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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 11, 2000
REGISTRATION NO. 333-45546
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2
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)
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DELAWARE APPLIED FOR
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
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ONE FIRST UNION CENTER, TW-9
CHARLOTTE, NORTH CAROLINA 28288
(704) 374-8437
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
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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)
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COPIES TO:
DALE W. LUM
Brown & Wood LLP
555 California Street, Suite
5000 San Francisco, California 94104
(415) 772-1200
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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. / /
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION
REGISTERED REGISTERED UNIT(1) PRICE(1) FEE(2)
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Asset Backed Notes and Certificates.......... $1,500,000,000(3) 100% $1,500,000,000 $396,000(3)
</TABLE>
(1) Estimated solely for purposes of calculating the Registration Fee.
(2) Previously paid.
(3) $500,000,000 aggregate principal amount of securities registered under
registration No. 333-36692 referred to below and not previously sold is
carried forward in this Registration Statement pursuant to Rule 429. A
registration fee of $132,000 in connection with such unsold amount of
securities was paid previously under the foregoing registration statement.
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PURSUANT TO RULE 429, THE PROSPECTUS AND FORMS OF PROSPECTUS SUPPLEMENT
CONTAINED IN THIS REGISTRATION STATEMENT ALSO RELATE TO, AND THIS REGISTRATION
STATEMENT CONSTITUTES A POST-EFFECTIVE AMENDMENT TO, REGISTRATION STATEMENT
NO. 333-36692, WHICH WAS FILED ON MAY 10, 2000 ON FORM S-3, BY REGISTRANT.
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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INTRODUCTORY NOTE
This Registration Statement contains a 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 describing 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. Each form of Prospectus Supplement
relates only to the securities which it describes 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.
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 DECEMBER 11, 2000
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>
PROSPECTUS
ASSET BACKED NOTES
ASSET BACKED CERTIFICATES
(EACH ISSUABLE IN SERIES)
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POOLED AUTO SECURITIES SHELF LLC
AS DEPOSITOR
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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 11 OF THIS certificates in one or more classes;
PROSPECTUS AND THE RISK FACTORS SET - will own --
FORTH IN THE RELATED PROSPECTUS - a pool of loans made to finance the retail
SUPPLEMENT. purchase of new or used automobiles, minivans,
The notes and the certificates will sport utility vehicles, light-duty trucks,
represent interests in or obligations motorcycles or commercial vehicles;
of the trust only and will not - collections on those loans;
represent interests in or obligations - security interests in the vehicles financed by
of Pooled Auto Securities Shelf LLC those loans; and
or any of its affiliates. - any proceeds from claims on related insurance
This prospectus may be used to offer policies; and
and sell any of the notes and/or - funds in accounts of the trust; and
certificates only if accompanied by - may have the benefit of one or more other forms
the prospectus supplement for the of credit enhancement.
related trust. The main sources of funds for making payments on a
trust's securities will be collections on its
loans and any credit enhancement that the trust
may have.
The amounts, prices and terms of each offering of
securities will be determined at the time of sale
and will be described in an accompanying
prospectus supplement.
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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 .
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TABLE OF CONTENTS
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PAGE
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Important Notice About
Information Presented in this
Prospectus and the
Accompanying Prospectus
Supplement.................... 4
Where You Can Find Additional
Information................... 4
Incorporation of Certain
Documents by Reference........ 4
Copies of the Documents....... 5
Summary......................... 6
Risk Factors.................... 11
The Trusts...................... 19
The Receivables............... 19
The Seller and the Servicer... 20
The Trustees.................. 21
The Receivables Pools........... 21
The Receivables............... 21
Maturity and Prepayment
Considerations................ 25
Pool Factors and Trading
Information................... 26
Notes......................... 26
Certificates.................. 27
The Factors Described Above
Will Decline as the Trust
Makes Payments on the
Securities.................. 27
Additional Information........ 27
Use of Proceeds................. 28
The Company..................... 28
Principal Documents............. 29
Certain Information Regarding
the Securities................ 31
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PAGE
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General....................... 31
Fixed Rate Securities......... 31
Floating Rate Securities...... 32
Book-Entry Registration....... 32
Definitive Securities......... 38
Reports to Securityholders.... 40
The Indenture................... 41
The Indenture Trustee......... 48
Description of the Receivables
Transfer and Servicing
Agreements.................... 48
Sale and Assignment of
Receivables................. 49
Accounts...................... 51
Servicing Procedures.......... 52
Collections................... 53
Advances...................... 54
Servicing Compensation and
Expenses.................... 55
Distributions................. 55
Credit and Cash Flow
Enhancement................. 56
Statements to Trustees and
Trusts...................... 57
Evidence as to Compliance..... 57
Certain Matters Regarding the
Servicer.................... 58
Events of Servicing
Termination................. 59
Rights Upon Event of Servicing
Termination................. 59
Waiver of Past Events of
Servicing Termination....... 60
Amendment..................... 60
Payment of Notes.............. 61
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2
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PAGE
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Termination................... 61
List of Certificateholders.... 62
Administration Agreement...... 62
Material Legal Issues Relating
to the Receivables............ 63
General....................... 63
Security Interests in the
Financed Vehicles........... 63
Enforcement of Security
Interests in Vehicles....... 65
Certain Bankruptcy
Considerations.............. 67
Consumer Protection Laws...... 67
Other Matters................. 68
Material Federal Income Tax
Consequences.................. 69
Trusts for Which a Partnership
Election is Made............ 70
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Trusts in Which all
Certificates are Retained by
the Seller or an Affiliate
of the Seller............... 79
Trusts Treated as Grantor
Trusts...................... 80
Certain State Tax
Consequences.................. 87
ERISA Considerations............ 87
Senior Certificates Issued by
Trusts...................... 90
Special Considerations
Applicable to Insurance
Company General Accounts.... 94
Plan of Distribution............ 94
Sales Through Underwriters.... 94
Other Placements of
Securities.................. 95
Legal Opinions.................. 96
Glossary of Terms............... 97
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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 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.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
Pooled Auto Securities Shelf LLC has filed a registration statement with the
SEC under 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 filed with it by
Pooled Auto Securities Shelf LLC on behalf of the trust, which means that we can
disclose important information to you by referring you to those documents. The
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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.
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.
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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 DEPOSITOR
Pooled Auto Securities Shelf LLC.
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 scheduled 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 of a series
that is not being offered to the public.
Generally, you may purchase the securities only in book-entry form and
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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.
INVESTMENT IN THE SECURITIES
There are material risks associated with an investment in the securities.
FOR A DISCUSSION OF THE RISK FACTORS WHICH SHOULD BE CONSIDERED IN DECIDING
WHETHER TO PURCHASE ANY OF THE SECURITIES, SEE "RISK FACTORS" IN THE PROSPECTUS
AND IN THE RELATED PROSPECTUS SUPPLEMENT.
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 amount. Upon such a
purchase, the securities of that trust will be prepaid in full.
THE RECEIVABLES AND OTHER TRUST PROPERTY
THE RECEIVABLES
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
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 any
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funding period that may be specified in the prospectus supplement. A funding
period will not exceed one year from the applicable closing date. During a
funding period the trust will purchase receivables using amounts deposited on
the closing date into the pre-funding account which will be an account of the
trust established with the related trustee. The other terms, conditions and
limitations of the purchase of receivables during any funding period will be
specified in the related prospectus supplement.
