE FUNDS".
CREDIT ENHANCEMENT
The credit enhancement for the securities will be as follows:
SUBORDINATION OF PRINCIPAL AND INTEREST
Payments of interest on the Class B Certificates will be subordinated to
payments of interest on the notes, and no payments of principal will be made on
the Class B Certificates until the notes have been paid in
S1-5
<PAGE>
full. If an event of default occurs and the notes are accelerated, no payments
will be made on the Class B Certificates until the notes are paid in full.
RESERVE FUND
On the closing date, the trust will deposit $ to its reserve
fund.
On each payment date, if collections on the receivables are insufficient to
pay the first five items listed in "Priority of Distributions" above, the
indenture trustee will withdraw funds from the reserve fund, to the extent
available, to pay such amounts.
The balance required to be on deposit in the reserve fund will be the lesser
of (a) % of the outstanding principal balance of the receivables and (b) %
of the principal balance of the receivables as of .
On each payment date, the trust will deposit into the reserve fund, to the
extent necessary to reinstate the required balance of the reserve fund, any
collections on the receivables remaining after the first five items listed in
"Priority of Distributions" above are satisfied.
On each payment date, the trust will distribute funds on deposit in the
reserve fund in excess of the required balance to the seller.
FOR A MORE DETAILED DESCRIPTION OF THE DEPOSITS TO AND WITHDRAWALS FROM THE
RESERVE FUND, SEE "DESCRIPTION OF THE RECEIVABLES TRANSFER AND SERVICING
AGREEMENTS--RESERVE FUND".
OPTIONAL PREPAYMENT
The servicer has the option to purchase the receivables on any payment date
on which the aggregate principal balance of the receivables is % or less of
the aggregate principal balance of the receivables at the time they were sold to
the trust. The purchase price will equal the outstanding principal balance of
the receivables plus accrued and unpaid interest thereon. The trust will apply
such payment to the payment of the securities in full.
It is expected that at the time this purchase option becomes available to
the servicer only the Class A-3 Notes and the Class B Certificates will be
outstanding.
FINAL SCHEDULED PAYMENT DATES
The trust is required to pay the entire principal amount of each class of
securities, to the extent not previously paid, on the respective final scheduled
payment dates specified on the cover page of this prospectus supplement.
PROPERTY OF THE TRUST
The property of the trust will include the following:
- the receivables and the collections on the receivables after , 2000;
- security interests in the vehicles financed by the receivables;
- bank accounts (other than the reserve fund);
- rights to proceeds under insurance policies that cover the obligors under
the receivables or the vehicles financed by the receivables; and
- other rights under documents relating to the receivables.
COMPOSITION OF THE RECEIVABLES
The composition of the receivables as of is as follows:
<TABLE>
<S> <C>
- Aggregate Principal
Balance............ $
- Number of
Receivables........
- Average Principal
Balance............ $
(Range).......... $ to $
- Average Original
Amount Financed.... $
(Range).......... $ to $
- Weighted Average of
Interest Rate...... %
(Range).......... % to %
- Weighted Average
Original Term...... months
(Range).......... months to months
- Weighted Average
Remaining Term..... months
(Range).......... months to months
</TABLE>
S1-6
<PAGE>
SERVICER OF THE RECEIVABLES
The trust will pay the servicer a servicing fee on each payment date for the
previous month equal to 1/12 of % of the principal balance of the receivables
at the beginning of the previous month. In addition to the servicing fee, the
trust will also pay the servicer a supplemental servicing fee equal to any late,
prepayment, and other administrative fees and expenses collected during each
month and any reinvestment earnings on any payments received on the receivables
and deposited into a trust account.
RATINGS
It is a condition to the issuance of the securities that the:
Class A-1 Notes be rated in the highest short-term rating category by at
least two nationally recognized rating agencies;
Class A-2 Notes and Class A-3 Notes be rated in the highest long-term rating
category by at least two nationally recognized rating agencies; and
Class B Certificates be rated " " or its equivalent by at least two
nationally recognized rating agencies.
A rating is not a recommendation to purchase, hold or sell the offered notes
and certificates, inasmuch as such rating does not comment as to market price or
suitability for a particular investor. The ratings of the securities address the
likelihood of the payment of principal and interest on the securities according
to their terms. A rating agency rating the securities may lower or withdraw its
rating in the future, in its discretion, as to any class of the securities.
MINIMUM DENOMINATIONS
<TABLE>
<S> <C>
NOTES $1,000 and integral multiples thereof
CLASS B $1,000 and integral multiples thereof
CERTIFICATES
</TABLE>
REQUIRED REPRESENTATIONS FROM PURCHASERS OF THE CLASS B CERTIFICATES
To purchase Class B Certificates, you (and anyone to whom you assign or sell
the Class B Certificates) must:
(1) represent and certify under penalties of perjury that you are a United
States person and
(2) represent and certify that you
(a) are not a plan that is subject to the fiduciary responsibility
provisions of the Employee Retirement Income Security Act of 1974, as
amended, or Section 4975 of the Internal Revenue Code of 1986, as
amended and are not purchasing Class B Certificates on behalf of such a
plan or arrangement or
(b) are an insurance company using its general account and less than 25% of
the assets of such general account represent assets of one or more plans
or arrangements described above.
You can find a form of the representation letter an investor in the Class B
Certificates will have to sign in Annex I to this prospectus supplement.
TAX STATUS
OPINIONS OF COUNSEL
Brown & Wood LLP will deliver its opinion that for federal income tax
purposes the notes will be characterized as debt and the trust will not be
characterized as an association (or a publicly traded partnership) taxable as a
corporation.
INVESTOR REPRESENTATIONS
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<S> <C>
NOTES If you purchase the notes, you agree
by your purchase that you will treat
the notes as indebtedness for federal
income tax purposes.
CLASS B If you purchase the Class B
CERTIFICATES Certificates, you agree by your
purchase that you will treat the
trust as a partnership in which the
certificateholders are partners for
federal income tax purposes.
</TABLE>
S1-7
<PAGE>
<TABLE>
<S> <C>
INVESTMENT RESTRICTIONS
CLASS B The Class B Certificates may not be
CERTIFICATES purchased by persons who are not U.S.
Persons for federal income tax
purposes.
</TABLE>
IF YOU ARE CONSIDERING PURCHASING THE CLASS B CERTIFICATES, SEE "MATERIAL
FEDERAL INCOME TAX CONSEQUENCES" IN THIS PROSPECTUS SUPPLEMENT AND IN THE
PROSPECTUS AND "MATERIAL STATE TAX CONSEQUENCES" IN THIS PROSPECTUS SUPPLEMENT
FOR MORE DETAILS.
ERISA CONSIDERATIONS
<TABLE>
<S> <C>
NOTES The notes are generally eligible for
purchase by employee benefit plans,
subject to the considerations
discussed under "ERISA
Considerations" in this prospectus
supplement and the prospectus.
CLASS B The Class B Certificates may not be
CERTIFICATES acquired by an employee benefit plan
or by an individual retirement
account. However, an insurance
company using its general account may
acquire the Class B Certificates
subject to the considerations
discussed under "ERISA
Considerations" in this prospectus
supplement and in the prospectus.
</TABLE>
INVESTOR INFORMATION--MAILING ADDRESS AND TELEPHONE NUMBER
The mailing address of the principal executive offices of Pooled Auto
Securities Shelf LLC is One First Union Center, TW-9, Charlotte, North Carolina
28288. Its telephone number is (704) 374-8437.
S1-8
<PAGE>
RISK FACTORS
You should consider the following risk factors (and the factors under "Risk
Factors" in the prospectus) in deciding whether to purchase any of these
securities.
<TABLE>
<S> <C>
SUBORDINATION OF THE CERTIFICATES Distributions of interest and principal on the Class B
TO THE NOTES INCREASES THE RISK OF Certificates will be subordinated in priority of payment
THE CERTIFICATES NOT RECEIVING to interest and principal due on the notes.
FULL DISTRIBUTION OF INTEREST AND Consequently, the certificateholders will not receive
PRINCIPAL any distributions with respect to a collection period
until the full amount of interest on and principal of
the notes due on such payment date has been paid. The
certificateholders will not receive any distributions of
principal until the notes have been paid in full.
PREPAYMENTS AND LOSSES ON YOUR An event of default under the indenture may result in
SECURITIES MAY RESULT FROM AN payments on the securities being accelerated. As a
EVENT OF DEFAULT UNDER THE result--
INDENTURE
- if the receivables are sold, you may suffer losses on
your notes or Class B Certificates if the sales proceeds
and any other assets of the trust are insufficient to
pay the amounts owed on the notes and the Class B
Certificates and
- your notes or Class B Certificates may be repaid
earlier than scheduled, which may require you to
reinvest your principal at a lower rate of return.
SEE "DESCRIPTION OF THE NOTES--PAYMENT OF
PRINCIPAL--EVENTS OF DEFAULT" IN THIS PROSPECTUS
SUPPLEMENT AND "THE INDENTURE--EVENTS OF DEFAULT" IN THE
PROSPECTUS.
YOU MAY SUFFER LOSSES BECAUSE YOU Because the trust has pledged its property to the
HAVE LIMITED CONTROL OVER ACTIONS indenture trustee to secure payment on the notes, the
OF THE TRUST AND CONFLICTS BETWEEN indenture trustee may, and at the direction of the
THE NOTEHOLDERS AND THE CLASS B holders of the specified percentage of the notes will,
CERTIFICATEHOLDERS MAY OCCUR take one or more of the other actions specified in the
indenture relating to the property of the trust,
including a sale of the receivables. Furthermore, the
holders of a majority of the notes, or the indenture
trustee acting on behalf of the holders of the notes,
under certain circumstances, has the right to waive
events of servicing termination or to terminate the
servicer as the servicer of the receivables without
consideration of the effect such waiver or termination
would have on the holders of the Class B Certificates.
The holders of Class B Certificates will not have the
ability to waive events of servicing termination or to
remove the servicer until the notes have been paid in
full.
SEE "DESCRIPTION OF THE RECEIVABLES TRANSFER AND
SERVICING AGREEMENTS--EVENTS OF SERVICING TERMINATION"
IN THE PROSPECTUS AND "--RIGHTS UPON EVENT OF SERVICING
TERMINATION" AND "--WAIVER OF PAST EVENTS OF SERVICING
TERMINATION" IN THIS PROSPECTUS SUPPLEMENT AND IN THE
PROSPECTUS.
</TABLE>
S1-9
<PAGE>
<TABLE>
<S> <C>
GEOGRAPHIC CONCENTRATION MAY As of , 2000 the servicer's records indicate that
RESULT IN MORE RISK TO YOU the locations of the obligors of the receivables were in
the following states:
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE OF AGGREGATE
PRINCIPAL BALANCE
-----------------------
<S> <C> <C>
.................................... %
.................................... %
.................................... %
.................................... %
</TABLE>
<TABLE>
<S> <C>
No other state, by billing addresses at the time of
origination, constituted more than 5% of the balance of
the receivables as of . Economic conditions or
other factors affecting these states in particular could
adversely affect the delinquency, credit loss or
repossession experience of the trust.
THE FAILURE TO MAKE PRINCIPAL The amount of principal required to be paid to
PAYMENTS ON THE NOTES WILL noteholders prior to the final scheduled payment date
GENERALLY NOT RESULT IN AN EVENT for a class of notes generally will be limited to
OF DEFAULT amounts available for those purposes. Therefore, the
failure to repay principal of a class of notes generally
will not result in the occurrence of an event of default
under the indenture until the final scheduled payment
date for the class of notes.
</TABLE>
THE TRUST
LIMITED PURPOSE AND LIMITED ASSETS
Pooled Auto Securities Shelf LLC (the "depositor") will establish the
Trust 200 - , a Delaware business trust, pursuant to a trust
agreement dated as of between the depositor and , as the
owner trustee. The trust will not engage in any activity other than:
- acquiring, holding and managing the assets of the trust, including the
receivables, and the proceeds of those assets;
- issuing the securities;
- making payments on the securities; and
- engaging in other activities that are necessary, suitable or convenient to
accomplish any of the other purposes listed above or are in any way
connected with those activities.
The trust will initially be capitalized with equity in an amount equal to
the certificate balance of $ , excluding amounts deposited in the reserve
fund. The equity of the trust, together with the net proceeds from the sale of
the notes, will be used by the trust to (1) purchase the receivables from the
depositor pursuant to the sale and servicing agreement, to be dated as of
among the trust, the depositor, the seller and the servicer, and
(2) to fund the initial deposit to the reserve fund.
If the protection provided to the noteholders by the subordination of the
certificates and to the noteholders and the certificateholders by the reserve
fund is insufficient, the trust would have to look solely to the obligors on the
receivables and the proceeds from the repossession and sale of the financed
vehicles which secure defaulted receivables. In that event, various factors,
such as the trust not having perfected security interests in the financed
vehicles securing the receivables in all states, may
S1-10
<PAGE>
affect the servicer's ability to repossess and sell the collateral securing the
receivables, and thus may reduce the proceeds which the trust can distribute to
the noteholders and the Class B Certificateholders. See "Description of the
Receivables Transfer and Servicing Agreements--Distributions" and "--Reserve
Fund" in this prospectus supplement and "Some Important Legal Issues Relating to
the Receivables" in the prospectus.
The trust's principal offices are in , Delaware , in care
of , as owner trustee, at the address listed below under "--The
Owner Trustee".
CAPITALIZATION OF THE TRUST
The following table illustrates the capitalization of the trust as of the
closing date, as if the issuance and sale of the notes and the certificates had
taken place on such date:
<TABLE>
<S> <C>
Class A-1 Notes............................................. $
-------
Class A-2 Notes.............................................
Class A-3 Notes.............................................
Class B Certificates........................................
Total....................................................... $
=======
</TABLE>
THE OWNER TRUSTEE
is the owner trustee under the trust agreement. is a
banking corporation and its principal offices are located at
. The depositor and its affiliates may maintain normal commercial banking
relations with the owner trustee, its parent and their affiliates.
S1-11
<PAGE>
THE RECEIVABLES POOL
The trust will own a pool of receivables consisting of motor vehicle
installment loans secured by security interests in the motor vehicles financed
by those contracts. The pool will consist of receivables which [will be] [have
been] purchased by the depositor from the seller, which purchased the
receivables, directly or indirectly, from dealers in the ordinary course of
business or in acquisitions, and which the depositor will transfer to the trust
on the closing date. The receivables will include payments on the receivables
which are made on or after (the "cutoff date").
CRITERIA APPLICABLE TO SELECTION OF RECEIVABLES.
The receivables were selected from the depositor's portfolio for inclusion
in the pool by several criteria, some of which are set forth in the prospectus
under "The Receivables Pools." These criteria include the requirement that each
receivable:
- has a remaining maturity, as of the cutoff date, of at least months
and not more than months;
- with respect to loans secured by new financed vehicles, had an original
maturity of at least months and not more than months; with
respect to loans secured by used financed vehicles, had an original
maturity of at least months and not more than months;
- is a fully-amortizing, fixed rate simple interest loan which provides for
level scheduled monthly payments (except for the last payment, which may
be minimally different from the level payments) over its remaining term
and has a simple interest contract rate (a "Contract Rate") that equals or
exceeds % per annum, is not secured by any interest in real estate,
and has not been identified on the computer files of the seller as
relating to an obligor who had requested a reduction in the periodic
finance charges, as of the cutoff date, by application of the Soldiers'
and Sailors' Civil Relief Act of 1940, as amended;
- is secured by a financed vehicle that, as of the cutoff date, had not been
repossessed without reinstatement;
- has not been identified on the computer files of the seller as relating to
an obligor who was in bankruptcy proceedings as of the cutoff date;
- has no payment more than days past due as of the cutoff date; and
- has a remaining principal balance, as of the cutoff date, of at least
$ .
No selection procedures believed by the seller to be adverse to the
securityholders were utilized in selecting the receivables. No receivable has a
scheduled maturity later than .
S1-12
<PAGE>
The composition of the receivables as of the cutoff date is as follows:
<TABLE>
<S> <C> <C>
- Aggregate Principal Balance.............. $
- Number of Receivables....................
- Average Principal Balance................ $
(Range)................................ $ to $
- Average Original Amount Financed......... $
(Range)................................ $ to $
- Weighted Average Interest Rate........... %
(Range)................................ % to %
- Weighted Average Original Term........... months
(Range)................................ months to months
- Weighted Average Remaining Term.......... months
(Range)................................ months to months
- Percentage of Aggregate Principal Balance % / %
of Receivables for New/Used Vehicles.....
</TABLE>
The geographical distribution and distribution by Contract Rate of the
receivables pool as of the cutoff date are set forth in the following tables.
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES POOL AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
PERCENTAGE
OF CUTOFF
NUMBER OF PRINCIPAL DATE POOL
STATE(1) RECEIVABLES BALANCE BALANCE(2)
-------- ----------- --------- ----------
<S> <C> <C> <C>
Alabama................
Alaska.................
Arizona................
Arkansas...............
California.............
Colorado...............
Connecticut............
Delaware...............
District of Columbia...
Florida................
Georgia................
Hawaii.................
Idaho..................
Illinois...............
Indiana................
Iowa...................
Kansas.................
Kentucky...............
Louisiana..............
Maine..................
Maryland...............
Massachusetts..........
Michigan...............
Minnesota..............
Mississippi............
Missouri...............
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE
OF CUTOFF
NUMBER OF PRINCIPAL DATE POOL
STATE(1) RECEIVABLES BALANCE BALANCE(2)
-------- ----------- --------- ----------
<S> <C> <C> <C>
Montana................
Nebraska...............
Nevada.................
New Hampshire..........
New Jersey.............
New Mexico.............
New York...............
North Carolina.........
North Dakota...........
Ohio...................
Oklahoma...............
Oregon.................
Pennsylvania...........
Rhode Island...........
South Carolina.........
South Dakota...........
Tennessee..............
Texas..................
Utah...................
Vermont................
Virginia...............
Washington.............
West Virginia..........
Wisconsin..............
Wyoming................
</TABLE>
------------------------------
(1) Based on the location of the obligors on the receivables at the time each
receivable was originated.
(2) May not add to 100% due to rounding.
S1-13
<PAGE>
DISTRIBUTION BY CONTRACT RATE OF THE RECEIVABLES AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
PERCENTAGE OF
CUTOFF DATE
NUMBER OF POOL
CONTRACT RATE RECEIVABLES PRINCIPAL BALANCE BALANCE (1)
------------- ----------- ----------------- -------------
<S> <C> <C> <C>
1.90% to 1.99%............................
2.00% to 2.49%............................
2.50% to 2.99%............................
3.00% to 3.49%............................
3.50% to 3.99%............................
4.00% to 4.49%............................
4.50% to 4.99%............................
5.00% to 5.49%............................
5.50% to 5.99%............................
6.00% to 6.49%............................
6.50% to 6.99%............................
7.00% to 7.49%............................
7.50% to 7.99%............................
8.00% to 8.49%............................
8.50% to 8.99%............................
9.00% to 9.49%............................
9.50% to 9.99%............................
10.00% to 10.49%..........................
10.50% to 10.99%..........................
11.00% to 11.49%..........................
11.50% to 11.99%..........................
12.00% to 12.49%..........................
12.50% to 12.99%..........................
13.00% to 13.49%..........................
13.50% to 13.99%..........................
14.00% to 14.49%..........................
14.50% to 14.99%..........................
15.00% to 15.49%..........................
15.50% to 15.99%..........................
16.00% to 16.49%..........................
16.50% to 16.99%..........................
17.00% to 17.49%..........................
17.50% to 17.99%..........................
18.00% to 18.49%..........................
18.50% to 18.99%..........................
19.00% to 19.49%..........................
19.50% to 19.99%..........................
20.00%....................................
Totals....................................
</TABLE>
------------------------
(1) May not add to 100.00% due to rounding.
S1-14
<PAGE>
WEIGHTED AVERAGE LIFE OF THE SECURITIES
The following information is given solely to illustrate the effect of
prepayments of the receivables on the weighted average life of the securities
under the stated assumptions and is not a prediction of the prepayment rate that
might actually be experienced by the receivables.
Prepayments on motor vehicle receivables can be measured relative to a
prepayment standard or model. The model used in this prospectus supplement, the
Absolute Prepayment Model ("ABS"), represents an assumed rate of prepayment each
month relative to the original number of receivables in a pool of receivables.
ABS further assumes that all the receivables are the same size and amortize at
the same rate and that each receivable in each month of its life will either be
paid as scheduled or be prepaid in full. For example, in a pool of receivables
originally containing 10,000 receivables, a 1% ABS rate means that 100
receivables prepay each month. ABS does not purport to be a historical
description of prepayment experience or a prediction of the anticipated rate of
prepayment of any pool of assets, including the receivables.
The rate of payment of principal of each class of notes and the Class B
Certificates will depend on the rate of payment (including prepayments) of the
principal balance of the receivables. For this reason, final payment of any
class of notes and the final distribution in respect of the Class B Certificates
could occur significantly earlier than the respective Final Scheduled Payment
dates. The noteholders and the Class B Certificateholders will exclusively bear
any reinvestment risk associated with early payment of their notes and
certificates.
The table (the "ABS Tables") captioned "Percent of Initial Note Principal
Amount at Various ABS Percentages" and "Percent of Initial Certificate Balance
at Various ABS Percentages" have been prepared on the basis of following assumed
characteristics of the receivables--
- the receivables prepay in full at the specified constant percentage of ABS
monthly, with no defaults, losses or repurchases;
- each scheduled monthly payment on the receivables is made on the last day
of each month and each month has 30 days;
- payments on the notes and the Class B Certificates are made on each
payment date (and each payment date is assumed to be the fifteenth day of
the applicable month);
- the balance in the reserve fund on the payment date is equal to the
Specified Reserve Fund Balance; and
- the servicer exercises its option to purchase the receivables on the
earliest payment date on which it is permitted to do so, as described in
this prospectus supplement.
The ABS Tables indicates the projected weighted average life of each class
of notes and the Class B Certificates and set forth the percent of the initial
principal amount of each class of notes and the percent of the initial
certificate balance of the Class B Certificates that is projected to be
outstanding after each of the payment dates shown at various constant ABS
percentages.
The ABS Tables also assume that the receivables have been aggregated into
hypothetical pools with all of the receivables within each such pool having the
following characteristics and that the level scheduled monthly payment for each
of the pools (which is based on its aggregate principal balance, contract rate
of interest, original term to maturity and remaining term to maturity as of the
cutoff date)
S1-15
<PAGE>
will be such that each pool will be fully amortized by the end of its remaining
term to maturity. The pools have an assumed cutoff date of .
<TABLE>
<CAPTION>
CONTRACT ORIGINAL TERM REMAINING TERM
AGGREGATE RATE OF TO MATURITY TO MATURITY
POOL PRINCIPAL BALANCE INTEREST (IN MONTHS) (IN MONTHS)
---- ----------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
1....................................
2....................................
3....................................
4....................................
5....................................
6....................................
7....................................
8....................................
9....................................
10...................................
11...................................
12...................................
13...................................
14...................................
15...................................
16...................................
17...................................
18...................................
</TABLE>
The actual characteristics and performance of the receivables will differ
from the assumptions used in constructing the ABS Tables. The assumptions used
are hypothetical and have been provided only to give a general sense of how the
principal cash flows might behave under varying prepayment scenarios. For
example, it is very unlikely that the receivables will prepay at a constant
level of ABS until maturity or that all of the receivables will prepay at the
same level of ABS. Moreover, the diverse terms of receivables within each of the
hypothetical pools could produce slower or faster principal distributions than
indicated in the ABS Tables at the various constant percentages of ABS
specified, even if the original and remaining terms to maturity of the
receivables are as assumed. Any difference between such assumptions and the
actual characteristics and performance of the receivables, or actual prepayment
experience, will affect the percentages of initial amounts outstanding over time
and the weighted average lives of each class of notes and the Class B
Certificates.
S1-16
<PAGE>
PERCENT OF INITIAL NOTE PRINCIPAL AMOUNT AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
CLASS A-1 NOTES CLASS A-2 NOTES CLASS A-3 NOTES
---------------------------------- ---------------------------------- ----------------------------------
PAYMENT DATE % % % % % % % % % % % %
------------ ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
</TABLE>
------------------------------
(1) The weighted average life of a note is determined by (a) multiplying the
amount of each principal payment on a note by the number of years from the
date of the issuance of the note to the related payment date, (b) adding the
results and (c) dividing the sum by the related initial principal amount of
the note.
THE ABS TABLE HAS BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED ABOVE
(INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND PERFORMANCE OF THE
RECEIVABLES WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS AND PERFORMANCE
THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.
S1-17
<PAGE>
PERCENT OF INITIAL CERTIFICATE BALANCE AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
CLASS B CERTIFICATES
----------------------------------------------------------------------------------
PAYMENT DATE % % % %
------------ ------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
</TABLE>
------------------------
(1) The weighted average life of a Class B Certificate is determined by
(a) multiplying the amount of each principal payment on a Class B
Certificate by the number of years from the date of the issuance of the
Class B Certificate to the related payment date, (b) adding the results and
(c) dividing the sum by the related initial certificate balance of the
Class B Certificate.
S1-18
<PAGE>
DELINQUENCY, CREDIT LOSS AND RECOVERY INFORMATION
Set forth below is certain information concerning the experience of the
seller pertaining to new and used automobile, minivan, sport utility vehicle,
light-duty truck, motorcycle or commercial vehicle receivables, including those
previously sold which the seller continues to service. There can be no assurance
that the delinquency, repossession and net loss experience on the receivables
transferred to the trust will be comparable to that set forth below.
DELINQUENCY EXPERIENCE
<TABLE>
<CAPTION>
AT AT DECEMBER 31,
------------------------------------------- -------------------------------------------
, 200 , 200 , 199 , 199
-------------------- -------------------- -------------------- --------------------
NUMBER OF NUMBER OF NUMBER OF NUMBER OF
CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT
--------- -------- --------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Portfolio............ $ $ $ $
Period of Delinquency
31-60 Days.........
61 Days or More....
Total Delinquencies $ $ $ $
Total Delinquencies
as a Percent of the
Portfolio.......... % % % % % % % %
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31,
------------------------------------------------------------------
, 199 , 199 , 199
-------------------- -------------------- --------------------
NUMBER OF NUMBER OF NUMBER OF
CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT
--------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Portfolio............................. $ $ $
Period of Delinquency
31-60 Days..........................
61 Days or More..................... $ $ $
Total Delinquencies
Total Delinquencies as a Percent of
the Portfolio....................... % % % % % %
</TABLE>
------------------------
(1) The information in the table includes previously sold contracts that the
seller continues to service.
(2) All amounts and percentages are based on the gross amount scheduled to be
paid on each contract, including unearned finance and other charges.
S1-19
<PAGE>
CREDIT LOSS/REPOSSESSION EXPERIENCE(1)
<TABLE>
<CAPTION>
ENDED YEAR ENDED DECEMBER 31,
------------------- ----------------------------------------------------
199 199 199 199 199 199 199
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Average Amount Outstanding During the Period......... $ $ $ $ $ $ $
Average Number of Contracts Outstanding During the
Period
Percent of Contracts Acquired During the Period with
Recourse to the Dealer............................. % % % % % % %
Repossessions as a Percent of Average Number of
Contracts Outstanding.............................. % % % % % % %
Net Losses as a Percent of Liquidations(3)(4)........ % % % % % % %
Net Losses as a Percent of Average Amount
Outstanding(2)(3).................................. % % % % % % %
</TABLE>
------------------------
(1) Except as indicated, all amounts and percentages are based on the gross
amount scheduled to be paid on each contract, including unearned finance and
other charges. The information in the table includes previously sold
contracts that the seller continues to service.
(2) Percentages have been annualized for the months ended ,
199 and 199 and are not necessarily indicative of the experience for the
year.
(3) [Net losses are equal to the aggregate of the balances of all contracts
which are determined to be uncollectible in the period, less any recoveries
on contracts charged off in the period or any prior periods, including any
losses resulting from disposition expenses and any losses resulting from the
failure to recover commissions to dealers with respect to contracts that are
prepaid or charged off.]
(4) Liquidations represent a reduction in the outstanding balances of the
contracts as a result of monthly cash payments and charge-offs.
The data presented in the foregoing tables are for illustrative purposes
only. Delinquency and credit loss experience may be influenced by a variety of
economic, social and other factors. We cannot assure you that the delinquency
and loan loss information of the seller, or that of the trust with respect to
its receivables, in the future will be similar to that set forth above.
THE SELLER
[DESCRIPTION OF SELLER AND ITS UNDERWRITING AND SERVICING STANDARDS]
GENERAL
UNDERWRITING PROCEDURES
THE DEPOSITOR
The depositor was formed in the State of Delaware on April 14, 2000, First
Union Pass Co., Inc., a wholly owned subsidiary of First Union National Bank, is
the sole member of the depositor. The principal executive offices of the
depositor are located at One First Union Center, TW-9, Charlotte, North Carolina
28288. Its telephone number is (704) 374-8437.
The depositor was organized, among other things, for the purposes of
establishing trusts, selling beneficial interests therein and acquiring and
selling assets to such trusts. Neither the depositor, its parent nor any of the
depositor's affiliates will ensure or guarantee distributions on the securities.
S1-20
<PAGE>
THE SERVICER
[DESCRIPTION OF THE SERVICER AND ITS SERVICING STANDARDS]
GENERAL
COLLECTION AND REPOSSESSION PROCEDURES
INSURANCE
EXTENSIONS
METHODS OF VEHICLE DISPOSAL
COMPUTING YOUR PORTION OF THE AMOUNT
OUTSTANDING ON THE NOTES OR CERTIFICATES
The servicer will provide to you in each report which it delivers to you a
factor which you can use to compute your portion of the principal amount
outstanding on the notes or certificates. See "Pool Factors and Trading
Information" in the prospectus.
MATURITY AND PREPAYMENT CONSIDERATIONS
Information regarding certain maturity and prepayment considerations with
respect to the securities is set forth under "Maturity and Prepayment
Considerations" in the prospectus. In addition, no principal payments will be
made
- on the Class A-2 Notes until the Class A-1 Notes have been paid in full;
- on the Class A-3 Notes until the Class A-2 Notes have been paid in full;
or
- on the Class B Certificates until the Class A-3 Notes have been paid in
full.
However, if the notes are accelerated after an event of default, principal
payments will be applied PRO RATA all classes of the notes. See "Application of
Available Funds" in this prospectus supplement.
Since the rate of payment of principal of each class of notes and the
Class B Certificates depends on the rate of payment (including prepayments) of
the principal balance of the receivables, final payment of any class of notes
and the final distribution in respect of the Class B Certificates could occur
significantly earlier than the respective Final Scheduled Payment dates.
WE CANNOT ASSURE YOU THAT YOUR SECURITIES WILL BE REPAID ON THE FINAL
SCHEDULED PAYMENT DATES. It is expected that final payment of each class of
notes and the final distribution in respect of the Class B Certificates will
occur on or prior to the respective Final Scheduled Payment dates. Failure to
make final payment of any class of notes by the respective Final Scheduled
Payment dates would constitute an event of default under the indenture. See
"Description of the Notes--Payments of Interest" in this prospectus supplement
and "Description of the Notes--The Indenture--Events of Default" in the
prospectus. In addition, the remaining certificate balance of the Class B
Certificates is required to be paid in full on or prior to its Final Scheduled
Payment date. However, we cannot assure you that sufficient funds will be
available to pay each class of notes and the Class B Certificates in full on or
prior to the respective Final Scheduled Payment dates. If sufficient funds are
not available, final payment of any class of notes and the final distribution in
respect of the Class B Certificates could occur later than such dates.
THE LEVEL OF PREPAYMENTS OF THE RECEIVABLES AND REQUIRED REPURCHASES BY THE
SELLER AND THE SERVICER ARE UNPREDICTABLE AND MAY AFFECT PAYMENTS ON THE
SECURITIES. The rate of prepayments of the receivables may be influenced by a
variety of economic, social and other factors. In addition, under circumstances
S1-21
<PAGE>
relating to breaches of representations, warranties or covenants, the seller
and/or the servicer may be obligated to purchase receivables from the trust. See
"The Receivables Pool" in this prospectus supplement and "Description of the
Receivables Transfer and Servicing Agreements--Sale and Assignment of
Receivables" in the prospectus. A higher than anticipated rate of prepayments
will reduce the aggregate principal balance of the receivables more quickly than
expected and thereby reduce the outstanding amounts of the securities and the
anticipated aggregate interest payments on the securities. The noteholders and
the Class B Certificateholders alone will bear any reinvestment risks resulting
from a faster or slower incidence of prepayment of receivables as set forth in
the priority of distributions in this prospectus supplement. Such reinvestment
risks include the risk that interest rates may be lower at the time such holders
received payments from the trust than interest rates would otherwise have been
had such prepayments not been made or had such prepayments been made at a
different time.
RISKS OF SLOWER OR FASTER REPAYMENTS. Noteholders and Class B
Certificateholders should consider--
- in the case of notes or Class B Certificates purchased at a discount, the
risk that a slower than anticipated rate of principal payments on the
receivables could result in an actual yield that is less than the
anticipated yield and
- in the case of notes or Class B Certificates purchased at a premium, the
risk that a faster than anticipated rate of principal payments on the
receivables could result in an actual yield that is less than the
anticipated yield.
DESCRIPTION OF THE NOTES
The trust will issue the notes under an indenture to be dated as of ,
2000 between the trust and , as indenture trustee. We will file a copy of
the indenture with the SEC after the trust issues the notes. We summarize below
some of the most important terms of the notes. This summary is not a complete
description of all the provisions of the notes and the indenture. We refer you
to those provisions. The following summary supplements the description of the
general terms and provisions of the notes of any trust and the related indenture
set forth under the headings "Certain Information Regarding the Securities" and
"The Indenture" in the prospectus. We refer you to those sections.
PAYMENTS OF INTEREST
Interest on the principal amounts of the notes will accrue at the respective
per annum interest rates for the various classes of notes and will be payable to
the noteholders on each payment date. The trust will make payments to the
noteholders as of each Record Date.
CALCULATION OF INTEREST. Interest will accrue and will be calculated on the
various classes of notes as follows:
- ACTUAL/360. Interest on the Class A-1 Notes will accrue from the prior
payment date (or the closing date, in the case of the first payment date)
to the current payment date and be calculated on the basis of actual days
elapsed and a 360-day year.
- 30/360. Interest on the Class A-2 Notes and Class A-3 Notes will accrue
form the th day of the previous month (or the closing date, in the case
of the first payment date) to the th of the current month and be
calculated on the basis of a 360-day year of twelve 30-day months.
- UNPAID INTEREST ACCRUES. Interest accrued as of any payment date but not
paid on such payment date will be due on the next payment date, together
with interest on such amount at the applicable interest rate (to the
extent lawful).
S1-22
<PAGE>
PRIORITY OF INTEREST PAYMENTS. The trust will pay interest on the notes
(without priority among the classes of notes) on each payment date with
available funds in accordance with the priority set forth under "Application of
Available Funds" in this prospectus supplement.
THE TRUST WILL PAY INTEREST PRO RATA TO NOTEHOLDERS IF IT DOES NOT HAVE
ENOUGH FUNDS AVAILABLE TO PAY ALL INTEREST DUE ON THE NOTES. The amount
available for interest payments on the notes could be less than the amount of
interest payable on the notes on any payment date. In that event, the holders of
each class of notes will receive their ratable share of the aggregate amount
available to be distributed in respect of interest on the notes. Each such
class' ratable share of the amount available to pay interest will be based on
the amount of interest due on such class relative to the total amount of
interest due to the noteholders.
PAYMENTS OF PRINCIPAL
PRIORITY AND AMOUNT OF PRINCIPAL PAYMENTS. The trust will generally make
principal payments to the noteholders on each payment date in the amount and in
the priority set forth under "Application of Available Funds" in this prospectus
supplement.
EVENT OF DEFAULT. An event of default will occur under the indenture if the
outstanding principal amount of any note has not been paid in full on its Final
Scheduled Payment date. The failure to pay principal of a note is not an event
of default until its Final Scheduled Payment date. Payments on the notes may be
accelerated upon an event of default. Upon an acceleration of the notes, the
priority in which the trust makes distributions to the noteholders and
certificateholders will change such that payments of principal will be made PRO
RATA to the holders of each class of notes and interest payments on the Class B
Certificates will not be made until the notes are paid in full.
NOTES MIGHT NOT BE REPAID ON THEIR FINAL SCHEDULED PAYMENT DATES. The
principal balance of any class of notes to the extent not previously paid will
be due on the Final Scheduled Payment date relating to that class listed on the
cover of this prospectus supplement. The actual date on which the aggregate
outstanding principal amount of any class of notes is paid may be earlier or
later than the Final Scheduled Payment date for that class of notes based on a
variety of factors, including those described under "Maturity and Prepayment
Considerations" in this prospectus supplement and in the prospectus.
OPTIONAL PREPAYMENT
All outstanding notes will be prepaid in whole, but not in part, on any
payment date on which the servicer exercises its option to purchase the
receivables. The servicer may purchase the receivables when the aggregate
principal balance of the receivables has declined to 10% or less of the
aggregate principal balance of the receivables as of the cutoff date, as
described in the prospectus under "Description of Receivables Transfer and
Servicing Agreements--Servicing Termination." The redemption price for the notes
outstanding will be equal to--
- the unpaid principal amount of such notes plus accrued and unpaid interest
on those notes, plus
- interest on any past due interest at the rate of interest on those notes
(to the extent lawful).
DESCRIPTION OF THE CERTIFICATES
The trust will issue the Class B Certificates in definitive form under the
trust agreement. We will file a copy of the trust agreement with the SEC after
the trust issues the notes and the Class B Certificates. We summarize below some
of the most important terms of the Class B Certificates. This summary is not a
complete description of all the provisions of the trust agreement and the
Class B Certificates. We refer you to those documents. The following summary is
a supplement to the description of the general terms and provisions of the
certificates of any given trust and the related
S1-23
<PAGE>
trust agreement provided under the headings "Certain Information Regarding the
Securities" in the prospectus and "Description of the Receivables Transfer and
Servicing Agreements" in the prospectus and in this prospectus supplement. We
refer you to those sections.
DISTRIBUTIONS
INTEREST. On each payment date, commencing , the Class B
Certificateholders will be entitled to receive the amount of interest that
accrues on the certificate balance at the applicable rate of interest set forth
on the cover page of this prospectus supplement.
Interest will accrue--
- in the case of the first payment date, from and including the closing date
to but excluding the th day of the following calendar month or
- otherwise, from and including the th day of the calendar month preceding
the payment date to but excluding the th day of the calendar month of
that payment date.
INTEREST IS CALCULATED 30/360. Interest on the certificates will be
calculated on the basis of a 360-day year of twelve 30-day months.
UNPAID INTEREST ACCRUES. Interest distributions due for any payment date
but not distributed on such payment date will be due on the next payment date
increased by an amount equal to interest on such amount at the rate of interest
on the Class B Certificates (to the extent lawful).
DISTRIBUTIONS ON CLASS B CERTIFICATES. The trust will make distributions on
the Class B Certificates in the amounts and in the priority set forth under
"Application of Available Funds" in this prospectus supplement. Class B
Certificateholders will not receive any distributions of principal until the
notes are paid in full. Following the occurrence of an event of default which
has resulted in an acceleration of the notes, the noteholders will be entitled
to be paid interest and all principal in full before any distributions may be
made on the Class B Certificates.
The outstanding certificate balance of the Class B Certificates will be
payable in full on the Final Scheduled Payment date for the Class B
Certificates. The actual date on which the trust pays the certificate balance of
the Class B Certificates may be earlier or later than that Final Scheduled
Payment date, based on a variety of factors, including those described under
"Maturity and Prepayment Considerations" in this prospectus supplement and in
the prospectus.
SUBORDINATION OF CLASS B CERTIFICATES
The rights of the Class B Certificateholders to receive distributions of
interest are subordinated to the rights of noteholders to receive payments of
interest and, if the notes have been accelerated, principal. In addition, the
Class B Certificateholders will have no right to receive distributions of
principal until the aggregate principal amount of all the notes has been paid in
full. This subordination is effected by the priority of distributions set forth
under "Application of Available Funds" in this prospectus supplement.
OPTIONAL PREPAYMENT
If the servicer exercises its option to purchase the receivables when the
aggregate principal balance of the receivables declines to 10% or less of the
aggregate principal balance of the receivables as of the cutoff date, you will
receive an amount in respect of your Class B Certificates equal to the sum of:
- the outstanding certificate balance of your Class B Certificates together
with accrued and unpaid interest at the rate of interest for the Class B
Certificates and
S1-24
<PAGE>
- interest on any past due interest at the rate of interest for the Class B
Certificates, to the extent lawful.
That distribution will cause the early retirement of your certificates. See
"Description of the Receivables Transfer and Servicing Agreements--Termination"
in the prospectus.
APPLICATION OF AVAILABLE FUNDS
SOURCES OF FUNDS OF DISTRIBUTIONS
The funds available to the trust to make payments on the securities on each
payment date will come from the following sources:
- collections received on the receivables during the prior calendar month,
- net recoveries received during the prior calendar month on receivables
that were charged off as losses in prior months,
- the aggregate amount of Advances remitted by the servicer,
- proceeds of repurchases of receivables by the seller or purchases of
receivables by the servicer because of certain breaches of representations
or covenants and
- funds, if any, withdrawn from the reserve fund for that payment date.
The precise calculation of the funds available to make payments on the
securities is set forth in the definition of Available Funds in the section
"Glossary of Terms". We refer you to that definition. Among other things,
Available Funds are net of (i) reimbursements of outstanding Advances to the
servicer and (ii) payments to the servicer of various fees paid by the obligors
that constitute the Supplemental Servicing Fee. See "Description of the
Receivables Transfer and Servicing Agreements--Advances" and "--Servicing
Compensation and Expenses" in the prospectus.
PRIORITY OF DISTRIBUTIONS
On each payment date the trust will apply the Available Funds for that
payment date in the following amounts and order of priority:
(i) SERVICING FEE--the Servicing Fee payable to the servicer;
(ii) NOTE INTEREST--interest due on all the notes ratably to the holders of
each class of notes;
(iii) CLASS B CERTIFICATE INTEREST--interest distributable to the holders of
the Class B Certificates; however, if an event of default has occurred
and the notes have been accelerated, amounts in this clause (3) will
instead be paid after clause (4) (iii) below;
(iv) PRINCIPAL PAYMENT--an amount equal to the sum of (i) the principal
collections on the receivables received during the prior calendar month
and (ii) the aggregate of principal balance (net of liquidation
proceeds applied to principal) of all receivables designated as
"defaulted receivables" in that month will be applied to pay principal
on the securities in the following order of priority:
(v) on the Class A-1 Notes until they are paid in full;
(vi) on the Class A-2 Notes until they are paid in full;
(vii) on the Class A-3 Notes until they are paid in full and
(viii) on the Class B Certificates until they are paid in full;
S1-25
<PAGE>
however, if the notes are accelerated after an event of default, principal
payments will be applied PRO RATA on all classes of the notes;
(ix) FINAL SCHEDULED PAYMENT DATE--if the payment date is a Final Scheduled
Payment date for a class of securities, the amount, if any, necessary
to pay that class in full after giving effect to the payment pursuant
to clause (5) will be paid on that class;
(x) RESERVE FUND DEPOSIT--to the reserve fund, the amount, if any, necessary
to reinstate the balance of the reserve fund up to the Specified Reserve
Fund Balance; and
(xi) any amounts remaining after the above distributions shall be paid to
the seller.
A defaulted receivable referred to in clause (4) above is a receivable
(i) that the servicer determines is unlikely to be paid in full or (ii) with
respect to which at least % of a scheduled payment is or more days
delinquent.
DESCRIPTION OF THE RECEIVABLES TRANSFER AND SERVICING AGREEMENTS
We have summarized below some of the important terms of the sale and
servicing agreement. We will file a copy of the sale and servicing agreement
with the SEC after we issue the notes and the certificates. This summary is not
a complete description of all of the provisions of the sale and servicing
agreement. We refer you to the sale and servicing agreement. You can find more
information about the transfer of the receivables from the seller to the trust
on the closing date in the prospectus under "Description of the Receivables
Transfer and Servicing Agreements".
ACCOUNTS
In general, the servicer will be permitted to retain collections on the
receivables until the business day preceding any payment date. However, the
servicer will be required to remit collections received with respect to the
receivables not later than the second Business Day after receipt to the
Collection Account (1) if there is an event of servicing termination, (2) if
is no longer the servicer or (3) if one of the other conditions set
forth in the sale and servicing agreement is not met. In addition to the
accounts referred to under "Description of Receivables Transfer and Servicing
Agreements--Accounts" in the prospectus--
- the indenture trustee will establish a payment account for the benefit of
the noteholders;
- the owner trustee will establish a payment account for the benefit of the
Class B Certificateholders; and
- the servicer will establish and will maintain with the indenture trustee
the reserve fund, in the name of the indenture trustee on behalf of the
noteholders and the certificateholders.
SERVICING COMPENSATION AND EXPENSES
The servicer is entitled to receive the Servicing Fee on each payment date.
The Servicing Fee, together with any portion of the Servicing Fee that remains
unpaid from prior payment dates, will be payable on each payment date. The
Servicing Fee will be paid only to the extent of the funds deposited in the
Collection Account with respect to the Collection Period preceding such payment
date, plus funds, if any, deposited into the Collection Account from the reserve
fund. The servicer also is entitled to receive the Supplemental Servicing Fee.
See "Description of the Receivables Transfer and Servicing Agreements--Servicing
Compensation and Expenses" in the prospectus.
S1-26
<PAGE>
RIGHTS UPON EVENT OF SERVICING TERMINATION
If an event of servicing termination occurs, the indenture trustee or
holders of not less than a majority of the principal amount of the notes (or, if
no notes are outstanding, a majority of the certificate balance of the Class B
Certificates) may remove the servicer without the consent of any of the other
securityholders.