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 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".
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TRANSFER AND SERVICING OF THE RECEIVABLES
With respect to each trust, a seller will sell the related receivables to
the depositor under a receivables purchase agreement, which, in turn, will
transfer the receivables to the trust under 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 fees and charges paid by obligors
and net investment income from reinvestment of collections on the receivables.
OPTIONAL SERVICER ADVANCES OF
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
If so 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 seller and the depositor of the breach.
If so provided in the related prospectus supplement, the 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 SERVICING
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AGREEMENTS--SALE AND ASSIGNMENT OF RECEIVABLES" AND "--SERVICING PROCEDURES".
TAX STATUS
TRUSTS OTHER THAN GRANTOR TRUSTS
Unless the prospectus supplement specifies that the related trust will be
treated as a grantor trust, it is the opinion of Brown & Wood LLP, as federal
tax counsel to the trust, that for federal income tax purposes:
- The notes will be characterized as debt unless otherwise stated in the
prospectus supplement.
- The trust will not be characterized as an association, or a publicly traded
partnership, taxable as a corporation. Therefore, the trust will not be
subject to an entity level tax for federal income tax purposes.
GRANTOR TRUSTS
If the prospectus supplement specifies that the related trust will be
treated as a grantor trust, it is the opinion of Brown & Wood LLP, as federal
tax counsel to the trust, that for federal income tax purposes:
- The trust will be characterized as a grantor trust and not as an association,
or publicly traded partnership, taxable as a corporation. Therefore, the trust
will not be subject to an entity level tax for federal income tax purposes.
- 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 owner
of a pro rata undivided interest in each of the receivables in the trust. Each
grantor trust certificateholder will be required to report on its federal
income tax return in accordance with the 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, original interest discount, if any, prepayment fees, assumption
fees, any gain recognized upon an assumption and late payment charges received
by the servicer.
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. The risk factors stated here and in the
prospectus supplement describe the principal risk factors of an investment in
the securities.
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YOU MAY HAVE DIFFICULTY SELLING YOUR There may be no secondary market for the
SECURITIES OR OBTAINING YOUR DESIRED PRICE securities. Underwriters may participate in
making a secondary market 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 THE Financing statements under the Uniform
RECEIVABLES COULD REDUCE THE FUNDS Commercial Code will be filed reflecting the
AVAILABLE TO MAKE PAYMENTS ON YOUR sale of the receivables by the seller to the
SECURITIES depositor and by the depositor to the 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.
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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;
- 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.
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The seller will be obligated to repurchase
from the trust any receivable sold to the
trust as to which a perfected security
interest in the name of the related seller in
the vehicle securing the receivable did not
exist as of the date such receivable was
transferred to the trust. However, the seller
will not be required to repurchase a
receivable if a perfected security interest in
the name of the seller in the vehicle securing
a receivable has not been perfected in the
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 the 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 REDUCE Federal and state consumer protection laws
PAYMENTS ON YOUR SECURITIES impose requirements upon creditors in
connection with extensions 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 AVAILABLE The securities represent interests solely in a
TO PAY YOUR SECURITIES trust or indebtedness of a trust and will not
be insured or guaranteed by the depositor, the
seller or any of their respective affiliates,
or, unless otherwise specified in the
prospectus supplement, 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.
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AMOUNTS ON DEPOSIT IN ANY RESERVE FUND The amount required to be on deposit in any
WILL BE LIMITED AND SUBJECT TO DEPLETION. reserve fund will be limited. If the amounts
in the reserve fund are depleted as amounts
are paid out to cover shortfalls in
distributions of principal and interest on the
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.
ANY CREDIT SUPPORT PROVIDED BY FINANCIAL Credit support for the securities may be
INSTRUMENTS MAY BE INSUFFICIENT TO PROTECT provided through the use of financial
YOU AGAINST LOSSES. instruments like swaps, interest rate caps,
other interest rate protection agreements,
letters of credit, credit or liquidity
facilities, surety bonds, insurance policies
regarding payment of the securities,
guaranteed investment contracts, repurchase
agreements, yield supplement agreements or
other agreements with respect to third party
payments. Credit support in this form is
limited by the credit of the provider of the
financial instrument and by its ability to
make payments as and when required by the
terms of the financial instrument. Any failure
of the credit support provider to meet its
obligations under the financial instrument
could result in losses on the related
securities. The terms of any financial
instrument providing credit support for the
securities may also impose limitations or
conditions on when or in what circumstances it
may be drawn on. Any form of credit support
may apply only to certain classes of
securities, may be limited in dollar amount,
may be accessible only under some
circumstances, and may not provide protection
against all risks of loss. The related
prospectus supplement will describe the
provider of any financial instrument
supporting the securities and any conditions,
limitations or risks material to the
securityholders.
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YOU MAY SUFFER LOSSES UPON A LIQUIDATION Under certain circumstances described in this
OF THE RECEIVABLES IF THE PROCEEDS OF THE prospectus and in the related prospectus
LIQUIDATION ARE LESS THAN THE AMOUNTS DUE supplement, the receivables of a trust may be
ON THE OUTSTANDING SECURITIES. sold after the occurrence of an event of
default. The related securityholders will
suffer losses if the trust sells the
receivables for less than the total amount due
on its securities. We cannot assure you that
sufficient funds would be available to repay
those securityholders in full.
SUBORDINATION OF CERTAIN SECURITIES MAY To the extent specified in the related
REDUCE PAYMENTS TO THOSE SECURITIES prospectus supplement, the rights of the
holders of any class of 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 related prospectus supplement.
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PREPAYMENTS ON THE RECEIVABLES MAY You may not be able to reinvest the principal
ADVERSELY AFFECT THE AVERAGE LIFE OF AND repaid to you at a rate of return that is
RATE OF RETURN ON YOUR SECURITIES equal to or greater than the rate of return on
your securities. Faster than 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
- 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 scheduled distribution date,
an event of default will occur and final
payment of that class of notes may occur later
than scheduled.
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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 SECURITIES Unless otherwise specified in the related
BECAUSE THE SERVICER MAY COMMINGLE prospectus supplement, each servicer which
COLLECTIONS ON THE RECEIVABLES WITH ITS satisfies certain requirements will be
OWN FUNDS permitted to hold 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 CONTROLS Generally, the holders of a majority of a
REMOVAL OF THE SERVICER UPON A DEFAULT ON trust's senior class of securities, or the
ITS SERVICING OBLIGATIONS applicable trustee acting on their behalf, can
remove the related servicer if the 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.
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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 TRUST'S Adverse economic conditions or other factors
RECEIVABLES MAY ADVERSELY AFFECT YOUR particularly affecting any state or region
SECURITIES where there is a high 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 these conditions may occur, or to what
extent these 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 related 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.
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CAPITALIZED TERMS USED IN THIS PROSPECTUS ARE DEFINED IN THE GLOSSARY ON
PAGE 97.
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 related 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 Financed Vehicles consisting
of new and used automobiles, minivans, sport utility vehicles, light-duty
trucks, motorcycles or commercial vehicles financed by those contracts, and the
receivables with respect thereto and all payments due thereunder on and after
the applicable Cutoff Date set forth in the related prospectus supplement 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 lenders and sold to the depositor. The
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 known as Subsequent Receivables to
the trust as frequently as daily during 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. With respect to any trust
that is to be treated as a grantor trust for federal income tax purposes, the
Funding Period, if any, will not exceed the period of 90 days from and after the
Closing Date and, with respect to any other trust, will not exceed the period of
one year from and after the Closing Date.
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;
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- the seller's and depositor's rights to certain documents and instruments
relating to the receivables;
- 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.
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 the secured notes and the consequences of including
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 its 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 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 funds available to make payments on your
securities" and "Description of the Receivables Transfer and Servicing
Agreements--Sale and Assignment of Receivables".
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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.
THE RECEIVABLES POOLS
THE RECEIVABLES
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 under 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 under 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 the
trust may vary significantly from those of the receivables transferred to the
trust on the Closing Date.
If so specified in the related prospectus supplement, the receivables may
include loans made to borrowers whose credit histories show previous financial
difficulties or who otherwise have insufficient credit histories to meet the
credit standards imposed
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by most traditional automobile financing sources. Loans made to borrowers of
these types are commonly referred to as "sub-prime" or "non-prime" loans.
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
- the portion of the payment applied to reduce the unpaid principal balance
will be correspondingly greater.
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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 be Actuarial
Receivables that 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, or Rule of 78's Receivables that allocate
payments according to the "sum of periodic balances" or "sum of monthly
payments" method, similar to the "rule of 78's". 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 the
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 be Balloon
Payment Receivables that 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. The final 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
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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,
- 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 the receivables and the consequences of including
the 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;
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- 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.
- 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
scheduled 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
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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
CALCULATION OF 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 a class of notes indicating the remaining
outstanding principal amount of that 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 the 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
CALCULATION OF 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 a class of certificates
indicating the remaining outstanding balance of that 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 the 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
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 the 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 second
Collection Period preceding the Distribution Date, as applicable, amounts
allocated or distributed on the preceding Distribution Date and any
reconciliation of those 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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<PAGE>
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 the net proceeds paid to it with
respect to any 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
Pooled Auto Securities Shelf LLC, or the Company, was formed in the State of
Delaware on April 14, 2000 as a limited liability company. The sole equity
member of the Company is First Union Pass Co., 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.
The depositor with respect to each series of securities will be the
Company. The Company anticipates that, as depositor, it will acquire receivables
to be included in each trust from sellers in the open market or in privately
negotiated transactions. The Company will have no ongoing servicing obligations
or responsibilities with respect to any Financed Vehicle and no administrative
obligations with respect to any trust.
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 or any of their respective affiliates will insure or guarantee the
receivables or the securities of any series.
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<PAGE>
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 Creates the trust
depositor
Provides for issuance of
certificates and
payments to
certificateholders
Establishes rights and
duties of trustee
Establishes rights of
certificateholders
Indenture Trust, as issuer of the Provides for issuance of
notes, and indenture the notes, the terms of
trustee the notes and payments
to noteholders
Establishes rights and
duties of indenture
trustee
Establishes rights of
noteholders
Sale and servicing The seller, the servicer Effects sale of
agreement and a trust as purchaser receivables 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>
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<PAGE>
IF THE TRUST IS A GRANTOR TRUST:
<TABLE>
<CAPTION>
DOCUMENT PARTIES PRIMARY PURPOSES
------------------------ ------------------------ ------------------------
<S> <C> <C>
Pooling and servicing Trustee, the seller and Creates the trust
agreement the 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>
The material terms 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.
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<PAGE>
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 each 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 in this prospectus 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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<PAGE>
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
class of floating rate securities, which may be either the trustee or indenture
trustee with respect to the 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 off 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, the 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
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<PAGE>
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 that 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 that 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 that 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 that class of certificates, for distribution to
certificateholders of that 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 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 the 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
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<PAGE>
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 the 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
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
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<PAGE>
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 any 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
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<PAGE>
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;
(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 the payments will be forwarded by the applicable trustee to
DTC's nominee. DTC will forward the 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
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<PAGE>
securities to persons or entities that do not participate in the DTC system, or
otherwise take actions with respect to these securities, may be limited due to
the lack of a physical certificate for these 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 the securities
are credited. DTC may take conflicting actions with respect to other undivided
interests to the extent that these actions are taken on behalf of participants
whose holdings include these undivided interests.
Non-United States holders of global securities will be subject to United
States withholding taxes unless these 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 Exchange Act. 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 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
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<PAGE>
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 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, 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.
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
38
<PAGE>
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 the 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 the 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 the
notes or certificates is no longer in the best interest of the holders of the
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 the securities as Definitive Securities to the securityholders.
Distributions of principal of, and interest on, the 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, the distributions will
be made by check mailed to the address of the holder as it appears on the
register maintained by the indenture trustee or trustee. The final payment on
any of the Definitive Security, however, will be made only upon presentation and
surrender of the 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.
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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 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 the 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;
(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 that 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
the unpaid interest to the extent permitted by law, if any, on each class
of securities, and the change in these 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 these amounts from the preceding
statement;
(11) the aggregate amount to be paid in respect of receivables, if any,
repurchased in that Collection Period;
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(12) the balance of any reserve fund, if any, on that date, after giving
effect to changes on that date;
(13) the amount of advances to be remitted by the servicer on that date;
(14) for each Distribution Date during any Funding Period, the amount
remaining in the pre-funding account;
(15) for the first Distribution 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 the 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 the credit or cash flow enhancement arrangement, and the
change in any 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 and received any payment with respect to the
trust a statement containing certain information for the purposes of the
securityholder's preparation of federal income tax returns.
See "Material Federal Income Tax Consequences".
THE INDENTURE
With respect to each trust that issues notes, one or more classes of notes
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 on the material provisions 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;
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- a default in the observance or performance of any covenant or agreement of
the trust made in the 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 indenture
trustee or to the trust and the 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 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 the breach not having been cured within 30 days after notice thereof
is given to the trust by the indenture trustee or to the trust and the
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
- other events, if any, set forth in the indenture or related 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. 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 a 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. That
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
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- 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 a
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 the trust consent to the sale,
excluding notes held by the seller, the servicer or their affiliates,
- the proceeds of the sale are sufficient to pay in full the principal of
and the accrued interest on the notes of the 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 the trust as the payments would have
become due if the Obligations had not been declared due and payable, and
the indenture trustee obtains the consent of the holders of 66 2/3% of the
aggregate outstanding amount of the Controlling Class of the 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 the
sale or the proceeds of the 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, the indenture
trustee will be under no obligation to exercise any of the rights or powers
under the indenture at the request or direction of any of the holders of the
notes, if the indenture trustee reasonably believes it will not be adequately
indemnified against the costs, expenses and liabilities which might be incurred
by it in complying with the 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
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or a default in respect of a covenant or provision of the indenture that cannot
be modified without the waiver or consent of the holders of all of the
outstanding notes of the related trust.
No holder of a note of any trust will have the right to institute any
proceeding with respect to the related indenture, unless:
- the 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 the trust have made written request to such indenture trustee to
institute such proceeding in its own name as indenture trustee;
- the holder or holders have offered such indenture trustee reasonable
indemnity;
- the indenture trustee has for 60 days after the notice, request and offer
of indemnity failed to institute the proceeding; and
- no direction inconsistent with the written request has been given to the
indenture trustee during the 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 indenture will provide that, notwithstanding any other provision of the
indenture, the right of any noteholder to receive payments of principal and
interest on its notes when due, or to institute suit for any payments not made
when due, shall not be impaired or affected without the holder's consent.