WAIVER OF PAST EVENTS OF SERVICING TERMINATION
If an event of servicing termination occurs, a majority of the principal
amount of the notes (or, if no notes are outstanding, a majority of the
certificate balance of the Class B Certificates), subject to the exceptions
provided in the sale and servicing agreement, may waive any event of servicing
termination except for a failure to make any required deposits to or payments
from any account, without the consent of any of the other securityholders. The
certificateholders will not have the right to determine whether any event of
servicing termination should be waived until the notes have been paid in full.
DEPOSITS TO THE COLLECTION ACCOUNT.
On or before the payment date, the servicer will cause all collections on
receivables, Advances by the servicer and other amounts constituting the
Available Funds to be deposited into the Collection Account. See "Description of
Receivables Transfer and Servicing Agreements--Collections" and "--Advances" in
the prospectus.
On or before each payment date, the servicer will notify the indenture
trustee to withdraw the following amounts from the reserve fund in the following
order and deposit them into the Collection Account. In each case, the amount
will be withdrawn only to the extent of funds in the reserve fund after giving
effect to all prior withdrawals. The amounts to be withdrawn from the reserve
fund are:
- the Reserve Fund Excess Amount and
- the amount, if any, by which (a) the Total Required Payment exceeds
(b) the Available Funds for that payment date.
The "Reserve Fund Excess Amount", with respect to any payment date, is the
amount equal to the excess, if any, of--
- the amount of cash or other immediately available funds in the reserve
fund on that payment date, prior to giving effect to any withdrawals from
the reserve fund relating to that payment date, over
- the Specified Reserve Fund Balance with respect to that payment date.
The "Total Required Payment" on any payment date, is the sum of--
(xii) the Servicing Fee and all unpaid Servicing Fees from prior Collection
Periods;
(xiii) all interest payable on the notes, including any accrued interest and
interest on accrued interest (to the extent lawful);
(xiv) all interest payable on the Class B Certificates, including any accrued
interest and interest on accrued interest (to the extent lawful);
(xv) the sum of (i) all principal collected on the receivables during the
related Collection Period and (ii) the aggregate of receivables that
were designated as defaulted receivables during the Collection Period;
and
S1-27
<PAGE>
(xvi) if that payment date is a Final Scheduled Payment date for a class of
securities, the amount, if any, required to reduce the principal
balance of that class of securities to zero after giving effect to the
amount in clause (iv).
However, following the acceleration of the notes after the occurrence of an
event of default, the Total Required Payment will be the sum of--
- the Servicing Fee and all unpaid Servicing Fees from prior Collection
Periods;
- all interest payable on the notes, including any accrued interest thereon
and
- the amount necessary to reduce the outstanding principal amount of all the
notes to zero.
SERVICER WILL PROVIDE INFORMATION TO INDENTURE TRUSTEE. On the Business Day
prior to each payment date, the servicer will provide the indenture trustee with
the information specified in the sale and servicing agreement with respect to
the Collection Period preceding such payment date, including:
- the amount of aggregate collections on the receivables;
- the aggregate amount of defaulted receivables;
- the aggregate Advances to be made by the servicer and
- the aggregate Purchase Amount of receivables to be repurchased by the
seller or to be purchased by the servicer;
- the aggregate amount to be distributed as principal and interest on the
securities; and
- the Servicing Fee.
RESERVE FUND
The servicer will establish the reserve fund. It will be held in the name of
the indenture trustee for the benefit of the noteholders and certificateholders.
To the extent that amounts on deposit in the reserve fund are depleted, the
noteholders and the Class B Certificateholders will have no recourse to the
assets of the depositor, the seller or the servicer as a source of payment.
DEPOSITS TO THE RESERVE FUND. The reserve fund will be funded by a deposit
by the seller on the closing date in the amount of $ . The
amount on deposit in the reserve fund may increase from time to time up to the
Specified Reserve Fund Balance by deposits of funds withdrawn from the
Collection Account after payment of the Total Required Payment. The "Specified
Reserve Fund Balance" will equal the lesser of (a) % of the outstanding
principal balance of the receivables and (b) % of the principal balance of
the receivables as of the cutoff date.
WITHDRAWALS FROM THE RESERVE FUND. The amount on deposit in the reserve
fund may be deposited into the Collection Account to the extent described under
"--Deposits to the Collection Account" above.
In addition, the indenture trustee will withdraw amounts from the reserve
fund on any payment date to the extent that such amounts together with the
Available Funds for such payment date would be sufficient to pay the sum of the
Servicing Fee and all outstanding notes and Class B Certificates in full.
INVESTMENT. Amounts on deposit in the reserve fund will be invested by the
indenture trustee at the direction of the seller in permitted investments and
investment earnings (net of losses and investment expenses) therefrom will be
deposited into the reserve fund. Permitted investments are generally limited to
obligations or securities that mature on or before the next payment date.
However, to the extent each rating agency rating the notes or the Class B
Certificates confirms that such actions
S1-28
<PAGE>
will not adversely affect its ratings of the securities, funds in the reserve
fund may be invested in obligations that will not mature prior to the next
payment date and will not be sold to meet any shortfalls.
FUNDS IN THE RESERVE FUND WILL BE LIMITED. Amounts on deposit in the
reserve fund from time to time are available to--
- enhance the likelihood that you will receive the amounts due on your notes
or Class B Certificates and
- decrease the likelihood that you will experience losses on your notes or
Class B Certificates.
However, the amounts on deposit in the reserve fund are limited to the
Specified Reserve Fund Balance. If the amount required to be withdrawn from the
reserve fund to cover shortfalls in funds on deposit in the Collection Account
exceeds the amount available to be withdrawn from the reserve fund, a shortfall
in the amounts distributed to the noteholders and Class B Certificateholders
could result. Depletion of the reserve fund ultimately could result in losses on
your notes or Class B Certificates.
After making distributions which are ranked senior in priority, the trust
will deposit amounts to the reserve fund in order to maintain the Specified
Reserve Fund Balance.
After the payment in full, or the provision for such payment of all accrued
and unpaid interest on the notes and Class B Certificates and the outstanding
principal amount of the notes and the certificate balance of the Class B
Certificates, any funds remaining on deposit in the reserve fund, subject to
certain limitations, will be paid to the seller.
S1-29
<PAGE>
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Brown & Wood LLP, counsel for the depositor and Federal
Tax Counsel for the trust, for federal income tax purposes, the notes will be
characterized as debt, and the trust will not be characterized as an association
(or a publicly traded partnership) taxable as a corporation. See "Material
Federal Income Tax Consequences" in the Prospectus.
MATERIAL STATE TAX CONSEQUENCES
[DESCRIPTION OF MATERIAL STATE TAX CONSEQUENCES]
ERISA CONSIDERATIONS
THE NOTES
The notes may, in general, be purchased by or on behalf of Benefit Plan
Investors. Although we cannot assure you in this regard, the notes should be
treated as "debt" and not as "equity interests" for purposes of the Plan Assets
Regulation because the notes--
- are expected to be treated as indebtedness under local law and will, in
the opinion of Federal Tax Counsel for the trust, be treated as debt,
rather than equity, for federal income tax purposes (see "Material Federal
Income Tax Consequences" in the prospectus) and
- should not be deemed to have any "substantial equity features."
See "ERISA Considerations" in the prospectus.
However, the acquisition and holding of notes of any class by or on behalf
of a Benefit Plan Investor could be considered to give rise to a prohibited
transaction under ERISA and Section 4975 of the Code if the trust, the owner
trustee, the indenture trustee, any certificateholder or any of their respective
affiliates, is or becomes a "party in interest" or a "disqualified person" (as
defined in ERISA and the Code, respectively) with respect to such Benefit Plan
Investor. In such case, certain exemptions from the prohibited transaction rules
could be applicable to such acquisition and holding by a Benefit Plan Investor
depending on the type and circumstances of the Benefit Plan Investor fiduciary
making the decision to acquire a note. For additional information regarding
treatment of the notes under ERISA, see "ERISA Considerations" in the
prospectus.
THE CLASS B CERTIFICATES
Benefit Plan Investors may not acquire the Class B Certificates. An
insurance company using the assets of its general account may purchase Class B
Certificates on the condition that--
- such insurance company is able to represent that, as of the date it
acquires an interest in a Class B Certificate, less than 25% of the assets
of such general account constitute "plan assets" for purposes of Title I
of ERISA and Section 4975 of the Code and
- such insurance company agrees that if at any time during any calendar
quarter while it is holding an interest in such Class B Certificate, 25%
or more of the assets of such general account constitute "plan assets" for
purposes of Title I of ERISA and Section 4975 of the Code, and, at that
time, if no exemption or exception applies to the continued holding of the
Class B Certificate under ERISA, by the end of the next quarter such
insurance company will dispose of all Class B Certificates then held in
its general account by the end of the next quarter.
In addition, investors other than Benefit Plan Investors should be aware
that a prohibited transaction under ERISA and the Code could be deemed to occur
if any holder of the Class B Certificates or any of its affiliates is or becomes
a party in interest or a disqualified person with respect to any Benefit Plan
Investor that acquires and holds the notes without such Benefit Plan Investor
being
S1-30
<PAGE>
covered by one or more exemptions from the prohibited transaction rules. Each
purchaser of the Class B Certificates will be required to represent and certify
that it either--
- is not a Benefit Plan Investor nor acquiring such Class B Certificates on
behalf of any such Benefit Plan Investor or
- is an insurance company using the assets of its general account under the
limitations described above.
For additional information regarding treatment of the Class B Certificates
under ERISA, see "ERISA Considerations" in the prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement,
the depositor has agreed to cause the trust to sell to each of the underwriters
named below, and each of those underwriters has severally agreed to purchase,
the initial principal amount of Class A-1 Notes, Class A-2 Notes and Class A-3
Notes set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT OF AMOUNT OF AMOUNT OF
CLASS A-1 CLASS A-2 CLASS A-3
NOTE UNDERWRITER NOTES NOTES NOTES
---------------- --------------- --------------- ---------------
<S> <C> <C> <C>
First Union Securities, Inc..............
.........................................
.........................................
.........................................
Total................................
</TABLE>
The depositor has been advised by the underwriters of the notes that they
propose initially to offer the notes to the public at the applicable prices set
forth on the cover page of this prospectus supplement. After the initial public
offering of the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes,
the public offering prices may change.
Subject to the terms and conditions set forth in the underwriting agreement,
the depositor has agreed to cause the trust to sell to each of the underwriters
named below, and each of those underwriters has severally agreed to purchase,
the initial principal amount of the Class B Certificates set forth below
opposite its name.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
CLASS B
CLASS B CERTIFICATES UNDERWRITERS CERTIFICATES
--------------------------------- ---------------
<S> <C>
First Union Securities, Inc.................................
............................................................
Total...................................................
</TABLE>
The depositor has been advised by the underwriters of the Class B
Certificates that they propose initially to offer the Class B Certificates to
the public at the prices set forth on the cover page of this prospectus
supplement. After the initial public offering of the Class B Certificates, the
public offering price may change.
The underwriting discounts and commissions, the selling concessions that the
underwriters of the notes and the certificates may allow to certain dealers, and
the discounts that such dealers may reallow
S1-31
<PAGE>
to certain other dealers, expressed as a percentage of the principal amount of
each Class of notes and as an aggregate dollar amount, shall be as follows:
<TABLE>
<CAPTION>
SELLING
CONCESSIONS REALLOWANCE
NOT TO EXCEED NOT TO EXCEED
------------- -------------
<S> <C> <C>
Class A-1 Notes.............................................
Class A-2 Notes.............................................
Class A-3 Notes.............................................
Class B Certificates........................................
Total for the Notes and Class B Certificates............
</TABLE>
------------------------
Until the distribution of the notes and the Class B Certificates is
completed, rules of the SEC may limit the ability of the underwriters and
certain selling group members to bid for and purchase the notes and the Class B
Certificates. As an exception to these rules, the underwriters are permitted to
engage in certain transactions that stabilize the price of the notes and the
Class B Certificates. Such transactions consist of bids or purchases for the
purpose of pegging, fixing or maintaining the price of the notes and the
Class B Certificates.
The underwriters may make short sales in the notes or the Class B
Certificates in connection with this offering (i.e., they sell more than they
are required to purchase in the offering). This type of short sale is commonly
referred to as a "naked" short sale because the underwriters do not have an
option to purchase these additional securities in the offering. The underwriters
must close out any naked short position by purchasing notes or Class B
Certificates, as the case may be, in the open market. A naked short position is
more likely to be created if the underwriters are concerned that there may be
downward pressure on the price of the notes or Class B Certificates in the open
market after pricing that could adversely affect investors who purchase in the
offering. Similar to other purchase transactions, the underwriter's purchases to
cover the syndicate short sales may have the effect of raising or maintaining
the market price of the notes or the Class B Certificates or preventing or
retarding a decline in the market price of the notes or the Class B
Certificates.
The underwriters may also impose a penalty bid on certain underwriters and
selling group members. This means that if the underwriters purchase notes or
Class B Certificates in the open market to reduce the underwriters' short
position or to stabilize the price of such notes or Class B Certificates, they
may reclaim the amount of the selling concession from any underwriter or selling
group member who sold those notes or Class B Certificates, as the case may be,
as part of the offering.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it were
to discourage resales of the security.
Neither the depositor nor any of the underwriters makes any representation
or prediction as to the direction or magnitude of any effect that the
transactions described above may have on the price of the notes or the Class B
Certificates. In addition, neither the depositor nor any of the underwriters
makes any representation that the underwriters will engage in such transactions
or that such transactions, once commenced, will not be discontinued without
notice.
The notes and the Class B Certificates are new issues of securities and
there currently is no secondary market for the notes or the certificates. The
underwriters for the notes and the Class B Certificates expect to make a market
in such securities but will not be obligated to do so. We cannot assure you that
a secondary market for the notes or the Class B Certificates will develop. If a
S1-32
<PAGE>
secondary market for the notes or the Class B Certificates does develop, it
might end at any time or it might not be sufficiently liquid to enable you to
resell any of your notes or Class B Certificates.
The indenture trustee may, from time to time, invest the funds in the
Collection Account and the reserve fund in investments acquired from or issued
by the underwriters.
In the ordinary course of business, the underwriters and their affiliates
have engaged and may engage in investment banking and commercial banking
transactions with the depositor and its affiliates.
The depositor has agreed to indemnify the underwriters against certain
liabilities, including civil liabilities under the Securities Act of 1933, as
amended, or to contribute to payments which the underwriters may be required to
make in respect thereof.
The closings of the sale of each class of the notes and the Class B
Certificates are conditioned on the closing of the sale of each other class of
notes and those certificates.
Upon receipt of a request by an investor who has received an electronic
prospectus from an underwriter or a request by such investor's representative
within the period during which there is an obligation to deliver a prospectus,
the depositor or the underwriter will promptly deliver, without charge, a paper
copy of this prospectus supplement and the prospectus.
LEGAL OPINIONS
Certain legal matters relating to the securities, including certain federal
income tax matters, will be passed upon for the depositor by Brown & Wood LLP.
Certain legal matters relating to the securities will be passed upon for the
underwriters by Brown & Wood LLP.
S1-33
<PAGE>
GLOSSARY OF TERMS
Additional defined terms used in this prospectus supplement are defined
under "Glossary of Terms" in the prospectus.
"ABS" means the Absolute Prepayment Model which we use to measure
prepayments on receivables and we describe under "The Receivables Pool--Weighted
Average Life of the Securities".
"ABS TABLE" means the table captioned "Percent of Initial Note Principal
Amount or Initial Certificate Balance at Various ABS Percentages" beginning on
page S1- of this prospectus supplement.
"ADVANCE" means, with respect to a receivable and a payment date, the
excess, if any, of (a) the product of the principal balance of that receivable
as of the first day of the related Collection Period and one-twelfth of its
contract rate of interest OVER (b) the interest actually received by the
servicer from the obligor or from payment of the Purchase Amount during or with
respect to that Collection Period.
"AVAILABLE COLLECTIONS" for a payment date will be the sum of the following
amounts with respect to the Collection Period preceding that payment date
(subject to the exclusions set forth below such amounts):
- all payments collected on the Receivables;
- all Liquidation Proceeds and all recoveries in respect of receivables
which were designated as defaulted receivables in prior Collection
Periods;
- all Advances made by the servicer of interest due on the receivables;
- the Purchase Amount of each receivable that was repurchased by the
seller or purchased by the servicer under an obligation which arose
during the related Collection Period and
- partial prepayments of any refunded item included in the principal
balance of a receivable, such as extended warranty protection plan
costs, or physical damage, credit life, disability insurance premiums,
or any partial prepayment which causes a reduction in the obligor's
periodic payment to an amount below the scheduled payment as of the
cutoff date.
The AVAILABLE COLLECTIONS on any payment date will exclude the following:
- amounts received on any receivable to the extent that the servicer has
previously made an unreimbursed Advance with respect to such
receivable;
- amounts received on any of the receivables to the extent that the
servicer has previously made an unreimbursed Advance on a receivable
which is not recoverable from collections on the particular receivable;
- all payments and proceeds (including Liquidation Proceeds) of any
receivables the Purchase Amount of which has been included in the
Available Funds in a prior Collection Period;
- Liquidation Proceeds with respect to accrued and unpaid interest (but
not including interest on the receivable for the then current
Collection Period) but only to the extent of any unreimbursed Advances
and
- amounts constituting the Supplemental Servicing Fee.
"AVAILABLE FUNDS" for a payment date shall be the sum of the Available
Collections and the Reserve Fund Excess Amount.
S1-34
<PAGE>
"BUSINESS DAY" is a day other than a Saturday, a Sunday or a day on which
banking institutions or trust companies in the State of New York are authorized
by law, regulation or executive order to be closed.
"CLEARSTREAM" means Clearstream Banking, a societe anonyme and a
professional depository under the laws of Luxembourg.
"CERTIFICATE BALANCE" means, with respect to the Class B Certificates,
initially, $ and, thereafter, means the initial certificate
balance of the Class B Certificates, reduced by all amounts allocable to
principal previously distributed to the Class B Certificateholders.
"CLOSING DATE" means .
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLECTION ACCOUNT" means an account, held in the name of the indenture
trustee, into which the servicer is required to deposit collections on the
receivables and other amounts.
"COLLECTION PERIOD" means, with respect to the first payment date, the
calendar month ending on , and with respect to each subsequent
payment date, the calendar month preceding the calendar month in which such
payment date occurs.
"CONTRACT RATE" means the per annum interest borne by a receivable.
"CUTOFF DATE" means the date as of which the seller will transfer the
receivables to the trust, which is .
"DEFAULTED RECEIVABLE" means a receivable (i) that the servicer determines
is unlikely to be paid in full or (ii) with respect to which at least % of a
scheduled payment is or more days delinquent as of the end of a calendar
month.
"DEPOSITOR" means .
"PAYMENT DATE" means the date on which the trust will pay interest and
principal on the notes and certificates, which will be the day of
each month or, if any such day is not a Business Day, on the next Business Day,
commencing .
"DTC" means The Depository Trust Company and any successor depository
selected by the trustee.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EUROCLEAR" means a professional depository operated by the Brussels,
Belgium office of Morgan Guaranty Trust Company of New York under contract with
Euroclear Clearance System, S.C., a Belgian cooperative corporation.
"FEDERAL TAX COUNSEL" means Brown & Wood LLP.
"FINAL SCHEDULED PAYMENT DATE" for each class of notes and Class B
Certificates means the respective dates set forth on the cover page of this
prospectus supplement or, if such date is not a Business Day, the next
succeeding Business Day.
"INDENTURE TRUSTEE" means , a bank and trust company, as
indenture trustee under the indenture.
"LIQUIDATION PROCEEDS" means with respect to any receivable (a) insurance
proceeds received by the servicer and (b) the monies collected by the servicer
from whatever source, including but not limited to proceeds of a financed
vehicle sold after repossession, on a defaulted receivable net of any payments
required by law to be remitted to the Obligor.
S1-35
<PAGE>
"OWNER TRUSTEE" means , a , as owner trustee under
the trust agreement under which the trust is formed.
"PAYMENT DATE" means the date on which the trust will pay interest and
principal on the notes and certificates, which will be the day of
each month or, if any such day is not a Business Day, on the next Business Day,
commencing .
"PURCHASE AMOUNT" means a price at which the seller or the servicer must
purchase a receivable, the unpaid principal balance of the receivable plus
interest accrued thereon to the date of repurchase at the interest rate
specified in the receivable.
"RECORD DATE" with respect to any payment date means--
- with respect to the notes, the day immediately preceding the payment
date or, if the notes are issued as Definitive Notes, the last day of
the preceding month and
- with respect to the certificates, the last day of the month preceding
the payment date.
"RESERVE FUND" means the account which the servicer will establish in the
name of the indenture trustee into which the trust will deposit the Reserve
Initial Deposit and into which the indenture trustee will make the other
deposits and withdrawals specified in this prospectus supplement.
"RESERVE INITIAL DEPOSIT" means the $ initially deposited into
the reserve fund.
"SEC" means the Securities and Exchange Commission.
"SELLER" means .
"SERVICING FEE" means a fee payable to the servicer on each payment date for
servicing the receivables which is equal to the product of 1/12 of [1.00]% and
the outstanding principal balance of the receivables as of the first day of the
related Collection Period.
"SPECIFIED RESERVE FUND BALANCE" means the lesser of--
- % of the outstanding principal balance of the receivables; and
- % of the principal balance of the receivables as of the cutoff date.
"SUPPLEMENTAL SERVICING FEE" means, for each Collection Period, the amount
of any late, prepayment, and other administrative fees and expenses collected
during that Collection Period, plus any interest earned during the Collection
Period on amounts on deposit in the Collection Account during the Collection
Period.
S1-36
<PAGE>
ANNEX I
FORM OF INVESTMENT LETTER--CLASS B CERTIFICATES
[Date]
______ Trust 200_-__,
as Issuer
____________,
as Owner Trustee and
as Certificate Registrar
____________
____________,______
Ladies and Gentlemen:
In connection with our proposed purchase of the Class B % Asset Backed
Certificates (the "Certificates") of Trust 200 - (the
"Issuer"), a trust formed by Pooled Auto Securities Shelf LLC (the "Depositor"),
we confirm that:
1. We are either:
(a) not, and each account (if any) for which we are purchasing the
Certificates is not, (i) an employee benefit plan (as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) that
is subject to Title I of ERISA, (ii) a plan described in Section 4975(e)(1) of
the Internal Revenue Code of 1986, as amended (the "Code") that is subject to
Section 4975 of the Code, (iii) a governmental plan, as defined in
Section 3(32) of ERISA, subject to any federal, state or local law which is, to
a material extent, similar to the provisions of Section 406 of ERISA or
Section 4975 of the Code, (iv) an entity whose underlying assets include plan
assets by reason of a plan's investment in the entity (within the meaning of
Department of Labor Regulation 29 C.F.R. Section 2510.3-101 or otherwise under
ERISA) or (v) a person investing "plan assets" of any such plan (including
without limitation, for purposes of this clause (v), an insurance company
general account, but excluding an entity registered under the Investment Company
Act of 1940, as amended), or
(b) an insurance company acting on behalf of a general account and (i) on
the date hereof less than 25% of the assets of such general account (as
reasonably determined by us) constitute "plan assets" for purposes of Title I of
ERISA and Section 4975 of the Code, (ii) the purchase and holding of such
Certificates are eligible for exemptive relief under Sections (I) and (III) of
Prohibited Transaction Class Exemption 95-60, and (iii) the undersigned agrees
that if, after the undersigned's initial acquisition of the Certificates, at any
time during any calendar quarter 25% or more of the assets of such general
account (as reasonably determined by us no less frequently than each calendar
quarter) constitute "plan assets" for purposes of Title I of ERISA or
Section 4975 of the Code and no exemption or exception from the prohibited
transaction rules applies to the continued holding of the Certificates under
Section 401(c) of ERISA and the final regulations thereunder or under an
exemption or regulation issued by the United States Department of Labor under
ERISA, we will dispose of all Certificates then held in our general account by
the end of the next following calendar quarter.
2. We are, and each account (if any) for which we are purchasing the
Certificates is, a person who is (A) a citizen or resident of the United States,
(B) a corporation or partnership organized in or under the laws of the United
States or any political subdivision thereof, (C) an estate the income of which
is includable in gross income for United States tax purposes, regardless of its
source, (D) a trust if a U.S. court is able to exercise primary supervision over
the administration of such trust and one or more Persons meeting the conditions
of clause (A), (B), (C) or (E) of this paragraph 2 has the authority to control
all substantial decisions of the trust or (E) a Person not described in clauses
(A) through (D) above whose ownership of the Certificates is effectively
connected with such Person's conduct of a
S1-1-1
<PAGE>
trade or business within the United States (within the meaning of the Code) and
who provides the Issuer and the Depositor with an IRS Form 4224 (and such other
certifications, representations, or opinions of counsel as may be requested by
the Issuer or the Depositor).
3. We understand that any purported resale, transfer, assignment,
participation, pledge, or other disposal of (any such act, a "Transfer") of any
Certificate (or any interest therein) to any person who does not meet the
conditions of paragraphs 1 and 2 above shall be null and void (each, a "Void
Transfer"), and the purported transferee in a Void Transfer shall not be
recognized by the Issuer or any other person as a Certificateholder for any
purpose.
4. We agree that if we determine to Transfer any of the Certificates we will
cause our proposed transferee to provide to the Issuer and the Certificate
Registrar a letter substantially in the form of this letter.
You are entitled to rely upon this letter and are irrevocably authorized to
produce this letter or a copy hereof to any interested party in any
administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.
<TABLE>
<S> <C> <C>
Very truly yours,
By:
----------------------------------------
Name:
Title:
</TABLE>
Securities To Be Purchased:
$____________ principal balance of Class B Certificates
Annex A attached hereto lists the name of the account and principal balance of
Certificates purchased for each account (if any) for which we are purchasing
Certificates.
S1-1-2
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS SUPPLEMENT, DATED , 200
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT IS NOT COMPLETE AND MAY BE
CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS
SUPPLEMENT AND THE ATTACHED PROSPECTUS ARE NOT AN OFFER TO SELL THESE SECURITIES
AND THEY ARE NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE
THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
Prospectus Supplement
(To Prospectus, dated , 200 )
$
TRUST 200 -
POOLED AUTO SECURITIES SHELF LLC
DEPOSITOR
SELLER AND SERVICER
<TABLE>
<S> <C> <C>
THE UNDERWRITERS ARE OFFERING THE FOLLOWING CERTIFICATES:
BEFORE YOU PURCHASE ANY OF
THESE SECURITIES, BE SURE
CLASS A CLASS B
YOU READ THIS PROSPECTUS SUPPLEMENT AND THE CERTIFICATES CERTIFICATES
-------- --------
ATTACHED PROSPECTUS,
Certificate Balance.... ESPECIALLY THE RISK
FACTORS $ $
Per Annum Interest Rate....... BEGINNING ON
PAGE S- OF THIS PROSPECTUS % %
Final Scheduled Payment date.... SUPPLEMENT
AND ON
Initial Public Offering Price(1)...........
PAGE OF THE PROSPECTUS. % %
Underwriting Discount..... These securities
are issued % %
Proceeds to Seller(1)(2)................... $ $
</TABLE>
by the trust. The securities
-------------------------------------------------
<TABLE>
<S> <C> <C>
are not obligations of
</TABLE>
(1) The price of the certificates will include accrued
<TABLE>
<S> <C> <C>
Pooled Auto Securities
</TABLE>
from .
<TABLE>
<S> <C> <C>
Shelf LLC or any of its
</TABLE>
(2) Before deducting expenses payable by the depositor
<TABLE>
<S> <C> <C>
affiliates.
</TABLE>
$ .
<TABLE>
<S> <C> <C>
No one may use this
</TABLE>
- The trust will distribute interest and principal
on the certificates on the th day of each
month. The first payment date will be .
<TABLE>
<S> <C> <C>
accompanied by the prospectus supplement to
offer and sell these securities unless it
is
</TABLE>
- The Class B Certificates are subordinated to the
<TABLE>
<S> <C> <C>
prospectus.
</TABLE>
Certificates.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS SUPPLEMENT OR THE ATTACHED PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
FIRST UNION SECURITIES, INC.
The date of this prospectus supplement is , 200
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
READING THESE DOCUMENTS..................................... S2-3
SUMMARY OF TERMS OF THE CERTIFICATES........................ S2-4
RISK FACTORS................................................ S2-8
THE TRUST................................................... S2-9
THE RECEIVABLES POOL........................................ S2-10
Criteria Applicable to Selection of Receivables........... S2-10
Weighted Average Life of the Certificates................. S2-13
Delinquency, Credit Loss and Recovery Information......... S2-16
THE SELLER.................................................. S2-17
THE DEPOSITOR............................................... S2-17
THE SERVICER................................................ S2-18
General................................................... S2-18
Collection and Repossession Procedures.................... S2-18
Insurance................................................. S2-18
Extensions................................................ S2-18
Methods of Vehicle Disposal............................... S2-18
HOW YOU CAN COMPUTE YOUR PORTION OF THE AMOUNT OUTSTANDING
ON THE CERTIFICATES....................................... S2-18
MATURITY AND PREPAYMENT CONSIDERATIONS...................... S2-18
DESCRIPTION OF THE CERTIFICATES............................. S2-19
Book-Entry Securities; Record Date; Denomination.......... S2-19
Distributions on Certificates............................. S2-19
Statements to Certificateholders.......................... S2-21
Subordination of Class B Certificates..................... S2-22
Optional Redemption....................................... S2-22
Servicing Compensation and Expenses....................... S2-22
Rights Upon Event of Servicing Termination................ S2-22
Waiver of Past Events of Servicing Termination............ S2-22
Reserve Fund.............................................. S2-22
MATERIAL FEDERAL INCOME TAX CONSEQUENCES.................... S2-23
ERISA CONSIDERATIONS........................................ S2-23
Class A Certificates...................................... S2-23
Class B Certificates...................................... S2-24
UNDERWRITING................................................ S2-25
LEGAL OPINIONS.............................................. S2-26
GLOSSARY OF TERMS........................................... S2-27
</TABLE>
S2-2
<PAGE>
READING THESE DOCUMENTS
We provide information on your securities in two separate documents that
offer varying levels of detail:
1. Prospectus--provides general information, some of which may not apply to
the certificates.
2. Prospectus Supplement--provides a summary of the specific terms of the
certificates.
We suggest you read this prospectus supplement and the prospectus in their
entirety. The prospectus supplement pages begin with "S". If the terms of the
offered certificates described in this prospectus supplement vary with the
accompanying prospectus, you should rely on the information in this prospectus
supplement.
We include cross-references to sections in these documents where you can
find further related discussions. Refer to the table of contents on page S2-2 in
this document and on page 2 in the prospectus to locate the referenced sections.
The Glossary of Terms on page S2- of this prospectus supplement and the
Glossary of Terms on page in the prospectus list definitions of certain terms
used in this prospectus supplement or the prospectus.
You should rely only on information on the certificates provided in this
prospectus supplement and the attached prospectus. We have not authorized anyone
to provide you with different information.
S2-3
<PAGE>
SUMMARY OF TERMS OF THE CERTIFICATES
The following summary is a short description of the main terms of the
offering of the certificates. For that reason, this summary does not contain all
of the information that may be important to you. To fully understand the terms
of the offering of the certificates, you will need to read both this prospectus
supplement and the attached prospectus in their entirety.
ISSUER
Trust 200 - will be formed pursuant to a pooling and servicing
agreement to be dated as of 1, 200 , among the depositor, the seller, the
servicer and the trustee. The trust will use the proceeds from the issuance and
sale of the certificates to purchase from the depositor a pool of motor vehicle
installment loans which constitute the receivables. The trust will rely upon
collections on the receivables and the funds on deposit in certain accounts to
make payments on the certificates. The trust will be solely liable for the
payment of the certificates.
OFFERED CERTIFICATES
The following certificates are being offered by this prospectus supplement:
- $ Class A % Asset Backed Certificates and
- $ Class B % Asset Backed Certificates
CLOSING DATE
The trust expects to issue the certificates on , 200 .
DEPOSITOR
Pooled Auto Securities Shelf LLC
SELLER AND SERVICER
TRUSTEE
PAYMENT DATES
The th day of each month (or if the th day is not a business day, the
next business day).
FIRST PAYMENT DATE
The first payment date will be , 200 .
INTEREST RATES
The trust will distribute interest on each class of certificates at the per
annum rates specified on the cover of this prospectus supplement.
INTEREST ACCRUAL
"30/360," accrued from the th day of the previous month (or the closing
date in the case of the first payment date) to the th day of the current
month.
This means that, if there are no outstanding shortfalls in the payment of
interest, the interest due on a class of certificates on each payment date will
be the product of:
1. the outstanding certificate balance of that class;
2. the interest rate for that class; and
3. 30 (or in the case of the first payment date, ) divided by 360.
FOR A MORE DETAILED DESCRIPTION OF THE PAYMENT OF INTEREST, SEE "DESCRIPTION
OF THE CERTIFICATES--DISTRIBUTIONS ON CERTIFICATES".
PRIORITY OF DISTRIBUTIONS
From collections on the receivables received during the prior calendar month
and amounts withdrawn from the reserve fund, the trust will distribute the
following amounts on each payment date in the following order of priority, after
reimbursement of advances made in prior months by the servicer for interest
payments due from obligors but not received:
(1) SERVICING FEE--the servicing fee payable to the servicer;
S2-4
<PAGE>
(2) CLASS A CERTIFICATE INTEREST--accrued and unpaid interest on the Class A
Certificates distributable to the holders of those certificates;
(3) CLASS B CERTIFICATE INTEREST--accrued and unpaid interest on the Class B
Certificates distributable to the holders of those certificates;
(4) CLASS A PRINCIPAL--principal in the amount described in this prospectus
supplement to the Class A Certificateholders;
(5) CLASS B PRINCIPAL--principal in the amount described in this prospectus
supplement to the Class B Certificateholders;
(6) any remaining amount will be deposited in the reserve fund until the amount
on deposit in the reserve fund equals the required amount; and
(7) any amounts remaining after the above distributions will be paid to the
seller.
FOR A MORE DETAILED DESCRIPTION OF THE PRIORITY OF DISTRIBUTIONS AND THE
ALLOCATION OF FUNDS ON EACH PAYMENT DATE, SEE "DESCRIPTION OF THE
CERTIFICATES--DISTRIBUTIONS ON CERTIFICATES".
CREDIT ENHANCEMENT
The credit enhancement for the certificates will be as follows:
SUBORDINATION OF PRINCIPAL AND INTEREST
Payments of interest on the Class B Certificates will be subordinated to
payments of interest on the Class A Certificates. Payments of principal on the
Class B Certificates will be subordinated to payments of interest and principal
on the Class A Certificates.
RESERVE FUND
On the closing date, the seller will deposit $ to the reserve
fund for the trust.
On each payment date, if collections on the receivables are insufficient to
distribute the first five items listed in "Priority of Distributions" above, the
trustee will withdraw funds from the reserve fund, to the extent available, to
distribute such amounts.
The balance required to be on deposit in the reserve fund will be the lesser
of (a) % of the outstanding principal balance of the receivables and
(b) % of the principal balance of the receivables as of .
On each payment date, the trust will distribute funds on deposit in the
reserve fund in excess of the required balance to the seller.
FOR A MORE DETAILED DESCRIPTION OF THE DEPOSITS TO AND WITHDRAWALS FROM THE
RESERVE FUND, SEE "DESCRIPTION OF THE CERTIFICATES--RESERVE FUND".
OPTIONAL PREPAYMENT
The servicer has the option to purchase the receivables on any payment date
on which the aggregate principal balance of the receivables is % or less of
the aggregate principal balance of the receivables as of . The
purchase price will equal the outstanding principal balance of the receivables
plus accrued and unpaid interest thereon. The trust will apply such payment to
the payment of the certificates in full.
FINAL SCHEDULED PAYMENT DATES
The trust is required to distribute the entire principal amount of each
class of certificates, to the extent not previously paid, on the respective
final scheduled payment dates specified on the cover page of this prospectus
supplement.
PROPERTY OF THE TRUST
The property of the trust will include the following:
- the receivables and the collections on the receivables on or after
, 200 ;
- security interests in the vehicles financed by the receivables;
- bank accounts (other than the reserve fund);
S2-5
<PAGE>
- rights to proceeds under insurance policies that cover the obligors under
the receivables or the vehicles financed by the receivables; and
- other rights under documents relating to the receivables.
COMPOSITION OF THE RECEIVABLES
The composition of the receivables as of is as follows:
<TABLE>
<C> <S> <C>
- Aggregate Principal
Balance............... $
- Number of
Receivables...........
- Average Principal
Balance............... $
(Range)............... $ to
$
- Average Original
Amount Financed....... $
(Range)............... $ to
$
- Weighted Average of
Contract Interest
Rates................. %
(Range)............... % to %
- Weighted Average
Original Term......... months
(Range)............... months to
months
- Weighted Average
Remaining Term........ months
(Range)............... months to
months
</TABLE>
SERVICER OF THE RECEIVABLES
The trust will pay the servicer a servicing fee on each payment date equal
to 1/12 of % of the principal balance of the receivables at the beginning of
the previous month. In addition to the servicing fee, the trust will also pay
the servicer a supplemental servicing fee equal to any late fees and other
administrative fees and expenses collected during each month and any
reinvestment earnings on any payments received on the receivables and deposited
into the collection account.
RATINGS
It is a condition to the issuance of the certificates that:
- the Class A Certificates be rated in the highest long-term rating category
by at least two nationally recognized rating agencies and
- the Class B Certificates be rated " " or its equivalent by at least
two nationally recognized rating agencies.
A rating is not a recommendation to purchase, hold or sell the certificates,
inasmuch as such rating does not comment as to market price or suitability for a
particular investor. The ratings of the certificates address the likelihood of
the payment of principal and interest on the certificates according to their
terms. A rating agency rating the certificates may lower or withdraw its rating
in the future, in its discretion, as to any class of the certificates.
MINIMUM DENOMINATIONS
$1,000 and integral multiples thereof
REQUIRED REPRESENTATIONS FROM PURCHASERS OF THE CLASS B CERTIFICATES
To purchase Class B Certificates, you (and anyone to whom you assign or sell
the Class B Certificates) must:
(1) represent and certify under penalties of perjury that you are a United
States person and
(2) represent and certify that you
(a) are not a plan that is subject to the fiduciary responsibility
provisions of the Employee Retirement Income Security Act of 1974, as
amended, or Section 4975 of the Internal Revenue Code of 1986, as
amended and are not purchasing Class B Certificates on behalf of such a
plan or arrangement or
(b) are an insurance company using its general account and less than 25%
S2-6
<PAGE>
of the assets of such general account represent assets of one or more
plans or arrangements described above.
You can find a form of the representation letter an investor in the Class B
Certificates will have to sign in Annex I to this prospectus supplement.
TAX STATUS
Brown & Wood LLP will deliver its opinion that for federal income tax
purposes the trust will be characterized as a grantor trust and not as an
association (or a publicly traded partnership) taxable as a corporation.
ERISA CONSIDERATIONS
<TABLE>
<S> <C>
CLASS A The Class A Certificates
CERTIFICATES are generally eligible
for purchase by employee
benefit plans, subject
to the considerations
discussed under "ERISA
Considerations" in this
prospectus supplement
and the prospectus.
CLASS B The Class B Certificates
CERTIFICATES may not be acquired by
an employee benefit plan
or by an individual
retirement account.
However, an insurance
company using its
general account may
acquire the Class B
Certificates subject to
the considerations
discussed under "ERISA
Considerations" in this
prospectus supplement
and in the prospectus.
</TABLE>
INVESTOR INFORMATION--MAILING ADDRESS AND TELEPHONE NUMBER
The mailing address of the principal executive offices of Pooled Auto
Securities Shelf LLC is One First Union Center, TW-9, Charlotte, North Carolina
28288. Its telephone number is (704) 374-8437.
S2-7
<PAGE>
RISK FACTORS
You should consider the following risk factors (and the factors under "Risk
Factors" in the prospectus) in deciding whether to purchase any of these
certificates.
<TABLE>
<S> <C>
SUBORDINATION OF THE CLASS B Distributions of interest and principal on the Class B
CERTIFICATES TO THE CLASS A Certificates will be subordinated in priority of payment to
CERTIFICATES INCREASES THE interest and principal due on the Class A Certificates.
RISK OF THE CLASS B Consequently, the Class B certificateholders will not
CERTIFICATES NOT RECEIVING receive any distributions with respect to a collection
FULL DISTRIBUTION OF INTEREST period until the full amount of interest on and principal of
AND PRINCIPAL the Class A Certificates due on such payment date has been
paid. The Class B certificateholders will not receive any
distributions of principal until the Class A Certificates
have been paid in full.
GEOGRAPHIC CONCENTRATION MAY As of , 200 , the servicer's records indicate that the
RESULT IN MORE RISK TO YOU locations of the obligors of the receivables were in the
following states:
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE OF
AGGREGATE PRINCIPAL
BALANCE
-------------------
<S> <C>
................. %
................. %
................. %
................. %
</TABLE>
<TABLE>
<S> <C>
No other state, by billing addresses at the time of
origination, constituted more than 5% of the balance of the
receivables as of . Economic conditions or other
factors affecting these states in particular could adversely
affect the delinquency, credit loss or repossession
experience of the trust.
[VALUE OF INTEREST ONLY [The yield to investors in the Class Certificates will
CERTIFICATES WILL GENERALLY be interest only certificates and will be sensitive to the
DECREASE IF THE RATE OF rate of principal payments (including prepayments) of the
PREPAYMENTS INCREASE] receivables (particularly those with high interest rates),
which erally can be prepaid at any time. In general,
receivables with higher interest rates tend to prepay at
higher rates than receivables with relatively lower interest
rates in response to a given change in market interest
rates. As a result, the receivables with higher interest
rates may prepay at higher rates, thereby reducing the yield
to maturity on the Class Certificates.]
[VALUE OF PRINCIPAL ONLY [The Class Certificates will be "principal only"
CERTIFICATES WILL GENERALLY certificates and will not bear interest. Lower than
DECREASE IF THE RATE OF anticipated rate of principal payments (including
PREPAYMENTS DECREASE] prepayments) on the receivables will have a negative effect
on the yield to estors in the Class Certificates.]
</TABLE>
S2-8
<PAGE>
THE TRUST
Pooled Auto Securities Shelf LLC (the "depositor") will establish the
Trust 200 - (the "trust") by assigning the receivables to the trust
in exchange for the % Automobile Loan Pass-Through Certificates, Class A (the
"Class A Certificates") and the % Automobile Loan Pass-Through Certificates,
Class B (the "Class B Certificates").
The servicer will service the receivables pursuant to the pooling and
servicing agreement and will be compensated for acting as the servicer. To
facilitate servicing and to minimize administrative burden and expense, the
servicer will be appointed custodian for the receivables by the trustee, but
will not stamp the receivables to reflect the sale and assignment of the
receivables to the trust. In addition, due to administrative burden and expense,
the certificates of title to the vehicles securing the receivables will not be
amended to reflect such assignment. In the absence of such procedures, the trust
may not have a perfected security interest in vehicles in some states and will
not have a perfected security interest in the vehicles documented under Federal
law. See "Some Important Legal Issues Relating to the Receivables" in the
prospectus.
If the protection provided to the certificateholders by the reserve fund
and, in the case of the Class A Certificateholders, the subordination of the
Class B Certificates is insufficient, the trust will look only to the obligors
on the receivables and the proceeds from the repossession and sale of financed
vehicles which secure defaulted receivables. In such event, certain factors,
such as the trust's not having first priority perfected security interests in
some of the financed vehicles, may affect the trust's ability to realize on the
financed vehicles securing the receivables, and thus may reduce the proceeds to
be distributed to certificateholders with respect to the certificates.
Each certificate will represent a fractional undivided interest in the
trust. The trust property will include a pool of fixed rate simple interest
motor vehicle installment loans for the purchase of new and used new or used
automobiles, minivans, sport utility vehicles, light-duty trucks, motorcycles or
commercial vehicles. The trust property will also include:
- all monies received on the receivables on or after (the "cutoff
date");
- such amounts as from time to time may be held in the Collection Account, a
distribution account for the Class A Certificateholders and a distribution
account for the Class B Certificateholders;
- security interests in the vehicles securing the receivables;
- the benefit of the right to payments from the reserve fund (the "reserve
fund");
- an assignment of the rights of the seller to receive proceeds from claims
on theft, physical damage, credit life and credit disability insurance
policies covering the financed vehicles or the obligors, as the case may
be, to the extent that such insurance policies relate to the receivables;
and
- the rights of the trust against the seller and the servicer under the
pooling and servicing agreement.
The trust will be formed for this transaction pursuant to the pooling and
servicing agreement and prior to formation will have had no assets or
obligations. After formation, the trust will not engage in any activity other
than acquiring and holding the receivables, issuing the certificates,
distributing payments thereon and as otherwise described herein and as provided
in the pooling and servicing agreement. The trust will not acquire any contracts
or assets other than the trust property described above.
S2-9
<PAGE>
THE RECEIVABLES POOL
The trust will own a pool of receivables consisting of motor vehicle
installment loans secured by security interests in the motor vehicles financed
by those contracts. The pool will consist of receivables which [will be][have
been] purchased by the depositor from the seller, which purchased the
receivables, directly or indirectly, from dealers in the ordinary course of
business or in acquisitions, and which the depositor will transfer to the trust
on the closing date. The receivables will include payments on the receivables
which are made on or after the cutoff date.
CRITERIA APPLICABLE TO SELECTION OF RECEIVABLES.
The receivables were selected for inclusion in the trust by several
criteria, some of which are set forth in the prospectus under "The Receivables
Pools." These criteria include the requirement that each receivable:
- has a remaining maturity, as of the cutoff date, of at least months and
not more than months;
- with respect to loans secured by new financed vehicles, had an original
maturity of at least months and not more than months; with
respect to loans secured by used financed vehicles, had an original
maturity of at least months and not more than months;
- is a fully-amortizing, fixed rate [simple interest] loan which provides
for level scheduled monthly payments (except for the last payment, which
may be minimally different from the level payments) over its remaining
term and has a [simple interest] contract rate (a "Contract Rate") that
equals or exceeds % per annum, is not secured by any interest in real
estate, and has not been identified on the computer files of the seller as
relating to an obligor who had requested a reduction in the periodic
finance charges, as of the cutoff date, by application of the Soldiers'
and Sailors' Civil Relief Act of 1940, as amended;
- is secured by a financed vehicle that, as of the cutoff date, had not been
repossessed without reinstatement;
- has not been identified on the computer files of the seller as relating to
an obligor who was in bankruptcy proceedings as of the cutoff date;
- has no payment more than days past due as of the cutoff date; and
- has a remaining principal balance, as of the cutoff date, of at least
$ .
No selection procedures believed by the seller to be adverse to the
certificateholders were utilized in selecting the receivables. No receivable has
a scheduled maturity later than .
S2-10
<PAGE>
The composition of the receivables as of the cutoff date is as follows:
<TABLE>
<S> <C> <C>
- Aggregate Principal Balance................................. $
- Number of Receivables.......................................
- Average Principal Balance................................... $
(Range)..................................................... $to $
- Average Original Amount Financed............................ $
(Range)..................................................... $to $
- Weighted Average Interest Rate.............................. %
(Range)..................................................... % to %
- Weighted Average Original Term.............................. months
(Range)..................................................... months to months
- Weighted Average Remaining Term............................. months
(Range)..................................................... months to months
Percentage of Aggregate Principal
- Balance of Receivables for New/Used Vehicles................ % / %
</TABLE>
The geographical distribution and distribution by Contract Rate of the
receivables pool as of the cutoff date are set forth in the following tables.
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES POOL AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
OF OF
CUTOFF DATE CUTOFF DATE
NUMBER OF PRINCIPAL POOL NUMBER OF PRINCIPAL POOL BALANCE
STATE (1) RECEIVABLES BALANCE BALANCE (2) STATE (1) RECEIVABLES BALANCE (2)
--------- ----------- --------- ----------- --------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Alabama.............. Montana..............
Alaska............... Nebraska.............
Arizona.............. Nevada...............
Arkansas............. New Hampshire........
California........... New Jersey...........
Colorado............. New Mexico...........
Connecticut.......... New York.............
Delaware............. North Carolina.......
District of North Dakota.........
Columbia.............
Florida.............. Ohio.................
Georgia.............. Oklahoma.............
Hawaii............... Oregon...............
Idaho................ Pennsylvania.........
Illinois............. Rhode Island.........
Indiana.............. South Carolina.......
Iowa................. South Dakota.........
Kansas............... Tennessee............
Kentucky............. Texas................
Louisiana............ Utah.................
Maine................ Vermont..............
Maryland............. Virginia.............
Massachusetts........ Washington...........
Michigan............. West Virginia........
Minnesota............ Wisconsin............
Mississippi.......... Wyoming..............
Missouri.............
</TABLE>
--------------------------
(1) Based on the location of the obligors on the receivables at the time each
receivable was originated.
(2) May not add to 100% due to rounding.
S2-11
<PAGE>
DISTRIBUTION BY CONTRACT RATE OF THE RECEIVABLES AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF CUTOFF DATE POOL
CONTRACT RATE RECEIVABLES PRINCIPAL BALANCE BALANCE (1)
------------- ----------- ----------------- ----------------
<S> <C> <C> <C>
1.90% to 1.99%.................................
2.00% to 2.49%.................................
2.50% to 2.99%.................................
3.00% to 3.49%.................................
3.50% to 3.99%.................................
4.00% to 4.49%.................................
4.50% to 4.99%.................................
5.00% to 5.49%.................................
5.50% to 5.99%.................................
6.00% to 6.49%.................................
6.50% to 6.99%.................................
7.00% to 7.49%.................................
7.50% to 7.99%.................................
8.00% to 8.49%.................................
8.50% to 8.99%.................................
9.00% to 9.49%.................................
9.50% to 9.99%.................................
10.00% to 10.49%...............................
10.50% to 10.99%...............................
11.00% to 11.49%...............................
11.50% to 11.99%...............................
12.00% to 12.49%...............................
12.50% to 12.99%...............................
13.00% to 13.49%...............................
13.50% to 13.99%...............................
14.00% to 14.49%...............................
14.50% to 14.99%...............................
15.00% to 15.49%...............................
15.50% to 15.99%...............................
16.00% to 16.49%...............................
16.50% to 16.99%...............................
17.00% to 17.49%...............................
17.50% to 17.99%...............................
18.00% to 18.49%...............................
18.50% to 18.99%...............................
19.00% to 19.49%...............................
19.50% to 19.99%...............................
20.00%.........................................
Totals.........................................
</TABLE>
------------------------
(1) May not add to 100.00% due to rounding.
S2-12
<PAGE>
WEIGHTED AVERAGE LIFE OF THE CERTIFICATES
The following information is given solely to illustrate the effect of
prepayments of the receivables on the weighted average life of the certificates
under the stated assumptions and is not a prediction of the prepayment rate that
might actually be experienced by the receivables.
Prepayments on motor vehicle receivables can be measured relative to a
prepayment standard or model. The model used in this prospectus supplement, the
Absolute Prepayment Model ("ABS"), represents an assumed rate of prepayment each
month relative to the original number of receivables in a pool of receivables.
ABS further assumes that all the receivables are the same size and amortize at
the same rate and that each receivable in each month of its life will either be
paid as scheduled or be prepaid in full. For example, in a pool of receivables
originally containing 10,000 receivables, a 1% ABS rate means that 100
receivables prepay each month. ABS does not purport to be a historical
description of prepayment experience or a prediction of the anticipated rate of
prepayment of any pool of assets, including the receivables.
The rate of payment of principal of each class of certificates will depend
on the rate of payment (including prepayments) of the principal balance of the
receivables. For this reason, final payment of any class of certificates could
occur significantly earlier than the respective Final Scheduled Payment dates.
The certificateholders will exclusively bear any reinvestment risk associated
with early payment of their notes and certificates.
The table (the "ABS Table") captioned "Percent of Initial Certificate
Balance at Various ABS Percentages" has been prepared on the basis of the
following assumed characteristics of the receivables--
- the receivables prepay in full at the specified constant percentage of ABS
monthly, with no defaults, losses or repurchases;
- each scheduled monthly payment on the receivables is made on the last day
of each month and each month has 30 days;
- payments on the certificates are made on each payment date (and each
payment date is assumed to be the fifteenth day of the applicable month);
- the balance in the reserve fund on the payment date is equal to the
Specified Reserve Fund Balance; and
- the servicer exercises its option to purchase the receivables on the
earliest payment date on which it is permitted to do so, as described in
this prospectus supplement.
The ABS Table indicates the projected weighted average life of each class of
certificates and sets forth the percent of the initial certificate balance of
each class of certificates that is projected to be outstanding after each of the
payment dates shown at various constant ABS percentages.
The ABS Table also assumes that the receivables have been aggregated into
hypothetical pools with all of the receivables within each such pool having the
following characteristics and that the level scheduled monthly payment for each
of the pools (which is based on its aggregate principal balance, contract rate
of interest, original term to maturity and remaining term to maturity as of the
cutoff date)
S2-13
<PAGE>
will be such that each pool will be fully amortized by the end of its remaining
term to maturity. The pools have an assumed cutoff date of .
<TABLE>
<CAPTION>
CONTRACT ORIGINAL TERM REMAINING TERM
AGGREGATE RATE OF TO MATURITY TO MATURITY
POOL PRINCIPAL BALANCE INTEREST (IN MONTHS) (IN MONTHS)
---- ----------------- -------- ------------- --------------
<S> <C> <C> <C> <C>
1.........................................
2.........................................
3.........................................
4.........................................
5.........................................
6.........................................
7.........................................
8.........................................
9.........................................
10........................................
11........................................
12........................................
13........................................
14........................................
15........................................
16........................................
17........................................
18........................................
</TABLE>
The actual characteristics and performance of the receivables will differ
from the assumptions used in constructing the ABS Table. The assumptions used
are hypothetical and have been provided only to give a general sense of how the
principal cash flows might behave under varying prepayment scenarios. For
example, it is very unlikely that the receivables will prepay at a constant
level of ABS until maturity or that all of the receivables will prepay at the
same level of ABS. Moreover, the diverse terms of receivables within each of the
hypothetical pools could produce slower or faster principal distributions than
indicated in the ABS Table at the various constant percentages of ABS specified,
even if the original and remaining terms to maturity of the receivables are as
assumed. Any difference between such assumptions and the actual characteristics
and performance of the receivables, or actual prepayment experience, will affect
the percentages of initial amounts outstanding over time and the weighted
average lives of each class of certificates.
S2-14
<PAGE>
PERCENT OF INITIAL CERTIFICATE BALANCE AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
CLASS A CERTIFICATES
-------------------------------------------------------------
PAYMENT DATE % % % %
------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
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...........................................
<CAPTION>
CLASS B CERTIFICATES
-------------------------------------------------------------
PAYMENT DATE % % % %
------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
...........................................
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...........................................
</TABLE>
------------------------------
(1) The weighted average life of a note is determined by (a) multiplying the
amount of each principal payment on a note by the number of years from the
date of the issuance of the note to the related payment date, (b) adding the
results and (c) dividing the sum by the related initial principal amount of
the note.
The ABS Table has been prepared based on the assumptions described above
(including the assumptions regarding the characteristics and performance of the
receivables which will differ from the actual characteristics and performance
thereof) and should be read in conjunction therewith.
S2-15
<PAGE>
DELINQUENCY, CREDIT LOSS AND RECOVERY INFORMATION
Set forth below is certain information concerning the experience of the
seller pertaining to new and used automobile, minivan, sport utility vehicle,
light-duty truck, motorcycle or commercial vehicle receivables, including those
previously sold which the seller continues to service. There can be no assurance
that the delinquency, repossession and net loss experience on the receivables
transferred to the trust will be comparable to that set forth below.
DELINQUENCY EXPERIENCE
<TABLE>
<CAPTION>
AT AT DECEMBER 31,
------------------------------------------- -------------------------------------------
, 200 , 200 , 199 , 199
-------------------- -------------------- -------------------- --------------------
NUMBER OF NUMBER OF NUMBER OF NUMBER OF
CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT
--------- -------- --------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Portfolio............................. $ $ $ $
Period of Delinquency
31-60 Days..........................
61 Days or More.....................
-------- ------ -------- ------ -------- ------ -------- ------
Total Delinquencies................... $ $ $ $
Total Delinquencies as a Percent of
the Portfolio......................... % % % % % % % %
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31,
---------------------------------------------------------------------
, 199 , 199 , 199
--------------------- --------------------- ---------------------
NUMBER OF NUMBER OF NUMBER OF
CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT
---------- -------- ---------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Portfolio................................................ $ $ $
Period of Delinquency
31-60 Days.............................................
61 Days or More........................................ $ $ $
-------- ------ -------- ------ -------- ------
Total Delinquencies......................................
Total Delinquencies as a Percent of the Portfolio........ % % % % % %
</TABLE>
------------------------------
(1) The information in the table includes previously sold contracts that the
seller continues to service.
(2) All amounts and percentages are based on the gross amount scheduled to be
paid on each contract, including unearned finance and other charges.
S2-16
<PAGE>
CREDIT LOSS/REPOSSESSION EXPERIENCE(1)
<TABLE>
<CAPTION>
ENDED
, YEAR ENDED DECEMBER 31,
------------------- ----------------------------------------------------
199 199 199 199 199 199 199
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Average Amount Outstanding During the Period....... $ $ $ $ $ $ $
Average Number of Contracts Outstanding During the
Period...........................................
Percent of Contracts Acquired During the Period
with Recourse to the Dealer...................... % % % % % % %
Repossessions as a Percent of Average Number of
Contracts Outstanding............................ % % % % % % %
Net Losses as a Percent of Liquidations(3)(4)...... % % % % % % %
Net Losses as a Percent of Average Amount
Outstanding(2)(3)................................ % % % % % % %
</TABLE>
------------------------------
(1) [Except as indicated, all amounts and percentages are based on the gross
amount scheduled to be paid on each contract, including unearned finance and
other charges. The information in the table includes previously sold
contracts that the seller continues to service.]
(2) Percentages have been annualized for the months ended ,
199 and 199 and are not necessarily indicative of the experience for the
year.
(3) [Net losses are equal to the aggregate of the balances of all contracts
which are determined to be uncollectible in the period, less any recoveries
on contracts charged off in the period or any prior periods, including any
losses resulting from disposition expenses and any losses resulting from the
failure to recover commissions to dealers with respect to contracts that are
prepaid or charged off.]
(4) Liquidations represent a reduction in the outstanding balances of the
contracts as a result of monthly cash payments and charge-offs.
The data presented in the foregoing tables are for illustrative purposes
only. Delinquency and credit loss experience may be influenced by a variety of
economic, social and other factors. We cannot assure you that the delinquency
and loan loss information of the seller, or that of the trust with respect to
its receivables, in the future will be similar to that set forth above.
THE SELLER
[DESCRIPTION OF SELLER AND ITS UNDERWRITING AND SERVICING STANDARDS]
GENERAL
UNDERWRITING PROCEDURES
THE DEPOSITOR
The depositor was formed in the State of Delaware on April 14, 2000. First
Union Pass Co., Inc., a wholly owned subsidiary of First Union National Bank, is
the sole member of the depositor. The principal executive offices of the
depositor are located at One First Union Center, TW-9, Charlotte, North Carolina
28288. Its telephone number is (704) 374-8437.
The depositor was organized, among other things, for the purposes of
establishing trusts, selling beneficial interests therein and acquiring and
selling assets to such trusts. Neither the depositor, its parent nor any of the
depositor's affiliates will ensure or guarantee distributions on the securities.
S2-17
<PAGE>
THE SERVICER
[DESCRIPTION OF THE SERVICER AND ITS SERVICING STANDARDS]
GENERAL
COLLECTION AND REPOSSESSION PROCEDURES
INSURANCE
EXTENSIONS
METHODS OF VEHICLE DISPOSAL
COMPUTING YOUR PORTION OF THE AMOUNT OUTSTANDING ON THE CERTIFICATES
The servicer will provide to you in each report which it delivers to you a
factor which you can use to compute your portion of the certificate balance
outstanding on your certificates. See "Pool Factors and Trading Information" in
the prospectus.
MATURITY AND PREPAYMENT CONSIDERATIONS
Information regarding certain maturity and prepayment considerations with
respect to the certificates is set forth under "Maturity and Prepayment
Considerations" in the prospectus. In addition, on each payment date, no
principal payments will be made on the Class B Certificates until the amount of
interest and principal due on the Class A Certificates has been paid.
Since the rate of payment of principal of each class of certificates depends
on the rate of payment (including prepayments) of the principal balance of the
receivables, final payment of either class of certificates could occur
significantly earlier than the Final Scheduled Payment date.
WE CANNOT ASSURE YOU THAT YOUR CERTIFICATES WILL BE REPAID ON THE FINAL
SCHEDULED PAYMENT DATE. We expect that final payment of each class of
certificates will occur on or prior to the Final Scheduled Payment date.
However, we cannot assure you that sufficient funds will be available to pay
each class of certificates in full on or prior to the Final Scheduled Payment
date. If sufficient funds are not available, the final distribution in respect
of each class of certificates could occur later than such date.
THE LEVEL OF PREPAYMENTS OF THE RECEIVABLES AND REQUIRED PURCHASES BY THE
DEPOSITOR AND THE SERVICER ARE UNPREDICTABLE AND MAY AFFECT PAYMENTS ON THE
CERTIFICATES. The rate of prepayments of the receivables may be influenced by a
variety of economic, social and other factors. In addition, under circumstances
relating to breaches of representations, warranties or covenants, the depositor
and/or the servicer may be obligated to purchase receivables from the trust. See
"The Receivables Pool" in this prospectus supplement and "Description of the
Receivables Transfer and Servicing Agreements--Sale and Assignment of
Receivables" in the prospectus. A higher than anticipated rate of prepayments
will reduce the aggregate principal balance of the receivables and thus the
outstanding principal amounts of the certificates more quickly than expected and
thereby reduce anticipated aggregate interest payments on the certificates. The
certificateholders alone will bear any reinvestment risks resulting from a
faster or slower incidence of prepayment of receivables. Such reinvestment risks
include the risk that interest rates may be lower at the time such holders
received payments from the trust than interest rates would otherwise have been
had such prepayments not been made or had such prepayments been made at a
different time.
RISKS OF SLOWER OR FASTER REPAYMENTS. You should consider--
- in the case of certificates purchased at a discount, the risk that a
slower than anticipated rate of principal payments on the receivables
could result in an actual yield that is less than the anticipated yield
and
S2-18
<PAGE>
- in the case of certificates purchased at a premium, the risk that a faster
than anticipated rate of principal payments on the receivables could
result in an actual yield that is less than the anticipated yield.
DESCRIPTION OF THE CERTIFICATES
We have filed a form of the pooling and servicing agreement as an exhibit to
the registration statement of which this prospectus supplement is a part. A copy
of the pooling and servicing agreement will be filed with the SEC after the
trust issues the certificates. We summarize below some of the most important
terms of the certificates. This summary is not a complete description of all the
provisions of the pooling and servicing agreement and the certificates. We refer
you to those documents. The following summary is a supplement to the description
of the general terms and provisions of the certificates of any series and the
related pooling and servicing agreement provided under the headings "Certain
Information Regarding the Securities" and "Description of the Receivables
Transfer and Servicing Agreements" in the prospectus. We refer you to those
sections.
BOOK-ENTRY SECURITIES; RECORD DATE; DENOMINATION
The certificates will be Book-Entry Securities. Definitive Certificates for
the certificates will be issued only in the limited circumstances specified
under "Certain Information Regarding the Securities--Definitive Securities" in
the prospectus. Distributions on the certificates on a payment date will be made
to persons who were the holders of record on the day prior to the payment date.
You may purchase certificates in denominations of $1,000 and integral multiples
thereof.
DISTRIBUTIONS ON CERTIFICATES
DEPOSITS TO COLLECTION ACCOUNT. The servicer will establish the Collection
Account as described under "Description of the Receivables Transfer and
Servicing Agreements--Accounts "in the prospectus. In general, the servicer will
be permitted to retain collections on the receivables until the Business Day
preceding any payment date. However, the servicer will be required to remit
collections received with respect to the receivables not later than the second
Business Day after receipt to the Collection Account (1) if there is an event of
servicing termination, (2) if is no longer the servicer or (3) if
one of the other conditions set forth in the pooling and servicing agreement is
not met.
On or before the th day of each month or, if such th day is not a
Business Day, the preceding Business Day, the servicer will inform the trustee
of the following amounts with respect to the preceding Collection Period:
(1) the amount of aggregate collections on the receivables;
(2) the aggregate amount of Advances to be remitted by the servicer;
(3) the aggregate Purchase Amount for the receivables to be repurchased by the
seller or purchased by the servicer;
(4) the aggregate amount to be withdrawn from the reserve fund;
(5) the aggregate amount to be distributed as principal and interest on the
certificates; and
(6) the Servicing Fee.
On or before the Business Day preceding each payment date:
(a) the servicer will cause all collections on the receivables, liquidation
proceeds and recoveries to be deposited into the Collection Account and
will deposit into the Collection Account all Purchase Amounts for the
receivables to be purchased by the servicer on that date;
S2-19
<PAGE>
(b) the seller will deposit into the Collection Account all Purchase Amounts
of receivables to be repurchased by the seller on that date; and
(c) the servicer will deposit all Advances for the payment date into the
Collection Account.
On each payment date the servicer will allocate collections and Advances for
the preceding calendar month (the "Collection Period") to Available Interest and
Available Principal. The amounts represented by those terms are more precisely
described in the section "Glossary of Terms" in this prospectus supplement. In
general, Available Interest for a Collection Period includes interest
collections on the receivables (including the interest portion of Purchase
Amounts and liquidation proceeds on receivables designated as defaulted
receivables in that Collection Period) and recoveries on receivables that were
designated as defaulted receivables prior to that Collection Period, minus
reimbursements to the servicer of its outstanding Advances. Available Principal
includes principal collections on the receivables (including the principal
portion of Purchased Amounts and liquidation proceeds on receivables designated
as defaulted receivables in that Collection Period). A receivable will be
designated as a "defaulted" receivable when the servicer determines that it is
unlikely to be paid in full or when at least % of a scheduled payment is or
more days delinquent at the end of a Collection Period.
The servicer will be entitled to receive reimbursements of its outstanding
Advances as described under the section entitled "Description of the Receivables
Transfer and Servicing Agreements--Advances" in the prospectus. We refer you to
that section.
DISTRIBUTIONS. On each payment date the trustee will make the following
deposits and distributions, to the extent of Available Interest and any
available funds in the reserve fund (net of investment earnings) remaining after
such reimbursements (and, to the extent indicated in clause (2) below, the
Class B Percentage of Available Principal), in the following order of priority:
(1) to the servicer, first from Available Interest and then, if necessary, from
any such funds in the reserve fund, any unpaid Servicing Fee for the related
Collection Period and all unpaid Servicing Fees from prior Collection
Periods;
(2) to the distribution account for the Class A Certificateholders, first from
Available Interest, then, if necessary, from any such funds in the reserve
fund, and finally, if necessary, from the Class B Percentage of Available
Principal, interest distributable on the Class A Certificates for such
payment date; and
(3) to the distribution account for the Class B Certificateholders, first from
Available Interest and then, if necessary, from any such funds in the
reserve fund, the interest distributable on the Class B Certificates for
such payment date.
The CLASS A PERCENTAGE is % and the CLASS B PERCENTAGE is %.
The interest distributable on a class of certificates on a payment date will
accrue on its certificate balance at the applicable per annum rate set forth on
the cover of this prospectus supplement from and including the prior payment
date (or the closing date in the case of the first payment date) to but
excluding the current payment date. Interest will be calculated on the basis of
a 360-day year consisting of twelve 30-day months. Interest accrued as of any
payment date but not paid on such payment date will be due on the next payment
date, together with interest on such amount at the applicable interest rate (to
the extent lawful).
On each payment date, the trustee will make the following deposits and
distributions, to the extent of the portion of Available Principal, Available
Interest and any such funds in the reserve fund (to be
S2-20
<PAGE>
applied in that order of priority) remaining after the application of clauses
(1), (2) and (3) above, in the following order of priority:
(4) to the distribution account for the Class A Certificateholders, the Class A
Principal Distribution for such payment date;
(5) to the distribution account for the Class B Certificateholders, the Class B
Principal Distribution for such payment date;
(6) to the reserve fund, any amounts remaining, until the amount on deposit in
the reserve fund equals the Specified Reserve Fund Balance; and
(7) to the seller, any amounts remaining.
On each payment date, the trustee will distribute (i) to the Class A
Certificateholders, all amounts on deposit in the distribution account for the
Class A Certificateholders and (ii) to the Class B Certificateholders, all
amounts on deposit in the distribution account for the Class B
Certificateholders.
"CERTIFICATE BALANCE" means, with respect to a class of certificates, the
original certificate balance for that class as reduced by all prior
distributions of principal to the holders of record of that class of
certificates. The original certificate balance of each class of certificates is
set forth on the cover of this prospectus supplement.
The "CLASS A PRINCIPAL DISTRIBUTION" for a payment date will equal the sum
of (i) the Class A Percentage of the Available Principal plus the Class A
Percentage of Realized Losses, (ii) the Class A Percentage of the Available
Principal for any prior payment date and the Class A Percentage of Realized
Losses for any prior payment date, in each case only to the extent, if any, that
they have not already been distributed to the Class A Certificateholders and
(iii) if that payment date is the Final Scheduled Payment date, the additional
amount, if any, needed to reduce the certificate balance of the Class A
Certificates to zero.
The "CLASS B PRINCIPAL DISTRIBUTION" for a payment date will equal the sum
of (i) the Class B Percentage of the Available Principal plus the Class B
Percentage of Realized Losses, (ii) the Class B Percentage of the Available
Principal for any prior payment date and the Class B Percentage of Realized
Losses for any prior payment date, in each case only to the extent, if any, that
they have not already been distributed to the Class B Certificateholders and
(iii) if that payment date is the Final Scheduled Payment date, the additional
amount, if any, needed to reduce the certificate balance of the Class B
Certificates to zero.
"REALIZED LOSSES" for any Collection Period will be the excess of the
aggregate principal balance of those receivables that were designated as
defaulted receivables during that Collection Period over liquidation proceeds
received with respect to such receivables during such Collection Period and
allocable to principal.
As an administrative convenience, the servicer will be permitted under
certain circumstances to make deposits of Advances and Purchase Amounts for, or
with respect to, a Collection Period net of payments to be made to the servicer
with respect to such Collection Period. The servicer, however, will account to
the trustee and to the certificateholders as if all such deposits and payments
were made on an aggregate basis for each type of payment or deposit.
STATEMENTS TO CERTIFICATEHOLDERS
On each payment date, the trustee will include with each distribution to
each certificateholder a statement setting forth the applicable information
under the heading "Certain Information Regarding the Securities--Reports to
Securityholders" in the prospectus.
S2-21
<PAGE>
The statements for each Collection Period will be delivered to DTC for
further distribution to beneficial owners of the certificates in accordance with
DTC procedures. Copies of such statements may be obtained by beneficial owners
of certificates by a request in writing addressed to the trustee at its
corporate trust office at .
SUBORDINATION OF CLASS B CERTIFICATES
The rights of the Class B Certificateholders to receive distributions of
interest are subordinated to the rights of Class A Certificateholders to receive
payments of interest and principal. In addition, on each payment date the
Class B Certificateholders will not receive a distribution of principal until
the Class A Certificateholders have received their distribution of principal.
This subordination is effected by the allocation of funds set forth under
"--Distributions on Certificates" above.
OPTIONAL REDEMPTION
If the servicer exercises its option to purchase the receivables when the
aggregate principal balance of the receivables declines to 10% or less of the
aggregate principal balance of the receivables as of the cutoff date, you will
receive an amount in respect of your certificates equal to the sum of:
- the outstanding certificate balance of your certificates together with
accrued and unpaid interest at the rate of interest for your certificates
and
- interest on any past due interest at the rate of interest for your
certificates, to the extent lawful.
See "Description of the Receivables Transfer and Servicing
Agreements--Termination" in the prospectus.
SERVICING COMPENSATION AND EXPENSES
On each payment date the servicer is entitled to receive the Servicing Fee,
together with any portion of the Servicing Fee that remains unpaid from prior
payment dates. The Servicing Fee will be paid only to the extent of the funds
deposited in the Collection Account with respect to the Collection Period
preceding such payment date, plus funds, if any, deposited into the Collection
Account from the reserve fund. The servicer also is entitled to receive the
Supplemental Servicing Fee. See "Description of the Receivables Transfer and
Servicing Agreements--Servicing Compensation and Expenses" in the prospectus.
RIGHTS UPON EVENT OF SERVICING TERMINATION
If an event of servicing termination occurs, the trustee or holders of
certificates evidencing not less than 25% of the aggregate principal balance of
the receivables may remove the servicer without the consent of any of the other
certificateholders.
WAIVER OF PAST EVENTS OF SERVICING TERMINATION
If an event of servicing termination occurs, holders of certificates
evidencing at least 51% of the aggregate principal balance of the receivables,
subject to the exceptions provided in the pooling and servicing agreement, may
waive any event of servicing termination except for a failure to make any
required deposits to or payments from any account, without the consent of any of
the other certificateholders.
RESERVE FUND
DEPOSITS TO THE RESERVE FUND. The reserve fund will be funded by a deposit
by the seller on the closing date in the amount of $ . The
amount on deposit in the reserve fund
S2-22
<PAGE>
may increase from time to time up to the Specified Reserve Fund Balance by
deposits of funds withdrawn from the Collection Account to the extent available
as described under "--Distribution on the Certificates--Distributions" above.
The "Specified Reserve Fund Balance" will equal the lesser of (a) % of the
outstanding principal balance of the receivables and (b) % of the
principal balance of the receivables as of the cutoff date.
WITHDRAWALS FROM THE RESERVE FUND. On each payment date, the amount
available in the reserve fund will equal the lesser of (a) the amount on deposit
in the reserve fund (exclusive of investment earnings) and (b) the Specified
Reserve Fund Balance. The funds on deposit in the reserve fund (exclusive of
investment earnings) may be deposited into the Collection Account to the extent
described under "--Distributions on the Certificates--Distributions" above.
Funds on deposit in the reserve fund in excess of the Specified Reserve Fund
Balance will be paid to the seller.
INVESTMENT. Amounts on deposit in the reserve fund will be invested by the
Servicer at the direction of the seller in permitted investments and investment
earnings (net of losses and investment expenses) therefrom will be deposited
into the reserve fund. Permitted investments are generally limited to
obligations or securities that mature on or before the next payment date.
However, to the extent each rating agency rating the certificates confirms that
such actions will not adversely affect its ratings of the certificates, funds in
the reserve fund may be invested in obligations that will not mature prior to
the next payment date and will not be sold to meet any shortfalls.
FUNDS IN THE RESERVE FUND WILL BE LIMITED. Amounts on deposit in the
reserve fund from time to time are available to--
- enhance the likelihood that you will receive the amounts due on your
certificates and
- decrease the likelihood that you will experience losses on your
certificates.
However, the amounts on deposit in the reserve fund are limited to the
Specified Reserve Fund Balance. If the amount required to cover shortfalls in
funds on deposit in the Collection Account exceeds the amount available to be
withdrawn from the reserve fund, a shortfall in the amounts distributed to the
certificateholders could result. Depletion of the reserve fund ultimately could
result in losses on your certificates.
After the payment in full, or the provision for such payment of all accrued
and unpaid interest on the certificates and the outstanding certificate balance
of the certificates, any funds remaining on deposit in the reserve fund, subject
to certain limitations, will be paid to the seller.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Brown & Wood LLP, counsel for the depositor and Federal
Tax Counsel for the trust, for federal income tax purposes, the trust will be a
grantor trust and will not be treated as an association (or a publicly traded
partnership) taxable as a corporation. See "Material Federal Income Tax
Consequences" in the prospectus.
ERISA CONSIDERATIONS
For a general discussion of ERISA considerations in respect of the
certificates, we refer you to the section entitled "ERISA Considerations" in the
prospectus.
CLASS A CERTIFICATES
The U.S. Department of Labor has granted an individual administrative
exemption to First Union Securities, Inc. (Prohibited Transaction Exemption
99-22, 61 Fed. Reg. 14827 (April 3, 1996)) (the "Exemption") from some of the
prohibited transaction rules of ERISA and the related excise tax
S2-23
<PAGE>
provisions of Section 4975 of the Code with respect to the initial purchase, the
holding and the subsequent resale by Plans of certificates in pass-through
trusts that consist of specified receivables, loans and other obligations that
meet the conditions and requirements of the Exemption. The Exemption applies to
motor vehicle installment loans such as the receivables owned by the trust. A
"Plan" is an employee benefit or other plan or arrangement (such as an
individual retirement plan or Keogh plan) that is subject to ERISA,
Section 4975 of the Code or a Similar Law.
For a general description of the Exemption and the conditions that must be
satisfied for the Exemption to apply, see "ERISA Considerations--Senior
Certificates Issued by Trusts" in the prospectus.
Before purchasing a Class A Certificate, a fiduciary of a Plan must satisfy
itself that (i) the Class A Certificates are "certificates" for purposes of the
Exemption and (ii) the general and specific conditions and requirements in the
Exemption would be met in the case of the Class A Certificates.
Prospective Plan investors are encouraged to consult with their legal
advisors concerning the impact of ERISA and the Code and the applicability of
the Exemption, and the potential consequences in their specific circumstances,
before making an investment in any of the offered certificates. Moreover, each
Plan fiduciary is encouraged to determine whether, under the general fiduciary
standards of investment prudence and diversification, an investment in the
Class A Certificates is appropriate for the Plan, taking into account the
overall investment policy of the Plan and the composition of the Plan's
investment portfolio.
CLASS B CERTIFICATES
Because the characteristics of the Class B Certificates will not meet the
requirements of the Exemption and may not meet any other exemption issued under
ERISA, a Plan may be engaging in a prohibited transaction or may incur excise
taxes or civil penalties if it purchases and holds Class B Certificates.
Consequently, transfers of the Class B Certificates will not be registered by
the trustee unless the trustee receives a deemed representation from the
transferee of the Class B Certificate that:
- the transferee is not a Plan or a person acting on behalf of a Plan or
using a Plan's assets to effect the transfer, or
- if the purchaser is an insurance company, the purchaser is an insurance
company which is purchasing the certificates with funds contained in an
"insurance company general account" (as defined in Section V(e) of
Prohibited Transaction Class Exemption 95-60 ("PTE 95-60")) and that the
purchase and holding of the certificates are covered under Sections I and
III of PTE 95-60.
This representation will be deemed to have been made to the trustee by the
transferee's acceptance of a Class B Certificate. If the representation is not
true, the attempted transfer or acquisition shall be void AB INITIO.
S2-24
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement,
the depositor has agreed to sell to each of the underwriters named below, and
each of those underwriters has severally agreed to purchase, the initial
certificate balances of Class A Certificates and Class B Certificates set forth
opposite its name below:
<TABLE>
<CAPTION>
CERTIFICATE BALANCE CERTIFICATE BALANCE
OF CLASS A OF CLASS B
UNDERWRITER CERTIFICATES CERTIFICATES
----------- ------------------- -------------------
<S> <C> <C>
First Union Securities, Inc.................................
Total...............................................
</TABLE>
The depositor has been advised by the underwriters that they propose to
offer the certificates to the public initially at the applicable prices set
forth on the cover page of this prospectus supplement. After the initial public
offering of the Class A Certificates and Class B Certificates, the public
offering prices may change.
The underwriting discounts and commissions, the selling concessions that the
underwriters may allow to certain dealers, and the discounts that such dealers
may reallow to certain other dealers, expressed as a percentage of the
certificate balance of each class of certificates and as an aggregate dollar
amount, shall be as follows:
<TABLE>
<CAPTION>
SELLING
CONCESSIONS REALLOWANCE
NOT TO EXCEED NOT TO EXCEED
------------- -------------
<S> <C> <C>
Class A Certificates........................................
Class B Certificates........................................
Total...............................................
</TABLE>
Until the distribution of the certificates is completed, rules of the SEC
may limit the ability of the underwriters and certain selling group members to
bid for and purchase the certificates. As an exception to these rules, the
underwriters are permitted to engage in certain transactions that stabilize the
price of the certificates. Such transactions consist of bids or purchases for
the purpose of pegging, fixing or maintaining the price of the certificates.
The underwriters may make short sales in the certificates in connection with
this offering (i.e., they sell more certificates than they are required to
purchase in the offering). This type of short sale is commonly referred to as a
"naked" short sale due to the fact that the underwriters do not have an option
to purchase these additional securities in the offering. The underwriters must
close out any naked short position by purchasing certificates in the open
market. A naked short position is more likely to be created if the underwriters
are concerned that there may be downward pressure on the price of the
certificates in the open market after the pricing that could adversely affect
investors who purchase in the offering. Similar to other purchase transactions,
the underwriters' purchase to cover the syndicate short sales may have the
effect of raising or maintaining the market price of the certificates or
preventing or retarding a decline in the market price of the certificates.
The underwriters may also impose a penalty bid on certain underwriters and
selling group members. This means that if the underwriters purchase certificates
in the open market to reduce the underwriters' short position or to stabilize
the price of such certificates, they may reclaim the amount
S2-25
<PAGE>
of the selling concession from any underwriter or selling group member who sold
those certificates, as the case may be, as part of the offering.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it were
to discourage resales of the security.
Neither the depositor nor any of the underwriters makes any representation
or prediction as to the direction or magnitude of any effect that the
transactions described above may have on the price of the certificates. In
addition, neither the depositor nor any of the underwriters makes any
representation that the underwriters will engage in such transactions or that
such transactions, once commenced, will not be discontinued without notice.
The certificates are new issues of securities and there currently is no
secondary market for the certificates. The underwriters for the certificates
expect to make a market in such securities but will not be obligated to do so.
We cannot assure you that a secondary market for the Class A Certificates or the
Class B Certificates will develop. If a secondary market for the Class A
Certificates or the Class B Certificates does develop, it might end at any time
or it might not be sufficiently liquid to enable you to resell any of your
certificates.
The trustee and the Servicer may, from time to time, invest the funds in the
Collection Account and the reserve fund, as applicable, in investments acquired
from or issued by the underwriters.
In the ordinary course of business, the underwriters and their affiliates
have engaged and may engage in investment banking and commercial banking
transactions with the depositor and its affiliates.
The depositor has agreed to indemnify the underwriters against certain
liabilities, including civil liabilities under the Securities Act of 1933, as
amended, or to contribute to payments which the underwriters may be required to
make in respect thereof.
The closing of the sale of each class of the certificates is conditioned on
the closing of the sale of the other class of certificates.
Upon receipt of a request by an investor who has received an electronic
prospectus from an underwriter or a request by such investor's representative
within the period during which there is an obligation to deliver a prospectus,
the depositor or the underwriter will promptly deliver, without charge, a paper
copy of this prospectus supplement and the prospectus.
LEGAL OPINIONS
Certain legal matters relating to the certificates, including certain
federal income tax matters, will be passed upon for the depositor by Brown &
Wood LLP, San Francisco, California. Certain legal matters relating to the
certificates will be passed upon for the underwriters by Brown & Wood LLP.
S2-26
<PAGE>
GLOSSARY OF TERMS
Additional defined terms used in this prospectus supplement are defined
under "Glossary of Terms for the Prospectus" in the prospectus.
"ABS" means the Absolute Prepayment Model which we use to measure
prepayments on receivables and we describe under "The Receivables Pool--Weighted
Average Life of the Certificates".
"ABS TABLE" means the table captioned "Percent of Initial Note Principal
Amount or Initial Certificate Balance at Various ABS Percentages" beginning on
page S- of this prospectus supplement.
"ADVANCE" means, with respect to a receivable and a payment date, the
excess, if any, of (a) the product of the principal balance of that receivable
as of the first day of the related Collection Period and one-twelfth of its
contract rate of interest over (b) the interest actually received by the
servicer from the obligor or from payment of the Purchase Amount during or with
respect to that Collection Period.
"AVAILABLE INTEREST" means, with respect to any payment date, the excess of
(a) the sum of:
- Interest Collections for such payment date;
- all Advances made by the servicer for such payment date; and
- beginning with the Collection Period for which the servicer shall not have
made an Advance with respect to a receivable other than because such
receivable was a defaulted receivable, net investment earnings on amounts
on deposit in the Collection Account as of the last day of the related
Collection Period,
OVER (b) the amount of outstanding Advances to be reimbursed on or with respect
to such payment date.
"AVAILABLE PRINCIPAL" means, with respect to any payment date, the sum of
the following amounts with respect to the preceding Collection Period:
- that portion of all collections on the receivables allocable to principal
in accordance with the terms of the receivables and the servicer's
customary servicing procedures;
- to the extent attributable to principal, the Purchase Amount received with
respect to each receivable repurchased by the seller or purchased by the
servicer under an obligation which arose during that Collection Period;
and
- all liquidation proceeds, to the extent allocable to principal, received
during such Collection Period.
Available Principal on any payment date will exclude all payments and proceeds
of any receivables the Purchase Amount of which has been distributed on a prior
payment date.
"BOOK-ENTRY SECURITIES" means securities that are held in the U.S. through
DTC and in Europe through Clearstream or Euroclear.
"BUSINESS DAY" is a day other than a Saturday, a Sunday or a day on which
banking institutions or trust companies in the State of New York are authorized
by law, regulation or executive order to be closed.
"CLEARSTREAM" means Clearstream Banking, a societe anonyme and a
professional depository under the laws of Luxembourg.
"CERTIFICATES" means, collectively, the Class A Certificates and the
Class B Certificates.
S2-27
<PAGE>
"CERTIFICATE BALANCE" means, with respect to a class of certificates, the
original certificate balance for that class as reduced by all prior
distributions of principal to the holders of record of that class of
certificates. The original certificate balance of each class of certificates is
set forth on the cover of this prospectus supplement.
"CLASS A CERTIFICATEHOLDERS" means the holders of record of Class A
Certificates.
"CLASS A CERTIFICATES" means the % Automobile Loan Pass-Through
Certificates, Class A.
"CLASS A PERCENTAGE" means %.
"CLASS A PRINCIPAL DISTRIBUTION" means, with respect to any payment date,
the sum of (i) the Class A Percentage of the Available Principal plus the
Class A Percentage of Realized Losses, (ii) the Class A Percentage of the
Available Principal for any prior payment date and the Class A Percentage of
Realized Losses for any prior payment date, in each case only to the extent, if
any, that they have not already been distributed to the Class A
Certificateholders and (iii) if that payment date is the Final Scheduled Payment
date, the additional amount, if any, needed to reduce the certificate balance of
the Class A Certificates to zero.
"CLASS B CERTIFICATEHOLDERS" means the holders of record of Class B
Certificates.
"CLASS B CERTIFICATES" means the % Automobile Loan Pass-Through
Certificates, Class B.
"CLASS B PERCENTAGE" means %.
"CLASS B PRINCIPAL DISTRIBUTION" means, with respect to any payment date,
the sum of (i) the Class B Percentage of the Available Principal plus the
Class B Percentage of Realized Losses, (ii) the Class B Percentage of the
Available Principal for any prior payment date and the Class B Percentage of
Realized Losses for any prior payment date, in each case only to the extent, if
any, that they have not already been distributed to the Class B
Certificateholders and (iii) if that payment date is the Final Scheduled Payment
date, the additional amount, if any, needed to reduce the certificate balance of
the Class B Certificates to zero.
"CLOSING DATE" means .
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL AGENT" means and its successors and assigns as the
collateral agent to which the funds and investments in the reserve fund have
been pledged for the benefit of the certificateholders.
"COLLECTION ACCOUNT" means an account, held in the name of the indenture
trustee, into which the servicer is required to deposit collections on the
receivables and other amounts.
"COLLECTION PERIOD" means, with respect to a payment date, the calendar
month preceding that payment date, or in the case of the initial payment date,
the period from the cutoff date to .
"CONTRACT RATE" means the per annum interest rate borne by a receivable.
"CUTOFF DATE" means the date as of which the seller will transfer the
receivables to the trust, which is .
"DEFAULTED RECEIVABLE" means a receivable (i) that the servicer determines
is unlikely to be paid in full or (ii) with respect to which at least 10% of a
scheduled payment is 120 or more days delinquent as of the end of a calendar
month.
S2-28
<PAGE>
"DEFINITIVE CERTIFICATES" means with respect to any class of certificates,
such certificates issued in fully registered, certificated form to
certificateholders or their respective nominees, rather than to DTC or its
nominee.
"PAYMENT DATE" means the date on which the trust will distribute interest
and principal on the certificates, which will be the day of each
month or, if any such day is not a Business Day, on the next Business Day,
commencing .
"DTC" means The Depository Trust Company and any successor depository
selected by the trustee.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EUROCLEAR" means a professional depository operated by the Brussels,
Belgium office of Morgan Guaranty Trust Company of New York under contract with
Euroclear Clearance System, S.C., a Belgian cooperative corporation.
"FEDERAL TAX COUNSEL" means Brown & Wood LLP.
"FINAL SCHEDULED PAYMENT DATE" means .
"INTEREST COLLECTIONS" mean, with respect to any payment date, the sum of
the following amounts with respect to the preceding Collection Period:
(1) that portion of all collections on the receivables allocable to interest
in accordance with the terms of the receivables and the servicer's
customary servicing procedures;
(2) all liquidation proceeds, to the extent allocable to interest, received
during such Collection Period;
(3) all recoveries received during such Collection Period; and
(4) to the extent attributable to interest, the Purchase Amount with respect
to each receivable repurchased by the seller or purchased by the servicer
under an obligation which arose during such Collection Period.
Interest Collections for any payment date shall exclude all payments and
proceeds of any receivables the Purchase Amount of which has been distributed on
a prior payment date.
"LIQUIDATION PROCEEDS" means with respect to any receivable (a) insurance
proceeds received by the servicer and (b) the monies collected by the servicer
from whatever source, including but not limited to proceeds of a financed
vehicle sold after repossession, on a defaulted receivable net of any payments
required by law to be remitted to the obligor.
"PLAN" means an employee benefit or other plan or arrangement (such as an
individual plan or Keogh plan) that is subject to ERISA, Section 4975 of the
Code or a Similar Law.
"PURCHASE AMOUNT" means a price at which the seller or the servicer must
purchase a receivable, equal to the amount required to be paid by the related
obligor to prepay such receivable (including one month's interest thereon, in
the month of payment, at the Contract Rate), after giving effect to the receipt
of any monies collected (from whatever source) on such receivable.
"REALIZED LOSSES" means, for any Collection Period, the excess of the
aggregate principal balance of those receivables that were designated as
Defaulted Receivables during that Collection Period over liquidation proceeds
received with respect to those receivables during that Collection Period, to the
extent allocable to principal.
"RECOVERIES" means, with respect to any Collection Period after a Collection
Period in which a receivable becomes a Defaulted Receivable, all monies received
by the servicer with respect to such
S2-29
<PAGE>
Defaulted Receivable during that Collection Period, net of any fees, costs and
expenses incurred by the servicer in connection with the collection of such
Defaulted Receivable and any payments required by law to be remitted to the
obligor.