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 the consolidation or merger is
organized under the laws of the United States, any state or the District
of Columbia,
- the entity expressly assumes the trust's obligation to make due and
punctual payments upon the notes of the related trust and the performance
or
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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 the merger or consolidation,
- the trust has been advised that the rating of the notes and the
certificates of the trust then in effect would not be reduced or
withdrawn by the rating agencies as a result of the merger or
consolidation,
- the trust has received an opinion of counsel to the effect that the
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.
- 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 the 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 the 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
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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 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 the
indenture trustee for the purpose of communicating with other noteholders with
respect to their rights under the related indenture or under such notes. The
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 the indenture trustee of funds sufficient
for the payment in full of all the notes.
MODIFICATION OF INDENTURE. Any trust, together with the related indenture
trustee, with the consent of or notification of any other parties set forth in
the indenture, 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 the action
will not materially adversely affect the interests of the noteholders.
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The trust and the applicable indenture trustee, with the consent of or
notification of any other parties set forth in the indenture, 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 the noteholders,
except with respect to the matters listed in the next paragraph which require
the approval of the noteholders, provided that:
- the action will not, as evidenced by an opinion of counsel, materially
adversely affect the interest of any noteholder;
- the 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 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
note or reduce the principal amount, the interest rate or the redemption
price with respect the note, change the application of the proceeds of a
sale of the trust property to payment of principal and interest on the
note or change any place of payment where, or the coin or currency in
which, that note or any interest on that note 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 the indenture;
- modify or alter the provisions of the related indenture regarding the
voting of notes held by the applicable trust, any other obligor on the
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 the sale would be
insufficient to pay the principal amount and accrued but unpaid interest
on the outstanding notes and certificates of the trust;
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- 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 the trust necessary to amend such
indenture or any of the other related agreements;
- 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
the notes or, except as otherwise permitted or contemplated in such
indenture, terminate the lien of the indenture on any such collateral or
deprive the holder of any the 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 the 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.
DESCRIPTION OF THE RECEIVABLES TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain material provisions of the documents
under which the depositor will purchase the receivables from a seller, a trust
will purchase the receivables from the depositor and a servicer will service 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
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agreement. For a grantor trust, they are the receivables purchase agreement and
the pooling and servicing agreement. This section also describes certain
material 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 on the material
provisions 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, under a receivables purchase agreement. The depositor will then
transfer and assign to the applicable trustee, without recourse, under a sale
and servicing agreement or a pooling and servicing agreement, as applicable, its
entire interest in those receivables, including its security interests in the
related Financed Vehicles. Each receivable will be identified in a schedule
appearing as an exhibit to the 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 the agreement 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
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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 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. 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,
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will repurchase that receivable from the trust at a price generally equal to the
Purchase Amount, which is the unpaid principal balance owed by the obligor under
the receivable plus interest 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 each 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 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
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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. If set forth in the related prospectus supplement, the
servicer may, consistent with its normal procedures, in its discretion, arrange
with the obligor on a receivable to defer 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 a date set forth in the related
prospectus supplement, or, if set forth in the prospectus supplement, the
servicer changes the
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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 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 (1) the
original servicer, or its successor, is the servicer, (2) there exists no Event
of Servicing Termination and (3) 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, 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.
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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 a Precomputed Advance in
the amount of the shortfall. 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 the advance from subsequent
collections or recoveries on the 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 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 make a Simple Interest Advance by depositing 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 the
Simple Interest Receivables are paid on their respective due dates, minus the
amount of interest actually received on the Simple Interest Receivables during
the related Collection Period. If calculation results in a negative number, an
amount equal to that 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 owing on that receivable, 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.
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
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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
the 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 that 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, 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
the securities entitled thereto will be made by the applicable trustee or
indenture trustee to the noteholders and the certificateholders of the trust.
The timing, calculation, allocation, order, source, priorities of and
requirements for all payments to each class of securityholders of the trust will
be set forth in the related prospectus supplement.
ALLOCATION OF COLLECTIONS ON RECEIVABLES. Except as set forth in the
related prospectus supplement, 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
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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 another 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, insurance
policies regarding payment of the securities, 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 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 that class of
the full amount of principal and interest due on the securities and
(2) decrease the likelihood that the 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 due on the securities. 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.
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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 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 of the amount of
Collection Period, net of distributions to the servicer as reimbursement of
advances, if any, or payment of fees to the servicer with respect to that
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 the 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 12 months (or,
in the case of the first 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 the
accountants' statement referred to above, of a certificate signed by an officer
of the servicer stating that the servicer has fulfilled its obligations under
that agreement throughout the preceding 12 months (or, in the case of the first
certificate, from the Closing Date) or, if there has been a default in the
fulfillment of any such obligation, describing each default.
Copies of these statements and certificates may be obtained by
securityholders by a request in writing addressed to the applicable trustee.
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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 its duties is no longer permissible under applicable 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 that Rating Agency. No
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 the 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. The servicer, however 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 the sale and servicing agreement or for
errors in judgment; except that neither the servicer nor any other 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. The 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; provided,
however, that the 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 the 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
that event, the servicer's legal expenses and costs of the action and
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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 the 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;
- 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 the sale and servicing agreement or pooling 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 the 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 the 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
- any other events 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
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under the sale and servicing agreement or pooling and servicing agreement,
whereupon the indenture trustee or trustee or a successor servicer appointed by
the indenture trustee or trustee will succeed to all the responsibilities,
duties and liabilities of the servicer under the 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 the
appointment has occurred, the receiver, bankruptcy trustee or official may have
the power to prevent the indenture trustee, the noteholders, the trustee or the
certificateholders from effecting a transfer of servicing. In the event that the
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. The 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 the 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 the 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 the agreements, without the consent of the related securityholders,
to add any provisions to or change or eliminate any of the provisions of the
Receivables Transfer and Servicing Agreements or modify the rights of the
noteholders or certificateholders; provided that the action will not materially
and adversely affect the interest of the noteholder or certificateholder as
evidenced by either (1) an opinion of counsel to that effect or
(2) 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 the 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 the 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 the Receivables
Transfer and Servicing Agreements
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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 the 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 the trust
which are required to consent to any the amendment, without the consent of the
holders of all the outstanding notes and certificates of the 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 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 any 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 the Collection Period, after giving effect to the receipt of any
monies collected on the receivable. The purchase price for the receivables will
not be less than the outstanding principal balance of the notes plus accrued and
unpaid interest.
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
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trustee receives satisfactory bids as described in the 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 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 the trust or one or more holders of the certificates evidencing
not less than 25% of the certificate balance of the 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 areement or under the 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 and the administrator will agree, to the extent provided in
the 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 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 an amount as may be set forth in the related prospectus supplement.
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MATERIAL 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 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, the 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 the 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.
Each receivables purchase agreement will provide that each seller will
assign to the depositor its interests in the Financed Vehicles securing the
receivables assigned by that seller to the depositor. With respect to each
trust, the related sale and servicing agreement or pooling and servicing
agreement will provide that the depositor will assign its interests in the
Financed Vehicles securing the related receivables to the 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 the trust as the new secured party on
the certificate of
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title relating to a Financed Vehicle nor will any entity execute and file any
transfer instrument. In most states, the assignment is an effective conveyance
of the 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 in accordance with the sale and servicing agreement or
pooling and servicing agreement, as applicable.