"RESERVE FUND" means the account which the seller will establish in the name
of the Collateral Agent into which the seller will deposit the Reserve Initial
Deposit. The trustee will make the other deposits into and withdrawals from the
reserve fund as specified in this prospectus supplement.
"RESERVE INITIAL DEPOSIT" means the $ initially deposited into
the reserve fund.
"SEC" means the Securities and Exchange Commission.
"SELLER" means .
"SERVICING FEE" means a fee payable to the servicer on each payment date for
servicing the receivables which is equal to the product of 1/12 of % and the
aggregate principal balance of the receivables as of the first day of the
related Collection Period.
"Specified Reserve Fund Balance" means the lesser of--
- % of the outstanding principal balance of the receivables; and
- % of the principal balance of the receivables as of the cutoff date.
"SUPPLEMENTAL SERVICING FEE" means, for each Collection Period, the amount
of any late fees and other administrative fees and expenses collected during
that Collection Period, plus any interest earned during the Collection Period on
amounts on deposit in the Collection Account during the Collection Period.
S2-30
<PAGE>
ANNEX I
FORM OF INVESTMENT LETTER--CLASS B CERTIFICATES
[Date]
Trust 200 - , as Issuer
,
as Trustee and
as Certificate Registrar
,
Ladies and Gentlemen:
In connection with our proposed purchase of the Class B % Asset Backed
Certificates (the "Certificates") of Trust 200 - (the "Issuer"),
a trust formed by Pooled Auto Securities Shelf LLC (the "Depositor"), we confirm
that:
1. We are either:
(a) not, and each account (if any) for which we are purchasing the
Certificates is not, (i) an employee benefit plan (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) that is subject to Title I of ERISA, (ii) a plan
described in Section 4975(e)(1) of the Internal Revenue Code of 1986, as
amended (the "Code") that is subject to Section 4975 of the Code,
(iii) a governmental plan, as defined in Section 3(32) of ERISA, subject
to any federal, state or local law which is, to a material extent,
similar to the provisions of Section 406 of ERISA or Section 4975 of the
Code, (iv) an entity whose underlying assets include plan assets by
reason of a plan's investment in the entity (within the meaning of
Department of Labor Regulation 29 C.F.R. Section 2510.3-101 or otherwise
under ERISA) or (v) a person investing "plan assets" of any such plan
(including without limitation, for purposes of this clause (v), an
insurance company general account, but excluding an entity registered
under the Investment Company Act of 1940, as amended), or
(b) an insurance company acting on behalf of a general account and (i) on
the date hereof less than 25% of the assets of such general account (as
reasonably determined by us) constitute "plan assets" for purposes of
Title I of ERISA and Section 4975 of the Code, (ii) the purchase and
holding of such Certificates are eligible for exemptive relief under
Sections (I) and (III) of Prohibited Transaction Class Exemption 95-60,
and (iii) the undersigned agrees that if, after the undersigned's initial
acquisition of the Certificates, at any time during any calendar quarter
25% or more of the assets of such general account (as reasonably
determined by us no less frequently than each calendar quarter)
constitute "plan assets" for purposes of Title I of ERISA or
Section 4975 of the Code and no exemption or exception from the
prohibited transaction rules applies to the continued holding of the
Certificates under Section 401(c) of ERISA and the final regulations
thereunder or under an exemption or regulation issued by the United
States Department of Labor under ERISA, we will dispose of all
Certificates then held in our general account by the end of the next
following calendar quarter.
2. We are, and each account (if any) for which we are purchasing the
Certificates is, a person who is (A) a citizen or resident of the United States,
(B) a corporation or partnership organized in or under the laws of the United
States or any political subdivision thereof, (C) an estate the income of which
is includable in gross income for United States tax purposes, regardless of its
source, (D) a trust if a U.S.
S2-I-1
<PAGE>
court is able to exercise primary supervision over the administration of such
trust and one or more Persons meeting the conditions of clause (A), (B), (C) or
(E) of this paragraph 2 has the authority to control all substantial decisions
of the trust or (E) a Person not described in clauses (A) through (D) above
whose ownership of the Certificates is effectively connected with such Person's
conduct of a trade or business within the United States (within the meaning of
the Code) and who provides the Issuer and the Depositor with an IRS Form 4224
(and such other certifications, representations, or opinions of counsel as may
be requested by the Issuer or the Depositor).
3. We understand that any purported resale, transfer, assignment,
participation, pledge, or other disposal of (any such act, a "Transfer") of any
Certificate (or any interest therein) to any person who does not meet the
conditions of paragraphs 1 and 2 above shall be null and void (each, a "Void
Transfer"), and the purported transferee in a Void Transfer shall not be
recognized by the Issuer or any other person as a Certificateholder for any
purpose.
4. We agree that if we determine to Transfer any of the Certificates we will
cause our proposed transferee to provide to the Issuer and the Certificate
Registrar a letter substantially in the form of this letter.
You are entitled to rely upon this letter and are irrevocably authorized to
produce this letter or a copy hereof to any interested party in any
administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.
Very truly yours,
By:
--------------------------------------
Name:
Title:
Securities To Be Purchased:
$ principal balance of Class B Certificates
Annex A attached hereto lists the name of the account and principal balance of
Certificates purchased for each account (if any) for which we are purchasing
Certificates.
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<PAGE>
THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES, AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS, DATED , 2000
PROSPECTUS
FIRST UNION AUTO RECEIVABLES TRUSTS
ASSET BACKED NOTES
ASSET BACKED CERTIFICATES
(EACH ISSUABLE IN SERIES)
------------------
POOLED AUTO SECURITIES SHELF LLC
------------------
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BEFORE YOU PURCHASE ANY OF THESE EACH TRUST--
SECURITIES, BE SURE TO READ THE RISK - will issue a series of asset-backed notes and/or
FACTORS BEGINNING ON PAGE OF certificates in one or more classes;
THIS PROSPECTUS AND THE RISK FACTORS - will own--
SET FORTH IN THE RELATED PROSPECTUS - a portfolio of motor vehicle installment loans;
SUPPLEMENT. - collections on those loans;
The notes and the certificates will - security interests in the vehicles financed by those
represent interests in or obligations loans; and
of the trust only and will not - funds in certain accounts of the trust; and
represent interests in or obligations - may have the benefit of one or more other forms of credit
of Pooled Auto Securities Shelf LLC enhancement.
or any of its affiliates. The main sources of funds for making payments on a trust's
This prospectus may be used to offer securities will be collections on its motor vehicle
and sell any of the notes and/or installment loans and any credit enhancement that the trust
certificates only if accompanied by may have.
the prospectus supplement for the The amounts, prices and terms of each offering of securities
related trust. will be determined at the time of sale and will be described
in an accompanying prospectus supplement.
</TABLE>
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS OR ANY RELATED PROSPECTUS SUPPLEMENT.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The date of this prospectus is , 200 .
<PAGE>
TABLE OF CONTENTS
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PAGE
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<S> <C>
IMPORTANT NOTICE ABOUT INFORMATION
PRESENTED IN THIS PROSPECTUS AND THE
ACCOMPANYING PROSPECTUS SUPPLEMENT..... 3
WHERE YOU CAN FIND ADDITIONAL
INFORMATION............................ 3
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE.............................. 3
Copies of the Documents................ 4
Summary................................ 5
RISK FACTORS........................... 9
The Trusts............................. 14
The Receivables........................ 14
The Seller and the Servicer............ 15
FASIT Election......................... 15
The Trustees........................... 15
The Receivables Pools.................. 16
MATURITY AND PREPAYMENT
CONSIDERATIONS......................... 18
POOL FACTORS AND TRADING INFORMATION... 19
Notes.................................. 19
Certificates........................... 20
The Factors Described Above Will
Decline as the Trust Makes Payments on
the Securities......................... 20
Additional Information................. 20
Use of Proceeds........................ 21
The Company and the Depositor.......... 21
Principal Documents.................... 21
CERTAIN INFORMATION REGARDING THE
SECURITIES............................. 23
General................................ 23
Fixed Rate Securities.................. 23
Floating Rate Securities............... 24
Book-Entry Registration................ 24
Definitive Securities.................. 29
Reports to Securityholders............. 29
THE INDENTURE.......................... 31
The Indenture Trustee.................. 36
DESCRIPTION OF THE RECEIVABLES TRANSFER
AND SERVICING AGREEMENTS............... 37
Sale and Assignment of Receivables..... 37
Accounts............................... 39
Servicing Procedures................... 39
Collections............................ 40
</TABLE>
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PAGE
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Advances............................... 40
Servicing Compensation and Expenses.... 41
Distributions.......................... 42
Credit and Cash Flow Enhancement....... 42
Net Deposits........................... 43
Statements to Trustees and Trusts...... 43
Evidence as to Compliance.............. 43
Certain Matters Regarding the
Servicer............................... 43
Events of Servicing Termination........ 44
Rights Upon Event of Servicing
Termination............................ 45
Waiver of Past Events of Servicing
Termination............................ 45
Amendment.............................. 45
Payment of Notes....................... 46
Termination............................ 46
List of Certificateholders............. 47
Administration Agreement............... 47
SOME IMPORTANT LEGAL ISSUES RELATING TO
THE RECEIVABLES........................ 48
General................................ 48
Security Interests in the Financed
Vehicles............................... 48
Enforcement of Security Interests in
Vehicles............................... 50
Certain Bankruptcy Considerations...... 50
Consumer Protection Laws............... 51
Other Matters.......................... 52
MATERIAL FEDERAL INCOME TAX
CONSEQUENCES........................... 52
Trusts for Which a Partnership Election
is Made................................ 52
Trusts in Which all Certificates are
Retained by the Seller or an Affiliate
of the Seller.......................... 59
Trusts Treated as Grantor Trusts....... 60
FASIT Provisions....................... 65
CERTAIN STATE TAX CONSEQUENCES......... 68
ERISA Considerations................... 68
Senior Certificates Issued by Trusts... 70
Special Considerations Applicable to
Insurance Company General Accounts..... 73
Plan of Distribution................... 73
Legal Opinions......................... 74
Glossary of Terms...................... 75
INFORMATION NOT REQUIRED IN
PROSPECTUS............................. II-1
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IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN
THIS PROSPECTUS AND THE ACCOMPANYING
PROSPECTUS SUPPLEMENT
We provide information on your securities in two separate documents that
offer varying levels of detail:
- this prospectus provides general information, some of which may not apply
to a particular series of securities, including your securities, and
- the accompanying prospectus supplement will provide a summary of the
specific terms of your securities.
If the terms of the securities described in this prospectus vary with the
accompanying prospectus supplement, you should rely on the information in the
prospectus supplement.
We include cross-references to sections in these documents where you can
find further related discussions. Refer to the table of contents in the front of
each document to locate the referenced sections.
You will find a glossary of defined terms used in this prospectus on page
.
You should rely only on the information contained in this prospectus and the
accompanying prospectus supplement, including any information incorporated by
reference. We have not authorized anyone to provide you with different
information. The information in this prospectus or the accompanying prospectus
supplement is only accurate as of the dates on their respective covers.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
Pooled Auto Securities Shelf LLC has filed a registration statement with the
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "Securities Act"). This prospectus is part of the Registration
Statement but the Registration Statement includes additional information.
You may inspect and copy the Registration Statement at:
- the public reference facilities maintained by the SEC at 450 Fifth Street,
N.W., Washington, D.C. 20549 (telephone 1-800-732-0330),
- the SEC's regional office at Citicorp Center, 500 West Madison Street,
14th Floor, Chicago, Illinois 60661, and
- the SEC's regional office at Seven World Trade Center, New York, New York
10048.
Also, the SEC maintains a Web site at http://www.sec.gov containing reports,
proxy and information statements and other information regarding registrants
that file electronically with the SEC.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" information we file with it,
which means that we can disclose important information to you by referring you
to those documents. The information incorporated by reference is considered to
be part of this prospectus. Information that we file later with the SEC will
automatically update the information in this prospectus. In all cases, you
should rely on the later information over different information included in this
prospectus or the related prospectus supplement. We incorporate by reference any
future annual, monthly or special SEC reports and proxy materials filed by or on
behalf of a trust until we terminate our offering of the securities by that
trust.
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<PAGE>
COPIES OF THE DOCUMENTS
You may receive a free copy of any or all of the documents incorporated by
reference in this prospectus or incorporated by reference into the accompanying
prospectus supplement if:
- you received this prospectus and the prospectus supplement and
- you request such copies from Pooled Auto Securities Shelf LLC, One First
Union Center, TW-9, Charlotte, North Carolina 28288. Telephone:
(704) 374-8437.
This offer only includes the exhibits to such documents if such exhibits are
specifically incorporated by reference in such documents. You may also read and
copy these materials at the public reference facilities of the SEC in
Washington, D.C. referred to above.
4
<PAGE>
SUMMARY
THE FOLLOWING SUMMARY IS A SHORT DESCRIPTION OF THE MAIN STRUCTURAL FEATURES
THAT A TRUST'S SECURITIES MAY HAVE. FOR THAT REASON, THIS SUMMARY DOES NOT
CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU OR THAT DESCRIBES
ALL OF THE TERMS OF A SECURITY. TO FULLY UNDERSTAND THE TERMS OF A TRUST'S
SECURITIES, YOU WILL NEED TO READ BOTH THIS PROSPECTUS AND THE RELATED
PROSPECTUS SUPPLEMENT IN THEIR ENTIRETY.
THE TRUSTS
A separate trust will be formed to issue each series of securities. If the
trust issues notes and certificates, it will be formed by a trust agreement
between the depositor and the trustee of the trust. If the trust issues only
certificates, it will be formed by a pooling and servicing agreement among the
seller, the servicer, the depositor and the trustee of the trust.
THE COMPANY
Pooled Auto Securities Shelf LLC.
DEPOSITOR
Either the company or a limited purpose finance subsidiary of the company.
SELLER
The prospectus supplement will name the seller for the trust.
SERVICER
The prospectus supplement will name the servicer for the trust.
TRUSTEE
The prospectus supplement will name the trustee for the trust.
INDENTURE TRUSTEE
If a trust issues notes, the prospectus supplement will name the indenture
trustee.
SECURITIES
A trust's securities may include one or more classes of notes and/or
certificates. You will find the following information about each class of
securities in the prospectus supplement:
- its principal amount;
- its interest rate, which may be fixed or variable or a combination;
- the timing, amount and priority or subordination of payments of principal
and interest;
- the method for calculating the amount of principal and interest payments;
- its final scheduled distribution date;
- whether and when it may be redeemed prior to its final distribution date;
and
- how losses on the receivables are allocated among the classes of
securities.
Some classes of securities may be entitled to:
- principal payments with disproportionate, nominal or no interest payments
or
- interest payments with disproportionate, nominal or no principal payments.
The prospectus supplement will identify any class of securities that is not
being offered to the public.
Generally, you may purchase the securities only in book-entry form and will
not receive your securities in definitive form. You may purchase securities in
the denominations set forth in the prospectus supplement. The record date for a
distribution date will be the business day immediately preceding the payment
date or, if definitive securities are issued, the last day of the preceding
calendar month.
OPTIONAL REDEMPTION
Except as otherwise specified in the related prospectus supplement, the
servicer will have the option to purchase the receivables of each trust on any
distribution date when the aggregate principal balance of the receivables sold
to the trust has declined to 10% or less of the initial
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amount. Upon such a purchase, the securities of that trust will be prepaid in
full.
THE RECEIVABLES AND OTHER TRUST PROPERTY
The receivables of each trust will consist of a pool of motor vehicle
installment loans originated, either (1) via direct channels or (2) indirectly
by motor vehicle dealers or lenders, and purchased, directly or indirectly, by a
seller, purchaser of acquired assets with dealers or lenders and sold to the
depositor. The receivables will be secured by new or used automobiles, minivans,
sport utility vehicles, light-duty trucks, motorcycles or commercial vehicles
and other property, including:
- the rights to receive payments made on the receivables after the cutoff
date specified in the related prospectus supplement;
- security interests in the vehicles financed by the receivables; and
- any proceeds from claims on various related insurance policies.
You will find a description of the characteristics of each trust's
receivables in the related prospectus supplement.
FOR A MORE DETAILED DESCRIPTION OF THE RECEIVABLES, INCLUDING THE CRITERIA
THEY MUST MEET IN ORDER TO BE INCLUDED IN A TRUST, AND THE OTHER PROPERTY
SUPPORTING THE SECURITIES, SEE "THE RECEIVABLES POOLS".
OTHER PROPERTY OF THE TRUST
In addition to the receivables, each trust will own amounts on deposit in
various trust accounts, which may include:
- an account into which collections are deposited;
- an account to fund post-closing purchases of additional receivables; or
- a reserve fund or other account providing credit enhancement.
PURCHASE OF RECEIVABLES AFTER THE CLOSING DATE
If a trust has not purchased all of its receivables at the time you purchase
your securities, it will purchase the remainder of its receivables from the
seller over a period specified in the prospectus supplement. A trust may, during
a period specified in the prospectus supplement, use principal collections on
its receivables to purchase additional receivables.
CREDIT OR CASH FLOW ENHANCEMENT
The prospectus supplement will specify the credit or cash flow enhancement,
if any, for each trust. Credit or cash flow enhancement may consist of one or
more of the following:
- subordination of one or more classes of securities;
- a reserve fund;
- overcollateralization (I.E., the amount by which the principal amount of
the receivables exceeds the principal amount of all of the trust's
securities);
- excess interest collections (I.E., the excess of anticipated interest
collections on the receivables over servicing fees, interest on the
trust's securities and any amounts required to be deposited in any reserve
fund);
- letter of credit or other credit facility;
- surety bond or insurance policy;
- liquidity arrangements;
- swaps (including currency swaps) and other derivative instruments and
interest rate protection agreements;
- repurchase or put obligations;
- yield supplement agreements;
- guaranteed investment contracts;
- guaranteed rate agreements; or
- other agreements with respect to third party payments or other support.
Limitations or exclusions from coverage could apply to any form of credit or
cash flow enhancement. The prospectus supplement will
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<PAGE>
describe the credit or cash flow enhancement and related limitations and
exclusions applicable for securities issued by a trust. Enhancements cannot
guarantee that losses will not be incurred on the securities.
RESERVE FUND
If there is a reserve fund, the seller will initially deposit in it cash or
securities having a value equal to the amount specified in the prospectus
supplement.
Amounts on deposit in a reserve fund will be available to cover shortfalls
in the payments on the securities as described in the prospectus supplement. The
prospectus supplement may also specify (1) a minimum balance to be maintained in
the reserve fund and what funds are available for deposit to reinstate that
balance and (2) when and to whom any amount will be distributed if the balance
exceeds this minimum amount.
FOR MORE INFORMATION ABOUT CREDIT ENHANCEMENT, SEE "DESCRIPTION OF THE
RECEIVABLES TRANSFER AND SERVICING AGREEMENTS--CREDIT AND CASH FLOW
ENHANCEMENT".
TRANSFER AND SERVICING OF THE RECEIVABLES
With respect to each trust, a seller will sell the related receivables to
the depositor pursuant to a receivables purchase agreement, which, in turn, will
transfer the receivables to the trust pursuant to a sale and servicing agreement
or a pooling and servicing agreement. The servicer will agree with the trust to
be responsible for servicing, managing, maintaining custody of and making
collections on the receivables.
FOR MORE INFORMATION ABOUT THE SALE AND SERVICING OF THE RECEIVABLES, SEE
"DESCRIPTION OF THE RECEIVABLES TRANSFER AND SERVICING AGREEMENTS--SALE AND
ASSIGNMENT OF RECEIVABLES".
SERVICING FEES
Each trust will pay the related servicer a servicing fee based on the
outstanding balance of the receivables. The amount of the servicing fee will be
specified in the prospectus supplement. The servicer may also be entitled to
retain as supplemental servicing compensation certain fees and charges paid by
obligors and net investment income from reinvestment of collections on the
receivables.
OPTIONAL SERVICER ADVANCES OF CERTAIN LATE INTEREST PAYMENTS
Unless otherwise specified in the related prospectus supplement, when
interest collections received on the receivables are less than the scheduled
interest collections in a monthly collection period, the servicer will advance
to the trust that portion of the shortfalls that the servicer, in its sole
discretion, expects to be paid in the future by the related obligors.
The servicer will be entitled to reimbursement from other collections of the
trust for advances that are not repaid out of collections of the related late
payments.
REPURCHASE MAY BE REQUIRED IN CERTAIN CIRCUMSTANCES
Unless otherwise provided in the related prospectus supplement, the seller
will be obligated to repurchase any receivable transferred to the trust, if
(1) one of the seller's representations or warranties is breached with respect
to that receivable, (2) the receivable is materially and adversely affected by
the breach and (3) the breach has not been cured following the discovery by or
notice to such seller and the depositor of the breach. If so specified in the
related prospectus supplement, the related seller will be permitted, in a
circumstance where it would otherwise be required to repurchase a receivable as
described in the preceding sentence, to instead substitute a comparable
receivable for the receivable otherwise requiring repurchase.
In the course of its normal servicing procedures, the servicer may defer or
modify the payment schedule of a receivable. Some of these arrangements may
obligate the servicer to repurchase the receivable.
FOR A DISCUSSION OF THE REPRESENTATIONS AND WARRANTIES GIVEN BY THE SELLER
AND THE SERVICER AND THEIR RELATED REPURCHASE OBLIGATIONS, SEE "DESCRIPTION OF
THE RECEIVABLES TRANSFER AND
7
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SERVICING AGREEMENTS--SALE AND ASSIGNMENT OF RECEIVABLES" AND "--SERVICING
PROCEDURES".
TAX STATUS
If the trust issues notes and the trust does not elect to be characterized
as a Financial Asset Securitization Investment Trust, federal tax counsel to the
trust will deliver an opinion when the notes are issued that for federal income
tax purposes:
- the notes will be characterized as debt unless otherwise stated in the
prospectus supplement and
- the trust will not be characterized as an association (or a publicly
traded partnership) taxable as a corporation.
If the trust is a grantor trust or elects to be treated as a Financial Asset
Securitization Investment Trust, you will find a discussion of the federal
income tax characterization of its certificates and the trust in this prospectus
and the prospectus supplement.
FOR ADDITIONAL INFORMATION CONCERNING THE APPLICATION OF FEDERAL AND STATE
TAX LAWS TO THE SECURITIES, SEE "MATERIAL FEDERAL INCOME TAX CONSEQUENCES".
ERISA CONSIDERATIONS
NOTES
Notes will generally be eligible for purchase by employee benefit plans.
UNSUBORDINATED GRANTOR TRUST CERTIFICATES
Certificates issued by a grantor trust that are not subordinated to any
other class will generally be eligible for purchase by employee benefit plans.
OTHER CERTIFICATES
Subordinated classes of certificates issued by a grantor trust and
certificates issued by owner trusts generally will not be eligible for purchase
by an employee benefit plan.
If you are an employee benefit plan, you should review the matters discussed
under "ERISA Considerations" before investing in the securities.
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RISK FACTORS
You should consider the following risk factors in deciding whether to
purchase any of the securities.
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YOU MAY HAVE DIFFICULTY SELLING There may be no secondary market for the securities.
YOUR SECURITIES OR OBTAINING Underwriters may participate in making a secondary market
YOUR DESIRED PRICE in the securities, but are under no obligation to do so.
We cannot assure you that a secondary market will develop.
In addition, there have been times in the past where there
have been very few buyers of asset backed securities and
thus there has been a lack of liquidity. There may be a
similar lack of liquidity in the future. As a result, you
may not be able to sell your securities when you want to
do so, or you may not be able to obtain the price that you
wish to receive.
INTERESTS OF OTHER PERSONS IN Financing statements under the Uniform Commercial Code
THE RECEIVABLES COULD REDUCE THE will be filed reflecting the sale of the receivables by
FUNDS AVAILABLE TO MAKE PAYMENTS the seller to the depositor and by the depositor to the
ON YOUR SECURITIES trust. Unless otherwise provided in the related standing
instructions, the seller will mark its computer systems,
and each of the seller and the depositor will mark its
accounting records, to reflect its sale of the
receivables. However, unless otherwise provided in the
related standing instructions, the servicer will maintain
possession of the receivables and will not segregate or
mark the receivables as belonging to the trust.
Additionally, another person could acquire an interest in
a receivable that is superior to the trust's interest by
obtaining physical possession of that receivable without
knowledge of the assignment of the receivable to the
trust. If another person acquires an interest in a
receivable that is superior to the trust's interest, some
or all of the collections on that receivable may not be
available to make payment on your securities.
Additionally, if another person acquires an interest in a
vehicle financed by a receivable that is superior to the
trust's security interest in the vehicle, some or all of
the proceeds from the sale of the vehicle may not be
available to make payments on the securities.
The trust's security interest in the financed vehicles
could be impaired for one or more of the following
reasons:
- the seller or the depositor might fail to perfect its
security interest in a financed vehicle;
- another person may acquire an interest in a financed
vehicle that is superior to the trust's security interest
through fraud, forgery, negligence or error because the
servicer will not amend the certificate of title or
ownership to identify the trust as the new secured
party;
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<TABLE>
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- the trust may not have a security interest in the
financed vehicles in certain states because the
certificates of title to the financed vehicles will not
be amended to reflect assignment of the security
interest to the trust;
- holders of some types of liens, such as tax liens or
mechanics' liens, may have priority over the trust's
security interest; and
- the trust may lose its security interest in vehicles
confiscated by the government.
Unless otherwise provided in the related prospectus
supplement, the related seller will be obligated to
repurchase from the related trust any receivable sold to
such trust as to which a perfected security interest in
the name of the related seller in the vehicle securing
such receivable did not exist as of the date such
receivable was transferred to such trust. However, the
related seller will not be required to repurchase a
receivable if a perfected security interest in the name of
the related seller in the vehicle securing a receivable
has not been perfected in the related trust or if the
security interest in a related vehicle or the receivable
becomes impaired after the receivable is sold to the
trust. If a trust does not have a perfected security
interest in a vehicle, its ability to realize on such
vehicle in the event of a default may be adversely
affected and some or all of the collections on that
vehicle may not be available to make payment on your
securities.
CONSUMER PROTECTION LAWS MAY Federal and state consumer protection laws impose
REDUCE PAYMENTS ON YOUR requirements upon creditors in connection with extensions
SECURITIES of credit and collections on retail installment loans.
Some of these laws make an assignee of the loan (such as a
trust) liable to the obligor for any violation by the
lender. Any liabilities of the trust under these laws
could reduce the funds that the trust would otherwise have
to make payments on your securities.
ONLY THE ASSETS OF THE TRUST ARE The securities represent interests solely in a trust or
AVAILABLE TO PAY YOUR SECURITIES indebtedness of a trust and will not be insured or
guaranteed by the depositor, the seller or any of their
respective affiliates, or any other person or entity other
than the trust. The only source of payment on your
securities are payments received on the receivables and,
if and to the extent available, any credit or cash flow
enhancement for the trust. Therefore, you must rely solely
on the assets of the trust for repayment of your
securities. If these assets are insufficient, you may
suffer losses on your securities.
AMOUNTS ON DEPOSIT IN ANY The amount required to be on deposit in any reserve fund
RESERVE FUND WILL BE LIMITED AND will be limited. If the amounts in the reserve fund are
SUBJECT TO DEPLETION. depleted as amounts are paid out to cover shortfalls in
distributions of principal and interest on securities, the
trust will depend solely on collections on the receivables
and any other credit or cash flow enhancement to make
payments on your securities. In addition, the minimum
required balance in a reserve fund may decrease as the
outstanding balance of the receivables decreases.
</TABLE>
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YOU MAY SUFFER LOSSES UPON A Under certain circumstances described herein and in the
LIQUIDATION OF THE RECEIVABLES related prospectus supplement, the receivables of a trust
IF THE PROCEEDS OF THE may be sold after the occurrence of an event of default.
LIQUIDATION ARE LESS THAN THE The related securityholders will suffer losses if the
AMOUNTS DUE ON THE OUTSTANDING trust sells the receivables for less than the total amount
SECURITIES. due on its securities. We cannot assure you that
sufficient funds would be available to repay those
securityholders in full.
SUBORDINATION OF CERTAIN To the extent specified in the related prospectus
SECURITIES MAY REDUCE PAYMENTS supplement, the rights of the holders of any class of
TO THOSE SECURITIES securities to receive payments of interest and principal
may be subordinated to one or more other classes of
securities. Subordination may take the following forms:
- interest payments on any date on which interest is due
may first be allocated to the more senior classes;
- principal payments on the subordinated classes might not
begin until principal of the more senior classes is repaid
in full;
- principal payments on the more senior classes may be
made on a distribution date before interest payments on
the subordinated classes are made; and
- if the trustee sells the receivables, the net proceeds
of that sale may be allocated first to pay principal and
interest on the more senior classes.
The timing and priority of payment, seniority, allocations
of losses and method of determining payments on the
respective classes of securities of any trust will be
described in the prospectus supplement.
PREPAYMENTS ON THE RECEIVABLES You may not be able to reinvest the principal repaid to
MAY ADVERSELY AFFECT THE AVERAGE you at a rate of return that is equal to or greater than
LIFE OF AND RATE OF RETURN ON the rate of return on your securities. Faster than
YOUR SECURITIES expected prepayments on the receivables may cause the
trust to make payments on its securities earlier than
expected. We cannot predict the effect of prepayments on
the average life of your securities.
All receivables, by their terms, may be prepaid at any
time. Prepayments include:
- prepayments in whole or in part by the obligor;
- liquidations due to default;
- partial payments with proceeds from physical damage,
credit life and disability insurance policies;
- required purchases of receivables by the servicer or
repurchases of receivables by the seller for specified
breaches of their representations or covenants; and
</TABLE>
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<TABLE>
<S> <C>
- an optional repurchase of a trust's receivables by the
servicer when their aggregate principal balance is 10% or
less of the initial aggregate principal balance, or
under such other circumstances as may be specified in
the related prospectus supplement.
A variety of economic, social and other factors will
influence the rate of optional prepayments on the
receivables and defaults. As a result of prepayments, the
final payment of each class of securities is expected to
occur prior to the final scheduled distribution date
specified in the related prospectus supplement. If
sufficient funds are not available to pay any class of
notes in full on its final distribution date, an event of
default will occur and final payment of such class of
notes may occur later than such date.
FOR MORE INFORMATION REGARDING THE TIMING OF REPAYMENTS OF
THE SECURITIES, SEE "MATURITY AND PREPAYMENT
CONSIDERATIONS" IN THE RELATED PROSPECTUS SUPPLEMENT AND
IN THIS PROSPECTUS.
YOU MAY SUFFER A LOSS ON YOUR Unless otherwise specified in the related prospectus
SECURITIES BECAUSE THE SERVICER supplement, each servicer which satisfies certain
MAY COMMINGLE COLLECTIONS ON THE requirements will be permitted to hold with its own funds
RECEIVABLES WITH ITS OWN FUNDS (1) collections it receives from obligors on the
receivables and (2) the purchase price of receivables
required to be repurchased from the trust until the day
prior to the date on which the related distributions are
made on the securities. During this time, the servicer may
invest those amounts at its own risk and for its own
benefit and need not segregate them from its own funds. If
the servicer is unable to pay these amounts to the trust
on the distribution date, you might incur a loss on your
securities.
FOR MORE INFORMATION ABOUT THE SERVICER'S OBLIGATIONS
REGARDING PAYMENTS ON THE RECEIVABLES, SEE "DESCRIPTION OF
THE RECEIVABLES TRANSFER AND SERVICING
AGREEMENTS--COLLECTIONS".
THE SENIOR CLASS OF SECURITIES Generally, the holders of a majority of a trust's senior
CONTROLS REMOVAL OF THE SERVICER class of securities (or the applicable trustee acting on
UPON A DEFAULT ON ITS SERVICING their behalf) can remove the related servicer if the
OBLIGATIONS servicer--
- does not deliver to the applicable trustee the available
funds for application to a required payment after a grace
period after notice or discovery;
- defaults on a servicing obligation which materially and
adversely affects the trust after a grace period after
notice; or
- initiates or becomes the subject of certain insolvency
proceedings.
</TABLE>
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<TABLE>
<S> <C>
Those holders may also waive a default by the servicer.
The holders of any subordinate class of securities may not
have any rights to participate in such determinations for
so long as any of the more senior classes are outstanding,
and the subordinate classes of securities may be adversely
affected by determinations made by the more senior
classes. See "Description of the Receivables Transfer and
Servicing Agreements--Events of Servicing Termination".
GEOGRAPHIC CONCENTRATION OF A Adverse economic conditions or other factors particularly
TRUST'S RECEIVABLES MAY affecting any state or region where there is a high
ADVERSELY AFFECT YOUR SECURITIES concentration of a trust's receivables could adversely
affect the securities of that trust. We are unable to
forecast, with respect to any state or region, whether any
such conditions may occur, or to what extent such
conditions may affect receivables or the repayment of your
securities. The location of a trust's receivables by
state, based upon obligors' addresses at the time the
receivables were originated, will be set out in the
related prospectus supplement.
RATINGS OF THE SECURITIES At the initial issuance of the securities of a trust, at
least one nationally recognized statistical rating
organization will rate the offered securities in one of
the four highest rating categories or in the categories
otherwise specified in the prospectus supplement. A rating
is not a recommendation to purchase, hold or sell
securities, and it does not comment as to market price or
suitability for a particular investor. The ratings of the
offered securities address the likelihood of the payment
of principal and interest on the securities according to
their terms. We cannot assure you that a rating will
remain for any given period of time or that a rating
agency will not lower or withdraw its rating if, in its
judgment, circumstances in the future so warrant. A
reduction or withdrawal of an offered security's rating
would adversely affect its value.
</TABLE>
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THE TRUSTS
The depositor will establish a separate trust as either a Delaware business
trust or a common law trust to issue each series of notes and/or certificates.
Each trust will be established for the transactions described in this prospectus
and in the related prospectus supplement. If a trust is a grantor trust for
federal income tax purposes, the prospectus supplement will so state.
The terms of each series of notes or certificates issued by each trust and
additional information concerning the assets of each trust and any applicable
credit or cash flow enhancement will be set forth in a prospectus supplement.
THE RECEIVABLES
The property of each trust will consist of a pool of motor vehicle
installment loans secured by security interests in new and used automobiles,
minivans, sport utility vehicles, light-duty trucks, motorcycles or commercial
vehicles financed by those contracts, ("financed vehicles") and the receivables
with respect thereto and all payments due thereunder on and after the applicable
cutoff date (as such term is defined in the related prospectus supplement, a
"cutoff date") in the case of precomputed receivables and all payments received
thereunder on and after the applicable cutoff date in the case of simple
interest receivables. The receivables were or will be originated, either via
direct channels or indirectly by dealers or lenders, purchased by the related
seller, directly or indirectly, pursuant to agreements with dealers or such
lenders and sold to the depositor. Such receivables will be serviced by the
servicer specified in the related prospectus supplement. On or prior to the
closing date for the trust, the seller will sell the receivables to the
depositor and the depositor, in turn, will sell the receivables to the trust. To
the extent provided in the prospectus supplement, the seller will convey
additional receivables ("subsequent receivables") to the trust as frequently as
daily during the period (the "funding period") specified in the prospectus
supplement. A trust will purchase any subsequent receivables with amounts
deposited in a pre-funding account. Up to 50% of the net proceeds from the sale
of the securities issued by a trust may be deposited into a pre-funding account
for the purchase of subsequent receivables. To the extent provided in the
prospectus supplement, a trust may use principal collections on its receivables
to purchase additional receivables ("additional receivables") from the seller
over a specified period (a "revolving period").
The property of each trust will also include:
- security interests in the financed vehicles;
- the rights to proceeds, if any, from claims on certain theft, physical
damage, credit life or credit disability insurance policies, if any,
covering the financed vehicles or the obligors;
- the seller's and depositor's rights to certain documents and instruments
relating to the receivables;
- such amounts as from time to time may be held in one or more accounts
maintained for the trust;
- any credit or cash flow enhancement specified in the prospectus
supplement;
- certain payments and proceeds with respect to the receivables held by the
servicer;
- certain rebates of premiums and other amounts relating to certain
insurance policies and other items financed under the receivables; and
- any and all proceeds of the above items.
If the trust issues notes, the trust's rights and benefits with respect to
the property of the trust will be assigned to the indenture trustee for the
benefit of the noteholders.
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<PAGE>
In the alternative, the property of each trust may consist of a pool of
notes secured by receivables and the related financed vehicles and all proceeds
generated by the receivables and financed vehicles. If the property of a trust
includes secured notes, we will provide more specific information about the
origination and servicing of such secured notes and the consequences of
including such secured notes in a trust in the related prospectus supplement.
THE SELLER AND THE SERVICER
Certain information concerning the related seller's experience with respect
to its portfolio of receivables (including previously sold receivables which the
seller continues to service) will be set forth in each prospectus supplement. We
cannot assure you that the delinquency, repossession and net loss experience on
any pool of receivables transferred to a trust will be comparable to that
information.
A servicer specified in the related prospectus supplement will service the
receivables held by each trust and will receive fees for such services. To
facilitate the servicing of the receivables, each trustee will authorize the
applicable servicer to retain physical possession of the receivables held by
each trust and other documents relating thereto as custodian for each such
trust. Due to the administrative burden and expense, the certificates of title
or UCC financing statements, as applicable, to the financed vehicles will not be
amended to reflect the sale and assignment of the security interest in the
financed vehicles to each trust. See "Risk Factors--Interests of other persons
in the receivables could reduce the payments on your securities" and
"Description of the Receivables Transfer and Servicing Agreements--Sale and
Assignment of Receivables".
FASIT ELECTION
If specified in the related prospectus supplement, principal collections
received on the receivables may be applied to purchase additional receivables
which will become assets of the related trust. Such additions may be made in
connection with a trust that is taxed as a partnership or with respect to which
a FASIT election has been made. The related prospectus supplement will set forth
the characteristics that such additional receivables will be required to meet.
THE TRUSTEES
The trustee for each trust and, if notes are issued, the indenture trustee,
will be specified in the related prospectus supplement. The liability of each
trustee in connection with the issuance and sale of the securities will be
limited solely to the express obligations of the trustee set forth in the
applicable trust agreement, pooling and servicing agreement or indenture. A
trustee may resign at any time, in which event the administrator of the trust,
in the case of a trust agreement, or the servicer, in case of a pooling and
servicing agreement or indenture, will be obligated to appoint a successor
trustee. The administrator of each trust may also remove a trustee if:
- the trustee ceases to be eligible to continue as trustee under the
applicable trust agreement, pooling and servicing agreement or indenture,
or
- the trustee becomes insolvent.
In either of these circumstances, the administrator or servicer must appoint
a successor trustee. If a trustee resigns or is removed, the resignation or
removal and appointment of a successor trustee will not become effective until
the successor trustee accepts its appointment.
You will find the addresses of the principal offices of the trust and each
trustee in the prospectus supplement.
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<PAGE>
THE RECEIVABLES POOLS
CRITERIA FOR SELECTING THE RECEIVABLES. The receivables to be held by each
trust have been or will be originated, either via direct channels or indirectly
by a dealer or lender and purchased by a seller pursuant to an agreement between
the related seller and the dealer or lender, as applicable. Each seller with
respect to a series of securities will be identified in the related prospectus
supplement. Receivables of a seller will be transferred to the depositor
pursuant to a receivables purchase agreement for sale by the depositor to the
applicable trust.
Subsequent receivables may be originated, either via direct channels or
indirectly by dealers or lenders at a later date using credit criteria different
from those which were applied to the receivables transferred to a trust on the
applicable closing date and may be of a different credit quality and seasoning.
In addition, following the transfer of subsequent receivables to the applicable
trust, the characteristics of the entire pool of receivables included in such
trust may vary significantly from those of the receivables transferred to such
trust on the closing date.
The related prospectus supplement will describe the applicable seller's
underwriting procedures and guidelines, including the type of information
reviewed in respect of each applicant, and the applicable servicer's servicing
procedures, including the steps customarily taken in respect of delinquent
receivables and the maintenance of physical damage insurance.
The receivables to be held by each trust will be purchased by the depositor
from a seller in accordance with several criteria, including that each
receivable
- is secured by a financed vehicle that, as of the cutoff date, has not been
repossessed without reinstatement,
- was originated in the United States,
- has a fixed or variable interest rate,
- provides for level monthly payments that fully amortize the amount
financed over its original term to maturity or provides for a different
type of amortization described in the prospectus supplement and
- satisfies the other criteria, if any, set forth in the prospectus
supplement.
No selection procedures believed by the related seller to be adverse to the
holders of securities of any series were or will be used in selecting the
receivables for each trust. Terms of the receivables included in each trust
which are material to investors will be described in the related prospectus
supplement.
SIMPLE INTEREST RECEIVABLES. The receivables may provide for the
application of payments on the simple interest method that provides for the
amortization of the loan over a series of fixed level payment monthly
installments. Unlike the monthly installment under an actuarial receivable, each
monthly installment under a simple interest receivable consists of an amount of
interest which is calculated on the basis of the outstanding principal balance
multiplied by the stated contract rate and further multiplied by the period
elapsed (as a fraction of a calendar year) since the last payment of interest
was made. As payments are received under a simple interest receivable, the
amount received is applied, first, to interest accrued to the date of payment,
second, to reduce the unpaid principal balance, and third, to late fees and
other fees and charges, if any. Accordingly, if an obligor on a simple interest
receivable pays a fixed monthly installment before its scheduled due date--
- the portion of the payment allocable to interest for the period since the
preceding payment was made will be less than it would have been had the
payment been made as scheduled and
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<PAGE>
- the portion of the payment applied to reduce the unpaid principal balance
will be correspondingly greater.
Conversely, if an obligor pays a fixed monthly installment after its
scheduled due date--
- the portion of the payment allocable to interest for the period since the
preceding payment was made will be greater than it would have been had the
payment been made as scheduled and
- the portion of the payment applied to reduce the unpaid principal balance
will be correspondingly less.
In either case, the obligor under a simple interest receivable pays fixed
monthly installments until the final scheduled payment date, at which time the
amount of the final installment is increased or decreased as necessary to repay
the then outstanding principal balance. If a simple interest receivable is
prepaid, the obligor is required to pay interest only to the date of prepayment.
PRECOMPUTED RECEIVABLES. Alternatively, the receivables may provide for
amortization of the loan over a series of fixed level payment monthly
installments, each consisting of an amount of interest equal to 1/12 of the
stated contract rate of interest of the loan multiplied by the unpaid principal
balance of the loan, and an amount of principal equal to the remainder of the
monthly payment ("actuarial receivables"), or for allocation of payments
according to the "sum of periodic balances" or "sum of monthly payments" method,
similar to the "rule of 78's" ("rule of 78's receivables"). A rule of 78's
receivable provides for the payment by the obligor of a specified total amount
of payments, payable in equal monthly installments on each due date, which total
represents the principal amount financed and add-on interest in an amount
calculated at the stated contract rate of interest for the term of the loan. The
rate at which such amount of add-on interest is earned and, correspondingly, the
amount of each fixed monthly payment allocated to reduction of the outstanding
principal are calculated in accordance with the "rule of 78's".
If the receivables in a pool of receivables included in a trust are neither
simple interest receivables nor precomputed receivables, the prospectus
supplement will describe the method of calculating interest on the receivables.
BALLOON PAYMENT RECEIVABLES. The receivables to be held by each trust,
whether simple interest receivables or precomputed receivables, may provide for
level monthly payments that fully amortize the amount financed over its original
term to maturity or, alternatively, provide for the amount financed to amortize
over a series of equal monthly installments with a substantially larger final
scheduled payment of principal together with one month's interest ("balloon
payment receivables"). This final payment, known as a "balloon payment", is
generally set by the related seller for each particular model of vehicle at the
time the receivable is originated and is due at the end of the term of the
receivable. The net amount actually due from an obligor at the end of term of a
balloon payment receivable may be greater or less than the balloon payment as a
result of:
- in the case of a simple interest receivable, early or late payments by the
obligor during the term of the receivable and the application of day
counting conventions and
- in the case of a simple interest receivable or an actuarial receivable,
additional fees and charges that may be owed by the obligor with respect
to the contract or the financed vehicle, including charges for excess wear
and tear and excess mileage on the financed vehicle.
Upon maturity of a balloon payment receivable, the related obligor may
satisfy the amount it owes by:
- paying the remaining principal amount of the receivable, all accrued and
unpaid interest, plus any fees, charges, and other amounts then owing,
during the term of the receivable and the application of day counting
conventions,
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<PAGE>
- refinancing the net amount then due, which may be greater or less that the
balloon payment, subject to several conditions or
- selling the related financed vehicle to the servicer or its assignee for
an amount equal to the balloon payment, as reduced by charges for excess
wear and tear and excess mileage and by a disposition fee payable to the
servicer, and paying any excess of the total amount owed under the
receivable over the balloon payment to the servicer.
If the obligor sells the financed vehicle to the servicer, acting on behalf
of the trust, the trust may or may not receive the full amount of the balloon
payment upon the subsequent sale of the financed vehicle. If the full amount
owed by an obligor under a balloon payment receivable is not collected, the
shortfall will reduce the funds available to make payments on the securities.
If the receivables in a pool of receivables included in a trust include
balloon payment receivables, we will provide more specific information about the
origination and servicing of such receivables and the consequences of including
such receivables in a trust in the related prospectus supplement.
WE WILL PROVIDE MORE SPECIFIC INFORMATION ABOUT THE RECEIVABLES IN THE
PROSPECTUS SUPPLEMENT
Information with respect to each pool of receivables included in a trust
will be set forth in the related prospectus supplement, including, to the extent
appropriate:
- the portion of the receivables pool consisting of precomputed receivables
and of simple interest receivables;
- the portion of the receivables pool secured by new financed vehicles and
by used financed vehicles;
- the aggregate principal balance of all of the related receivables;
- the average principal balance of the related receivables and the range of
principal balances;
- the number of receivables in the receivables pool;
- the geographic distribution of receivables in the receivables pool;
- the average original amount financed and the range of original amounts
financed;
- the weighted average contract rate of interest and the range of such
rates;
- the weighted average original term and the range of original terms;
- the weighted average remaining term and the range of remaining terms;
- the scheduled weighted average life; and
- the distribution by stated contract rate of interest.
MATURITY AND PREPAYMENT CONSIDERATIONS
The weighted average life of the securities of any trust will generally be
influenced by the rate at which the principal balances of its receivables are
paid, which payment may be in the form of scheduled amortization or prepayments.
"Prepayments" for these purposes includes the following circumstances:
- Prepayments by obligors, who may repay at any time without penalty.
- The seller may be required to repurchase a receivable sold to the trust if
certain breaches of representations and warranties occur and the
receivable is materially and adversely affected by the breach.
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- The servicer may be obligated to purchase a receivable from the trust if
certain breaches of covenants occur or if the servicer extends or modifies
the terms of a receivable beyond the collection period preceding the final
payment date for the securities specified in the prospectus supplement.
- Partial prepayments, including those related to rebates of extended
warranty contract costs and insurance premiums.
- Liquidations of the receivables due to default.
- Partial prepayments from proceeds from physical damage, credit life and
disability insurance policies.
In light of the above considerations, we cannot assure you as to the amount
of principal payments to be made on the securities of a trust on each payment
date since that amount will depend, in part, on the amount of principal
collected on the trust's receivables during the applicable collection period.
Any reinvestment risks resulting from a faster or slower incidence of prepayment
of receivables will be borne entirely by the securityholders. The related
prospectus supplement may set forth certain additional information with respect
to the maturity and prepayment considerations applicable to the receivables and
the securities of the trust.
The rate of prepayments on the receivables may be influenced by a variety of
economic, social and other factors, including the fact that an obligor may not
sell or transfer the financed vehicle without the seller's consent. These
factors may also include unemployment, servicing decisions, seasoning of loans,
destruction of vehicles by accident, sales of vehicles and market interest
rates. A predominant factor affecting the prepayment of a large group of loans
is the difference between the interest rates on the loans and prevailing market
interest rates. If the prevailing market interest rates were to fall
significantly below the interest rates borne by the loans, the rate of
prepayment and refinancings would be expected to increase. Conversely, if
prevailing market interest rates were to increase significantly above those
interest rates, the rate of prepayments and refinancings would be expected to
decrease.
The related prospectus supplement may set forth certain additional
information with respect to the maturity and prepayment considerations
applicable to the receivables and the securities of the trust.
POOL FACTORS AND TRADING INFORMATION
The servicer will provide to you in each report which it delivers to you a
factor which you can use to compute your portion of the principal amount
outstanding on the notes or certificates.
NOTES
HOW THE SERVICER COMPUTES THE FACTOR FOR YOUR CLASS OF NOTES. The servicer
will compute a separate factor for each class of notes. The factor for each
class of notes will be a seven-digit decimal which the servicer will compute
prior to each distribution with respect to such class of notes indicating the
remaining outstanding principal amount of such class of notes, as of the
applicable distribution date. The servicer will compute the factor after giving
effect to payments to be made on such distribution date, as a fraction of the
initial outstanding principal amount of such class of notes.
YOUR PORTION OF THE OUTSTANDING AMOUNT OF THE NOTES. For each note you own,
your portion of that class of notes is the product of--
- the original denomination of your note and
- the factor relating to your class of notes computed by the servicer in the
manner described above.
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CERTIFICATES
HOW THE SERVICER COMPUTES THE FACTOR FOR YOUR CLASS OF CERTIFICATES. The
servicer will compute a separate factor for each class of certificates. The
factor for each class of certificates will be a seven-digit decimal which the
servicer will compute prior to each distribution with respect to such class of
certificates indicating the remaining outstanding balance of such class of
certificates, as of the applicable distribution date. The factor will be
calculated after giving effect to distributions to be made on such distribution
date, as a fraction of the initial outstanding balance of such class of
certificates.
YOUR PORTION OF THE OUTSTANDING AMOUNT OF THE CERTIFICATES. For each
certificate you own, your portion of that class of certificates is the product
of--
- the original denomination of your certificate and
- the factor relating to your class of certificates computed by the servicer
in the manner described above.
THE FACTORS DESCRIBED ABOVE WILL DECLINE AS THE TRUST MAKES PAYMENTS ON THE
SECURITIES
The factor for each class of notes and certificates will initially be
1.0000000. The factors will then decline to reflect reductions, as applicable,
in--
- the outstanding principal amount of the applicable class of notes or
- the outstanding balance of the applicable class of certificates.
These amounts will be reduced over time as a result of scheduled payments,
prepayments, purchases of the receivables by the seller or the servicer and
liquidations of the receivables.
ADDITIONAL INFORMATION
Unless otherwise provided in the related prospectus supplement with respect
to a trust, the noteholders and the certificateholders, as applicable, will
receive reports on or about each distribution date concerning (i) with respect
to the collection period immediately preceding such distribution date, payments
received on the receivables, the outstanding balance of the related pool of
receivables, factors for each class of notes and certificates described above,
as applicable, and various other items of information, and (ii) with respect to
the collection period second preceding such distribution date, as applicable,
amounts allocated or distributed on the preceding distribution date and any
reconciliation of such amounts with information provided by the servicer prior
to such current distribution date. In addition, securityholders of record during
any calendar year will be furnished information for tax reporting purposes not
later than the latest date permitted by law. See "Certain Information Regarding
the Securities--Reports to Securityholders".
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USE OF PROCEEDS
Unless the related prospectus supplement provides for other applications,
the net proceeds from the sale of the securities of a trust will be applied by
the trust:
- to the purchase of the receivables from the depositor;
- if the trust has a pre-funding account, to make the deposit into that
account;
- if the trust has a yield supplement account, to make the deposit into
that account;
- if the trust has a reserve fund, to make the initial deposit into that
account; and
- for any other purposes specified in the prospectus supplement.
The depositor will use that portion of such net proceeds paid to it with
respect to any such trust to purchase receivables from the related seller and to
pay for certain expenses incurred in connection with the purchase of the
receivables and sale of the securities. The trust may also issue certain classes
of securities to the seller in partial payment for the receivables.
THE COMPANY AND THE DEPOSITOR
Pooled Auto Securities Shelf LLC (the "company") was formed in the State of
Delaware on April 14, 2000 as a single member limited liability company. The
sole equity member of the company is First Union Securities, Inc. The company
maintains its principal office at One First Union Center, TW-9, Charlotte, North
Carolina 28288. Its telephone number is (704) 374-8437.
As specified in the related prospectus supplement, the depositor with
respect to any series of securities (the "depositor") may be the company or a
limited purpose finance subsidiary of the company. The company anticipates that
the depositor will acquire receivables to be included in each trust from sellers
in the open market or in privately negotiated transactions.
The depositor will have no ongoing servicing obligations or responsibilities
with respect to any financed vehicle.
The company does not have, is not required to have, and is not expected in
the future to have, any significant assets. None of the company, the related
seller, the related depositor or any of their respective affiliates will insure
or guarantee the receivables or the securities of any series.
PRINCIPAL DOCUMENTS
In general, the operations of a trust will be governed by the following
documents:
IF THE TRUST ISSUES NOTES:
<TABLE>
<CAPTION>
DOCUMENT PARTIES PRIMARY PURPOSES
-------- ------- ----------------
<S> <C> <C>
Trust Agreement.............. Trustee and the depositor - Creates the trust
- Provides for issuance of
certificates and payments
to certificateholders
- Establishes rights and
duties of trustee
- Establishes rights of
certificateholders
</TABLE>
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<TABLE>
<CAPTION>
DOCUMENT PARTIES PRIMARY PURPOSES
-------- ------- ----------------
<S> <C> <C>
Indenture.................... Trust, as issuer of the - Provides for issuance of
notes, and indenture trustee the notes, the terms of the
notes and payments to
noteholders
- Establishes rights and
duties of indenture trustee
- Establishes rights of
noteholders
Sale and Servicing The seller, the servicer, and - Effects sale of receivables
Agreement.................... a trust as purchaser to the trust
- Contains representations
and warranties of seller
concerning the receivables
- Contains servicing
obligations of servicer
- Provides for compensation
to servicer
- Directs how cash flow will
be applied to expenses of the
trust and payments on its
securities
</TABLE>
IF THE TRUST IS A GRANTOR TRUST (AS SPECIFIED IN THE PROSPECTUS SUPPLEMENT):
<TABLE>
<CAPTION>
DOCUMENT PARTIES PRIMARY PURPOSES
-------- ------- ----------------
<S> <C> <C>
Pooling and Servicing Trustee, the seller and the - Creates the trust
Agreement servicer - Effects sale of receivables
to the trust
- Contains representations
and warranties of seller
concerning the receivables
- Contains servicing
obligations of servicer
- Provides for compensation
to servicer
- Provides for issuance of
certificates and payments
to certificateholders
- Directs how cash flow will
be applied to expenses of the
trust and payments to
certificateholders
- Establishes rights and
duties of trustee
- Establishes rights of
certificateholders
</TABLE>
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Various provisions of these documents are described throughout this
prospectus and in the related prospectus supplement. The prospectus supplement
for a series will describe any material provisions of these documents as used in
that series that differ in a material way from the provisions described in this
prospectus.
A form of each of these principal documents has been filed as an exhibit to
the registration statement of which this prospectus forms a part. The summaries
of the principal documents in this prospectus do not purport to be complete and
are subject to, and are qualified in their entirety by reference to, all the
provisions of those principal documents.
CERTAIN INFORMATION REGARDING THE SECURITIES
GENERAL
The prospectus supplement will describe
- the timing, amount and priority of payments of principal and interest
on each class of the securities,
- their interest rates or the formula for determining their interest
rates,
- the method of determining the amount of their principal payments,
- the priority of the application of the trust's available funds to its
expenses and payments on its securities and
- the allocation of losses on the receivables among the classes of
securities.
The rights of any class of securities to receive payments may be senior or
subordinate to other classes of securities. A security may be entitled to
- principal payments with disproportionate, nominal or no interest
payments or
- interest payments with disproportionate, nominal or no principal
payments or
- residual cash flow remaining after all other classes have been paid.
Interest rates may be fixed or floating. If a class of securities is redeemable,
the prospectus supplement will describe when they may be redeemed and at what
price. The aggregate initial principal amount of the securities issued by a
trust may be greater than, equal to or less than the aggregate initial principal
amount of the receivables held by that trust.
Payments of principal and interest on any class of securities will be made
on a pro rata basis among all the security holders of such class. If the amount
of funds available to make a payment on a class is less than the required
payment, the holders of the securities of that class will receive their pro rata
share of the amount available for the class. A series may provide for a
liquidity facility or similar arrangement that permits one or more classes of
securities to be paid in planned amounts on scheduled distribution dates.
FIXED RATE SECURITIES
Each class of securities entitled to receive principal and interest payments
may bear interest at a fixed rate of interest or a floating rate of interest as
more fully described below and in the related prospectus supplement. Each class
of fixed rate securities will bear interest at the applicable per annum interest
rate or pass-through rate, as the case may be, specified in the related
prospectus supplement. Interest on each class of fixed rate securities may be
computed on the basis of a 360-day year of twelve 30-day months or on such other
day count basis as is specified in the related prospectus supplement.
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FLOATING RATE SECURITIES
Each class of floating rate securities will bear interest for each
applicable interest accrual period described in the prospectus supplement at a
rate determined (i) by reference to a base rate of interest, plus or minus the
number of basis points specified in the prospectus supplement, if any, or
multiplied by the percentage specified in the prospectus supplement, if any, or
(ii) as otherwise specified in the related prospectus supplement.
The base rate of interest for any floating rate securities will be based on
a London interbank offered rate, commercial paper rates, Federal funds rates,
United States government treasury securities rates, negotiable certificates of
deposit rates or another rate set forth in the related prospectus supplement.
A class of floating rate securities may also have either or both of the
following (in each case expressed as a rate per annum):
- a maximum limitation, or ceiling, on the rate at which interest may
accrue during any interest accrual period. In addition to any maximum
interest rate that may be applicable to any class of floating rate
securities, the interest rate applicable to any class of floating rate
securities will in no event be higher than the maximum rate permitted
by applicable law and
- a minimum limitation, or floor, on the rate at which interest may
accrue during any interest accrual period.
Each trust issuing floating rate securities may appoint a calculation agent
to calculate interest rates on each class of its floating rate securities. The
prospectus supplement will identify the calculation agent, if any, for each such
class of floating rate securities, which may be either the trustee or indenture
trustee with respect to such trust. All determinations of interest by a
calculation agent shall, in the absence of manifest error, be conclusive for all
purposes and binding on the holders of the floating rate securities. All
percentages resulting from any calculation of the rate of interest on a floating
rate security will be rounded, if necessary, to the nearest 1/100,000 of 1%
(.0000001), with five one-millionths of a percentage point rounded upward.
BOOK-ENTRY REGISTRATION
THE TRUSTS MAY USE BOOK-ENTRY REGISTRATION INSTEAD OF ISSUING DEFINITIVE
SECURITIES. Except for the securities, if any, of a trust retained by the
seller, each class of securities offered through this prospectus and the related
prospectus supplement may initially be represented by one or more certificates
registered in the name of DTC's nominee, except as set forth below. The
securities will be available for purchase in the denominations specified in the
related prospectus supplement and may be available for purchase in book-entry
form only. Accordingly, such nominee is expected to be the holder of record of
any class of securities issued in book-entry form. If a class of securities is
issued in book-entry form, unless and until definitive securities are issued
under the limited circumstances described in this prospectus or in the related
prospectus supplement, you, as an owner of securities will not be entitled to
receive a physical certificate representing your interest in the securities of
such class.
If a class of securities is issued in book-entry form, all references in
this prospectus and in the related prospectus supplement to actions by holders
of such class of securities refer to actions taken by DTC upon instructions from
its participating organizations and all references in this prospectus and in the
related prospectus supplement to distributions, notices, reports and statements
to certificateholders of such class of certificates refer to distributions,
notices, reports and statements to DTC or its nominee, as the case may be, as
the registered holder of such class of certificates, for distribution to
certificateholders of such class of certificates in accordance with DTC's
procedures with respect thereto.
Any securities of a given trust owned by the seller or its affiliates will
be entitled to equal and proportionate benefits under the applicable indenture,
trust agreement or pooling and servicing
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agreement, except that, unless the seller and its affiliates own the entire
class, such securities will be deemed not to be outstanding for the purpose of
determining whether the requisite percentage of securityholders have given any
request, demand, authorization, direction, notice, consent or other action under
the related agreements.
The prospectus supplement will specify whether the holders of the notes or
certificates of the trust may hold their respective securities as book-entry
securities.
You may hold your securities through DTC in the United States, Clearstream
or the Euroclear System in Europe or in any manner described in the related
prospectus supplement. The global securities 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.
INITIAL SETTLEMENT OF THE GLOBAL SECURITIES. All global securities will be
held in book-entry form by DTC in the name of Cede & Co. as nominee of DTC.
Investors' interests in the global securities will be represented through
financial institutions acting on their behalf as direct and indirect
participants in DTC. As a result, Clearstream and Euroclear will hold positions
on behalf of their customers or participants through their respective
depositaries, which in turn will hold such positions in accounts as DTC
participants.
Investors electing to hold their global securities through DTC will follow
the settlement practices that apply 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 securities through Clearstream or
Euroclear accounts will follow the settlement procedures that apply to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global securities will be credited to the
securities custody accounts on the settlement date against payment in same-day
funds.
Except as required by law, none of the administrator, if any, the applicable
trustee or the applicable indenture trustee, if any, will have any liability for
any aspect of the records relating to payments made on account of beneficial
ownership interests of the securities of any trust held by DTC's nominee, or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
SECONDARY MARKET TRADING OF THE GLOBAL SECURITIES. Since the purchaser
determines the place of delivery, it is important to establish at the time of
the trade where both the purchaser's and seller's accounts are located to ensure
that 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 obligations in same-day funds.
TRADING BETWEEN CLEARSTREAM CUSTOMERS AND/OR EUROCLEAR
PARTICIPANTS. Secondary market trading between Clearstream customers or
Euroclear participants will be settled using the procedures applicable to
conventional eurobonds in same-day funds.
TRADING BETWEEN DTC SELLER AND CLEARSTREAM OR EUROCLEAR PURCHASER. When
global securities are to be transferred from the account of a DTC participant to
the account of a Clearstream customer or a Euroclear participant, the purchaser
will send instructions to Clearstream or Euroclear through a Clearstream
customer or Euroclear participant at least one business day prior to settlement.
Clearstream or Euroclear will instruct the respective depositary, as the case
may be, to receive the global securities against payment. Payment will include
interest accrued on the global securities from and including the last coupon
distribution 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 securities. After settlement has been completed, the
global securities will be credited to the respective clearing system and by the
clearing system, in accordance with its usual procedures, to the Clearstream
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customer's or Euroclear participant's account. The securities credit will appear
the next day (European time) and the cash debit will be back-valued to, and the
interest on the global securities will accrue from, the value date (which would
be the preceding day when settlement occurred in New York). If settlement is not
completed on the intended value date (that is, the trade fails), the Clearstream
or Euroclear cash debit will be valued instead as of the actual settlement date.
Clearstream customers 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 this is to pre-position funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within Clearstream or Euroclear. Under this
approach, they may take on credit exposure to Clearstream or Euroclear until the
global securities are credited to their accounts one day later.
As an alternative, if Clearstream or Euroclear has extended a line of credit
to them, Clearstream customers or Euroclear participants can elect not to
pre-position funds and allow that credit line to be drawn upon to finance
settlement. Under this procedure, Clearstream customers or Euroclear
participants purchasing global securities would incur overdraft charges for one
day, assuming they cleared the overdraft when the global securities were
credited to their accounts. However, interest on the global securities would
accrue from the value date. Therefore, in many cases the investment income on
the global securities earned during that one-day period may substantially reduce
or offset the amount of such overdraft charges, although this result will depend
on each Clearstream customer's or Euroclear participant's particular cost of
funds.
Since the settlement is taking place during New York business hours, DTC
participants can employ their usual procedures for sending global securities to
the respective depositary for the benefit of Clearstream customers or Euroclear
participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC participant a cross-market transaction will
settle no differently than a trade between two DTC participants.
TRADING BETWEEN CLEARSTREAM OR EUROCLEAR SELLER AND DTC PURCHASER. Due to
time zone differences in their favor, Clearstream customers and Euroclear
participants may employ their customary procedures for transactions in which
global securities are to be transferred by the respective clearing system,
through the respective depositary, to a DTC participant. The seller will send
instructions to Clearstream or Euroclear through a Clearstream customer or
Euroclear participant at least one business day prior to settlement. In these
cases, Clearstream or Euroclear will instruct the respective depositary, as
appropriate, to deliver the securities to the DTC participant's account against
payment. Payment will include interest accrued on the global securities from and
including the last coupon distribution date to and excluding the settlement
date. The payment will then be reflected in the account of the Clearstream
customer or Euroclear participant the following day, and receipt of the cash
proceeds in the Clearstream customer'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 Clearstream customer 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 (that
is, the trade fails), receipt of the cash proceeds in the Clearstream customer's
or Euroclear participant's account would instead be valued as of the actual
settlement date.
Finally, day traders that use Clearstream or Euroclear and that purchase
global securities from DTC participants for delivery to Clearstream customers 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:
(a) borrowing through Clearstream or Euroclear for one day (until the
purchase side of the day trade is reflected in their Clearstream or
Euroclear accounts) in accordance with the clearing system's customary
procedures;
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(b) borrowing the global securities in the United States from a DTC
participant no later than one day prior to settlement, which would give
the global securities sufficient time to be reflected in their
Clearstream or Euroclear account in order to settle the sale side of the
trade; or
(c) staggering the value dates for the buy and sell sides of the trade so
that the value date for the purchase from the DTC participant is at least
one day prior to the value date for the sale to the Clearstream customer
or Euroclear participant.
The securityholders who are not participants, either directly or indirectly,
but who desire to purchase, sell or otherwise transfer ownership of, or other
interest in, securities may do so only through direct and indirect participants.
In addition, securityholders will receive all distributions of principal and
interest from the indenture trustee or the applicable trustee through the
participants who in turn will receive them from DTC. Under a book-entry format,
securityholders may experience some delay in their receipt of payments, since
such payments will be forwarded by the applicable trustee to DTC's nominee. DTC
will forward such payments to its participants which thereafter will forward
them to indirect participants or securityholders. To the extent the related
prospectus supplement provides that Book-Entry Securities will be issued, the
only "noteholder" or "certificateholder," as applicable, will be DTC's nominee.
Securityholders will not be recognized by the applicable trustee as
"noteholders" or "certificateholders" and securityholders will be permitted to
exercise the rights of securityholders only indirectly through DTC and its
participants.
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers of securities among
participants on whose behalf it acts with respect to the securities and is
required to receive and transmit distributions of principal and interest on the
securities. Participants and indirect participants with which securityholders
have accounts with respect to their respective securities similarly are required
to make book-entry transfers and receive and transmit such payments on behalf of
their respective securityholders. Accordingly, although securityholders will not
possess their respective securities, the rules provide a mechanism by which
participants will receive payments and will be able to transfer their interests.
Because DTC can only act on behalf of participants, who in turn act on
behalf of indirect participants and certain banks, the ability of a
securityholder to pledge securities to persons or entities that do not
participate in the DTC system, or otherwise take actions with respect to such
securities, may be limited due to the lack of a physical certificate for such
securities.
DTC will advise the related administrator of each trust that it will take
any action permitted to be taken by a securityholder under the related
indenture, trust agreement or pooling and servicing agreement only at the
direction of one or more participants to whose accounts with DTC such securities
are credited. DTC may take conflicting actions with respect to other undivided
interests to the extent that such actions are taken on behalf of participants
whose holdings include such undivided interests.
Non-United States holders of global securities will be subject to United
States withholding taxes unless such holders meet certain requirements and
deliver appropriate United States tax documents to the securities clearing
organizations or their participants.
THE DEPOSITORIES. DTC is a limited-purpose trust company organized under
the laws of the State of New York, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code, and a "clearing agency" registered under the provisions of Section 17A of
the Securities Exchange Act of 1934, as amended. DTC was created to hold
securities for its participants and facilitate the clearance and settlement of
securities transactions between participants through electronic book-entries,
thereby eliminating the need for physical movement of certificates. Participants
include securities brokers and dealers (who may include any of the underwriters
of securities of the trust), banks, trust companies and clearing corporations
and may include certain other organizations. Indirect access to the DTC system
also is available to others such
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as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
Clearstream is incorporated under the laws of Luxembourg as a professional
depository. Clearstream holds securities for its customers and facilitates the
clearance and settlement of securities transactions between Clearstream
customers through electronic book-entry changes in accounts of Clearstream
customers, thereby eliminating the need for physical movement of certificates.
Transactions may be settled by Clearstream in any of 36 currencies, including
United States dollars. Clearstream provides to its Clearstream customers, among
other things, services for safekeeping, administration, clearance and settlement
of internationally traded securities and securities lending and borrowing.
Clearstream interfaces with domestic markets in several countries. As a
professional depository, Clearstream is subject in Luxembourg to regulation by
and supervision by the Commission for the Supervision of the Financial Sector.
Clearstream customers are recognized financial institutions around the world,
including underwriters, securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations and may include any of the
underwriters of any trust securities. Indirect access to Clearstream is also
available to others, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a Clearstream customer,
either directly or indirectly.
Euroclear was created in 1968 to hold securities for its 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 certificates and the risk from transfers of
securities and cash that are not simultaneous.
The Euroclear system has subsequently been extended to clear and settle
transactions between Euroclear participants and counterparties both in
Clearstream and in many domestic securities markets. Transactions may be settled
in any of 34 currencies. In addition to safekeeping (custody) and securities
clearance and settlement, the Euroclear system includes securities lending and
borrowing and money transfer services. The Euroclear system is operated by the
Brussels, Belgium office of Morgan Guaranty Trust Company of New York under
contract with Euroclear Clearance System, S.C., a Belgian cooperative
corporation that establishes policy on behalf of Euroclear participants. 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.
All operations are conducted by the Euroclear operator and all Euroclear
securities clearance accounts and cash accounts are accounts with the Euroclear
operator. They are governed by the Terms and Conditions Governing Use of
Euroclear and the related Operating Procedures of the Euroclear system and
applicable Belgian law. These govern all transfers of securities and cash, both
within the Euroclear system, and receipts and withdrawals of securities and
cash. All securities in the Euroclear system are held on a fungible basis
without attribution of specific certificates to specific securities clearance
accounts.
Euroclear participants include banks (including central banks), securities
brokers and dealers and other professional financial intermediaries and may
include any of the underwriters of any trust securities. Indirect access to the
Euroclear system is also available to other firms that clear through or maintain
a custodial relationship with a Euroclear participant, either directly or
indirectly. The Euroclear operator acts under the Terms and Conditions, the
Operating Procedures of the Euroclear system and Belgian law only on behalf of
Euroclear participants and has no record of or relationship with persons holding
through Euroclear participants.
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DEFINITIVE SECURITIES
With respect to any class of notes and any class of certificates issued in
book-entry form, such notes or certificates will be issued as definitive notes
and definitive certificates, respectively, to noteholders or certificateholders
or their respective nominees, rather than to DTC or its nominee, only if
(1) the administrator of the trust or trustee of the trust determines that DTC
is no longer willing or able to discharge properly its responsibilities as
depository with respect to such securities and the administrator or the seller,
as the case may be, is unable to locate a qualified successor and so notifies
the trustee in writing, (2) the administrator or the seller, as the case may be,
at its option, elects to terminate the book-entry system through DTC or
(3) after the occurrence of an event of default under the indenture or an event
of servicing termination under the related sale and servicing agreement or
pooling and servicing agreement, as applicable, with respect to such securities,
holders representing at least a majority of the outstanding principal amount of
the notes or the certificates, as the case may be, of such class advise the
indenture trustee or the trustee through DTC in writing that the continuation of
a book-entry system through DTC (or a successor thereto) with respect to such
notes or certificates is no longer in the best interest of the holders of such
securities.
Upon the occurrence of any event described in the immediately preceding
paragraph, the indenture trustee or the trustee will be required to notify all
applicable securityholders of a given class through participants of the
availability of definitive securities. Upon surrender by DTC of the definitive
certificates representing the corresponding securities and receipt of
instructions for re-registration, the indenture trustee or the trustee will
reissue such securities as definitive securities to such securityholders.
Distributions of principal of, and interest on, such definitive securities
will thereafter be made by the indenture trustee or the trustee in accordance
with the procedures set forth in the related indenture or the related trust
agreement directly to holders of definitive securities in whose names the
definitive securities were registered at the close of business on the record
date specified for such securities in the related prospectus supplement. Unless
otherwise specified in the related prospectus supplement, such distributions
will be made by check mailed to the address of such holder as it appears on the
register maintained by the indenture trustee or trustee. The final payment on
any such definitive security, however, will be made only upon presentation and
surrender of such definitive security at the office or agency specified in the
notice of final distribution to the applicable securityholders.
Definitive securities will be transferable and exchangeable at the offices
of the indenture trustee or the trustee or of a registrar named in a notice
delivered to holders of definitive securities. No service charge will be imposed
for any registration of transfer or exchange, but the indenture trustee or the
trustee may require payment of a sum sufficient to cover any tax or other
governmental charge imposed in connection therewith.
REPORTS TO SECURITYHOLDERS
On or prior to each distribution date, the servicer or administrator will
prepare and provide to the related indenture trustee and/or trustee a statement
to be delivered to the securityholders on such distribution date. With respect
to securities of each trust, each such statement to be delivered to
securityholders will include (to the extent applicable to those securityholders)
the following information (and any other information so specified in the
prospectus supplement) with respect to such distribution date or the period
since the previous distribution date, as applicable:
(1) the amount of the distribution allocable to principal of each class of
securities;
(2) the amount of the distribution allocable to interest on or with respect
to each class of securities;
(3) the amount of the distribution allocable to draws from any reserve fund
or payments in respect of any other credit or cash flow enhancement
arrangement;
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(4) the outstanding aggregate balance of the receivables in the trust as of
the close of business on the last day of the preceding collection period
exclusive of the aggregate principal balance of balloon payments, if any,
and the aggregate principal balance of the balloon payments calculated as
of the close of business on the last day of the preceding collection
period;
(5) any credit enhancement amount;
(6) the aggregate outstanding principal balance and the appropriate factor
for each class of notes, and the outstanding balance and the appropriate
factor for each class of certificates, each after giving effect to all
payments reported under clause (1) above on such date;
(7) the amount of the servicing fee paid to the servicer and the amount of
any unpaid servicing fee with respect to the related collection period or
collection periods, as the case may be;
(8) the amount of the aggregate losses realized on the receivables during
that collection period (calculated as described in the related prospectus
supplement);
(9) previously due and unpaid interest payments (plus interest accrued on
such unpaid interest to the extent permitted by law), if any, on each
class of securities, and the change in such amounts from the preceding
statement;
(10) previously due and unpaid principal payments (plus interest accrued on
such unpaid principal to the extent permitted by law), if any, on each
class of securities, and the change in such amounts from the preceding
statement;
(11) the aggregate amount to be paid in respect of receivables, if any,
repurchased in such collection period;
(12) the balance of any reserve fund, if any, on such date, after giving
effect to changes therein on such date;
(13) the amount of advances to be remitted by the servicer on such date;
(14) for each such date during any funding period, the amount remaining in
the pre-funding account;
(15) for the first such date that is on or immediately following the end of
any funding period, the amount remaining in the pre-funding account that
has not been used to fund the purchase of subsequent receivables and is
being passed through as payments of principal on the securities of such
trust; and
(16) the amount of any cumulative shortfall between payments due in respect
of any credit or cash flow enhancement arrangement and payments received
in respect of such credit or cash flow enhancement arrangement, and the
change in any such shortfall from the preceding statement.
Each amount set forth under clauses (1), (2), (7), (9) and (10) with respect
to the notes or the certificates of any trust will be expressed as a dollar
amount per $1,000 of the initial principal amount of such securities.
Within the prescribed period of time for federal income tax reporting
purposes after the end of each calendar year during the term of each trust, the
applicable trustee will mail to each person who at any time during such calendar
year has been a securityholder with respect to the trust and received any
payment thereon a statement containing certain information for the purposes of
such securityholder's preparation of federal income tax returns. See "Material
Federal Income Tax Consequences".
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THE INDENTURE
With respect to each trust that issues notes, one or more classes of notes
of a trust will be issued under the terms of an indenture between the trust and
the indenture trustee specified in the prospectus supplement, a form of which
has been filed as an exhibit to the registration statement of which this
prospectus forms a part. This summary describes the material provisions common
to the notes of each trust that issues notes; the attached prospectus supplement
will give you additional information specific to the notes which you are
purchasing. This 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.
EVENTS OF DEFAULT. With respect to the notes issued by a trust, "events of
default" under the related indenture will consist of:
- a default by the trust for five days (or such longer period specified in
the prospectus supplement) or more in the payment of any interest on any
notes;
- a default in the payment of the principal of or any installment of the
principal of any note when the same becomes due and payable;
- a default in the observance or performance of any covenant or agreement of
the trust made in the related indenture other than those dealt with
specifically elsewhere as an event of default which default materially and
adversely affects the noteholders and which default continues for a period
of 30 days after notice thereof is given to the trust by the applicable
indenture trustee or to the trust and such indenture trustee by the
holders of at least 25% in principal amount of the controlling class of
notes;
- any representation or warranty made by the trust in the related indenture
or in any certificate delivered pursuant thereto or in connection
therewith having been incorrect in any material adverse respect as of the
time made, and such breach not having been cured within 30 days after
notice thereof is given to the trust by the applicable indenture trustee
or to the trust and such indenture trustee by the holders of at least 25%
in principal amount of the controlling class of notes;
- certain events of bankruptcy, insolvency, receivership or liquidation of
the applicable trust or its property as specified in the indenture; or
- such other events, if any, set forth in the related indenture or
prospectus supplement.
The "controlling class" of notes of a trust will be its senior most class of
notes as long as they are outstanding. When they have been paid in full, the
next most senior class of the trust's notes, if any, will become the controlling
class so long as they are outstanding, and so on.
The amount of principal due and payable to noteholders of a trust under the
related indenture until the final payment generally will be limited to amounts
available to pay principal thereon. Therefore, the failure to pay principal on a
class of notes generally will not result in the occurrence of an event of
default under the indenture until the final scheduled distribution date for such
class of notes.
RIGHTS UPON EVENT OF DEFAULT. If an event of default should occur and be
continuing with respect to the notes of any trust, the related indenture trustee
or holders of a majority in principal amount of the controlling class may
declare the principal of such notes to be immediately due and payable. Such
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declaration may be rescinded by the holders of a majority in principal amount of
the controlling class then outstanding if both of the following occur:
- the trust has paid or deposited with the indenture trustee enough money to
pay:
- all payments of principal of and interest on all notes and all other
amounts that would then be due if the event of default causing the
acceleration of maturity had not occurred and
- all sums paid or advanced by the indenture trustee and the reasonable
compensation, expenses, disbursements and advances of the indenture
trustee and its agents and counsel; and
- all events of default, other than the nonpayment of the principal of the
notes that has become due solely by the acceleration, have been cured or
waived.
If an event of default has occurred with respect to the notes issued by any
trust, the related indenture trustee may institute proceedings to collect
amounts due or foreclose on trust property, exercise remedies as a secured party
or sell the related receivables. Except as otherwise specified in the related
prospectus supplement, upon the occurrence of an event of default resulting in
acceleration of the notes, the indenture trustee may sell the related
receivables if:
- the holders of 100% of the notes issued by such trust consent to such sale
(excluding notes held by the seller, the servicer or their affiliates),
- the proceeds of such sale are sufficient to pay in full the principal of
and the accrued interest on the notes of such trust at the date of such
sale or
- there has been an event of default arising from the failure to pay
principal or interest and the indenture trustee determines that the
proceeds of the receivables would not be sufficient on an ongoing basis to
make all payments on the notes of such trust as such payments would have
become due if such obligations had not been declared due and payable, and
such indenture trustee obtains the consent of the holders of 66K% of the
aggregate outstanding amount of the controlling class of such trust.
In addition, if the event of default relates to a default by a trust in
observing or performing any covenant or agreement (other than an event of
default relating to non-payment of interest or principal, insolvency or any
other event which is otherwise specifically dealt with by the indenture), the
indenture trustee is prohibited from selling the receivables unless the holders
of all outstanding notes and certificates issued by that trust consent to such
sale or the proceeds of such sale are sufficient to pay in full the principal of
and the accrued interest on the outstanding notes and certificates of that
trust. The indenture trustee may also elect to have the trust maintain
possession of the receivables and apply collections as received without
obtaining the consent of securityholders.
Subject to the provisions of the applicable indenture relating to the duties
of the related indenture trustee, if an event of default under the indenture
occurs and is continuing with respect to notes of the trust, such indenture
trustee will be under no obligation to exercise any of the rights or powers
under such indenture at the request or direction of any of the holders of such
notes, if such 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 related indenture, the
holders of a majority in principal amount of the controlling class of a given
trust will have the right to direct the time, method and place of conducting any
proceeding or any remedy available to the applicable indenture trustee, and the
holders of a majority in principal amount of the controlling class 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 such indenture that cannot be modified without the waiver or
consent of the holders of all of the outstanding notes of the related trust.
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No holder of a note of any trust will have the right to institute any
proceeding with respect to the related indenture, unless:
- such holder previously has given to the applicable indenture trustee
written notice of a continuing event of default;
- the holders of not less than 25% in principal amount of the controlling
class of such trust have made written request to such indenture trustee to
institute such proceeding in its own name as indenture trustee;
- such holder or holders have offered such indenture trustee reasonable
indemnity;
- such indenture trustee has for 60 days after such notice, request and
offer of indemnity failed to institute such proceeding; and
- no direction inconsistent with such written request has been given to such
indenture trustee during such 60-day period by the holders of a majority
in principal amount of the controlling class.
Each indenture trustee and the related noteholders, by accepting the related
notes, will covenant that they will not at any time institute against the
applicable trust any bankruptcy, reorganization or other proceeding under any
federal or state bankruptcy or similar law.
With respect to any trust, neither the related indenture trustee nor the
related trustee in its individual capacity, nor any holder of a certificate
representing an ownership interest in the trust nor any of their respective
owners, beneficiaries, agents, officers, directors, employees, affiliates,
successors or assigns will be personally liable for the payment of the principal
of or interest on the related notes or for the agreements of the trust contained
in the applicable indenture.
EACH TRUST WILL BE SUBJECT TO COVENANTS UNDER THE INDENTURE. Each trust
will be subject to the covenants discussed below, as provided in the related
indenture.
- RESTRICTIONS ON MERGER AND CONSOLIDATION. The related trust may not
consolidate with or merge into any other entity, unless:
- the entity formed by or surviving such consolidation or merger is
organized under the laws of the United States, any state or the District
of Columbia,
- such entity expressly assumes the trust's obligation to make due and
punctual payments upon the notes of the related trust and the
performance or observance of every agreement and covenant of the trust
under the indenture,
- no event that is (or with notice or lapse of time or both would become)
an event of default under the indenture shall have occurred and be
continuing immediately after such merger or consolidation,
- the trust has been advised that the rating of the notes and the
certificates of such trust then in effect would not be reduced or
withdrawn by the rating agencies as a result of such merger or
consolidation,
- the trust has received an opinion of counsel to the effect that such
consolidation or merger would have no material adverse tax consequence
to the trust or to any related noteholder or certificateholder,
- any action as is necessary to maintain the lien and security interest
created by the related indenture shall have been taken and
- the trust has received an opinion of counsel and officer's certificate
each stating that such consolidation or merger satisfies all
requirements under the related indenture.
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- OTHER NEGATIVE COVENANTS. Each trust will not, among other things--
- except as expressly permitted by the applicable agreements, sell,
transfer, exchange or otherwise dispose of any of the assets of the
trust,
- claim any credit on or make any deduction from the principal and
interest payable in respect of the notes of the related trust (other
than amounts withheld under the tax 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 trust or its
property,
- dissolve or liquidate in whole or in part,
- permit the lien of the related indenture to be subordinated or otherwise
impaired,
- permit the validity or effectiveness of the related indenture to be
impaired or permit any person to be released from any covenants or
obligations with respect to such notes under such indenture except as
may be expressly permitted thereby or
- 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 trust or any part thereof, or any interest
therein or the proceeds thereof, except for tax, mechanics' or certain
other liens and except as may be created by the terms of the related
indenture.
No trust may engage in any activity other than as specified under the
section of the related prospectus supplement titled "The Trust". No trust will
incur, assume or guarantee any indebtedness other than indebtedness incurred
under the related notes and indenture, the related certificates and as a result
of any advances made to it by the servicer or otherwise in accordance with the
related sale and servicing agreement, pooling and servicing agreement or other
documents relating to the trust.
LIST OF NOTEHOLDERS. With respect to the notes of any trust, three or more
holders of the notes of any trust or one or more holders of such notes
evidencing not less than 25% of the aggregate outstanding principal amount of
the controlling class may, by written request to the related indenture trustee
accompanied by a copy of the communication that the applicant proposes to send,
obtain access to the list of all noteholders maintained by such indenture
trustee for the purpose of communicating with other noteholders with respect to
their rights under the related indenture or under such notes. Such indenture
trustee may elect not to afford the requesting noteholders access to the list of
noteholders if it agrees to mail the desired communication or proxy, on behalf
of and at the expense of the requesting noteholders, to all noteholders of the
trust.
ANNUAL COMPLIANCE STATEMENT. Each trust will be required to file annually
with the related indenture trustee a written statement as to the fulfillment of
its obligations under the indenture.
INDENTURE TRUSTEE'S ANNUAL REPORT. The indenture trustee for each trust
will be required to mail each year to all related 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
trust to the applicable indenture trustee in its individual capacity, the
property and funds physically held by such indenture trustee as such and any
action taken by it that materially affects the related notes and that has not
been previously reported.
SATISFACTION AND DISCHARGE OF INDENTURE. An indenture will be discharged
with respect to the collateral securing the related notes upon the delivery to
the related indenture trustee for cancellation of all such notes or, with
certain limitations, upon deposit with such indenture trustee of funds
sufficient for the payment in full of all such notes.
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MODIFICATION OF INDENTURE. Any trust, together with the related indenture
trustee, may, without the consent of the noteholders of the trust, execute a
supplemental indenture for the purpose of adding to the covenants of the trust,
curing any ambiguity, correcting or supplementing any provision which may be
inconsistent with any other provision or making any other provision with respect
to matters arising under the related indenture which will not be inconsistent
with other provisions of the indenture provided that such action will not
materially adversely affect the interests of the noteholders.
The trust and the applicable indenture trustee may also enter into
supplemental indentures, without obtaining the consent of the noteholders of the
related trust, for the purpose of, among other things, adding any provisions to
or changing in any manner or eliminating any of the provisions of the related
indenture or modifying in any manner the rights of such noteholders (except with
respect to the matters listed in the next paragraph which require the approval
of the noteholders) provided that:
- such action will not, as evidenced by an opinion of counsel, materially
adversely affect the interest of any noteholder;
- such action will not, as confirmed by the rating agencies rating the notes
of the related trust, cause the then current rating assigned to any class
of such notes to be withdrawn or reduced; and
- an opinion of counsel as to certain tax matters is delivered.
Without the consent of the holder of each such outstanding note affected
thereby (in addition to the satisfaction of each of the conditions set forth in
the preceding paragraph), however, no supplemental indenture will:
- change the due date of any installment of principal of or interest on any
such note or reduce the principal amount thereof, the interest rate
thereon or the redemption price with respect thereto, change the
application of the proceeds of a sale of the trust property to payment of
principal and interest on the notes or change any place of payment where,
or the coin or currency in which, any such note or any interest thereon is
payable;
- impair the right to institute suit for the enforcement of certain
provisions of the related indenture regarding payment;
- reduce the percentage of the aggregate amount of the controlling class or
of the notes, the consent of the holders of which is required for any such
supplemental indenture or the consent of the holders of which is required
for any waiver of compliance with certain provisions of the related
indenture or of certain defaults or events of default thereunder and their
consequences as provided for in such indenture;
- modify or alter the provisions of the related indenture regarding the
voting of notes held by the applicable trust, any other obligor on such
notes, the seller or an affiliate of any of them;
- reduce the percentage of the aggregate outstanding amount of the
controlling class, the consent of the holders of which is required to
direct the related indenture trustee to sell or liquidate the receivables
after an event of default if the proceeds of such sale would be
insufficient to pay the principal amount and accrued but unpaid interest
on the outstanding notes and certificates of such trust;
- decrease the percentage of the aggregate principal amount of the
controlling class or of the notes required to amend the sections of the
related indenture which specify the applicable percentage of aggregate
principal amount of the notes of such trust necessary to amend such
indenture or any of the other related agreements;
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- affect the calculation of the amount of interest or principal payable on
any note on any distribution date (including the calculation of any of the
individual components of such calculation);
- affect the rights of the noteholders to the benefit of any provisions for
the mandatory redemption of the notes provided in the related indenture;
or
- permit the creation of any lien ranking prior to or on a parity with the
lien of the related indenture with respect to any of the collateral for
such notes or, except as otherwise permitted or contemplated in such
indenture, terminate the lien of such indenture on any such collateral or
deprive the holder of any such note of the security afforded by the lien
of such indenture.
THE INDENTURE TRUSTEE
The indenture trustee for a series of notes will be specified in the related
prospectus supplement. The indenture trustee for any trust may resign at any
time, in which event the administrator of the trust will be obligated to appoint
a successor trustee. The administrator of a trust will be obligated to remove an
indenture trustee if such indenture trustee ceases to be eligible to continue as
such under the related indenture or if such indenture trustee becomes insolvent.
In such circumstances, the administrator of the trust will be obligated to
appoint a successor trustee for the notes of the applicable trust. In addition,
a majority of the controlling class may remove the indenture trustee without
cause and may appoint a successor indenture trustee. If a trust issues a class
of notes that is subordinated to one or more other classes of notes and an event
of default occurs under the related indenture, the indenture trustee may be
deemed to have a conflict of interest under the Trust Indenture Act of 1939 and
may be required to resign as trustee for one or more of the classes of notes. In
any such case, the indenture will provide for a successor indenture trustee to
be appointed for those classes of notes. Any resignation or removal of the
indenture trustee and appointment of a successor trustee for the notes of the
trust does not become effective until acceptance of the appointment by the
successor trustee for such trust.
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DESCRIPTION OF THE RECEIVABLES TRANSFER
AND SERVICING AGREEMENTS
The following summary describes certain terms of the documents pursuant to
which the depositor will purchase the receivables from a seller, a trust will
purchase the receivables from the depositor and a servicer will services the
receivables on behalf of the trust. In the case of a trust that is not a grantor
trust, these documents are the receivables purchase agreement and the sale and
servicing agreement. For a grantor trust, they are the receivables purchase
agreement and the pooling and servicing agreement. This section also describes
certain provisions of the trust agreement for a trust that is not a grantor
trust. Forms of those documents have been filed as exhibits to the registration
statement of which this prospectus forms a part. This summary describes the
material provisions common to the securities of each trust; the attached
prospectus supplement will give you additional information specific to the
securities which you are purchasing. This summary does not purport to be
complete and is subject to, and qualified in its entirety by reference to, all
the provisions of those documents.