In most states, assignments like those under the receivables purchase
agreement and the sale and servicing agreement or pooling and servicing
agreement, as applicable, are an effective conveyance 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 those
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 other states, in the absence of an amendment and
re-registration, a perfected security interest in the Financed Vehicles may not
have been effectively conveyed to the trust. Except in that 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 that agreement 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, and holders of these Financed Vehicles. The 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
the vehicle in the new
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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 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 appflicable, 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 the 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 under the 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 the 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 a lien or confiscation arises and any 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
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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 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 those 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 freasonable", 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 uncollectable.
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 the vehicle or if no lienholder exists, the UCC requires the
creditor to remit the surplus to the obligor.
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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 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
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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 the 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 the warranty to the
applicable trust under the related sale and servicing agreement or pooling and
servicing agreement, that each receivable complies with all requirements of law
in all material respects. Accordingly, if an obligor has a claim against the
trust for violation of any law and that claim materially and adversely affects
the trust's interest in a receivable, the violation would constitute a breach of
the warranties of the seller under the 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.
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MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following is a 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 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. We suggest that
prospective investors 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, 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 Brown & Wood LLP, as
federal tax counsel to each trust, regarding certain federal income tax matters
discussed below. A legal opinion, however, is not binding on the Internal
Revenue Service 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 the trust.
Brown & Wood LLP, as federal tax counsel to each trust, is of the opinion that:
(a) Unless the prospectus supplement specifies that the related trust
will be treated as a grantor trust for federal income tax purposes,
assuming compliance with all of the provisions of the applicable
agreement,
(1)the securities so designated will be considered indebtedness of
the trust fund for federal income tax purposes and
(2)the trust will not be considered to be an association or a
publicly traded partnership taxable as a corporation.
(b) If the prospectus supplement indicates that the related trust will
be treated as a grantor trust for federal income tax purposes,
assuming compliance with all of the provisions of the applicable
agreement,
(1) the trust will be considered to be a grantor trust under
Subpart E, Part 1 of Subchapter J of the Internal Revenue Code
and will not be considered to be an association or publicly
traded partnership taxable as a corporation and
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(2) a holder of the related securities will be treated for federal
income tax purposes as the owner of a pro rata undivided interest
in the assets included in the trust.
(c) Therefore, in either case, the trust will not be subject to an
entity level tax for federal income tax purposes.
Each opinion is a an expression of an opinion only, is not a guarantee of
results and is not binding on the Internal Revenue Service or any third party
TRUSTS FOR WHICH A PARTNERSHIP ELECTION IS MADE
TAX CHARACTERIZATION OF THE TRUST AS A PARTNERSHIP
In the opinion of Brown & Wood LLP, as federal tax counsel to each trust, 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
purposes. Therefore, the trust itself will not be subject to tax 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 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 corporate income
tax could materially reduce cash available to fmake payments on the notes and
distributions on the certificates, and certificateholders could be liable for
any 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. In the opinion of Brown & Wood LLP, except as
otherwise provided in the related prospectus supplement, the notes will be
classified as debt for federal income tax purposes. The discussion below assumes
that this characterization is correct.
ORIGINAL ISSUE DISCOUNT, 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 the original issue discount regulations relating to original
issue discount, and that any original issue discount 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
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the number of full years included in their term, all within the meaning of the
original issue discount regulations. If these conditions are not satisfied with
respect to the notes, additional tax considerations with respect to the 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 original issue discount. The stated interest thereon will be taxable to a
noteholder as ordinary interest income when received or accrued in accordance
with the noteholder's method of tax accounting. Under the original issue
discount regulations, a holder of a note issued with a DE MINIMIS amount of
original issue discount must include any original issue discount 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
Internal Revenue Code.
A holder of 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 Internal
Revenue 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
Internal Revenue 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
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,
original issue discount and gain previously included by the 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 the noteholder with respect to the note. Any 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
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fnote 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. We suggest that prospective investors 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 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 Internal
Revenue 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 BEN 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 Internal Revenue Service 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 Internal
Revenue Service Form W-8BEN claiming an Exemption from or reduction in
withholding under the benefit of a tax treaty or an Internal Revenue Service
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 that interest at
graduated rates.
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 (1) the gain is not
effectively connected with the conduct of a trade or business in the United
States by the Foreign Person and (2) 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, under
penalty of perjury, a
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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% of the amount
otherwise payable to the holder, and remit the withheld amount to the Internal
Revenue Service as a credit against the holder's federal income tax liability.
NEW WITHHOLDING REGULATIONS. Recently, the Treasury Department issued 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. We suggest that 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 Brown & Wood LLP, the Internal Revenue Service 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 Brown & Wood LLP, 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. Treatment of
the notes as equity interests in such a partnership would probably be treated as
guaranteed payments, which could result in 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.
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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. That
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. See "Tax Consequences
to Holder of these Notes" above. 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 the certificates will be disclosed in the applicable prospectus
supplement.
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 the 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, original issue discount 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 Internal Revenue 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 that month, including interest accruing at the applicable
pass-through rate for that 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 that month;
and
(iv) any other amounts of income payable to the certificateholders for that
month.
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That 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 Internal
Revenue Service 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 these 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 these 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".
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 the a holder under the Internal Revenue
Service 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. Those deductions might be disallowed to the individual in whole or
in part and might result in the holder being taxed on an amount of income that
exceeds the amount of cash actually distributed to the 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 Internal Revenue
Service were to require that these 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 original issue discount, and, therefore, the trust should
not have original issue discount 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.
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If the trust acquires the receivables at a market discount or premium, the
trust will elect to include that discount in income currently as it accrues over
the life of the receivables or to offset that premium against interest income on
the receivables. As indicated above, a portion of that market discount income or
premium deduction may be allocated to certificateholders.
SECTION 708 TERMINATION. Under Section 708 of the Internal Revenue 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 consisting of the old partnership to a new partnership in
exchange for interests in the partnership. The 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 (includable in
income) and decreased by any distributions received with respect to the
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 the certificates, and, upon sale or other disposition of some of the
certificates, allocate a portion of that 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 these 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, the 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 the
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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 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.
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 Internal Revenue 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 that 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. The 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, Internal Revenue Service Form 1065, with the Internal
Revenue Service 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 the nominees will be required to forward the
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 Internal
Revenue Service of all such inconsistencies.