SALE AND ASSIGNMENT OF RECEIVABLES
When the trust issues securities, the seller will transfer and assign,
without recourse, to the depositor its entire interests in the related
receivables, together with its security interests in the related financed
vehicles, pursuant to a receivables purchase agreement. The depositor will then
transfer and assign to the applicable trustee, without recourse, pursuant to a
sale and servicing agreement or a pooling and servicing agreement, as
applicable, its entire interest in such receivables, including its security
interests in the related financed vehicles. Each such receivable will be
identified in a schedule appearing as an exhibit to such pooling and servicing
agreement or sale and servicing agreement, as applicable.
SALE AND ASSIGNMENT OF SUBSEQUENT RECEIVABLES. The related prospectus
supplement for the trust will specify whether, and the terms, conditions and
manner under which, subsequent receivables will be sold by the seller to the
depositor and by the depositor to the applicable trust from time to time during
any funding period on each subsequent transfer date.
REPRESENTATIONS AND WARRANTIES. In each receivables purchase agreement the
related seller will represent and warrant to the depositor (who will in turn
assign its rights under such warranty to the applicable trust under the related
sale and servicing agreement or pooling and servicing agreement), among other
things, that at the date of issuance of the related notes and/or certificates or
at the applicable subsequent transfer date--
- each receivable (a) has been originated for the retail financing of a
motor vehicle by an obligor located in one of the states of the United
States or the District of Columbia and (b) contains customary and
enforceable provisions such that the rights and remedies of the holder
thereof shall be adequate for realization against the collateral of the
benefits of the security;
- each receivable and the sale of the related financed vehicle complies in
all material respects with all requirements of applicable federal, state,
and local laws, and regulations thereunder, including usury laws, the
Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair
Credit Reporting Act, the Federal Trade Commission Act, the Magnuson-Moss
Warranty Act, Federal Reserve Board Regulations B and Z, state adaptations
of the National Consumer Act and of the Uniform Consumer Credit Code, and
any other consumer credit, equal opportunity and disclosure laws
applicable to such receivable and sale;
- each receivable constitutes the legal, valid, and binding payment
obligation in writing of the obligor, enforceable by the holder thereof in
all material respects in accordance with its terms, subject, as to
enforcement, to applicable bankruptcy, insolvency, reorganization,
liquidation and
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other similar laws and equitable principles relating to or affecting the
enforcement of creditors' rights;
- immediately prior to the sale and assignment thereof to the trust, each
receivable was secured by a validly perfected first priority security
interest in the financed vehicle in favor of the seller as secured party
or all necessary action with respect to such receivable has been taken to
perfect a first priority security interest in the related financed vehicle
in favor of the seller as secured party, which security interest is
assignable and has been so assigned by the seller to the depositor and by
the depositor to the trust;
- as of the cutoff date, there are no rights of rescission, setoff,
counterclaim, or defense, and the seller has no knowledge of the same
being asserted or threatened, with respect to any receivable;
- as of the cutoff date, the seller had no knowledge of any liens or claims
that have been filed, including liens for work, labor, materials or unpaid
taxes relating to a financed vehicle, that would be liens prior to, or
equal or coordinate with, the lien granted by the receivable;
- except for payment defaults continuing for a period of not more than
30 days (or such other number of days specified in the prospectus
supplement) as of the cutoff date, the seller has no knowledge that a
default, breach, violation, or event permitting acceleration under the
terms of any receivable exists; the seller has no knowledge that a
continuing condition that with notice or lapse of time would constitute a
default, breach, violation or event permitting acceleration under the
terms of any receivable exists, and the seller has not waived any of the
foregoing;
- each receivable requires that the obligor thereunder obtain comprehensive
and collision insurance covering the financed vehicle; and
- any other representations and warranties that may be set forth in the
related prospectus supplement.
SELLER MUST REPURCHASE RECEIVABLES RELATING TO A BREACH OF REPRESENTATION OR
WARRANTY. Unless otherwise provided in the related prospectus supplement, as of
the last day of the second (or, if the seller elects, the first) collection
period following the discovery by or notice to the seller of a breach of any
representation or warranty of the seller which materially and adversely affects
the interests of the related trust in any receivable, the seller, unless the
breach is cured, will repurchase such receivable from such trust at a price
generally equal to the "purchase amount", which is the unpaid principal balance
owed by the obligor thereon plus interest thereon to the date of purchase at the
respective contract rate of interest. Alternatively, if so specified in the
related prospectus supplement, the related seller will be permitted, in a
circumstance where it would otherwise be required to repurchase a receivable as
described in the preceding sentence, to instead substitute a comparable
receivable for the receivable otherwise requiring repurchase, subject to certain
conditions and eligibility criteria for the substitute receivable to be
summarized in the related prospectus supplement. The repurchase obligation (or,
if applicable, the substitution alternative with respect thereto) constitutes
the sole remedy available to the certificateholders or the trustee and any
noteholders or indenture trustee in respect of such trust for any such uncured
breach.
SERVICING OF THE RECEIVABLES. Under each sale and servicing agreement or
pooling and servicing agreement, to assure uniform quality in servicing the
receivables and to reduce administrative costs, each trust will designate a
servicer to service and administer the receivables held by the trust and, as
custodian on behalf of the trust, maintain possession of the installment loan
agreements and any other documents relating to such receivables. To assure
uniform quality in servicing the receivables, as well as to facilitate servicing
and save administrative costs, the installment loan agreements and other
documents relating thereto will not be physically segregated from other similar
documents that are in the servicer's possession or otherwise stamped or marked
to reflect the transfer to the trust. The obligors under the receivables will
not be notified of the transfer. However, Uniform Commercial Code
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financing statements reflecting the sale and assignment of those receivables by
the seller to the trust will be filed, and the servicer's accounting records and
computer systems will be marked to reflect such sale and assignment. Because
those receivables will remain in the servicer's possession and will not be
stamped or otherwise marked to reflect the assignment to the trust if a
subsequent purchaser were to obtain physical possession of such receivables
without knowledge of the assignment, the trust's interest in the receivables
could be defeated. See "Some Important Legal Issues Relating to the
Receivables--Security Interests in the Financed Vehicles".
ACCOUNTS
In the case of a trust that issues notes, the servicer will establish and
maintain with the related indenture trustee one or more collection accounts in
the name of the indenture trustee on behalf of the related noteholders into
which all payments made on or with respect to the related receivables will be
deposited. The servicer may establish and maintain with such indenture trustee a
note payment account (which may be a subaccount of the collection account), in
the name of such indenture trustee on behalf of such noteholders, into which
amounts released from the collection account and any other accounts of the trust
for payment to such noteholders will be deposited and from which all
distributions to such noteholders will be made. In the case of a trust that
issues certificates or is a grantor trust, the servicer may establish and
maintain with the related trustee one or more certificate distribution accounts,
in the name of the trustee on behalf of the certificateholders, into which
amounts released from the collection account and any other accounts of the trust
for distribution to the certificateholders will be deposited and from which all
distributions to the certificateholders will be made.
Any other accounts to be established with respect to securities of the
trust, including any pre-funding account, yield supplement account or reserve
fund, will be described in the related prospectus supplement.
For any securities of the trust, funds in the trust accounts will be
invested as provided in the related sale and servicing agreement or pooling and
servicing agreement in permitted investments. Permitted investments are
generally limited to obligations or securities that mature on or before the date
of the next distribution for such series. However, to the extent permitted by
the rating agencies, funds in any reserve fund may be invested in securities
that will not mature prior to the date of the next distribution on the notes or
certificates and which will not be sold to meet any shortfalls. Thus, the amount
of cash available in any reserve fund at any time may be less than the balance
of the reserve fund. If the amount required to be withdrawn from any reserve
fund to cover shortfalls in collections on the related receivables (as provided
in the related prospectus supplement) exceeds the amount of cash in the reserve
fund, a temporary shortfall in the amounts distributed to the related
noteholders or certificateholders could result, which could, in turn, increase
the average life of the notes or the certificates of such trust. Net investment
earnings on funds deposited in the trust accounts shall be deposited in the
applicable collection account or distributed as provided in the related
prospectus supplement.
The trust accounts will be maintained as eligible deposit accounts, which
satisfy certain requirements of the rating agencies.
SERVICING PROCEDURES
The servicer will make reasonable efforts to collect all payments due with
respect to the receivables held by the related trust and will, consistent with
the related sale and servicing agreement or pooling and servicing agreement,
follow such collection procedures as it follows with respect to motor vehicle
retail installment sale contracts, installment loans, purchase money notes or
other notes that it services for itself or others and that are comparable to
such receivables. Consistent with its normal procedures, the servicer may, in
its discretion, arrange with the obligor on a receivable to defer
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or modify the payment schedule. Some of such arrangements may require the
servicer to purchase the receivable while others may result in the servicer
making advances with respect to the receivable. The servicer may be obligated to
purchase or make advances with respect to any receivable if, among other things,
it extends the date for final payment by the obligor of such receivable beyond
six months past the last day of the collection period preceding the latest date
that a receivable matures, as set forth in the related prospectus supplement, or
changes the contract rate of interest or the total amount or number of scheduled
payments of such receivable. If the servicer determines that eventual payment in
full of a receivable is unlikely, the servicer will follow its normal practices
and procedures to realize upon the receivable, including the repossession and
disposition of the financed vehicle securing the receivable at a public or
private sale, or the taking of any other action permitted by applicable law.
COLLECTIONS
With respect to each trust, the servicer will deposit all payments on the
related receivables (from whatever source) and all proceeds of such receivables
collected during each collection period into the related collection account
within two business days after receipt thereof. However, at any time that and
for so long as (i) the original servicer (or its successor) is the servicer,
(ii) there exists no Event of Servicing Termination and (iii) each other
condition to making deposits less frequently than daily as may be specified by
the rating agencies or set forth in the related prospectus supplement is
satisfied, the servicer will not be required to deposit such amounts into the
collection account until the business day preceding the applicable distribution
date. Pending deposit into the collection account, collections may be invested
by the servicer at its own risk and for its own benefit and will not be
segregated from its own funds. If the servicer were unable to remit such funds,
securityholders might incur a loss. To the extent set forth in the related
prospectus supplement, the servicer may, in order to satisfy the requirements
described above, obtain a letter of credit or other security for the benefit of
the related trust to secure timely remittances of collections on the related
receivables and payment of the aggregate purchase amount with respect to
receivables purchased by the servicer.
Collections on a precomputed receivable made during a collection period
shall be applied first to repay any outstanding precomputed advances made by the
servicer with respect to such receivable (as described below), and to the extent
that collections on a precomputed receivable during a collection period exceed
the outstanding precomputed advances, the collections shall then be applied to
the scheduled payment on such receivable. If any collections remaining after the
scheduled payment is made are insufficient to prepay the precomputed receivable
in full, then, generally such remaining collections shall be transferred to and
kept in a separate account, until such later collection period when the
collections may be transferred to the collection account and applied either to
the scheduled payment or to prepay such receivable in full.
Collections on a receivable made during a collection period which are not
late fees, prepayment charges, or certain other similar fees or charges shall be
applied first to any outstanding advances made by the servicer with respect to
such receivable and then to the scheduled payment.
ADVANCES
PRECOMPUTED RECEIVABLES. If so provided in the related prospectus
supplement, to the extent the collections of interest on and principal of a
precomputed receivable with respect to a collection period fall short of the
respective scheduled payment, the servicer will make an advance in the amount of
the shortfall (a "precomputed advance"). The servicer will be obligated to make
a precomputed advance on a precomputed receivable only to the extent that the
servicer, in its sole discretion, expects to recoup such advance from subsequent
collections or recoveries on such receivable or other precomputed receivables in
the related receivables pool. The servicer will deposit the precomputed advance
in the applicable collection account on or before the business day preceding the
applicable distribution date. The servicer will recoup its precomputed advance
from subsequent payments by or on behalf of the
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related obligor or from insurance or liquidation proceeds with respect to the
receivable and will release its right to reimbursement in conjunction with its
purchase of the receivable as servicer, or, upon the determination that
reimbursement from the preceding sources is unlikely, will recoup its
precomputed advance from any collections made on other precomputed receivables
in the related receivables pool or from any other source of funds identified in
the related prospectus supplement.
SIMPLE INTEREST RECEIVABLES. If so provided in the related prospectus
supplement, on or before the business day prior to each applicable distribution
date, the servicer shall deposit into the related collection account an amount
equal to the amount of interest that would have been due on the related simple
interest receivables at their respective contract rates of interest for the
related collection period (assuming that such simple interest receivables are
paid on their respective due dates) minus the amount of interest actually
received on such simple interest receivables during the related collection
period (a "simple interest advance"). If such calculation results in a negative
number, an amount equal to such amount shall be paid to the servicer in
reimbursement of outstanding simple interest advances. In addition, in the event
that a simple interest receivable becomes a defaulted receivable, the amount of
accrued and unpaid interest thereon (but not including interest for the then
current collection period) shall be withdrawn from the collection account and
paid to the servicer in reimbursement of outstanding simple interest advances.
No advances of principal will be made with respect to simple interest
receivables. As used herein, "advances" means both precomputed advances and
simple interest advances.
BALLOON PAYMENT RECEIVABLES. If so provided in the related prospectus
supplement, the servicer will make an advance for any portion of a balloon
payment for the calendar month in which the balloon payment becomes due if the
entire scheduled payment has not been received by the servicer. Generally, the
servicer will be reimbursed for an advance relating to a balloon payment on each
payment date following the payment date on which the advance was made out of
payments by or on behalf of the related obligor to the extent those payments are
allocable to the reimbursement of the advance and out of collections on other
receivables to the extent of any losses allocable to the balloon payment, but
only to the extent the balloon payment and the advance have not otherwise been
reimbursed.
The servicer will deposit all advances into the applicable collection
account on the business day immediately preceding the related distribution date.
SERVICING COMPENSATION AND EXPENSES
Unless otherwise specified in the prospectus supplement with respect to any
trust, the servicer will be entitled to receive a servicing fee for each
collection period in an amount equal to a specified percentage per annum of the
outstanding balance of the related pool of receivables as of the first day of
such collection period. The servicer also may be entitled to receive as a
supplemental servicing fee for each collection period any late, prepayment, and
other administrative fees and expenses collected during such collection period.
If specified in the related prospectus supplement, the supplemental servicing
fee will include net investment earnings on funds deposited in the trust
accounts and other accounts with respect to the trust. The servicer will be paid
the servicing fee and the supplemental servicing fee for each collection period
on the applicable distribution date.
The servicing fee and the supplemental servicing fee are intended to
compensate the servicer for performing the functions of a third party servicer
of the receivables as an agent for the trust, including collecting and posting
all payments, responding to inquiries of obligors on the receivables,
investigating delinquencies, sending payment coupons to obligors, reporting
federal income tax information to obligors, paying costs of collections, and
policing the collateral. The fees will also compensate the servicer for
administering the particular receivables pool, including making advances,
accounting for collections, furnishing monthly and annual statements to the
related trustee and indenture trustee with respect to distributions, and
generating federal income tax information for the trust. The fees, if any,
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also will reimburse the servicer for certain taxes, the fees of the related
trustee and indenture trustee, if any, accounting fees, outside auditor fees,
data processing costs, and other costs incurred in connection with administering
the applicable receivables.
DISTRIBUTIONS
With respect to securities of each trust, beginning on the distribution date
specified in the related prospectus supplement, distributions of principal and
interest (or, where applicable, of principal or interest only) on each class of
such securities entitled thereto will be made by the applicable trustee or
indenture trustee to the noteholders and the certificateholders of such trust.
The timing, calculation, allocation, order, source, priorities of and
requirements for all payments to each class of securityholders of such trust
will be set forth in the related prospectus supplement.
ALLOCATION OF COLLECTIONS ON RECEIVABLES. Distributions of principal on the
securities of the trust may be based on the amount of principal collected or due
and the amount of realized losses incurred in a collection period. The servicer
will allocate collections to the interest and principal portion of scheduled
payments on the receivables in accordance with its customary servicing
procedures. On the business day before each distribution date (or such other
date as described in the related prospectus supplement), the servicer will
determine the amount in the collection account available to make payments or
distributions to securityholders on the related distribution date and will
direct the indenture trustee, if any, and/or the trustee to make the
distributions as described in the related prospectus supplement.
CREDIT AND CASH FLOW ENHANCEMENT
ANY FORM OF CREDIT ENHANCEMENT MAY BE LIMITED AND MAY ONLY APPLY TO CERTAIN
CLASSES OF SECURITIES. The amounts and types of credit and cash flow enhancement
arrangements and the provider thereof, if applicable, with respect to each class
of securities of a given series, if any, will be set forth in the related
prospectus supplement. If, and to the extent provided in the related prospectus
supplement, credit and cash flow enhancement may be in the form of subordination
of one or more classes of securities, reserve funds, overcollateralization,
letters of credit, credit or liquidity facilities, surety bonds, guaranteed
investment contracts, swaps or other interest rate protection agreements,
repurchase obligations, yield supplement agreements, other agreements with
respect to third party payments or other support, cash deposits or such other
arrangements as may be described in the related prospectus supplement or any
combination of two or more of the foregoing. If specified in the applicable
prospectus supplement, credit or cash flow enhancement for a class of securities
may cover one or more other classes of securities of the same series, and credit
or cash flow enhancement for a series of securities may cover one or more other
series of securities.
The presence of a reserve fund and other forms of credit or cash flow
enhancement for the benefit of any class or securities of the trust is intended
to (1) enhance the likelihood of receipt by the securityholders of such class of
the full amount of principal and interest due thereon and (2) decrease the
likelihood that such securityholders will experience losses. The credit or cash
flow enhancement for a class of securities may not provide protection against
all risks of loss and may not guarantee repayment of the entire principal amount
and interest thereon. If losses occur which exceed the amount covered by any
credit enhancement or which are not covered by any credit enhancement,
securityholders will bear their allocable share of deficiencies, as described in
the related prospectus supplement.
SELLER MAY REPLACE CREDIT OR CASH FLOW ENHANCEMENT WITH RATING
CONFIRMATION. If so provided in the related prospectus supplement, the seller
may replace the credit enhancement for any class of securities with another form
of credit enhancement without the consent of securityholders, provided the
rating
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agencies confirm in writing that substitution will not result in the reduction
or withdrawal of the rating of any class of securities of the related trust.
RESERVE FUND. If so provided in the related prospectus supplement, the
reserve fund will be funded by an initial deposit by the trust or the seller on
the closing date in the amount set forth in the related prospectus supplement
and, if the related trust has a funding period, will also be funded on each
subsequent transfer date to the extent described in the related prospectus
supplement. As further described in the related prospectus supplement, the
amount on deposit in a reserve fund will be increased on each distribution date
thereafter up to the specified reserve balance by the deposit therein of the
amount of collections on the related receivables available thereof or as
described in the prospectus supplement. The related prospectus supplement will
describe the circumstances and manner under which distributions may be made out
of a reserve fund.
NET DEPOSITS
As an administrative convenience and for so long as certain conditions are
satisfied (see "Collections" above), the servicer will be permitted to make the
deposit of collections, aggregate advances and payments of purchase amounts for
any trust for or with respect to the related collection period, net of
distributions to the servicer as reimbursement of advances or payment of fees to
the servicer with respect to such collection period. The servicer, however, will
account to the trustee, any indenture trustee, the noteholders, if any, and the
certificateholders with respect to each trust as if all deposits, distributions,
and transfers were made individually.
STATEMENTS TO TRUSTEES AND TRUSTS
Prior to each distribution date with respect to securities of each trust,
the servicer will provide to the applicable indenture trustee, if any, and the
applicable trustee as of the close of business on the last day of the preceding
collection period the report that is required to be provided to securityholders
of such trust described under "Certain Information Regarding the
Securities--Reports to Securityholders".
EVIDENCE AS TO COMPLIANCE
Each sale and servicing agreement and pooling and servicing agreement will
provide that a firm of independent certified public accountants will furnish to
the related trust and indenture trustee or trustee, as applicable, annually a
statement as to compliance by the servicer during the preceding twelve months
(or, in the case of the first such certificate, from the applicable closing
date) with certain standards relating to the servicing of the applicable
receivables.
Each sale and servicing agreement and pooling and servicing agreement will
also provide for delivery to the related trust and indenture trustee or trustee,
as applicable, substantially simultaneously with the delivery of such
accountants' statement referred to above, of a certificate signed by an officer
of the servicer stating that the servicer has fulfilled its obligations under
the that agreement throughout the preceding twelve months (or, in the case of
the first such certificate, from the closing date) or, if there has been a
default in the fulfillment of any such obligation, describing each such default.
Copies of such statements and certificates may be obtained by
securityholders by a request in writing addressed to the applicable trustee.
CERTAIN MATTERS REGARDING THE SERVICER
Each sale and servicing agreement and pooling and servicing agreement will
provide that the servicer may not resign from its obligations and duties as
servicer thereunder, except (i) upon a determination that the servicer's
performance of such duties is no longer permissible under applicable
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law or (ii) in the event of the appointment of a successor servicer, without the
consent of any securityholder upon notification by each rating agency then
rating any of the related securities that the rating then assigned to the
securities will not be reduced or withdrawn by such rating agency. No such
resignation will become effective until the related indenture trustee or
trustee, as applicable, or a successor servicer has assumed the servicing
obligations and duties under such sale and servicing agreement or the pooling
and servicing agreement. The servicer will also have the right to delegate any
of its duties under those agreements to a third party without the consent of any
securityholder or the confirmation of any rating. Notwithstanding any such
delegation, the servicer will remain responsible and liable for its duties under
those agreements as if it had made no delegations.
Each sale and servicing agreement and pooling and servicing agreement will
further provide that neither the servicer nor any of its directors, officers,
employees and agents will be under any liability to the related trust or the
related noteholders or certificateholders for taking any action or for
refraining from taking any action under such sale and servicing agreement or for
errors in judgment; except that neither the servicer nor any such person will be
protected against any liability that would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence in the performance of the
servicer's duties thereunder or by reason of reckless disregard of its
obligations and duties thereunder, except that employees of the servicer or its
affiliates will be protected against liability that would otherwise be imposed
by reason of negligence. Such agreement will further provide that the servicer,
and its directors, officers, employees and agents are entitled to
indemnification by the trust for, and will be held harmless against, any loss,
liability or expense incurred by reason of the servicer's willful misfeasance,
bad faith, or negligence in the performance of duties or by reason of the
servicer's reckless disregard of obligations and duties thereunder; and
provided, however, that such indemnification will be paid on a distribution date
only after all payments required to be made to securityholders and the servicer
have been made and all amounts required to be deposited in enhancement accounts
have been deposited. In addition, each sale and servicing agreement and pooling
and servicing agreement will provide that the servicer is under no obligation to
appear in, prosecute or defend any legal action that is not incidental to the
servicer's servicing responsibilities under such sale and servicing agreement
and that, in its opinion, may cause it to incur any expense or liability. The
servicer may, however, undertake any reasonable action that it may deem
necessary or desirable in respect of a particular sale and servicing agreement
or pooling and servicing agreement, as applicable, the rights and duties of the
parties thereto, and the interests of the related securityholders thereunder. In
such event, the legal expenses and costs of such action and any liability
resulting therefrom will be expenses, costs, and liabilities of the trust, and
the servicer will be entitled to be reimbursed therefor.
Under the circumstances specified in each sale and servicing agreement and
pooling and servicing agreement, any entity into which the servicer may be
merged or consolidated, or any entity resulting from any merger or consolidation
to which the servicer is a party, or any entity succeeding to the business of
the servicer, which corporation or other entity in each of the foregoing cases
assumes the obligations of the servicer, will be the successor of the servicer
under such sale and servicing agreement or pooling and servicing agreement, as
applicable.
EVENTS OF SERVICING TERMINATION
"Events of servicing termination" under each sale and servicing agreement or
pooling and servicing agreement will consist of:
- any failure by the servicer (or, so long as the seller is the servicer,
the seller) to deliver to the trustee or indenture trustee for
distribution to the securityholders of the related trust or for deposit in
any of the trust accounts or the certificate distribution account any
required payment, which failure continues unremedied for five business
days after written notice from the trustee or indenture trustee is
received by the servicer or the seller, as the case may be, or after
discovery by an officer of the servicer or the seller, as the case may be;
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- any failure by the servicer (or, so long as the seller is the servicer,
the seller) duly to observe or perform in any material respect any other
covenant or agreement in such sale and servicing agreement, which failure
materially and adversely affects the rights of the noteholders or the
certificateholders of the related trust and which continues unremedied for
90 days after the giving of written notice of such failure (A) to the
servicer or the seller, as the case may be, by the trustee or the
indenture trustee or (B) to the servicer, the seller and the trustee or
the indenture trustee by holders of notes or certificates of such trust,
as applicable, of not less than 25% in principal amount of the controlling
class (or, if no notes are outstanding, 25% by aggregate certificate
balance of the certificates);
- the occurrence of certain insolvency events specified in the sale and
servicing agreement or pooling and servicing agreement with respect to the
servicer; and
- such other events, if any, set forth in the related prospectus supplement.
RIGHTS UPON EVENT OF SERVICING TERMINATION
As long as an event of servicing termination under a sale and servicing
agreement or pooling and servicing agreement remains unremedied, the related
indenture trustee or holders of not less than a majority of the controlling
class or the class of notes specified in the prospectus supplement (and after
the notes have been paid in full or if the trust has not issued notes, the
trustee or the holders of not less than a majority of the certificate balance)
may terminate all the rights and obligations of the servicer under such sale and
servicing agreement or pooling and servicing agreement, whereupon such indenture
trustee or trustee or a successor servicer appointed by such indenture trustee
or trustee will succeed to all the responsibilities, duties and liabilities of
the servicer under such sale and servicing agreement or pooling and servicing
agreement and will be entitled to similar compensation arrangements.
If, however, a receiver, bankruptcy trustee or similar official has been
appointed for the servicer, and no event of servicing termination other than
such appointment has occurred, such receiver, bankruptcy trustee or official may
have the power to prevent such indenture trustee, such noteholders, the trustee
or such certificateholders from effecting a transfer of servicing. In the event
that such indenture trustee or trustee of the trust is legally unable to act as
servicer, it may appoint, or petition a court of competent jurisdiction for the
appointment of, a successor servicer. Such indenture trustee or trustee may make
such arrangements for compensation to be paid to the successor servicer.
WAIVER OF PAST EVENTS OF SERVICING TERMINATION
The holders of not less than a majority of the controlling class or the
class of notes specified in the prospectus supplement (and after the notes have
been paid in full or if the trust has not issued notes, the trustee or the
holders of not less than a majority of the certificate balance) may, on behalf
of all such noteholders and certificateholders, waive any event of servicing
termination under the related sale and servicing agreement or pooling and
servicing agreement and its consequences, except an event of servicing
termination consisting of a failure to make any required deposits to or payments
from any of the trust accounts or to the certificate distribution account in
accordance with such sale and servicing agreement or pooling and servicing
agreement.
AMENDMENT
The parties to each of the receivables transfer and servicing agreements may
amend any of such agreements, without the consent of the related
securityholders, to add any provisions to or change or eliminate any of the
provisions of such receivables transfer and servicing agreements or modify the
rights of such noteholders or certificateholders; provided that such action will
not materially and adversely affect the interest of any such noteholder or
certificateholder as evidenced by either (i) an
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opinion of counsel to that effect or (ii) notification by each rating agency
then rating any of the related securities that the rating then assigned to the
securities will not be reduced or withdrawn by such rating agency together with
an officer's certificate of the servicer to that effect. The receivables
transfer and servicing agreements may also be amended by the parties thereto
with the consent of the holders of notes of such trust evidencing not less than
a majority in principal amount of the notes, and the holders of the certificates
of such trust evidencing not less than a majority of the certificate balance of
the certificates then outstanding, to add any provisions to or change or
eliminate any of the provisions of such receivables transfer and servicing
agreements or modify the rights of the noteholders or certificateholders;
provided, however, that no such amendment may (1) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on the related receivables or distributions that are required to be
made for the benefit of such noteholders or certificateholders or change any
interest rate on the securities or the amount required to be on deposit in the
reserve fund, if any, or (2) reduce the percentage of the notes or certificates
of such trust which are required to consent to any such amendment, without the
consent of the holders of all the outstanding notes and certificates of such
trust.
PAYMENT OF NOTES
The indenture trustee will agree in the related indenture that, upon the
payment in full of all outstanding notes of a given trust and the satisfaction
and discharge of the related indenture, to continue to carry out its obligations
under the sale and servicing agreement or pooling and servicing agreement, as
applicable, as agent for the trustee of the trust.
TERMINATION
With respect to each trust, the obligations of the servicer, the seller, the
depositor, the related trustee and the related indenture trustee under the
receivables transfer and servicing agreements will terminate upon the earlier of
(1) the maturity or other liquidation of the last related receivable and the
disposition of any amounts received upon liquidation of any such remaining
receivables and (2) the payment to noteholders and certificateholders of the
related trust of all amounts required to be paid to them under the receivables
transfer and servicing agreements and (3) the occurrence of either event
described below.
In order to avoid excessive administrative expense, the servicer will be
permitted at its option to purchase from each trust as of the end of any
applicable collection period, if the aggregate principal balance of the
receivables held by the trust is 10% or less of the aggregate principal balance
of the receivables as of the cutoff date (or under such other circumstances as
may be specified in the related prospectus supplement), all remaining related
receivables at a price equal to the aggregate of the purchase amounts thereof as
of the end of such collection period, after giving effect to the receipt of any
monies collected on the receivable.
If and to the extent provided in the related prospectus supplement with
respect to the trust, the applicable trustee will, within ten days following a
distribution date as of which the aggregate principal balance of the receivables
is equal to or less than the percentage of the initial aggregate principal
balance of the receivables as of the cutoff date specified in the related
prospectus supplement, solicit bids for the purchase of the receivables
remaining in the trust in the manner and subject to the terms and conditions set
forth in such prospectus supplement. If the applicable trustee receives
satisfactory bids as described in such prospectus supplement, then the
receivables remaining in the trust will be sold to the highest bidder.
As more fully described in the related prospectus supplement, any
outstanding notes of the related trust will be paid in full concurrently with
either of the events specified above and the subsequent
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distribution to the related certificateholders of all amounts required to be
distributed to them under the applicable trust agreement will effect early
retirement of the certificates of such trust.
LIST OF CERTIFICATEHOLDERS
With respect to the certificates of any trust, three or more holders of the
certificates of such trust or one or more holders of such certificates
evidencing not less than 25% of the certificate balance of such certificates
may, by written request to the related trustee accompanied by a copy of the
communication that the applicant proposes to send, obtain access to the list of
all certificateholders maintained by the trustee for the purpose of
communicating with other certificateholders with respect to their rights under
the related trust agreement or pooling and servicing agreement or under such
certificates.
ADMINISTRATION AGREEMENT
If so specified in the related prospectus supplement, a person named as
administrator in the related prospectus supplement, will enter into an
administration agreement with each trust that issues notes and the related
indenture trustee pursuant to which the administrator will agree, to the extent
provided in such administration agreement, to provide the notices and to perform
other administrative obligations required by the related indenture. Unless
otherwise specified in the related prospectus supplement with respect to any
such trust, as compensation for the performance of the administrator's
obligations under the applicable administration agreement and as reimbursement
for its expenses related thereto, the administrator will be entitled to a
monthly administration fee in such an amount as may be set forth in the related
prospectus supplement.
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SOME IMPORTANT LEGAL ISSUES RELATING TO THE RECEIVABLES
GENERAL
The transfer of the receivables to a trust, the perfection of the security
interests in the receivables and the enforcement of rights to realize on the
financed vehicles as collateral for the receivables are subject to a number of
federal and state laws, including the UCC as in effect in various states. Each
of the depositor, the servicer and the seller will take such action as is
required to perfect the rights of the trustee in the receivables. If, through
inadvertence or otherwise, another party purchases (including the taking of a
security interest in) the receivables for new value in the ordinary course of
its business, without actual knowledge of the trust's interest, and takes
possession of the receivables, such purchaser would acquire an interest in the
receivables superior to the interest of the trust.
SECURITY INTERESTS IN THE FINANCED VEHICLES
Retail installment sale contracts such as the receivables evidence the
credit sale of motor vehicles by dealers to obligors; the contracts also
constitute personal property security agreements and include grants of security
interests in the related vehicles under the UCC. Perfection of security
interests in motor vehicles is generally governed by state certificate of title
statutes or by the motor vehicle registration laws of the state in which each
vehicle is located. In most states, a security interest in a motor vehicle is
perfected by notation of the secured party's lien on the vehicle's certificate
of title.
Unless otherwise specified in the related prospectus supplement, each seller
will be obligated to have taken all actions necessary under the laws of the
state in which the financed vehicle is located to perfect its security interest
in the financed vehicle securing the related receivable purchased by it from a
dealer or lender, including, where applicable, by having a notation of its lien
recorded on such vehicle's certificate of title or, if appropriate, by
perfecting its security interest in the related financed vehicles under the UCC.
Because the servicer will continue to service the receivables, the obligors on
the receivables will not be notified of the sales from a seller to the depositor
or from the depositor to the trust, and no action will be taken to record the
transfer of the security interest from a seller to the depositor or from the
depositor to the trust by amendment of the certificates of title for the
financed vehicles or otherwise.
Pursuant to each receivables purchase agreement, each seller will assign to
the depositor its interests in the financed vehicles securing the receivables
assigned by that seller to the depositor and, with respect to each trust,
pursuant to the related sale and servicing agreement or pooling and servicing
agreement, the depositor will assign its interests in the financed vehicles
securing the related receivables to such trust. However, because of the
administrative burden and expense, none of the seller, the depositor, the
servicer or the related trustee will amend any certificate of title to identify
either the depositor or such trust as the new secured party on such certificate
of title relating to a financed vehicle nor will any such entity execute and
file any transfer instrument. In most states, such assignment is an effective
conveyance of such security interest without amendment of any lien noted on the
related certificates of title and the new secured party succeeds to the seller's
rights as the secured party as against creditors of the obligor. In some states,
in the absence of such endorsement and delivery, neither the indenture trustee
nor the trustee may have a perfected security interest in the financed vehicle.
However, UCC financing statements with respect to the transfer to the
depositor's of the seller's security interest in the financed vehicles and the
transfer to the trust of the depositor's security interest in the financed
vehicles will be filed. In addition, the servicer or the custodian will continue
to hold any certificates of title relating to the financed vehicles in its
possession as custodian for the trustee pursuant to the sale and servicing
agreement or pooling and servicing agreement, as applicable.
In most states, assignments such as those under the receivables purchase
agreement and the sale and servicing agreement or pooling and servicing
agreement, as applicable, are an effective conveyance
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of a security interest without amendment of any lien noted on a vehicle's
certificate of title, and the assignee succeeds thereby to the assignor's rights
as secured party. In such states, although re-registration of the vehicle is not
necessary to convey a perfected security interest in the financed vehicles to
the trust, because the trust will not be listed as legal owner on the
certificates of title to the financed vehicles, its security interest could be
defeated through fraud or negligence. Moreover, in certain other states, in the
absence of such amendment and re-registration, a perfected security interest in
the financed vehicles may not have been effectively conveyed to the trust.
Except in such event, however, in the absence of fraud, forgery or
administrative error, the notation of seller's lien on the certificates of title
will be sufficient to protect the trust against the rights of subsequent
purchasers of a financed vehicle or subsequent creditors who take a security
interest in a financed vehicle. In the receivables purchase agreement, the
seller will represent and warrant to the depositor (who will in turn assign its
rights under such warranty to the applicable trust under the related sale and
servicing agreement or pooling and servicing agreement), that all action
necessary for the seller to obtain a perfected security interest in each
financed vehicle has been taken. If there are any financed vehicles as to which
the seller failed to obtain a first perfected security interest, its security
interest would be subordinate to, among others, subsequent purchasers of such
financed vehicles and holders of perfected security interests therein. Such a
failure, however, would constitute a breach of the seller's representations and
warranties under the receivables purchase agreement and the depositor's
representations and warranties under the sale and servicing agreement or pooling
and servicing agreement, as applicable. Accordingly, unless the breach was
cured, the related seller would be required to repurchase the related receivable
from the trust.
Under the laws of most states, a perfected security interest in a vehicle
continues for four months after the vehicle is moved to a new state from the one
in which it is initially registered and thereafter until the owner re-registers
such vehicle in the new state. A majority of states require surrender of the
related certificate of title to re-register a vehicle. In those states that
require a secured party to hold possession of the certificate of title to
maintain perfection of the security interest, the secured party would learn of
the re-registration through the request from the obligor under the related
installment sale contract to surrender possession of the certificate of title.
In the case of vehicles registered in states providing for the notation of a
lien on the certificate of title but not possession by the secured party, the
secured party would receive notice of surrender from the state of
re-registration if the security interest is noted on the certificate of title.
Thus, the secured party would have the opportunity to re-perfect its security
interest in the vehicles in the state of relocation. However, these procedural
safeguards will not protect the secured party if through fraud, forgery or
administrative error, the obligor somehow procures a new certificate of title
that does not list the secured party's lien. Additionally, in states that do not
require a certificate of title for registration of a vehicle, re-registration
could defeat perfection. In the ordinary course of servicing the receivables,
the servicer will take steps to effect re-perfection upon receipt of notice of
re-registration or information from the obligor as to relocation. Similarly,
when an obligor sells a financed vehicle, the servicer must surrender possession
of the certificate of title or will receive notice as a result of its lien noted
thereon and accordingly will have an opportunity to require satisfaction of the
related receivable before release of the lien. Under the sale and servicing
agreement or pooling and servicing agreement, as applicable, the servicer will
be obligated to take appropriate steps, at its own expense, to maintain
perfection of security interests in the financed vehicles.
Under the laws of most states, liens for repairs performed on a motor
vehicle and liens for unpaid taxes take priority over even a first perfected
security interest in such vehicle. The Internal Revenue Code of 1986, as
amended, also grants priority to certain federal tax liens over the lien of a
secured party. The laws of certain states and federal law permit the
confiscation of motor vehicles by governmental authorities under certain
circumstances if used in unlawful activities, which may result in the loss of a
secured party's perfected security interest in a confiscated vehicle. The seller
will represent and warrant in the receivables purchase agreement to the
depositor (who will in turn assign its rights
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under such warranty to the applicable trust under the related sale and servicing
agreement or pooling and servicing agreement), that, as of the closing date, the
security interest in each financed vehicle is prior to all other present liens
upon and security interests in such financed vehicle. However, liens for repairs
or taxes could arise at any time during the term of a receivable. No notice will
be given to the trustees or securityholders in the event such a lien or
confiscation arises and any such lien or confiscation arising after the closing
date would not give rise to the seller's repurchase obligation.
ENFORCEMENT OF SECURITY INTERESTS IN VEHICLES
The servicer on behalf of each trust may take action to enforce its security
interest by repossession and resale of the financed vehicles securing the
trust's receivables. The actual repossession may be contracted out to third
party contractors. Under the UCC and laws applicable in most states, a creditor
can repossess a motor vehicle securing a loan by voluntary surrender,
"self-help" repossession that is "peaceful" or, in the absence of voluntary
surrender and the ability to repossess without breach of the peace, by judicial
process. In the event of default by the obligor, some jurisdictions require that
the obligor be notified of the default and be given a time period within which
to cure the default prior to repossession. Generally, this right of cure may
only be exercised on a limited number of occasions during the term of the
related contract. In addition, the UCC and other state laws require the secured
party to provide the obligor 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. The obligor has the right to redeem the collateral prior
to actual sale by paying the secured party the unpaid principal balance of the
obligation, accrued interest thereon plus reasonable expenses for repossessing,
holding and preparing the collateral for disposition and arranging for its sale,
plus, in some jurisdictions, reasonable attorneys' fees or in some states, by
payment of delinquent installments or the unpaid balance.
The proceeds of resale of the repossessed vehicles generally will be applied
first to the expenses of resale and repossession and then to the satisfaction of
the indebtedness. While some states impose prohibitions or limitations on
deficiency judgments if the net proceeds from resale do not cover the full
amount of the indebtedness, a deficiency judgment can be sought in those states
that do not prohibit or limit such judgments. In addition to the notice
requirement, the UCC requires that every aspect of the sale or other
disposition, including the method, manner, time, place and terms, be
"commercially reasonable". Generally, courts have held that when a sale is not
"commercially reasonable", the secured party loses its right to a deficiency
judgment. In addition, the UCC permits the debtor or other interested party to
recover for any loss caused by noncompliance with the provisions of the UCC.
Also, prior to a sale, the UCC permits the debtor or other interested person to
prohibit the secured party from disposing of the collateral if it is established
that the secured party is not proceeding in accordance with the "default"
provisions under the UCC. However, the deficiency judgment would be a personal
judgment against the obligor for the shortfall, and a defaulting obligor can be
expected to have very little capital 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 or be uncollectible.
Occasionally, after resale of a repossessed vehicle and payment of all
expenses and indebtedness, there is a surplus of funds. In that case, the UCC
requires the creditor to remit the surplus to any holder of a subordinate lien
with respect to such vehicle or if no such lienholder exists, the UCC requires
the creditor to remit the surplus to the obligor.
CERTAIN BANKRUPTCY CONSIDERATIONS
The depositor and the seller will take steps in structuring the transactions
contemplated hereby so that the transfer of the receivables from the seller to
the depositor and from the depositor to the trust constitutes a sale, rather
than a pledge of the receivables to secure indebtedness of the seller or the
depositor, as the case may be. However, if the seller or the depositor were to
become a debtor under
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the federal bankruptcy code, it is possible that a creditor or trustee in
bankruptcy of the seller or the depositor, as the case may be, as
debtor-in-possession, may argue that the sale of the receivables by the seller
or the depositor, as the case may be, was a pledge of the receivables rather
than a sale. This position, if presented to or accepted by a court, could result
in a delay in or reduction of distribution to the securityholders.
CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws and related regulations
impose substantial requirements upon creditors and servicers involved in
consumer finance. These laws include the Truth-in-Lending Act, the Equal Credit
Opportunity Act, the Federal Trade Commission Act, the Fair Credit Billing Act,
the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the
Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations B and Z, the
Soldiers' and Sailors' Civil Relief Act of 1940, the Military Reservist Relief
Act, state adaptations of the National Consumer Act and of the Uniform Consumer
Credit Code and state motor vehicle retail installment sale acts, retail
installment sales acts and other similar laws. Also, the laws of certain states
impose finance charge ceilings and other restrictions on consumer transactions
and require contract disclosures in addition to those required under federal
law. These requirements impose specific statutory liabilities upon creditors who
fail to comply with their provisions. In some cases, this liability could affect
the ability of an assignee such as the indenture trustee to enforce consumer
finance contracts such as the receivables.
The so-called "Holder-in-Due-Course Rule" of the Federal Trade Commission
has the effect of subjecting a seller (and certain related lenders and their
assignees) in a consumer credit transaction to all claims and defenses which the
obligor in the transaction could assert against the seller of the goods.
Liability under the Holder-in-Due-Course Rule is limited to the amounts paid by
the obligor under the contract, and the holder of the contract may also be
unable to collect any balance remaining due thereunder from the obligor. The
Holder-in-Due-Course Rule is generally duplicated by the Uniform Consumer Credit
Code, other state statutes or the common law in certain states.
Most of the receivables will be subject to the requirements of the
Holder-in-Due-Course Rule. Accordingly, the trust, as holder of the receivables,
will be subject to any claims or defenses that the purchaser of a financed
vehicle may assert against the seller of the financed vehicle. Such claims are
limited to a maximum liability equal to the amounts paid by the obligor on the
receivable.
If an obligor were successful in asserting any such claim or defense as
described in the two immediately preceding paragraphs, such claim or defense
would constitute a breach of a representation and warranty under the receivables
purchase agreement and the sale and servicing agreement or the pooling and
serving agreement, as applicable, and would create an obligation of the seller
to repurchase such receivable unless the breach were cured.
Courts have applied general equitable principles to secured parties pursuing
repossession or litigation involving deficiency balances. These equitable
principles may have the effect of relieving an obligor from some or all of the
legal consequences of a default.
In several cases, consumers have asserted that the self-help remedies of
secured parties under the UCC and related laws violate the due process
protection of the Fourteenth Amendment to the Constitution of the United States.
Courts have generally either upheld the notice provisions of the UCC and related
laws as reasonable or have found that the creditor's repossession and resale do
not involve sufficient state action to afford constitutional protection to
consumers.
Under each receivables purchase agreement, the related seller will warrant
to the depositor (who will in turn assign its rights under such warranty to the
applicable trust under the related sale and servicing agreement or pooling and
servicing agreement) that each receivable complies with all
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requirements of law in all material respects. Accordingly, if an obligor has a
claim against such trust for violation of any law and such claim materially and
adversely affects such trust's interest in a receivable, such violation would
constitute a breach of the warranties of the seller under such receivables
purchase agreement and would create an obligation of the seller to repurchase
the receivable unless the breach is cured.
OTHER MATTERS
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a creditor to
realize upon collateral or enforce a deficiency judgment. For example, in a
Chapter 13 proceeding under the federal bankruptcy law, a court may prevent a
creditor from repossessing a motor vehicle, and, as part of the rehabilitation
plan, reduce the amount of the secured indebtedness to the market value of the
motor vehicle at the time of bankruptcy (as determined by the court), leaving
the party providing financing as a general unsecured creditor for the remainder
of the indebtedness. A bankruptcy court may also reduce the monthly payments due
under the related contract or change the rate of interest and time of repayment
of the indebtedness.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of material federal income tax
consequences of the purchase, ownership and disposition of the notes and the
certificates. The summary does not purport to deal with federal income tax
consequences applicable to all categories of holders, some of which may be
subject to special rules. For example, it does not discuss the tax treatment of
noteholders or certificateholders that are insurance companies, regulated
investment companies or dealers in securities. Moreover, there are no cases or
Internal Revenue Service (the "IRS") rulings on similar transactions involving
both debt and equity interests issued by a trust with terms similar to those of
the notes and the certificates. As a result, the IRS may disagree with all or a
part of the discussion below. Prospective investors are urged to consult their
own tax advisors in determining the federal, state, local, foreign and any other
tax consequences to them of the purchase, ownership and disposition of the notes
and the certificates.