Under Section 6031 of the Internal Revenue 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. The information
includes (1) the name, address and taxpayer identification number of the nominee
and (2) as to each beneficial owner (a) the name, address and identification
number of the person, (b) whether the 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 the person throughout the year. In addition, brokers and financial
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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 Exchange
Act, is not required to furnish this 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, therefore, will be responsible for representing the
certificateholders in any dispute with the Internal Revenue Service. The
Internal Revenue 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 these purposes, the trust will withhold as if it were so engaged in
order to protect the trust from possible adverse consequences 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
Internal Revenue Code, as if the 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 Internal Revenue
Form W-8BEN, Internal Revenue Code Form W-9 or the holder's certification of
nonforeign status signed under penalty 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 Internal Revenue Service and submit
that number to the trust on Internal Revenue Service Form W-8BEN, or
substantially identical form, in order to assure appropriate crediting of the
taxes withheld. A foreign holder
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generally would be entitled to file with the Internal Revenue Service 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 the 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 that 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. We suggest
that prospective investors 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
In the opinion of Brown & Wood LLP, as federal tax counsel to each trust, 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. Therefore, the trust itself will not be subject
to tax 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. In the opinion of Brown & Wood LLP, except as
otherwise provided in the related prospectus supplement, the notes will be
classified as debt for federal income tax purposes. Assuming this
characterization of the notes is correct, the federal income tax consequences to
noteholders described above under "Trusts For Which a Partnership Election is
Made--Tax Consequences to Holders of the Notes" would apply to the noteholders.
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If, contrary to the opinion of Brown & Wood LLP, the IRS successfully
asserted that one or more classes of notes did not represent debt for federal
income tax purposes, this class or classes of 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 more likely in the view of
Brown & Wood LLP, 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 a partnership could have adverse tax consequences to certain
holders of the 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 the notes.
TRUSTS TREATED AS GRANTOR TRUSTS
TAX CHARACTERIZATION OF THE TRUST AS A GRANTOR TRUST
If a partnership election is not made, Brown & Wood LLP, as federal tax
counsel to each trust, is of the opinion that the trust will not be classified
as an association taxable as a corporation and that the trust will be classified
as a grantor trust under subpart E, part 1, subchapter J, chapter 1 of subtitle
A of the Internal Revenue Code. Therefore, the trust itself will not be subject
to tax for federal income tax purposes. In this case, Grantor Trust
Certificateholders will be treated for federal income tax purposes as owners of
a portion of the trust's assets as described below.
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.
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Each Grantor Trust Certificateholder will be required to report on its
federal income tax return in accordance with the 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, original interest discount, 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 these 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 these expenses plus all other
Section 212 expenses exceed two percent of its adjusted gross income. In
addition, Section 68 of the Internal Revenue 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 (1) 3% of the
excess of the individual's adjusted gross income over that amount or (2) 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
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 that 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 Internal Revenue 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
Internal Revenue Service, 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 the recently issued
Section 1286 Treasury Regulations, if the discount on a stripped bond is larger
than a DE MINIMIS amount, as calculated for purposes of the original issue
discount rules of the Internal Revenue Code, the stripped bond will be
considered to have been issued with original issue discount. See "Original Issue
Discount". The original issue discount on a Grantor Trust Certificate will be
the excess of the 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
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price paid by the 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 the 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 that 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 original issue discount.
ORIGINAL ISSUE DISCOUNT ON STRIPPED BONDS. If the stripped bonds have more
than a DE MINIMIS amount of original issue discount, the special rules of the
Code relating to "original issue discount", currently Internal Revenue Code
Sections 1271 through 1273 and 1275, will be applicable to a Grantor Trust
Certificateholder's interest in those receivables treated as stripped bonds.
Generally, a Grantor Trust Certificateholder that acquires an interest in a
stripped bond issued or acquired with original issue discount must include in
gross income the sum of the "daily portions," as defined below, of the original
issue discount on that 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 original issue discount with respect to a stripped bond
generally would be determined as follows. A calculation will be made of the
portion of original issue discount 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 (1) 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 (2) any payments received
during that accrual period, and subtracting from that total the "adjusted issue
price" of the stripped bond at the beginning of that 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
original issue discount rules of the Internal Revenue 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 original issue discount 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 original
issue discount accruing during that accrual period will then be divided by the
number of days in the period to determine the daily portion of original issue
discount for each day in the period. With respect to an initial accrual period
shorter than a full monthly accrual period, the daily portions of original issue
discount must be determined according to an
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appropriate allocation under either an exact or approximate method set forth in
the original issue discount regulations, or some other reasonable method,
provided that the 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 original issue
discount as described above will cause the accrual of original issue discount 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. We suggest
that subsequent purchasers that purchase stripped bonds at more than a DE
MINIMIS discount consult their tax advisors with respect to the proper method to
accrue the original issue discount.
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 Internal Revenue Code 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 the
receivable allocable to the holder's undivided interest over the holder's tax
basis in the 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, we suggest that
investors 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 Internal Revenue 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 the 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 Internal Revenue 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 original issue discount,
the amount of market discount that accrues during any accrual period would be
equal to the product of (1) the total
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remaining market discount and (2) a fraction, the numerator of which is the
original issue discount accruing during the period and the denominator of which
is the total remaining original issue discount at the beginning of the accrual
period. For Grantor Trust Certificates issued without original issue discount,
the amount of market discount that accrues during a period is equal to the
product of (1) the total remaining market discount and (2) 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
the instruments, the same prepayment assumption applicable to calculating the
accrual of original issue discount 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
the Grantor Trust Certificate purchased with market discount. For these
purposes, the DE MINIMIS rule referred above applies. Any deferred interest
expense would not exceed the market discount that accrues during the taxable
year and is, in general, allowed as a deduction not later than the year in which
the market discount is includable in income. If the holder elects to include
market discount in income currently as it accrues on all market discount
instruments acquired by the 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 the holder's undivided interest in each receivable based on each
receivable's relative fair market value, so that the 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 the premium under a constant interest method. Amortizable bond
premium will be treated as an offset to interest income on the Grantor Trust
Certificate. The basis for the 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 Internal Revenue Code 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 the Grantor Trust Certificateholder acquires
during the year of the election or thereafter.
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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 the 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 the receivable. If a
reasonable prepayment assumption is used to amortize the 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 Internal Revenue Service issued final 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 Internal Revenue Service, 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 these amortizable bond premium
regulations.
ELECTION TO TREAT ALL INTEREST AS ORIGINAL ISSUE DISCOUNT. The original
issue discount 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 the 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 the 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. The adjusted basis generally
will equal the seller's purchase price for the Grantor Trust Certificate,
increased by the original issue discount included 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. The 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
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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
12 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 the 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 original issue discount paid by the person
required to withhold tax under Internal Revenue Code Section 1441 or 1442 to
(i) an owner that is not a United States Person 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 original issue discount recognized by the owner on the sale
or exchange of a Grantor Trust Certificate also will be subject to federal
income tax at the same rate. Generally, these 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 the 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 the Grantor Trust Certificateholder is
not a United States Person and providing the name and address of the 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.
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 the
year, the 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 the 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 the 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 the 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
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December 31, 2000, subject to certain transition rules. We suggest that
prospective investors consult their own tax advisors regarding the New
Regulations.
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. We suggest that
noteholders and certificateholders 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
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A NOTEHOLDER'S OR
CERTIFICATEHOLDER'S PARTICULAR TAX SITUATION. WE SUGGEST THAT PROSPECTIVE
PURCHASERS 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 Internal Revenue 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 Internal Revenue Code from
engaging in certain transactions involving Plan Assets with persons that are
"parties in interest" under ERISA or "disqualified person" under the Internal
Revenue Code with respect to the Plan. Certain governmental plans, although not
subject to ERISA or the Code, are subject to Similar Law that impose similar
requirements. A violation of these "prohibited transaction" rules may generate
excise tax and other liabilities under ERISA and the Internal Revenue Code or
under Similar Law for these 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 96-23, which exempts certain
transactions effected by an "in-house asset manager";
- Prohibited Transaction Class Exemption 95-60, which exempts certain
transactions between insurance Company general accounts and parties in
interest;
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- Prohibited Transaction Class Exemption 91-38, which exempts certain
transactions between bank collective investment funds and parties in
interest;
- Prohibited Transaction Class Exemption 90-1, which exempts certain
transactions between insurance Company pooled separate accounts and
parties in interest; or
- Prohibited Transaction Class Exemption 84-14, which exempts certain
transactions effected 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 an exemption, if it
did apply, would apply to all prohibited transactions that may occur in
connection with the 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 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 the 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 Plan Assets Regulation, in general when a Plan acquires an
equity interest in an entity such as the trust and the 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 (1) freely transferable, (2) part of a class of securities that
is owned by 100 or more investors independent of the issuer and of each other,
and (3) 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
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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% 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. 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 that 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 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 the 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 Internal Revenue 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 Prohibited Transaction Class Exemption 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
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nonexempt prohibited transaction as defined in Section 406 of ERISA or
Section 4975 of the Internal Revenue 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 the 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, a governmental or church
Plan which is qualified under Section 401(a) of the Internal Revenue Code and
exempt from taxation under Section 501(a) of the Internal Revenue Code is
subject to the prohibited transaction rules in Section 503 of the Internal
Revenue 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 the Senior Certificates issued by a trust.
The United States Department of Labor has granted to the lead underwriter
named in the prospectus supplement the Exemption from certain of the prohibited
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 the conditions,
highlighted below, are met.
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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 acquisition that is in one of the three highest generic
rating categories from either 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
the 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 Department of Labor 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 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 the
Pre-Funding Period, instead of requiring that all of these Obligations be either
identified or transferred on or before the Closing Date. The relief is available
when the following conditions are met:
(1) The Pre-Funding Limit must not exceed 25%.
(2) 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.
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(3) The transfer of the 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.
(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:
(a) the characteristics of the Additional Obligations must be
monitored by an insurer or other credit support provider that is
independent of the depositor or
(b) 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 the 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:
(a) any pre-funding account and/or capitalized interest account used
in connection with a pre-funding account;
(b) the duration of the Pre-Funding Period;
(c) the percentage and/or dollar amount of the Pre-Funding Limit for
the trust; and
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(d) 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,
(1) 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,
(2) the 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,
(3) 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
(4) 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 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 a member of
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 the trust intends
for the Exemption to apply to its sales of Senior Certificates to Plans, it may
prohibit 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 Internal
Revenue Code, the applicability of the Exemption, as amended, and the potential
consequences in their specific circumstances, prior to making the 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.
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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 Internal Revenue 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 Internal Revenue 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 Internal
Revenue 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 the purchase.
As of the date hereof, the Department of Labor 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
Prohibited Transaction Class Exemption 95-60.
PLAN OF DISTRIBUTION
The securities of each series that are offered by this prospectus and a
prospectus supplement will be offered through one or more of the following
methods. The related prospectus supplement will provide specified details as to
the method of distribution for the offering.
SALES THROUGH UNDERWRITERS
If specified in the related prospectus supplement, 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
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to purchase the principal amount 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 the 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 the sale.
After the initial public offering of the notes and certificates, the public
offering prices and the 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 the underwriting agreement
will be conditioned on the closing of the sale of all other 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 market-making may be discontinued at
any time at their sole discretion.
OTHER PLACEMENTS OF SECURITIES
To the extent set forth in the related prospectus supplement, securities of
a given series may be offered by placements with institutional investors through
dealers or by direct placements with institutional investors.
The prospectus supplement with respect to any securities offered by
placements through dealers will contain information regarding the nature of the
offering and any agreements to be entered into between the depositor and
purchasers of securities.
Purchasers of securities, including dealers, may, depending upon the facts
and circumstances of the purchases, be deemed to be "underwriters" within the
meaning of the Securities Act in connection with reoffers and sales by them of
securities.
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Securityholders should consult with their legal advisors in this regard prior to
any reoffer or sale.
LEGAL OPINIONS
Certain legal matters relating to the securities of any series have been
passed upon for the depositor by Brown & Wood LLP, San Francisco, California.
Certain legal matters relating to each trust that is a Delaware business trust
have been passed upon for the depositor by Richards, Layton & Finger,
Wilmington, Delaware. Brown & Wood LLP, San Francisco, California will act as
counsel for the underwriters of each series.
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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.
"Administrator" means the entity specified in the prospectus supplement as
the administrator of the trust under an administration agreement.
"Advances" means both Precomputed Advances and Simple Interest Advances.
"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 Internal Revenue 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.
"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
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initial denomination, reduced by all amounts distributed in respect of such
certificate and allocable to principal.
"Clearstream" means Clearstream Banking, a societe anonyme and a
professional depository under the laws of Luxembourg.
"Clearstream Customer" means a participating organization of Clearstream.
"Closing Date" means that date specified in the prospectus supplement on
which the trust issues its securities.
"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.
"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.
"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.
"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
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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
- 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.
"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.
"Exchange Act" means the Securities Exchange Act of 1940, as amended.
"Exemption" means the exemption granted to the lead underwriter named in the
prospectus supplement by the Department of Labor and described under "ERISA
Considerations".
"Financed Vehicle" means new or used automobile, minivan, sport utility
vehicle, light duty truck, motorcycle or commercial 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.
"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 under bankruptcy proceedings or inability to pay its obligations.
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"Insolvency Laws" means the United States Bankruptcy Code or similar
applicable state laws.
"Insurer Default" means that the insurer shall fail to make any payment
required under the policy or an event of bankruptcy, insolvency, receivership or
liquidation shall occur with respect to the insurer.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended.
"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.
"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 Department of Labor.
"Plans" means, collectively, Plans subject to ERISA, Section 4975 or Similar
Law.
"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.
100
<PAGE>
"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.
"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 on the receivable 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 under which a
trust will purchase receivables from the depositor and the servicer will agree
to service such receivables, each trust agreement, including, in the case of a
grantor trust, the pooling and servicing agreement, under which a trust will be
created and certificates will be issued and each administration agreement under
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 5% of
the aggregate unamortized principal balance of the assets in the trust, or any
affiliate of such parties.
"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.
"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 original issue discount rules
of the Code, such stripped bond will be considered to have been issued with
original issue discount.
101
<PAGE>
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Certificates" means nonsubordinated certificates issued by a trust.
"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.
"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.
"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 includable 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.
102
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS SUPPLEMENT, DATED DECEMBER 11, 2000
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 , 2000)
$
TRUST 200 -
POOLED AUTO SECURITIES SHELF LLC
DEPOSITOR
---------------------
SELLER AND SERVICER
The trust will issue the following securities:
$ Class A-1 % Asset Backed Notes
$ Class A-2 % Asset Backed Notes
$ Class A-3 % Asset Backed Notes
$ Class B % Asset Backed Certificates
The primary assets of the trust are a pool of loans made to finance the retail
purchase of new or used automobiles, minivans, sport utility vehicles, light
duty trucks, motorcycles or commercial vehicles.