The following summary is based upon current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), the Treasury regulations
promulgated thereunder and judicial or ruling authority, all of which are
subject to change, which change may be retroactive. Each trust will be provided
with an opinion of special federal tax counsel to each trust specified in the
related prospectus supplement, regarding certain federal income tax matters
discussed below. An opinion of federal tax counsel, however, is not binding on
the IRS or the courts. No ruling on any of the issues discussed below will be
sought from the IRS. For purposes of the following summary, references to the
trust, the notes, the certificates and related terms, parties and documents
shall be deemed to refer, unless otherwise specified herein, to each trust and
the notes, certificates and related terms, parties and documents applicable to
such trust.
The federal income tax consequences to certificateholders will vary
depending on whether (i) an election is made to treat the trust as a partnership
under the Code, (ii) all the certificates are retained by the seller or an
affiliate thereof, (iii) the trust will be treated as a grantor trust or
(iv) on election is made to treat the trust as a FASIT. The prospectus
supplement for each series of certificates will specify whether a partnership
election will be made or the trust will be treated as a grantor trust.
TRUSTS FOR WHICH A PARTNERSHIP ELECTION IS MADE
TAX CHARACTERIZATION OF THE TRUST AS A PARTNERSHIP
Federal tax counsel will deliver its opinion that a trust for which a
partnership election is made will not be an association (or publicly traded
partnership) taxable as a corporation for federal income tax
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purposes. This opinion will be based on the assumption that the terms of the
trust agreement and related documents will be complied with, and on counsel's
conclusions that the nature of the income of the trust will exempt it from the
rule that certain publicly traded partnerships are taxable as corporations.
If a trust were taxable as a corporation for federal income tax purposes,
the trust would be subject to corporate income tax on its taxable income. The
trust's taxable income would include all its income on the receivables, and may
possibly be reduced by its interest expense on the notes. Any such corporate
income tax could materially reduce cash available to make payments on the notes
and distributions on the certificates, and certificateholders could be liable
for any such tax that is unpaid by the trust.
TAX CONSEQUENCES TO HOLDERS OF THE NOTES
TREATMENT OF THE NOTES AS INDEBTEDNESS. The depositor will agree, and the
noteholders will agree by their purchase of notes, to treat the notes as debt
for federal income tax purposes. Federal tax counsel will, except as otherwise
provided in the related prospectus supplement, advise the trust that the notes
will be classified as debt for federal income tax purposes. The discussion below
assumes that this characterization is correct.
OID, ETC. The discussion below assumes that all payments on the notes are
denominated in United States dollars, that principal and interest is payable on
the notes and that the notes are not indexed securities or are entitled to
principal or interest payments with disproportionate, nominal or no payments.
Moreover, the discussion assumes that the interest formula for the notes meets
the requirements for "qualified stated interest" under Treasury regulations (the
"OID regulations") relating to original issue discount ("OID"), and that any OID
on the notes (I.E., any excess of the principal amount of the notes over their
issue price) does not exceed a DE MINIMIS amount (I.E., 1/4% of their principal
amount multiplied by the number of full years included in their term), all
within the meaning of the OID regulations. If these conditions are not satisfied
with respect to the notes, additional tax considerations with respect to such
notes will be provided in the applicable prospectus supplement.
INTEREST INCOME ON THE NOTES. Based on the foregoing assumptions, except as
discussed in the following paragraph, the notes will not be considered issued
with OID. The stated interest thereon will be taxable to a noteholder as
ordinary interest income when received or accrued in accordance with such
noteholder's method of tax accounting. 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. A purchaser who
buys a note for more or less than its principal amount will generally be
subject, respectively, to the premium amortization or market discount rules of
the Code.
A holder of a note that has a fixed maturity date of not more than one year
from its issue date (a "Short-Term Note") may be subject to special rules. An
accrual basis holder of a Short-Term Note (and certain cash method holders,
including regulated investment companies, as set forth in Section 1281 of the
Code) generally would be required to report interest income as interest accrues
on a straight-line basis over the term of each interest period. Other cash basis
holders of a Short-Term Note would, in general, be required to report interest
income as interest is paid (or, if earlier, upon the taxable disposition of the
Short-Term Note). However, a cash basis holder of a Short-Term Note reporting
interest income as it is paid may be required to defer a portion of any interest
expense otherwise deductible on indebtedness incurred to purchase or carry the
Short-Term Note until the taxable disposition of the Short-Term Note. A cash
basis taxpayer may elect under Section 1281 of the Code to accrue interest
income on all nongovernment debt obligations with a term of one year or less, in
which case the taxpayer would include interest on the Short-Term Note in income
as it accrues, but would not
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be subject to the interest expense deferral rule referred to in the preceding
sentence. Certain special rules apply if a Short-Term Note is purchased for more
or less than its principal amount.
SALE OR OTHER DISPOSITION. If a noteholder sells a note, the holder will
recognize gain or loss in an amount equal to the difference between the amount
realized on the sale and the holder's adjusted tax basis in the note. The
adjusted tax basis of a note to a particular noteholder will equal the holder's
cost for the note, increased by any market discount, acquisition discount, OID
and gain previously included by such noteholder in income with respect to the
note and decreased by the amount of bond premium (if any) previously amortized
and by the amount of principal payments previously received by such noteholder
with respect to such note. Any such gain or loss will be capital gain or loss if
the note was held as a capital asset, except for gain representing accrued
interest and accrued market discount not previously included in income. Any
capital gain recognized upon a sale, exchange or other disposition of a note
will be long-term capital gain if the seller's holding period is more than one
year and will be short-term capital gain if the seller's holding period is one
year or less. The deductibility of capital losses is subject to certain
limitations. Prospective investors should consult with their own tax advisors
concerning the United States federal tax consequences of the sale, exchange or
other disposition of a note.
FOREIGN HOLDERS. Interest payments made (or accrued) to a noteholder who is
a nonresident alien, foreign corporation or other non-United States person (a
"foreign person") generally will be considered "portfolio interest", and
generally will not be subject to United States federal income tax and
withholding tax, if the interest is not effectively connected with the conduct
of a trade or business within the United States by the foreign person and the
foreign person (i) is not actually or constructively a "10 percent shareholder"
of the trust or the depositor (including a holder of 10% of the outstanding
certificates) or a "controlled foreign corporation" with respect to which the
trust or the seller is a "related person" within the meaning of the Code and
(ii) provides the indenture trustee or other person who is otherwise required to
withhold United States tax with respect to the notes with an appropriate
statement (on Form W-8 or a similar form), signed under penalty of perjury,
certifying that the beneficial owner of the note is a foreign person and
providing the foreign person's name and address. If a note is held through a
securities clearing organization or certain other financial institutions, the
organization or institution may provide the relevant signed statement to the
withholding agent; in that case, however, the signed statement must be
accompanied by IRS Form W-8 or IRS Form W-8BEN or substitute form provided by
the foreign person that owns the note. If such interest is not portfolio
interest, then it will be subject to withholding tax at a rate of 30 percent,
unless the foreign person provides a properly executed (i) IRS Form 1001 or IRS
Form W-8BEN claiming an exemption from or reduction in withholding under the
benefit of a tax treaty or (ii) IRS Form 4224 or IRS Form W-8ECI stating that
interest paid is not subject to withholding tax because it is effectively
connected with the foreign person's conduct of a trade or business in the United
States. If the interest is effectively connected income, the foreign person,
although exempt from the withholding tax discussed above, will be subject to
United States federal income tax on such interest at graduated rates. After
December 31, 2000, only IRS Form W-8BCI and IRS Form W-8ECI will be acceptable.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a note by a foreign person will be exempt from United
States federal income and withholding tax, provided that (i) such gain is not
effectively connected with the conduct of a trade or business in the United
States by the foreign person and (ii) in the case of an individual foreign
person, the foreign person is not present in the United States for 183 days or
more in the taxable year and does not otherwise have a "tax home" within the
United States.
BACKUP WITHHOLDING. Each holder of a note (other than an exempt holder such
as a corporation, tax-exempt organization, qualified pension and profit-sharing
trust, individual retirement account or nonresident alien who provides
certification as to status as a nonresident) will be required to provide,
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under penalty of perjury, a certificate containing the holder's name, address,
correct federal taxpayer identification number and a statement that the holder
is not subject to backup withholding. Should a nonexempt noteholder fail to
provide the required certification, the trust will be required to withhold
31 percent of the amount otherwise payable to the holder, and remit the withheld
amount to the IRS as a credit against the holder's federal income tax liability.
NEW WITHHOLDING REGULATIONS. Recently, the Treasury Department issued new
regulations (the "New Regulations") which make certain modifications to
withholding, backup withholding and information reporting rules. The New
Regulations attempt to unify certification requirements and modify reliance
standards. The New Regulations will generally be effective for payments made
after December 31, 2000, subject to certain transition rules. Prospective
investors are urged to consult their own tax advisors regarding the New
Regulations.
POSSIBLE ALTERNATIVE TREATMENTS OF THE NOTES. If, contrary to the opinion
of Federal tax counsel, the IRS successfully asserted that one or more of the
notes did not represent debt for federal income tax purposes, the notes might be
treated as equity interests in the trust. If so treated, the trust might be
treated as a publicly traded partnership taxable as a corporation with
potentially adverse tax consequences (and the publicly traded partnership
taxable as a corporation would not be able to reduce its taxable income by
deductions for interest expense on notes recharacterized as equity).
Alternatively, and most likely in the view of federal tax counsel, the trust
would be treated as a publicly traded partnership that would not be taxable as a
corporation because it would meet certain qualifying income tests. Nonetheless,
treatment of the notes as equity interests in such a partnership could have
adverse tax consequences to certain holders. For example, income to certain
tax-exempt entities (including pension funds) would be "unrelated business
taxable income", income to foreign holders generally would be subject to United
States tax and United States tax return filing and withholding requirements, and
individual holders might be subject to certain limitations on their ability to
deduct their share of trust expenses.
TAX CONSEQUENCES TO HOLDERS OF THE CERTIFICATES
TREATMENT OF THE TRUST AS A PARTNERSHIP. The depositor will agree, and the
certificateholders will agree by their purchase of certificates, to treat the
trust as a partnership for purposes of federal and state income tax, franchise
tax and any other tax measured in whole or in part by income, with the assets of
the partnership being the assets held by the trust, the partners of the
partnership being the certificateholders (including the seller in its capacity
as recipient of distributions from any reserve fund), and the notes being debt
of the related partnership. However, the proper characterization of the
arrangement involving the trust, the certificates, the notes, the depositor and
the seller is not clear because there is no authority on transactions closely
comparable to that contemplated herein.
A variety of alternative characterizations are possible. For example,
because the certificates have certain features characteristic of debt, the
certificates might be considered debt of the depositor or the trust. Any such
characterization would not result in materially adverse tax consequences to
certificateholders as compared to the consequences from treatment of the
certificates as equity in a partnership, described below. The following
discussion assumes that the certificates represent equity interests in a
partnership.
INDEXED SECURITIES, ETC. The following discussion assumes that all payments
on the certificates are denominated in United States dollars, principal and
interest are distributed on the certificates, that a series of securities
includes a single class of certificates and that the certificates are not
indexed securities or are entitled to principal or interest payments with
disproportionate, nominal or no payments. If these conditions are not satisfied
with respect to any given series of certificates, additional tax considerations
with respect to such certificates will be disclosed in the applicable prospectus
supplement.
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PARTNERSHIP TAXATION. As a partnership, the trust will not be subject to
federal income tax. Rather, each certificateholder will be required to
separately take into account such holder's allocated share of income, gains,
losses, deductions and credits of the trust. The trust's income will consist
primarily of interest and finance charges earned on the receivables (including
appropriate adjustments for market discount, OID and bond premium) and any gain
upon collection or disposition of receivables. The trust's deductions will
consist primarily of interest accruing with respect to the notes, servicing and
other fees, and losses or deductions upon collection or disposition of
receivables.
The tax items of a partnership are allocable to the partners in accordance
with the Code, Treasury regulations and the partnership agreement (in this case,
the trust agreement and related documents). The trust agreement will provide, in
general, that the certificateholders will be allocated taxable income of the
trust for each month equal to the sum of
(i) the interest that accrues on the certificates in accordance with their
terms for such month, including interest accruing at the applicable
pass-through rate for such month and interest on amounts previously due
on the certificates but not yet distributed;
(ii) any trust income attributable to discount on the receivables that
corresponds to any excess of the principal amount of the certificates
over their initial issue price;
(iii) prepayment premium payable to the certificateholders for such month;
and
(iv) any other amounts of income payable to the certificateholders for such
month.
Such allocation will be reduced by any amortization by the trust of premium
on receivables that corresponds to any excess of the issue price of certificates
over their principal amount. All remaining taxable income of the trust will be
allocated to the depositor. Based on the economic arrangement of the parties,
this approach for allocating trust income should be permissible under applicable
Treasury regulations, although no assurance can be given that the IRS would not
require a greater amount of income to be allocated to certificateholders.
Moreover, even under the foregoing method of allocation, certificateholders may
be allocated income equal to the entire pass-through rate plus the other items
described above even though the trust might not have sufficient cash to make
current cash distributions of such amount. Thus, cash basis holders will in
effect be required to report income from the certificates on the accrual basis
and certificateholders may become liable for taxes on trust income even if they
have not received cash from the trust to pay such taxes. In addition, because
tax allocations and tax reporting will be done on a uniform basis for all
certificateholders but certificateholders may be purchasing certificates at
different times and at different prices, certificateholders may be required to
report on their tax returns taxable income that is greater or less than the
amount reported to them by the trust. See "Allocations Between Transferors and
Transferees" below.
All of the taxable income allocated to a certificateholder that is a
pension, profit sharing or employee benefit plan or other tax-exempt entity
(including an individual retirement account) will constitute "unrelated business
taxable income" generally taxable to such a holder under the Code.
An individual taxpayer's share of expenses of the trust (including fees to
the servicer but not interest expense) would be miscellaneous itemized
deductions. Such deductions might be disallowed to the individual in whole or in
part and might result in such holder being taxed on an amount of income that
exceeds the amount of cash actually distributed to such holder over the life of
the trust.
The trust intends to make all tax calculations relating to income and
allocations to certificateholders on an aggregate basis. If the IRS were to
require that such calculations be made separately for each receivable, the trust
might be required to incur additional expense but it is believed that there
would not be a material adverse effect on certificateholders.
DISCOUNT AND PREMIUM. Unless otherwise indicated in the applicable
prospectus supplement, the applicable seller will represent that the receivables
were not issued with OID, and, therefore, the trust
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should not have OID income. However, the purchase price paid by the trust for
the receivables may be greater or less than the remaining principal balance of
the receivables at the time of purchase. If so, the receivables will have been
acquired at a premium or discount, as the case may be. (As indicated above, the
trust will make this calculation on an aggregate basis, but might be required to
recompute it on a receivable-by-receivable basis.)
If the trust acquires the receivables at a market discount or premium, the
trust will elect to include any such discount in income currently as it accrues
over the life of the receivables or to offset any such premium against interest
income on the receivables. As indicated above, a portion of such market discount
income or premium deduction may be allocated to certificateholders.
SECTION 708 TERMINATION. Under Section 708 of the Code, the trust will be
deemed to terminate for federal income tax purposes if 50% or more of the
capital and profits interests in the trust are sold or exchanged within a
12-month period. Pursuant to final Treasury regulations issued on May 9, 1997,
if such a termination occurs, the trust will be considered to have contributed
the assets of the trust (the "old partnership") to a new partnership in exchange
for interests in the partnership. Such interests would be deemed distributed to
the partners of the old partnership in liquidation thereof, which would not
constitute a sale or exchange.
DISPOSITION OF CERTIFICATES. Generally, capital gain or loss will be
recognized on a sale of certificates in an amount equal to the difference
between the amount realized and the seller's tax basis in the certificates sold.
A certificateholder's tax basis in a certificate will generally equal the
holder's cost increased by the holder's share of trust income (includible in
income) and decreased by any distributions received with respect to such
certificate. In addition, both the tax basis in the certificates and the amount
realized on a sale of a certificate would include the holder's share of the
notes and other liabilities of the trust. A holder acquiring certificates at
different prices may be required to maintain a single aggregate adjusted tax
basis in such certificates, and, upon sale or other disposition of some of the
certificates, allocate a portion of such aggregate tax basis to the certificates
sold (rather than maintaining a separate tax basis in each certificate for
purposes of computing gain or loss on a sale of that certificate).
Any gain on the sale of a certificate attributable to the holder's share of
unrecognized accrued market discount on the receivables would generally be
treated as ordinary income to the holder and would give rise to special tax
reporting requirements. The trust does not expect to have any other assets that
would give rise to such special reporting requirements. Thus, to avoid those
special reporting requirements, the trust will elect to include market discount
in income as it accrues.
If a certificateholder is required to recognize an aggregate amount of
income (not including income attributable to disallowed itemized deductions
described above) over the life of the certificates that exceeds the aggregate
cash distributions with respect thereto, such excess will generally give rise to
a capital loss upon the retirement of the certificates.
ALLOCATIONS BETWEEN TRANSFERORS AND TRANSFEREES. In general, the trust's
taxable income and losses will be determined monthly and the tax items for a
particular calendar month will be apportioned among the certificateholders in
proportion to the principal amount of certificates owned by them as of the close
of the last day of such month. As a result, a holder purchasing certificates may
be allocated tax items (which will affect its tax liability and tax basis)
attributable to periods before the actual transaction.
The use of such a monthly convention may not be permitted by existing
regulations. If a monthly convention is not allowed (or only applies to
transfers of less than all of the partner's interest), taxable income or losses
of the trust might be reallocated among the certificateholders. The depositor is
authorized to revise the trust's method of allocation between transferors and
transferees to conform to a method permitted by future regulations.
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SECTION 754 ELECTION. In the event that a certificateholder sells its
certificates at a profit (or loss), the purchasing certificateholder will have a
higher (or lower) basis in the certificates than the selling certificateholder
had. The tax basis of the trust's assets will not be adjusted to reflect that
higher (or lower) basis unless the trust were to file an election under
Section 754 of the Code. In order to avoid the administrative complexities that
would be involved in keeping accurate accounting records, as well as potentially
onerous information reporting requirements, the trust will not make such an
election. As a result, certificateholders might be allocated a greater or lesser
amount of trust income than would be appropriate based on their own purchase
price for the certificates.
ADMINISTRATIVE MATTERS. The trustee is required to keep or have kept
complete and accurate books of the trust. Such books will be maintained for
financial reporting and tax purposes on an accrual basis and the fiscal year of
the trust will be the calendar year. The trustee will file a partnership
information return (IRS Form 1065) with the IRS for each taxable year of the
trust and will report each certificateholder's allocable share of items of trust
income and expense to holders and the IRS on Schedule K-1. The trust will
provide the Schedule K-1 information to nominees that fail to provide the trust
with the information statement described below and such nominees will be
required to forward such information to the beneficial owners of the
certificates. Generally, holders must file tax returns that are consistent with
the information return filed by the trust or be subject to penalties unless the
holder notifies the IRS of all such inconsistencies.
Under Section 6031 of the code, any person that holds certificates as a
nominee at any time during a calendar year is required to furnish the trust with
a statement containing certain information on the nominee, the beneficial owners
and the certificates so held. Such information includes (i) the name, address
and taxpayer identification number of the nominee and (ii) as to each beneficial
owner (a) the name, address and identification number of such person,
(b) whether such person is a United States person, a tax-exempt entity or a
foreign government, an international organization, or any wholly owned agency or
instrumentality of either of the foregoing, and (c) certain information on
certificates that were held, bought or sold on behalf of such person throughout
the year. In addition, brokers and financial institutions that hold certificates
through a nominee are required to furnish directly to the trust information as
to themselves and their ownership of certificates. A clearing agency registered
under Section 17A of the Securities Exchange Act of 1934, as amended, is not
required to furnish any such information statement to the trust. The information
referred to above for any calendar year must be furnished to the trust on or
before the following January 31. Nominees, brokers and financial institutions
that fail to provide the trust with the information described above may be
subject to penalties.
The depositor will be designated as the tax matters partner in the related
trust agreement and, as such, will be responsible for representing the
certificateholders in any dispute with the IRS. The Code provides for
administrative examination of a partnership as if the partnership were a
separate and distinct taxpayer. Generally, the statute of limitations for
partnership items does not expire before three years after the date on which the
partnership information return is filed. Any adverse determination following an
audit of the return of the trust by the appropriate taxing authorities could
result in an adjustment of the returns of the certificateholders, and, under
certain circumstances, a certificateholder may be precluded from separately
litigating a proposed adjustment to the items of the trust. An adjustment could
also result in an audit of a certificateholder's returns and adjustments of
items not related to the income and losses of the trust.
TAX CONSEQUENCES TO FOREIGN CERTIFICATEHOLDERS. It is not clear whether the
trust would be considered to be engaged in a trade or business in the United
States for purposes of federal withholding taxes with respect to non-United
States persons because there is no clear authority dealing with that issue under
facts substantially similar to those described herein. Although it is not
expected that the trust would be engaged in a trade or business in the United
States for such purposes, the trust will withhold as if it were so engaged in
order to protect the trust from possible adverse consequences
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of a failure to withhold. The trust expects to withhold on the portion of its
taxable income that is allocable to foreign certificateholders pursuant to
Section 1446 of the Code, as if such income were effectively connected to a
United States trade or business, at a rate of 35% for foreign holders that are
taxable as corporations and 39.6% for all other foreign holders. Subsequent
adoption of Treasury regulations or the issuance of other administrative
pronouncements may require the trust to change its withholding procedures. In
determining a holder's withholding status, the trust may rely on IRS Form W-8 or
IRS Form W-8BEN, IRS Form W-9 or the holder's certification of nonforeign status
signed under penalties of perjury.
Each foreign holder might be required to file a United States individual or
corporate income tax return (including, in the case of a corporation, the branch
profits tax) on its share of the trust's income. Each foreign holder must obtain
a taxpayer identification number from the IRS and submit that number to the
trust on IRS Form W-8 or IRS Form W-8BEN, (or substantially identical form) in
order to assure appropriate crediting of the taxes withheld. A foreign holder
generally would be entitled to file with the IRS a claim for refund with respect
to taxes withheld by the trust, taking the position that no taxes were due
because the trust was not engaged in a United States trade or business. However,
interest payments made (or accrued) to a certificateholder who is a foreign
person generally will be considered guaranteed payments to the extent such
payments are determined without regard to the income of the trust. If these
interest payments are properly characterized as guaranteed payments, then the
interest will not be considered "portfolio interest". As a result,
certificateholders will be subject to United States federal income tax and
withholding tax at a rate of 30%, unless reduced or eliminated pursuant to an
applicable treaty. In such case, a foreign holder would only be entitled to
claim a refund for that portion of the taxes in excess of the taxes that should
be withheld with respect to the guaranteed payments.
BACKUP WITHHOLDING. Distributions made on the certificates and proceeds
from the sale of the certificates will be subject to a "backup" withholding tax
of 31% if, in general, the certificateholder fails to comply with certain
identification procedures, unless the holder is an exempt recipient under
applicable provisions of the Code.
NEW WITHHOLDING REGULATIONS. Recently, the Treasury Department issued the
New Regulations which attempt to unify certification requirements and modify
reliance standards. The New Regulations will generally be effective for payments
made after December 31, 2000, subject to certain transition rules. Prospective
investors are urged to consult their own tax advisors regarding the New
Regulations.
TRUSTS IN WHICH ALL CERTIFICATES ARE RETAINED BY THE SELLER OR AN AFFILIATE OF
THE SELLER
TAX CHARACTERIZATION OF THE TRUST
Federal tax counsel will deliver its opinion that a trust which issues one
or more classes of notes to investors and all the certificates of which are
retained by the seller or an affiliate thereof will not be an association (or
publicly traded partnership) taxable as a corporation for federal income tax
purposes. This opinion will be based on the assumption that the terms of the
trust agreement and related documents will be complied with, and on counsel's
conclusions that the trust will constitute a mere security arrangement for the
issuance of debt by the single certificateholder.
TREATMENT OF THE NOTES AS INDEBTEDNESS. The seller will agree, and the
noteholders will agree by their purchase of notes, to treat the notes as debt
for federal income tax purposes. Federal tax counsel will, except as otherwise
provided in the related prospectus supplement, advise the trust that the notes
will be classified as debt for federal income tax purposes. Assuming such
characterization of the notes is correct, the federal income tax consequences to
noteholders described above under the heading "Trusts For Which a Partnership
Election is Made--Tax Consequences to Holders of the Notes" would apply to the
noteholders.
If, contrary to the opinion of federal tax counsel, the IRS successfully
asserted that one or more classes of notes did not represent debt for federal
income tax purposes, such class or classes of notes
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might be treated as equity interests in the trust. If so treated, the trust
might be treated as a publicly traded partnership taxable as a corporation with
potentially adverse tax consequences (and the publicly traded partnership
taxable as a corporation would not be able to reduce its taxable income by
deductions for interest expense on notes recharacterized as equity).
Alternatively, and more likely in the view of federal tax counsel, the trust
would most likely be treated as a publicly traded partnership that would not be
taxable as a corporation because it would meet certain qualifying income tests.
Nonetheless, treatment of notes as equity interests in such a partnership could
have adverse tax consequences to certain holders of such notes. For example,
income to certain tax-exempt entities (including pension funds) would be
"unrelated business taxable income", income to foreign holders may be subject to
United States withholding tax and United States tax return filing requirements,
and individual holders might be subject to certain limitations on their ability
to deduct their share of trust expenses. In the event one or more classes of
notes were treated as interests in a partnership, the consequences governing the
certificates as equity interests in a partnership described above under "Trusts
For Which a Partnership Election is Made--Tax Consequences to Holders of the
Certificates" would apply to the holders of such notes.
TRUSTS TREATED AS GRANTOR TRUSTS
TAX CHARACTERIZATION OF THE TRUST AS A GRANTOR TRUST
If a partnership election is not made, federal tax counsel will deliver its
opinion that the trust will not be classified as an association taxable as a
corporation and that such trust will be classified as a grantor trust under
subpart E, part 1, subchapter J, chapter 1 of subtitle A of the Code. In this
case, owners of certificates (referred to herein as "Grantor Trust
Certificateholders") will be treated for federal income tax purposes as owners
of a portion of the trust's assets as described below. The certificates issued
by a trust that is treated as a grantor trust are referred to herein as "Grantor
Trust Certificates".
CHARACTERIZATION. Each Grantor Trust Certificateholder will be treated as
the owner of a pro rata undivided interest in the interest and principal
portions of the trust represented by the Grantor Trust Certificates and will be
considered the equitable owner of a pro rata undivided interest in each of the
receivables in the trust. Any amounts received by a Grantor Trust
Certificateholder in lieu of amounts due with respect to any receivable because
of a default or delinquency in payment will be treated for federal income tax
purposes as having the same character as the payments they replace.
Each Grantor Trust Certificateholder will be required to report on its
federal income tax return in accordance with such Grantor Trust
Certificateholder's method of accounting its pro rata share of the entire income
from the receivables in the trust represented by Grantor Trust Certificates,
including interest, OID, if any, prepayment fees, assumption fees, any gain
recognized upon an assumption and late payment charges received by the servicer.
Under Sections 162 or 212 each Grantor Trust Certificateholder will be entitled
to deduct its pro rata share of servicing fees, prepayment fees, assumption
fees, any loss recognized upon an assumption and late payment charges retained
by the servicer, provided that such amounts are reasonable compensation for
services rendered to the trust. Grantor Trust Certificateholders that are
individuals, estates or trusts will be entitled to deduct their share of
expenses only to the extent such expenses plus all other Section 212 expenses
exceed two percent of its adjusted gross income. In addition, Section 68 of the
Code provides that the amount of itemized deductions otherwise allowable for an
individual whose adjusted gross income exceeds a specified amount will be
reduced by the lesser of (i) 3% of the excess of the individual's adjusted gross
income over such amount or (ii) 80% of the amount of itemized deductions
otherwise allowable for the taxable year. Further, Grantor Trust
Certificateholders (other than corporations) subject to the alternative minimum
tax may not deduct miscellaneous itemized deductions in determining such
holder's alternative minimum taxable income. A Grantor Trust Certificateholder
using the cash method of accounting must take into account its pro rata share of
income and deductions as and when collected by or paid to the servicer. A
Grantor Trust Certificateholder using an accrual method of
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accounting must take into account its pro rata share of income and deductions as
they become due or are paid to the servicer, whichever is earlier. If the
servicing fees paid to the servicer are deemed to exceed reasonable servicing
compensation, the amount of such excess could be considered as an ownership
interest retained by the servicer (or any person to whom the servicer assigned
for value all or a portion of the servicing fees) in a portion of the interest
payments on the receivables. The receivables would then be subject to the
"stripped bond" rules of the Code discussed below.
STRIPPED BONDS. If the servicing fees on the receivables are deemed to
exceed reasonable servicing compensation, based on recent guidance by the IRS,
each purchaser of a Grantor Trust Certificate will be treated as the purchaser
of a stripped bond which generally should be treated as a single debt instrument
issued on the day it is purchased for purposes of calculating any original issue
discount. Generally, under recently issued Treasury regulations (the
"Section 1286 Treasury Regulations"), if the discount on a stripped bond is
larger than a DE MINIMIS amount (as calculated for purposes of the OID rules of
the Code) such stripped bond will be considered to have been issued with OID.
See "Original Issue Discount". The original issue discount on a Grantor Trust
Certificate will be the excess of such Certificate's stated redemption price
over its issue price. The issue price of a Grantor Trust Certificate as to any
purchaser will be equal to the price paid by such purchaser of the Grantor Trust
Certificate. The stated redemption price of a Grantor Trust Certificate will be
the sum of all payments to be made on such Certificate other than "qualified
stated interest", if any. Based on the preamble to the Section 1286 Treasury
Regulations, federal tax counsel is of the opinion that, although the matter is
not entirely clear, the interest income on the certificates at the sum of the
pass through rate and the portion of the servicing fee rate that does not
constitute excess servicing will be treated as "qualified stated interest"
within the meaning of the Section 1286 Treasury Regulations and such income will
be so treated in the trustee's tax information reporting. Notice will be given
in the applicable pricing supplement when it is determined that Grantor Trust
Certificates will be issued with greater than DE MINIMIS OID.
ORIGINAL ISSUE DISCOUNT ON STRIPPED BONDS. If the stripped bonds have more
than a DE MINIMIS amount of OID, the special rules of the Code relating to
"original issue discount" (currently Sections 1271 through 1273 and 1275) will
be applicable to a Grantor Trust Certificateholder's interest in those
receivables treated as stripped bonds (the "Stripped Bonds"). Generally, a
Grantor Trust Certificateholder that acquires an interest in a stripped bond
issued or acquired with OID must include in gross income the sum of the "daily
portions," as defined below, of the OID on such stripped bond for each day on
which it owns a certificate, including the date of purchase but excluding the
date of disposition. In the case of an original Grantor Trust Certificateholder,
the daily portions of OID with respect to a stripped bond generally would be
determined as follows. A calculation will be made of the portion of OID that
accrues on the stripped bond during each successive monthly accrual period (or
shorter period in respect of the date of original issue or the final
distribution date). This will be done, in the case of each full monthly accrual
period, by adding (i) the present value of all remaining payments to be received
on the stripped bond under the prepayment assumption used in respect of the
stripped bonds and (ii) any payments received during such accrual period, and
subtracting from that total the "adjusted issue price" of the stripped bond at
the beginning of such accrual period. No representation is made that the
stripped bonds will prepay at any prepayment assumption. The "adjusted issue
price" of a stripped bond at the beginning of the first accrual period is its
issue price (as determined for purposes of the OID rules of the Code) and the
"adjusted issue price" of a stripped bond at the beginning of a subsequent
accrual period is the "adjusted issue price" at the beginning of the immediately
preceding accrual period plus the amount of OID allocable to that accrual period
and reduced by the amount of any payment (other than "qualified stated
interest") made at the end of or during that accrual period. The OID accruing
during such accrual period will then be divided by the number of days in the
period to determine the daily portion of OID for each day in the period. With
respect to an initial accrual period shorter than a full monthly accrual period,
the daily portions of OID must be determined according to an appropriate
allocation under either an exact or approximate
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method set forth in the OID Regulations, or some other reasonable method,
provided that such method is consistent with the method used to determine the
yield to maturity of the stripped bonds.
With respect to stripped bonds, the method of calculating OID as described
above will cause the accrual of OID to either increase or decrease (but never
below zero) in any given accrual period to reflect the fact that prepayments are
occurring at a faster or slower rate than the prepayment assumption used in
respect of the stripped bonds. Subsequent purchasers that purchase stripped
bonds at more than a DE MINIMIS discount should consult their tax advisors with
respect to the proper method to accrue such OID.
MARKET DISCOUNT IF STRIPPED BOND RULES DO NOT APPLY. A Grantor Trust
Certificateholder that acquires an undivided interest in receivables may be
subject to the market discount rules of Sections 1276 through 1278 to the extent
an undivided interest in a receivable is considered to have been purchased at a
"market discount". Generally, the amount of market discount is equal to the
excess of the portion of the principal amount of such receivable allocable to
such holder's undivided interest over such holder's tax basis in such interest.
Market discount with respect to a Grantor Trust Certificate will be considered
to be zero if the amount allocable to the Grantor Trust Certificate is less than
0.25% of the Grantor Trust Certificate's stated redemption price at maturity
multiplied by the weighted average maturity remaining after the date of
purchase. Treasury regulations implementing the market discount rules have not
yet been issued; therefore, investors should consult their own tax advisors
regarding the application of these rules and the advisability of making any of
the elections allowed under Code Sections 1276 through 1278.
The Code provides that any principal payment (whether a scheduled payment or
a prepayment) or any gain on disposition of a market discount bond shall be
treated as ordinary income to the extent that it does not exceed the accrued
market discount at the time of such payment. The amount of accrued market
discount for purposes of determining the tax treatment of subsequent principal
payments or dispositions of the market discount bond is to be reduced by the
amount so treated as ordinary income.
The Code also grants the Treasury Department authority to issue regulations
providing for the computation of accrued market discount on debt instruments,
the principal of which is payable in more than one installment. While the
Treasury Department has not yet issued regulations, rules described in the
relevant legislative history will apply. Under those rules, the holder of a
market discount bond may elect to accrue market discount either on the basis of
a constant interest rate or according to one of the following methods. If a
Grantor Trust Certificate is issued with OID, the amount of market discount that
accrues during any accrual period would be equal to the product of (i) the total
remaining market discount and (ii) a fraction, the numerator of which is the OID
accruing during the period and the denominator of which is the total remaining
OID at the beginning of the accrual period. For Grantor Trust Certificates
issued without OID, the amount of market discount that accrues during a period
is equal to the product of (i) the total remaining market discount and (ii) a
fraction, the numerator of which is the amount of stated interest paid during
the accrual period and the denominator of which is the total amount of stated
interest remaining to be paid at the beginning of the accrual period. For
purposes of calculating market discount under any of the above methods in the
case of instruments (such as the Grantor Trust Certificates) that provide for
payments that may be accelerated by reason of prepayments of other obligations
securing such instruments, the same prepayment assumption applicable to
calculating the accrual of OID will apply. Because the regulations described
above have not been issued, it is impossible to predict what effect those
regulations might have on the tax treatment of a Grantor Trust Certificate
purchased at a discount or premium in the secondary market.
A holder who acquired a Grantor Trust Certificate at a market discount also
may be required to defer a portion of its interest deductions for the taxable
year attributable to any indebtedness incurred or continued to purchase or carry
such Grantor Trust Certificate purchased with market discount. For
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these purposes, the DE MINIMIS rule referred above applies. Any such deferred
interest expense would not exceed the market discount that accrues during such
taxable year and is, in general, allowed as a deduction not later than the year
in which such market discount is includible in income. If such holder elects to
include market discount in income currently as it accrues on all market discount
instruments acquired by such holder in that taxable year or thereafter, the
interest deferral rule described above will not apply.
PREMIUM. The price paid for a Grantor Trust Certificate by a holder will be
allocated to such holder's undivided interest in each receivable based on each
receivable's relative fair market value, so that such holder's undivided
interest in each receivable will have its own tax basis. A Grantor Trust
Certificateholder that acquires an interest in receivables at a premium may
elect to amortize such premium under a constant interest method. Amortizable
bond premium will be treated as an offset to interest income on such Grantor
Trust Certificate. The basis for such Grantor Trust Certificate will be reduced
to the extent that amortizable premium is applied to offset interest payments.
It is not clear whether a reasonable prepayment assumption should be used in
computing amortization of premium allowable under Section 171. A Grantor Trust
Certificateholder that makes this election for a Grantor Trust Certificate that
is acquired at a premium will be deemed to have made an election to amortize
bond premium with respect to all debt instruments having amortizable bond
premium that such Grantor Trust Certificateholder acquires during the year of
the election or thereafter.
If a premium is not subject to amortization using a reasonable prepayment
assumption, the holder of a Grantor Trust Certificate acquired at a premium
should recognize a loss if a receivable prepays in full, equal to the difference
between the portion of the prepaid principal amount of such receivable that is
allocable to the Grantor Trust Certificate and the portion of the adjusted basis
of the Grantor Trust Certificate that is allocable to such receivable. If a
reasonable prepayment assumption is used to amortize such premium, it appears
that such a loss would be available, if at all, only if prepayments have
occurred at a rate faster than the reasonable assumed prepayment rate. It is not
clear whether any other adjustments would be required to reflect differences
between an assumed prepayment rate and the actual rate of prepayments.
On December 30, 1997 the IRS issued final regulations (the "Amortizable Bond
Premium Regulations") dealing with amortizable bond premium. These regulations
specifically do not apply to prepayable debt instruments subject to Code
Section 1272(a)(6). Absent further guidance from the IRS, the trustee intends to
account for amortizable bond premium in the manner described above. It is
recommended that prospective purchasers of the certificates consult their tax
advisors regarding the possible application of the Amortizable Bond Premium
Regulations.
ELECTION TO TREAT ALL INTEREST AS OID. The OID regulations permit a Grantor
Trust Certificateholder to elect to accrue all interest, discount (including DE
MINIMIS market or original issue discount) and premium in income as interest,
based on a constant yield method. If such an election were to be made with
respect to a Grantor Trust Certificate with market discount, the Grantor Trust
Certificateholder would be deemed to have made an election to include in income
currently market discount with respect to all other debt instruments having
market discount that such Grantor Trust Certificateholder acquires during the
year of the election or thereafter. Similarly, a Grantor Trust Certificateholder
that makes this election for a Grantor Trust Certificate that is acquired at a
premium will be deemed to have made an election to amortize bond premium with
respect to all debt instruments having amortizable bond premium that such
Grantor Trust Certificateholder owns or acquires. See "--Premium". The election
to accrue interest, discount and premium on a constant yield method with respect
to a Grantor Trust Certificate is irrevocable.
SALE OR EXCHANGE OF A GRANTOR TRUST CERTIFICATE. Sale or exchange of a
Grantor Trust Certificate prior to its maturity will result in gain or loss
equal to the difference, if any, between the amount received and the owner's
adjusted basis in the Grantor Trust Certificate. Such adjusted basis generally
will equal the seller's purchase price for the Grantor Trust Certificate,
increased by the OID included
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in the seller's gross income with respect to the Grantor Trust Certificate, and
reduced by principal payments on the Grantor Trust Certificate previously
received by the seller. Such gain or loss will be capital gain or loss to an
owner for which a Grantor Trust Certificate is a "capital asset" within the
meaning of Section 1221, and will be long-term or short-term depending on
whether the Grantor Trust Certificate has been owned for the long-term capital
gain holding period (currently more than twelve months).
Grantor Trust Certificates will be "evidences of indebtedness" within the
meaning of Section 582(c) (1), so that gain or loss recognized from the sale of
a Grantor Trust Certificate by a bank or a thrift institution to which such
section applies will be treated as ordinary income or loss.
NON-UNITED STATES PERSONS. Generally, to the extent that a Grantor Trust
Certificate evidences ownership in underlying receivables that were issued on or
before July 18, 1984, interest or OID paid by the person required to withhold
tax under Section 1441 or 1442 to (i) an owner that is not a United States
Person (as defined below) or (ii) a Grantor Trust Certificateholder holding on
behalf of an owner that is not a United States Person will be subject to federal
income tax, collected by withholding, at a rate of 30% or such lower rate as may
be provided for interest by an applicable tax treaty. Accrued OID recognized by
the owner on the sale or exchange of such a Grantor Trust Certificate also will
be subject to federal income tax at the same rate. Generally, such payments
would not be subject to withholding to the extent that a Grantor Trust
Certificate evidences ownership in receivables issued after July 18, 1984, by
natural persons if such Grantor Trust Certificateholder complies with certain
identification requirements (including delivery of a statement, signed by the
Grantor Trust Certificateholder under penalty of perjury, certifying that such
Grantor Trust Certificateholder is not a United States Person and providing the
name and address of such Grantor Trust Certificateholder). Additional
restrictions apply to receivables of where the obligor is not a natural person
in order to qualify for the exemption from withholding.
As used herein, a "United States Person" means a citizen or resident of the
United States, a corporation or a partnership organized in or under the laws of
the United States, any state thereof or the District of Columbia, an estate, the
income of which from sources outside the United States is includible in gross
income for federal income tax purposes regardless of its connection with the
conduct of a trade or business within the United States, or a trust if a court
within the United States is able to exercise primary supervision of the
administration of the trust and one or more United States persons have the
authority to control all substantial decisions of the trust.
INFORMATION REPORTING AND BACKUP WITHHOLDING. The servicer will furnish or
make available, within a reasonable time after the end of each calendar year, to
each person who was a Grantor Trust Certificateholder at any time during such
year, such information as may be deemed necessary or desirable to assist Grantor
Trust Certificateholders in preparing their federal income tax returns, or to
enable holders to make such information available to beneficial owners or
financial intermediaries that hold Grantor Trust Certificates as nominees on
behalf of beneficial owners. If a holder, beneficial owner, financial
intermediary or other recipient of a payment on behalf of a beneficial owner
fails to supply a certified taxpayer identification number or if the Secretary
of the Treasury determines that such person has not reported all interest and
dividend income required to be shown on its federal income tax return, 31%
backup withholding may be required with respect to any payments. Any amounts
deducted and withheld from a distribution to a recipient would be allowed as a
credit against such recipient's federal income tax liability.
NEW WITHHOLDING REGULATIONS. Recently, the Treasury Department issued the
New Regulations which attempt to unify certification requirements and modify
reliance standards. The New Regulations will generally be effective for payments
made after December 31, 2000, subject to certain transition rules. Prospective
investors are urged to consult their own tax advisors regarding the New
Regulations.
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FASIT PROVISIONS
The Small Business and Job Protection Act of 1996 added Sections 860H
through 860L to the Code (the "FASIT provisions"), which provide for a new type
of entity for United States federal income tax purposes known as a "financial
asset securitization investment trust" (a "FASIT"). Federal tax counsel will
deliver its opinion that a trust for which a FASIT election is made will be
treated as a FASIT for federal income tax purposes assuming compliance with the
terms of the trust agreement (including the making of a timely FASIT election)
and related documents. The FASIT provisions of the Code became effective on
September 1, 1997. On February 4, 2000, the IRS and Treasury Department issued
proposed Treasury regulations on FASITs. The regulations generally would not be
effective until final regulations are filed with the federal register. However,
it appears that certain anti-abuse rules would apply as of February 4, 2000.
Accordingly, definitive guidance cannot be provided with respect to many aspects
of the tax treatment of the trust or the holders of FASIT regular interests
(such holders, "FASIT Regular Noteholders"). In general, the FASIT legislation
will enable a trust to be treated as a pass through entity not subject to United
States federal entity-level income tax (except with respect to certain
prohibited transactions) and to issue securities that would be treated as debt
for United States federal income tax purposes.
QUALIFICATION AS A FASIT. A trust will qualify under the Code as a FASIT in
which FASIT Regular Notes will constitute the "regular interests" and the
certificate issued by the trust (the "FASIT Ownership Security") will constitute
the "ownership interest", respectively, if (i) a FASIT election is in effect,
(ii) certain tests concerning (a) the composition of the FASIT's assets and
(b) the nature of the noteholders' interests in the FASIT are met on a
continuing basis and (iii) the trust is not a regulated investment company as
defined in section 851(a) of the Code. Moreover, the qualification as a FASIT of
any transfer for which a FASIT election is made (a "FASIT Trust") depends on the
trust's ability to satisfy the requirements of the FASIT provisions on an
ongoing basis, including, without limitation, the requirements of any final
Treasury regulations that may be promulgated in the future under the FASIT
provisions or as a result of any change in applicable law. Thus, no assurances
can be made regarding the qualification as a FASIT of any FASIT Trust for which
a FASIT election is made at any particular time after the issuance of securities
by the FASIT Trust.
ASSET COMPOSITION. In order for the trust to be eligible for FASIT status,
substantially all of the assets of the trust must consist of "permitted assets"
as of the close of the third month beginning after the closing date and at all
times thereafter (the "FASIT Qualification Test"). Permitted assets include
(i) cash or cash equivalents, (ii) debt instruments with fixed terms that would
qualify as regular interests if issued by a Real Estate Mortgage Investment
Conduit as defined in section 860D of the Code ("REMIC") (generally, instruments
that provide for interest at a fixed rate, a qualifying variable rate or a
qualifying interest-only ("IO") type rate), (iii) foreclosure property,
(iv) certain hedging instruments (generally, interest and currency rate swaps
and credit enhancement contracts) that are reasonably required to guarantee or
hedge against the FASIT's risks associated with being the obligor on FASIT
interests, (v) contract rights to acquire qualifying debt instruments or
qualifying hedging instruments, (vi) FASIT regular interests, and (vii) REMIC
regular interests. Permitted assets do not include any debt instruments issued
by the holder of the FASIT's ownership interest or by any person related to such
holder.
INTERESTS IN A FASIT. In addition to the foregoing asset qualification
requirements, the interests in a FASIT also must meet certain requirements. All
of the interests in a FASIT must belong to either of the following: (i) one or
more classes of regular interests or (ii) a single class of ownership interest
that is held by a fully taxable domestic C Corporation.
A FASIT interest generally qualifies as a FASIT regular interest if (i) it
is designated as a regular interest, (ii) it has a stated maturity no greater
than 30 years, (iii) it entitles its holder to a specified principal amount,
(iv) the issue price of the interest does not exceed 125% of its stated
principal amount, (v) the yield to maturity of the interest is less than the
applicable Treasury rate published by
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the IRS plus 5%, and (vi) if it pays interest, such interest is payable at
either (a) a fixed rate with respect to the principal amount of the regular
interest or (b) a permissible variable rate with respect to such principal
amount.
If an interest in a FASIT fails to meet one or more of the requirements set
out in clauses (iii), (iv), or (v) in the immediately preceding paragraph, but
otherwise meets all requirements to be treated as a FASIT, it may still qualify
as a type of regular interest known as a "High-Yield Interest". In addition, if
an interest in a FASIT fails to meet the requirement of clause (vi), but the
interest payable on the interest consists of a specified portion of the interest
payments on permitted assets and that portion does not vary over the life of the
security, the interest will also qualify as a High-Yield Interest. A High-Yield
Interest may be held only by domestic C corporations that are fully subject to
corporate income tax ("Eligible Corporations"), other FASITs and dealers in
securities who acquire such interests as inventory, rather than for investment.
In addition, holders of High-Yield Interests are subject to limitations on
offset of income derived from such interest. In addition, the FASIT provisions
contain an anti-abuse rule that imposes corporate income tax on income derived
from a FASIT Regular Note that is held by a pass-through entity (other than
another FASIT) that issues debt or equity securities backed by the FASIT Regular
Note and that have the same features as High-Yield Interests.
ANTI-ABUSE RULE. Under proposed Treasury regulations, the Commissioner of
Internal Revenue (the "Commissioner") may make appropriate adjustments with
regard to the FASIT and any arrangement or transaction involving the FASIT if a
principal purpose of forming or using the FASIT is to achieve results
inconsistent with the intent of the FASIT provisions and the FASIT regulations.
This determination would be based on all of the facts and circumstances,
including a comparison of the purported business purpose for a transaction and
the claimed tax benefits resulting from the transaction.
CONSEQUENCES OF THE FAILURE OF THE FASIT TRUST TO QUALIFY AS A FASIT. If a
FASIT Trust fails to comply with one or more of the Code's ongoing requirements
for FASIT status during any taxable year, the proposed Treasury regulations
provide that its FASIT status would be lost for that year and the FASIT Trust
will be unable to elect FASIT status without the Commissioner's approval. If
FASIT status is lost, under proposed Treasury regulations the entity
classification of the former FASIT (the "New Arrangement") is determined under
general federal income tax principles. The holder of the FASIT Ownership
Security is treated as exchanging the New Arrangement's assets for an amount
equal to their value and gain recognized is treated as gain from a prohibited
transaction that is subject to the 100 percent tax, without exception. Loss, if
any, is disallowed. In addition, the holder of the FASIT Ownership Security must
recognize cancellation of indebtedness income, on a regular interest by regular
interest basis, in an amount equal to the adjusted issue price of each FASIT
Regular Note outstanding immediately before the cessation over its fair market
value. If the holder of the FASIT Ownership Security has a continuing economic
interest in the New Arrangement, the characterization of this interest is
determined under general federal income tax principles. Holders of FASIT Regular
Notes are treated as exchanging their Notes for interests in the New
Arrangement, the classification of which is determined under general federal
income tax principles. Gain is recognized to the extent the new interest either
does not qualify as debt or differs either in kind or extent. The basis of the
interest in the New Arrangement equals the basis in the FASIT Regular Note
increased by any gain recognized on the exchange.
TAX TREATMENT OF FASIT REGULAR NOTES. Payments received by Holders of FASIT
Regular Notes generally should be accorded the same tax treatment under the Code
as payments received on other taxable corporate debt instruments. Holders of
FASIT Regular Notes must report income from such Notes under an accrual method
of accounting, even if they otherwise would have used the cash receipts and
disbursements method. Except in the case of FASIT Regular Notes issued with
original issue discount or acquired with market discount or premium, interest
paid or accrued on a FASIT Regular Note generally will be treated as ordinary
income to the Holder and a principal payment on such Note
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will be treated as a return of capital to the extent that the Holder's basis is
allocable to that payment. FASIT Regular Notes issued with original issue
discount or acquired with market discount or premium generally will treat
interest and principal payments on such securities in the same manner described
for notes. See "Material Federal Income Tax Consequences--Trusts for which a
Partnership Election is Made--Tax Consequences to Holders of the Notes," above.
If a FASIT Regular Note is sold or exchanged, the holder thereof generally
will recognize gain or loss upon the sale in the manner described above for
notes. See "Material Federal Income Tax Consequences--Trusts for which a
Partnership Election is Made--Tax Consequences to Holders of the Notes--Sale or
Other Disposition". In addition, if a FASIT Regular Note becomes wholly or
partially worthless as a result of default and delinquencies of the underlying
assets, the holder of such note should be allowed to deduct the loss sustained
(or alternatively be able to report a lesser amount of income).
TAX TREATMENT OF FASIT OWNERSHIP SECURITIES. A FASIT Ownership Security
represents the residual equity interest in a FASIT. As such, the holder of a
FASIT Ownership Security determines its taxable income by taking into account
all assets, liabilities and items of income, gain, deduction, loss and credit of
a FASIT. In general, the character of the income to the holder of a FASIT
Ownership Security will be the same as the character of such income of the
FASIT, except that any tax-exempt interest income taken into account by the
holder of a FASIT Ownership Security is treated as ordinary income. In
determining that taxable income, the holder of a FASIT Ownership Security must
determine the amount of interest, original issue discount, market discount and
premium recognized with respect to the FASIT's assets and the FASIT Regular
Notes issued by the FASIT according to a constant yield methodology and under an
accrual method of accounting. In addition, holders of FASIT Ownership Securities
are subject to the same limitations on their ability to use losses to offset
income from their FASIT Security as are the holders of High-Yield Interests. See
"Material Federal Income Tax Consequences--FASIT Provisions--Interests in a
FASIT".
Losses on dispositions of a FASIT Ownership Security generally will be
disallowed where, within six months before or after the disposition, the seller
of such security acquires any other FASIT Ownership Security. In addition, if
any security that is sold or contributed to a FASIT by the holder of the related
FASIT Ownership Security was required to be marked-to-market under Code
Section 475 by such holder, then Section 475 will continue to apply to such
securities, except that the amount realized under the mark-to-market rules will
be a greater of the securities' value under present law or the securities' value
after applying special valuation rules contained in the FASIT provisions. Those
special valuation rules generally require that the value of debt instruments
that are not traded on an established securities market be determined by
calculating the present value of the reasonably expected payments under the
instrument using a discount rate of 120% of the applicable federal rate,
compounded semiannually.
The Holder of a FASIT Ownership Security will be subject to a tax equal to
100% of the net income derived by the FASIT from any "prohibited transactions".
Prohibited transactions include (i) the receipt of income derived from assets
that are not permitted assets, (ii) certain dispositions of permitted assets,
(iii) the receipt of any income derived from any loan originated by a FASIT and
(iv) in certain cases, the receipt of income representing a servicing fee or
other compensation. Any offering for which a FASIT election is made generally
will be structured to avoid application of the prohibited transaction tax.
BACKUP WITHHOLDING, REPORTING AND TAX ADMINISTRATION. Holders of FASIT
Notes and Ownership Securities will be subject to backup withholding to the same
extent holders of notes would be subject. See "Material Federal Income Tax
Consequences--Trusts for which a Partnership Election is Made--Foreign Holders"
and "--Backup Withholding". For purposes of reporting and tax administration,
holders of record of FASIT Notes and Ownership Securities generally will be
treated in the same manner as holders of notes.
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Under proposed Treasury regulations, if a non-United States Person holds
(either directly or through a vehicle which itself is not subject to U.S.
federal income tax such as a partnership or a trust) a FASIT Regular Note and a
"conduit debtor" pays or accrues interest on a debt instrument held by such
FASIT, any interest received or accrued by the non-United States Person FASIT
Regular Noteholder is treated as received or accrued from the conduit debtor.
The proposed Treasury regulations state that a debtor is a conduit debtor if the
debtor is a United States Person or the United States branch of a non-United
States Person and the non-United States Person regular interest holder is (1) a
"10 percent shareholder" of the debtor, (2) a "controlled foreign corporation"
and the debtor is a related person with respect to the controlled foreign
corporation or (3) related to the debtor. As set forth above, the proposed
Treasury regulations would not be effective until final regulations are filed
with the federal register.
CERTAIN STATE TAX CONSEQUENCES
The activities of servicing and collecting the receivables will be
undertaken by the servicer. Because of the variation in each state's tax laws
based in whole or in part upon income, it is impossible to predict tax
consequences to holders of notes and certificates in all of the state taxing
jurisdictions in which they are already subject to tax. Noteholders and
certificateholders are urged to consult their own tax advisors with respect to
state tax consequences arising out of the purchase, ownership and disposition of
notes and certificates.
* * * * *
THE FEDERAL AND STATE TAX DISCUSSIONS SET FORTH ABOVE ARE INCLUDED FOR
GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A NOTEHOLDER'S
OR CERTIFICATEHOLDER'S PARTICULAR TAX SITUATION. PROSPECTIVE PURCHASERS SHOULD
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF NOTES AND CERTIFICATES, INCLUDING THE TAX
CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE
EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
ERISA CONSIDERATIONS
Section 406 of ERISA and Section 4975 of the Code prohibit a pension, profit
sharing or other employee benefit or other plan (such as an individual
retirement account and certain types of Keogh Plans) that is subject to Title I
of ERISA or to Section 4975 of the Code from engaging in certain transactions
involving "plan assets" with persons that are "parties in interest" under ERISA
or "disqualified person" under the Code with respect to the plan. Certain
governmental plans, although not subject to ERISA or the Code, are subject to
federal, state or local laws ("Similar Law") that impose similar requirements
(such plans subject to ERISA, Section 4975, or Similar Law referred to herein as
"Plans"). A violation of these "prohibited transaction" rules may generate
excise tax and other liabilities under ERISA and the Code or under Similar Law
for such persons.
Depending on the relevant facts and circumstances, certain prohibited
transaction exemptions may apply to the purchase or holding of the
securities--for example:
- Prohibited Transaction Class Exemption ("PTE") 96-23, which exempts
certain transactions effected on behalf of a Plan by an "in-house asset
manager";
- PTE 95-60, which exempts certain transactions between insurance company
general accounts and parties in interest;
- PTE 91-38, which exempts certain transactions between bank collective
investment funds and parties in interest;
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- PTE 90-1, which exempts certain transactions between insurance company
pooled separate accounts and parties in interest; or
- PTE 84-14, which exempts certain transactions effected on behalf of a Plan
by a "qualified professional asset manager".
There can be no assurance that any of these exemptions will apply with respect
to any Plan's investment in the securities, or that such an exemption, if it did
apply, would apply to all prohibited transactions that may occur in connection
with such investment. Furthermore, these exemptions would not apply to
transactions involved in operation of a Trust if, as described below, the assets
of the trust were considered to include Plan assets.
ERISA also imposes certain duties on persons who are fiduciaries of Plans
subject to ERISA, including the requirements of investment prudence and
diversification, and the requirement that such a Plan's investments be made in
accordance with the documents governing the Plan. Under ERISA, any person who
exercises any authority or control respecting the management or disposition of
the assets of a Plan is considered to be a fiduciary of such Plan. Plan
fiduciaries must determine whether the acquisition and holding of securities and
the operations of the trust would result in prohibited transactions if Plans
that purchase the securities were deemed to own an interest in the underlying
assets of the trust under the rules discussed below. There may also be an
improper delegation of the responsibility to manage Plan assets if Plans that
purchase the securities are deemed to own an interest in the underlying assets
of the trust.
Pursuant to Department of Labor Regulation Section2510.3-101 (the "Plan
Assets Regulation"), in general when a Plan acquires an equity interest in an
entity such as the trust and such interest does not represent a "publicly
offered security" or a security issued by an investment company registered under
the Investment Company Act of 1940, as amended, the Plan's assets include both
the equity interest and an undivided interest in each of the underlying assets
of the entity, unless it is established either that the entity is an "operating
company" or that equity participation in the entity by "benefit plan investors"
is not "significant". In general, an "equity interest" is defined under the Plan
Assets Regulation as any interest in an entity other than an instrument which is
treated as indebtedness under applicable local law and which has no substantial
equity features. A "publicly-offered security" is a security that is (i) freely
transferable, (ii) part of a class of securities that is owned by 100 or more
investors independent of the issuer and of each other, and (iii) either
(A) part of a class of securities registered under Section 12(b) or 12(g) of the
Exchange Act or (b) sold to the Plan as part of an offering pursuant to an
effective registration statement under the Securities Act, and the class of
securities is registered under the Exchange Act within 120 days after the end of
the issuer's fiscal year in which the offering occurred. Equity participation by
benefit plan investors in an entity is significant if immediately after the most
recent acquisition of an equity interest in the entity, 2% percent or more of
the value of any class of equity interest in the entity is held by benefit plan
investors. In calculating this percentage, the value of any equity interest held
by a person, other than a benefit plan investor, who has discretionary authority
or provides investment advice for a fee with respect to the assets of the
entity, or by an affiliate of any such person, is disregarded. "Benefit Plan
Investors" include Plans, whether or not they are subject to ERISA, as well as
entities whose underlying assets include plan assets by reason of a Plan's
investment in the entity. The likely treatment in this context of notes and
certificates of a trust will be discussed in the related prospectus supplement.
However, it is anticipated that the certificates will be considered equity
interests in the trust for purposes of the Plan Assets Regulation, and that the
assets of the trust may therefore constitute plan assets if certificates are
acquired by Plans. In such event, the fiduciary and prohibited transaction
restrictions of ERISA and Section 4975 of the Code would apply to transactions
involving the assets of the trust.
As a result, except in the case of unsubordinated certificates with respect
to which the Exemption is available (as described below) and certificates which
are "publicly-offered securities" or in which
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there will be no significant investment by benefit plan investors, certificates
generally shall not be transferred and the trustee shall not register any
proposed transfer of certificates unless it receives:
- a representation substantially to the effect that the proposed transferee
is not a Plan and is not acquiring the certificates on behalf of or with
the assets of a Plan (including assets that may be held in an insurance
company's separate or general accounts where assets in such accounts may
be deemed "plan assets" for purposes of ERISA), or
- an opinion of counsel in form and substance satisfactory to the trustee
and the seller that the purchase or holding of the certificates by or on
behalf of a Plan will not constitute a prohibited transaction and will not
result in the assets of the trust being deemed to be "plan assets" and
subject to the fiduciary responsibility provisions of ERISA or the
prohibited transaction provisions of ERISA and the Code or any similar
federal, state or local law or subject any trustee or the seller to any
obligation in addition to those undertaken in the trust agreement or the
pooling and servicing agreement, as applicable.
Transfer of subordinated certificates which would be eligible for coverage
under the Exemption if they were not subordinated may also be registered if the
transferee is an "insurance company general account" that represents that its
acquisition and holding of the certificates are eligible for exemption under
Parts I and III of PTCE 95-60.
Unless otherwise specified in the related prospectus supplement, the notes
may be purchased by a Plan. A fiduciary of a Plan must determine that the
purchase of a note is consistent with its fiduciary duties under ERISA and does
not result in a nonexempt prohibited transaction as defined in Section 406 of
ERISA or Section 4975 of the Code. However, the notes may not be purchased with
the assets of a Plan if the depositor, the seller, an underwriter, the indenture
trustee, the trustee or any of their affiliates
- has investment or administrative discretion with respect to that Plan
assets;
- has authority or responsibility to give, or regularly gives, investment
advice with respect to that Plan assets for a fee and pursuant to an
agreement or understanding that such advice
-- will serve as a primary basis for investment decisions with respect
to that Plan assets and
-- will be based on the particular investment needs for that Plan; or
- is an employer maintaining or contributing to that Plan.
Employee benefit plans that are governmental plans (as defined in
Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33) of
ERISA) are not subject to ERISA requirements. However, any such governmental or
church plan which is qualified under Section 401(a) of the Code and exempt from
taxation under Section 501(a) of the Code is subject to the prohibited
transaction rules in Section 503 of the Code.
A fiduciary of a Plan considering the purchase of securities of a given
series should consult its tax and/or legal advisors regarding whether the assets
of the related trust would be considered plan assets, the possibility of
exemptive relief from the prohibited transaction rules and other issues and
their potential consequences.
SENIOR CERTIFICATES ISSUED BY TRUSTS
Unless otherwise specified in the related prospectus supplement, the
following discussion applies only to nonsubordinated certificates (the "Senior
Certificates") issued by a Trust.
The United States Department of Labor (the "DOL") has granted to the lead
underwriter named in the prospectus supplement an exemption (the "Exemption")
from certain of the prohibited
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transaction rules of ERISA with respect to the initial purchase, the holding and
the subsequent resale by Plans of certificates representing interests in
asset-backed pass-through trusts that consist of certain receivables, loans and
other obligations that meet the conditions and requirements of the Exemption.
The receivables covered by the Exemption include motor vehicle installment loans
such as the receivables. The Exemption will apply to the acquisition, holding
and resale of the Senior Certificates by a Plan, provided that certain
conditions (certain of which are described below) are met.
Among the conditions which must be satisfied for the Exemption to apply to
the Senior Certificates are the following:
(1) The acquisition of the Senior Certificates by a Plan is on terms
(including the price for the Senior Certificates) that are at least as
favorable to the Plan as they would be in an arm's length transaction with
an unrelated party;
(2) The rights and interests evidenced by the Senior Certificates
acquired by the Plan are not subordinated to the rights and interests
evidenced by other certificates of the trust;
(3) The Senior Certificates acquired by the Plan have received a rating
at the time of such acquisition that is in one of the three highest generic
rating categories from either Standard & Poor's Standard & Poor's Ratings
Services, Moody's Investors Service, Inc., Duff & Phelps Inc. or Fitch
IBCA, Inc.;
(4) The trustee is not an affiliate of any other member of the
Restricted Group;
(5) The sum of all payments made to the underwriters in connection with
the distribution of the Senior Certificates represents not more than
reasonable compensation for underwriting the Senior Certificates; the sum of
all payments made to and retained by the seller pursuant to the sale of the
receivables to the trust represents not more than the fair market value of
such receivables; and the sum of all payments made to and retained by the
Servicer represents not more than reasonable compensation for the servicer's
services under the applicable agreement and reimbursement of the servicer's
reasonable expenses in connection therewith; and
(6) The Plan investing in the Senior Certificates is an "accredited
investor" as defined in Rule 501(a)(1) of Regulation D of the SEC under the
Securities Act.
On July 21, 1997, the DOL published in the Federal Register an amendment to
the Exemption, which extends exemptive relief to certain mortgage-backed and
asset-backed securities transactions using pre-funding accounts for trusts
issuing pass-through certificates. The amendment generally allows mortgage loans
or other secured receivables (the "Obligations") supporting payments to
certificateholders, and having a value equal to no more than 25% of the total
principal amount of the certificates being offered by the trust, to be
transferred to the trust within a 90-day or three-month period following the
closing date (the "pre-funding period"), instead of requiring that all such
Obligations be either identified or transferred on or before the closing date.
The relief is available when the following conditions are met:
(1) The ratio of the amount allocated to the pre-funding account to the
total principal amount of the certificates being offered (the "Pre-Funding
Limit") must not exceed 25%.
(2) All Obligations transferred after the closing date (the "Additional
Obligations") must meet the same terms and conditions for eligibility as the
original Obligations used to create the trust, which terms and conditions
have been approved by a rating agency.
(3) The transfer of such Additional Obligations to the trust during the
pre-funding period must not result in the certificates to be covered by the
Exemption receiving a lower credit rating from a rating agency upon
termination of the pre-funding period than the rating that was obtained at
the time of the initial issuance of the certificates by the trust.
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(4) Solely as a result of the use of pre-funding, the weighted average
annual percentage interest rate for all of the Obligations in the trust at
the end of the pre-funding period must not be more than 100 basis points
lower than the average interest rate for the Obligations transferred to the
trust on the closing date.
(5) In order to insure that the characteristics of the Additional
Obligations are substantially similar to the original Obligations which were
transferred to the trust:
(i) the characteristics of the Additional Obligations must be
monitored by an insurer or other credit support provider that is
independent of the depositor; or
(ii) an independent accountant retained by the depositor must provide
the depositor with a letter (with copies provided to each rating agency
rating the certificates, the related underwriter and the related trustee)
stating whether or not the characteristics of the Additional Obligations
conform to the characteristics described in the related prospectus or
prospectus supplement and/or pooling and servicing agreement; in
preparing such letter, the independent accountant must use the same type
of procedures as were applicable to the Obligations transferred to the
trust as of the closing date.
(6) The pre-funding period must end no later than three months or
90 days after the closing date or earlier in certain circumstances if the
pre-funding account falls below the minimum level specified in the pooling
and servicing agreement or an Event of Default occurs.
(7) Amounts transferred to any pre-funding account and/or capitalized
interest account used in connection with the pre-funding may be invested
only in certain permitted investments.
(8) The related prospectus or prospectus supplement must describe:
(i) any pre-funding account and/or capitalized interest account used
in connection with a pre-funding account;
(ii) the duration of the pre-funding period;
(iii) the percentage and/or dollar amount of the Pre-Funding Limit
for the trust; and
(iv) that the amounts remaining in the pre-funding account at the end
of the pre-funding period will be remitted to certificateholders as
repayments of principal.
(9) The related pooling and servicing agreement must describe the
permitted investments for the pre-funding account and/or capitalized
interest account and, if not disclosed in the related prospectus supplement,
the terms and conditions for eligibility of Additional Obligations.
The Exemption would also provide relief from certain self-dealing/conflict
of interest or prohibited transactions that may occur when the Plan fiduciary
causes a Plan to acquire certificates in a trust containing receivables on which
the fiduciary (or its affiliate) is an obligor only if, among other
requirements,
(i) in the case of the acquisition of Senior Certificates in connection with
the initial issuance, at least 50% of the Senior Certificates are
acquired by persons independent of the Restricted Group,
(ii) such fiduciary (or its affiliate) is an obligor with respect to 5% or
less of the fair market value of the obligations contained in the
trust,
(iii) the Plan's investment in Senior Certificates does not exceed 25% of all
of the Senior Certificates outstanding at the time of the acquisition,
and
(iv) immediately after the acquisition, no more than 25% of the assets of
any Plan with respect to which the fiduciary has discretionary
authority or renders investment advice are invested in
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certificates representing an interest in one or more trusts containing
assets sold or serviced by the same entity. The Exemption does not
apply to Plans sponsored by the depositor, the seller, any underwriter,
the trustee, the servicer, any obligor with respect to receivables
included in the trust constituting more than 5% of the aggregate
unamortized principal balance of the assets in the trust, or any
affiliate of such parties (the "Restricted Group").
The prospectus supplement for each series of securities will indicate the
classes of securities, if any, offered thereby to which it is expected that the
Exemption will apply. It is not clear that the Exemption will apply to
securities issued by a trust that has a revolving period. If such a trust
intends for the Exemption to apply to its sales of Senior Certificates to Plans,
it may prohibit such sales until the expiration of the revolving period.
Any Plan fiduciary which proposes to cause a Plan to purchase securities
should consult with counsel concerning the impact of ERISA and the Code, the
applicability of the Exemption (as amended) and the potential consequences in
their specific circumstances, prior to making such investment. Moreover, each
Plan fiduciary should determine whether, under the general fiduciary standards
of investment prudence and diversification, an investment in the securities is
appropriate for the Plan, taking into account the overall investment policy of
the Plan and the composition of the Plan's investment portfolio.
SPECIAL CONSIDERATIONS APPLICABLE TO INSURANCE COMPANY GENERAL ACCOUNTS
The Small Business Job Protection Act of 1996 added new Section 401(c) of
ERISA relating to the status of the assets of insurance company general accounts
under ERISA and Section 4975 of the Code. Under Section 401(c), the Department
of Labor is required to issue general account regulations with respect to
insurance policies issued on or before December 31, 1998 that are supported by
an insurer's general account. The general account regulations are to provide
guidance on which assets held by the insurer constitute "plan assets" for
purposes of the fiduciary responsibility provisions of ERISA and Section 4975 of
the Code. Section 401(c) also provides that, except in the case of avoidance of
the general account regulations and actions brought by the Secretary of Labor
relating to certain breaches of fiduciary duties that also constitute breaches
of state or federal criminal law, until the date that is 18 months after the
general account regulations become final, no liability under the fiduciary
responsibility and prohibited transaction provisions of ERISA and Section 4975
of the Code may result on the basis of a claim that the assets of the general
account of an insurance company constitute the assets of any Plan. The plan
asset status of insurance company separate accounts is unaffected by new
Section 401(c) of ERISA, and separate account assets continue to be treated as
the plan assets of any Plan invested in a separate account. Plan investors
considering the purchase of securities on behalf of an insurance company general
account should consult their legal advisors regarding the effect of the general
account regulations on such purchase.
As of the date hereof, the DOL has issued proposed regulations under
Section 401(c). It should be noted that if the general account regulations are
adopted substantially in the form in which proposed, the general account
regulations may not exempt the assets of insurance company general accounts from
treatment as "plan assets" after December 31, 1998. The general account
regulations should not, however, adversely affect the applicability of PTCE
95-60.
PLAN OF DISTRIBUTION
On the terms and conditions set forth in an underwriting agreement with
respect to the securities of a given series, the depositor will agree to sell,
or cause the related trust to sell, to the underwriters named in the related
prospectus supplement the notes and certificates of the trust specified in the
underwriting agreement. Each of the underwriters will severally agree to
purchase the principal amount
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of each class of notes and certificates of the related trust set forth in the
related prospectus supplement and the underwriting agreement.
Each prospectus supplement will either--
- set forth the price at which each class of notes and certificates, as the
case may be, being offered thereby will be offered to the public and any
concessions that may be offered to certain dealers participating in the
offering of such notes and certificates or
- specify that the related notes and certificates, as the case may be, are
to be resold by the underwriters in negotiated transactions at varying
prices to be determined at the time of such sale.
After the initial public offering of any such notes and certificates, such
public offering prices and such concessions may be changed.
Each underwriting agreement will provide that the depositor will indemnify
the underwriters against certain civil liabilities, including liabilities under
the Securities Act, or contribute to payments the several underwriters may be
required to make in respect thereof.
Each trust may, from time to time, invest the funds in its trust accounts in
investments acquired from such underwriters or from the depositor.
Under each underwriting agreement with respect to a given trust, the closing
of the sale of any class of securities subject to such underwriting agreement
will be conditioned on the closing of the sale of all other such classes of
securities of that trust (some of which may not be registered or may not be
publicly offered).
The place and time of delivery for the securities in respect of which this
prospectus is delivered will be set forth in the related prospectus supplement.
The underwriters may make a limited market in the securities, but they are
not obligated to do so. In addition, any such market-making may be discontinued
at any time at their sole discretion.
LEGAL OPINIONS
Certain legal matters relating to the securities of any series will be
passed upon for the related trust and the depositor by Brown & Wood LLP, San
Francisco, California, and for the underwriters for such series by Brown & Wood
LLP Material federal income tax will be passed upon for each trust by Brown &
Wood LLP.
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GLOSSARY OF TERMS
Set forth below is a list of the defined terms used in this prospectus,
which, except as otherwise noted in a prospectus supplement, are also used in
the prospectus supplement.
"actuarial receivables" means receivables which provide for amortization of
the loan over a series of fixed level payment monthly installments consisting of
an amount of interest equal to 1/12 of the contract rate of interest of the loan
multiplied by the unpaid principal balance of the loan, and an amount of
principal equal to the remainder of the monthly payment.
"additional obligations" means all Obligations transferred to the trust
after the closing date.
"additional receivables" means, with respect to a trust with a revolving
period, receivables acquired by a trust during that revolving period.
"advances" means both precomputed advances and simple interest advances.
"administrator" means the entity specified in the prospectus supplement as
the administrator of the trust under an administration agreement.
"Amortizable Bond Premium Regulations" means the final regulations issued on
December 30, 1997 by the IRS dealing with amortizable bond premium.
"balloon payment" means, with respect to a balloon payment receivable, the
final payment which is due at the end of the term of the receivable.
"balloon payment receivable" means a receivable that provides for the
amortization of the entire amount financed under the receivable over a series of
equal monthly installments with a substantially larger final payment which is
due at the end of the term of the receivable.
"Benefit Plan Investor" means any:
- "employee benefit plans" (as defined in Section 3(3) of ERISA), including
without limitation governmental plans, foreign pension plans and church
plans;
- "plans" described in Section 4975(e) (1) of the Code, including individual
retirement accounts and Keogh plans; or
- entities whose underlying assets include plan assets by reason of a plan's
investment in such entity, including without limitation, as applicable, an
insurance company general account.
"book-entry securities" means the notes and certificates that are held in
the United States through DTC and in Europe through Clearstream or Euroclear.
"Clearstream" means Clearstream Banking, a societe anonyme and a
professional depository under the laws of Luxembourg.
"Clearstream Customer" means a participating organization of Clearstream.
"certificate balance" means with respect to each class of certificates and
as the context so requires, with respect to (i) all certificates of such class,
an amount equal to, initially, the initial certificate balance of such class of
certificates and, thereafter, an amount equal to the initial certificate balance
of such class of certificates, reduced by all amounts distributed to
certificateholders of such class of certificates and allocable to principal or
(ii) any certificate of such class, an amount equal to, initially, the initial
denomination of such certificate and, thereafter, an amount equal to such
initial denomination, reduced by all amounts distributed in respect of such
certificate and allocable to principal.
"closing date" means that date specified in the prospectus supplement on
which the trust issues its securities.
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<PAGE>
"Code" means the Internal Revenue Code of 1986, as amended.
"collection period" means with respect to securities of each trust, the
period specified in the related prospectus supplement with respect to
calculating payments and proceeds of the related receivables.
"company" means Pooled Auto Securities Shelf LLC.
"controlling class" means, with respect to any trust, the senior most class
of notes described in the prospectus supplement as long as any notes of such
class are outstanding, and thereafter, in order of seniority, each other class
of notes, if any, described in the prospectus supplement as long as they are
outstanding.
"cutoff date" means the "cutoff date" specified in the applicable prospectus
supplement.
"daily portion" is computed as specified under "Material Federal Income Tax
Consequences--Trusts Treated as a Grantor Trust--Stripped Bonds and Stripped
Coupons--Original Issue Discount".
"defaulted receivable" means, unless otherwise specified in the related
prospectus supplement, a receivable (i) that the servicer determines is unlikely
to be paid in full or (ii) with respect to which at least 10% of a scheduled
payment is 90 or more days delinquent as of the end of a calendar month.
"definitive certificates" means with respect to any class of certificates
issued in book-entry form, such certificates issued in fully registered,
certificated form to certificateholders or their respective nominees, rather
than to DTC or its nominee.
"definitive notes" means with respect to any class of notes issued in
book-entry form, such notes issued in fully registered, certificated form to
noteholders or their respective nominees, rather than to DTC or its nominee.
"definitive securities" means collectively, the definitive notes and the
definitive certificates.
"depositor" means the company or a limited purpose finance subsidiary of the
company.
"depository" means DTC and any successor depository selected by the trust.
"distribution date" means the date specified in each related prospectus
supplement for the payment of principal of and interest on the securities.
"DOL" means the United States Department of Labor.
"DTC" means The Depository Trust Company and any successor depository
selected by the trust.
"Eligible Corporation" means, with respect to FASITs, a domestic C
corporation that is fully subject to corporate income tax.
"eligible deposit account" means either--
- a segregated account with an Eligible Institution; or
- a segregated trust account with the corporate trust department of a
depository institution organized under the laws of the United States or
any one of the states thereof or the District of Columbia (or any domestic
branch of a foreign bank), having corporate trust powers and acting as
trustee for funds deposited in such account, so long as any of the
securities of such depository institution have a credit rating from each
rating agency in one of its generic rating categories which signifies
investment grade.
"Eligible Institution" means--
- the corporate trust department of the indenture trustee or the related
trustee, as applicable; or
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<PAGE>
- a depository institution organized under the laws of the United States or
any one of the states thereof or the District of Columbia (or any domestic
branch of a foreign bank), (i) which has either (a) a long-term unsecured
debt rating acceptable to the rating agencies or (b) a short-term
unsecured debt rating or certificate of deposit rating acceptable to the
rating agencies and (ii) whose deposits are insured by the FDIC.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Euroclear" means a professional depository operated by the Brussels,
Belgium office of Morgan Guaranty Trust Company of New York under contract with
Euroclear Clearance System, S.C., a Belgian cooperative corporation.
"events of default" under the related indenture will consist of the events
specified under "Description of the Notes--The Indenture" in this prospectus.
"events of servicing termination" under each sale and servicing agreement or
pooling and servicing agreement will consist of the events specified under
"Description of the Receivables Transfer and Servicing Agreements--Events of
Servicing Termination" in this prospectus.
"Exemption" means the exemption granted to the lead underwriter named in the
prospectus supplement by the DOL and described under "ERISA Considerations".
"FASIT" means a financial asset securitization investment trust.
"FASIT provisions" means sections 860H through 860L of the Code.
"FASIT Qualification Test" is the requirement for FASIT status eligibility
that substantially all of the assets of the trust must consist of "permitted
assets" as of the close of the third month beginning after the closing date and
at all times thereafter.
"FASIT Regular Noteholders" means holders of FASIT regular interests.
"federal tax counsel" means the special federal tax counsel to each trust
specified in the related prospectus supplement.
"financed vehicle" means the motor vehicle financed by a receivable.
"foreign person" means a nonresident alien, foreign corporation or other
non-United States person.
"funding period" means the period specified in the related prospectus
supplement during which the seller will sell any subsequent receivables to the
trust, which sale may occur as frequently as daily.
"Grantor Trust Certificateholders" means owners of certificates issued by a
trust that is treated as a grantor trust.
"Grantor Trust Certificates" means certificates issued by a trust that is
treated as a grantor trust.
"indenture" means the indenture between the Trust, as issuer of the notes,
and the indenture trustee, identified in the prospectus supplement.
"Insolvency Event" means, with respect to any entity, any of the following
events or actions: certain events of insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings with respect to
such entity and certain actions by such entity indicating its insolvency,
reorganization pursuant to bankruptcy proceedings or inability to pay its
obligations.
"Insolvency Laws" means the United States Bankruptcy Code or similar
applicable state laws.
"IO" means interest-only.
"IRS" means the Internal Revenue Service.
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<PAGE>
"New Regulations" means the regulations recently issued by the Treasury
Department which make certain modifications to withholding, backup withholding
and information reporting rules.
"Obligations" means, with respect to the Exemption, loans or other secured
receivables.
"OID" means original issue discount.
"OID regulations" means those Treasury regulations relating to OID.
"permitted investments" means:
- direct obligations of, and obligations fully guaranteed as to timely
payment by, the United States of America or its agencies;
- demand deposits, time deposits, certificates of deposit or bankers'
acceptances of certain depository institutions or trust companies having
the highest rating from each rating agency;
- commercial paper having, at the time of such investment, a rating in the
highest rating category from each rating agency;
- investments in money market funds having the highest rating from each
rating agency;
- repurchase obligations with respect to any security that is a direct
obligation of, or fully guaranteed by, the United States of America or its
agencies, in either case entered into with a depository institution or
trust company having the highest rating from each rating agency; and
- any other investment acceptable to each rating agency.
Permitted Investments are generally limited to obligations or securities
which mature on or before the next distribution date.
"Plan Assets Regulation" means a regulation, 29 C.F.R. Section 2510.3-101,
issued by the DOL.
"pooling and servicing agreement" means the pooling and servicing agreement
among the depositor, the seller, the servicer and the applicable trustee.
"precomputed advance" means the excess of (i) the scheduled payment on a
precomputed receivable, over (ii) the collections of interest on and principal
of the respective precomputed receivable with respect to the related collection
period.
"precomputed receivables" means either an actuarial receivable or a rule of
78's receivables.
"Pre-Funding Limit" means, with respect to the Exemption, the ratio of the
amount allocated to the pre-funding account to the total principal amount of the
certificates being offered.
"pre-funding period" means, with respect to the Exemption, a 90-day or
three-month period following the closing date during which, subject to certain
conditions, Additional Obligations may be transferred to the trust.
"PTCE" means a Prohibited Transaction Class Exemption under ERISA.
"purchase amount" means a price at which the seller or the servicer must
purchase a receivable from a trust, equal to the unpaid principal balance of the
receivable plus interest accrued thereon to the date of purchase at the weighted
average interest rate borne by the trust's securities.
"rating agency" means a nationally recognized rating agency providing, at
the request of the seller, a rating on the securities issued by the applicable
trust.
"receivables transfer and servicing agreements" means, collectively, each
sale and servicing agreement or pooling and servicing agreement pursuant to
which a trust will purchase receivables from the depositor and the servicer will
agree to service such receivables, each trust agreement (in the case
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<PAGE>
of a grantor trust, the pooling and servicing agreement) pursuant to which a
trust will be created and certificates will be issued and each administration
agreement pursuant to which the servicer (or such other person named in the
related prospectus supplement) will undertake certain administrative duties with
respect to a trust that issues notes.
"record date" means the business day immediately preceding the distribution
date or, if definitive securities are issued, the last day of the preceding
calendar month.
"REMIC" means a Real Estate Mortgage Investment Conduit as defined in
section 860D of the Code.
"Restricted Group" means, with respect to the Exemption, Benefit Plans
sponsored by the seller, any underwriter, the trustee, the servicer, any obligor
with respect to receivables included in the trust constituting more than five
percent of the aggregate unamortized principal balance of the assets in the
trust, or any affiliate of such parties.
"revolving period" means the period, if one is specified in the prospectus
supplement, during which the trust uses principal collections on the receivables
to purchase additional receivables.
"rule of 78's receivable" means a receivable which provides for the payment
by the obligor of a specified total amount of payments, payable in equal monthly
installments on each due date, which total represents the principal amount
financed and add-on interest in an amount calculated at the contract rate of
interest for the term of the receivable.
"sale and servicing agreement" means the sale and servicing agreement
between the depositor, the seller and servicer and the trust identified in the
related prospectus supplement.
"SEC" means the Securities and Exchange Commission.
"Section 1286 Treasury Regulations" means recently issued Treasury
regulations under which, if the discount on a stripped bond is larger than a DE
MINIMIS amount (as calculated for purposes of the OID rules of the Code), such
stripped bond will be considered to have been issued with OID.
"Securities Act" means the Securities Act of 1933, as amended.
"seller" means the entity specified in the prospectus supplement as the
seller of the receivables.
"Senior Certificates" means the nonsubordinated certificates issued by a
trust.
"servicer" means the entity specified in the prospectus supplement as the
servicer of the receivables under the applicable sale and servicing agreement or
pooling and servicing agreement.
"Short-Term Note" means a note that has a fixed maturity date of not more
than one year from the issue date of such note.
"Similar Law" means federal, state or local laws that impose requirements
similar to ERISA or the Code.
"simple interest advance" means an amount equal to the amount of interest
that would have been due on a simple interest receivable at its contract rate of
interest for the related collection period (assuming that such simple interest
receivable is paid on its due date) minus the amount of interest actually
received on such simple interest receivable during the related collection
period.
"simple interest receivable" means a receivables that provides for the
amortization of the amount financed under such receivable over a series of fixed
level payment monthly installments.
"subsequent receivables" means additional receivables sold by the seller to
the applicable trust during a funding period after the closing date.
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"subsequent transfer date" means each date specified as a transfer date in
the related prospectus supplement on which subsequent receivables will be sold
by the seller to the applicable trust.
"trustee" means the trustee of the trust identified in the related
prospectus supplement.
"trust agreement" means the trust agreement between the trustee and the
depositor identified in the related prospectus supplement.
"United States Person" means a citizen or resident of the United States, a
corporation or a partnership organized in or under the laws of the United States
or any political subdivision thereof, an estate or trust, the income of which
from sources outside the United States is includible in gross income for federal
income tax purposes regardless of its connection with the conduct of a trade or
business within the United States, or a trust if a court within the United
States is able to exercise primary supervision of the administration of the
trust and one or more United States persons have the authority to control all
substantial decisions of the trust.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
Expenses in connection with the offering of the Securities being registered
herein are estimated as follows:
<TABLE>
<S> <C>
SEC registration fee........................................ $132,000
Legal fees and expenses..................................... 200,000
Accounting fees and expenses................................ 70,000
Blue sky fees and expenses.................................. 15,000
Rating agency fees.......................................... 250,000
Trustee's fees and expenses................................. 40,000
Indenture Trustee's fees and expenses....................... 100,000
Printing.................................................... 50,000
Miscellaneous............................................... $ 25,000
--------
Total................................................. $882,000
========
</TABLE>
------------------------
* All amounts except the SEC registration fee are estimates of expenses
incurred or to be incurred in connection with the issuance and distribution
of a series of securities in an aggregate principal amount assumed for these
purposes to be equal to $500,000,000 of securities registered hereby.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Pooled Auto Securities Shelf LLC (the "Registrant") has undertaken in its
Limited Liability Company Agreement to indemnify, to the maximum extent
permitted by the Delaware Limited Liability Company Law as from time to time
amended, any currently acting or former director, officer, employee and agent of
the Registrant against any and all liabilities incurred in connection with their
services in such capacities.
ITEM 16. EXHIBITS.
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement for Owner Trusts
1.2 Form of Underwriting Agreement for Grantor Trusts
3.1 Certificate of Formation of the Registrant
3.2 Limited Liability Company Agreement of the Registrant
4.1 Form of Trust Agreement (including form of Certificates)
4.2.1 Form of Pooling and Servicing Agreement (including form of
Certificates)
4.2.2 Form of Standard Terms and Conditions
4.3 Form of Indenture (including form of Notes)
5.1 Opinion of Brown & Wood LLP with respect to legality
8.1 Opinion of Brown & Wood LLP with respect to certain tax
matters
10.1 Form of Sale and Servicing Agreement
10.2 Form of Administration Agreement
10.3 Form of Receivables Purchase Agreement
23.1 Consent of Brown & Wood LLP (included in Exhibit 5.1)
23.2 Consent of Brown & Wood LLP (included in Exhibit 8.1)
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <S>
24.1 Power of Attorney*
</TABLE>
------------------------
* Previously filed.
ITEM 17. UNDERTAKINGS.
(a) As to Rule 415:
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Securities and Exchange Commission (the "Commission") pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table
in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) As to documents subsequently filed that are incorporated by reference:
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) 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.
(c) As to indemnification:
Insofar as indemnification for liabilities arising under the Securities Act
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 Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of
II-2
<PAGE>
expenses incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
(d) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
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, 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.
(e) As to qualification of trust indentures:
The undersigned Registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under
Section 310(a) of the Trust Indenture Act of 1939, as amended, in accordance
with the rules and regulations prescribed by the Commission under
Section 305(b)(2) of the Securities Act.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe (i) that it meets
all of the requirements for filing on Form S-3 and (ii) that the security rating
requirement will be met by the time of sale of the securities, and has duly
caused this Amendment No. 1 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Charlotte,
the State of North Carolina, on July 11, 2000.
POOLED AUTO SECURITIES SHELF LLC
By: /s/ BENNETT S. COLE
------------------------------------------------------------------------------
Bennett S. Cole
Director
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 1 to the Form S-3 Registration Statement has been signed below by
the following persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ BENNETT S. COLE Director and Senior Vice President July 11, 2000
------------------------------------
Bennett S. Cole
/s/ JOSEPH G. PARISH* Director and Senior Vice President July 11, 2000
------------------------------------
Joseph G. Parish
/s/ BRIAN E. SIMPSON* Director and President July 11, 2000
------------------------------------
Brian E. Simpson
/s/ KEVIN BURNS* Director July 11, 2000
------------------------------------
Kevin Burns
/s/ ANDREW STIDD* Director July 11, 2000
------------------------------------
Andrew Stidd
</TABLE>
<TABLE>
<S> <C> <C> <C>
*By: /s/ BENNETT S. COLE
--------------------------------------
Bennett S. Cole
ATTORNEY-IN-FACT
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement for Owner Trusts
1.2 Form of Underwriting Agreement for Grantor Trusts
3.1 Certificate of Formation of the Registrant
3.2 Limited Liability Company Agreement of the Registrant
4.1 Form of Trust Agreement (including form of Certificates)
4.2.1 Form of Pooling and Servicing Agreement (including form of
Certificates)
4.2.2 Form of Standard Terms and Conditions
4.3 Form of Indenture (including form of Notes)
5.1 Opinion of Brown & Wood LLP with respect to legality
8.1 Opinion of Brown & Wood LLP with respect to certain tax
matters
10.1 Form of Sale and Servicing Agreement
10.2 Form of Administration Agreement
10.3 Form of Receivables Purchase Agreement
23.1 Consent of Brown & Wood LLP (included in Exhibit 5.1)
23.2 Consent of Brown & Wood LLP (included in Exhibit 8.1)
24.1 Power of Attorney*
</TABLE>
------------------------
* Previously filed.