The terms of the offering are as follows:
<TABLE>
<CAPTION>
CLASS A-1 CLASS A-2 CLASS A-3 CLASS B
NOTES NOTES NOTES CERTIFICATES
--------- --------- --------- ------------
<S> <C> <C> <C> <C>
Initial Public Offering Price.................. % % % %
Underwriting Discount.......................... % % % %
Proceeds to Depositor.......................... % % % %
</TABLE>
The price of the securities listed in the table will also include accrued
interest, if any, from .
The proceeds to depositor listed in the table are before deducting expenses
payable by the depositor estimated to be $ .
BEFORE YOU PURCHASE ANY OF THESE SECURITIES, BE SURE YOU READ THIS PROSPECTUS
SUPPLEMENT AND THE ATTACHED PROSPECTUS, ESPECIALLY THE RISK FACTORS BEGINNING ON
PAGE S-11 OF THIS PROSPECTUS SUPPLEMENT AND ON PAGE 11 OF THE PROSPECTUS.
These securities are issued by the trust. The securities are not obligations of
Pooled Auto Securities Shelf LLC or any of its affiliates.
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...... S1-3
Summary of Terms of The
Securities................. S1-4
Risk Factors................. S1-11
The Trust.................... S1-14
Limited Purpose and Limited
Assets................... S1-14
Capitalization of the
Trust.................... S1-15
The Owner Trustee.......... S1-15
The Receivables Pool......... S1-15
Criteria Applicable to
Selection of
Receivables.............. S1-15
Weighted Average Life of
the Securities........... S1-20
Delinquency, Credit Loss
and Recovery
Information.............. S1-26
The Seller................... S1-27
General.................... S1-27
Underwriting............... S1-28
Dealer Agreement........... S1-29
The Depositor................ S1-29
The Servicer................. S1-29
General.................... S1-29
Collection and Repossession
Procedures............... S1-29
Insurance.................. S1-29
Extensions................. S1-29
Methods of Vehicle
Disposal................. S1-29
Computing Your Portion of the
Amount Outstanding on the
Notes or Certificates...... S1-29
Maturity and Prepayment
Considerations............. S1-30
Description of the Notes..... S1-31
Payments of Interest....... S1-31
Payments of Principal...... S1-32
</TABLE>
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Optional Prepayment........ S1-33
Description of the
Certificates............... S1-33
Distributions.............. S1-33
Subordination of Class B
Certificates............. S1-34
Optional Prepayment........ S1-34
Application of Available
Funds...................... S1-35
Sources of Funds of
Distributions............ S1-35
Priority of
Distributions............ S1-35
Description of the
Receivables Transfer and
Servicing Agreements....... S1-36
Accounts................... S1-36
Servicing Compensation and
Expenses................. S1-37
Rights Upon Event of
Servicing Termination.... S1-37
Waiver of Past Events of
Servicing Termination.... S1-37
Deposits to the Collection
Account.................. S1-37
Reserve Fund............... S1-38
Material Federal Income Tax
Consequences............... S1-39
Material State Tax
Consequences............... S1-40
ERISA Considerations......... S1-40
The Notes.................. S1-40
The Class B Certificates... S1-40
Underwriting................. S1-41
Legal Opinions............... S1-44
Glossary of Terms............ S1-45
Annex I--Form of Investment
Letter--Class B
Certificates............... S-I-1
</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.
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,
200 , 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,
INVESTMENT IN THE SECURITIES
There are material risks associated with an investment in the securities.
FOR A DISCUSSION OF THE RISK FACTORS WHICH SHOULD BE CONSIDERED IN DECIDING
WHETHER TO PURCHASE ANY OF THE SECURITIES, SEE "RISK FACTORS".
CLOSING DATE
The trust expects to issue the securities on , 200 .
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 , 200 .
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.
</TABLE>
S1-4
<PAGE>
<TABLE>
<S> <C>
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 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
S1-5
<PAGE>
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;
(5) 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;
(6) 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 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.
S1-6
<PAGE>
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> <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 %
</TABLE>
S1-7
<PAGE>
<TABLE>
<S> <C> <C>
- 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 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.
NO LISTING ON AN EXCHANGE
The securities will not be listed on exchange or quoted on an automated
quotation system of a registered securities association.
FOR A DISCUSSION OF THE RISKS ASSOCIATED WITH THESE SECURITIES, SEE "RISK
FACTORS".
MINIMUM DENOMINATIONS
<TABLE>
<S> <C>
NOTES $1,000 and integral
multiples thereof
CLASS B CERTIFICATES $1,000 and integral
multiples thereof
</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
S1-8
<PAGE>
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
In the opinion of Brown & Wood LLP, 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.
Therefore, the trust will not be subject to an entity level tax for federal
income tax purposes.
INVESTOR REPRESENTATIONS
<TABLE>
<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 CERTIFICATES If you purchase the
class B 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>
INVESTMENT RESTRICTIONS
<TABLE>
<S> <C>
CLASS B CERTIFICATES The class B
certificates may not
be 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.
S1-9
<PAGE>
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 CERTIFICATES The class B
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.
S1-10
<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. The risk factors stated here and in the prospectus describe the
principal risk factors of an investment in these securities.
<TABLE>
<S> <C>
SUBORDINATION OF THE Distributions of interest and principal on the
CERTIFICATES TO THE NOTES class B certificates will be subordinated in
INCREASES THE RISK OF THE priority of payment to interest and principal
CERTIFICATES NOT RECEIVING due on the notes. Consequently, the
FULL DISTRIBUTION OF certificateholders will not receive any
INTEREST AND PRINCIPAL 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 An event of default under the indenture may
YOUR SECURITIES MAY RESULT result in payments on the securities being
FROM AN EVENT OF DEFAULT accelerated. As a result --
UNDER THE 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.
</TABLE>
S1-11
<PAGE>
<TABLE>
<S> <C>
YOU MAY SUFFER LOSSES Because the trust has pledged its property to
BECAUSE YOU HAVE LIMITED the indenture trustee to secure payment on the
CONTROL OVER ACTIONS OF notes, the indenture trustee may, and at the
THE TRUST AND CONFLICTS direction of the holders of the specified
BETWEEN THE NOTEHOLDERS percentage of the notes will, take one or more
AND THE CLASS B of the other actions specified in the indenture
CERTIFICATEHOLDERS MAY relating to the property of the trust, including
OCCUR 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.
GEOGRAPHIC CONCENTRATION As of , 2000 the servicer's records
MAY RESULT IN MORE RISK TO indicate that the locations of the obligors of
YOU 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.
</TABLE>
S1-12
<PAGE>
<TABLE>
<S> <C>
THE FAILURE TO MAKE The amount of principal required to be paid to
PRINCIPAL PAYMENTS ON THE noteholders prior to the Final Scheduled Payment
NOTES WILL GENERALLY NOT Date for a class of notes generally will be
RESULT IN AN EVENT OF limited to amounts available for those
DEFAULT 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.
THE SECURITIES WILL NOT BE The trust will not apply to list the securities
LISTED ON AN EXCHANGE AND on an exchange or quote them in the automated
THIS MAY MAKE THE quotation system of a registered securities
SECURITIES DIFFICULT TO association. The liquidity of securities will
SELL OR TO OBTAIN YOUR therefore likely be less than what it would be
DESIRED PRICE in the event that they were so listed or quoted,
and there may be no secondary market for the
securities. 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. SEE "RISK FACTORS--YOU MAY HAVE
DIFFICULTY SELLING YOUR SECURITIES OR OBTAINING
YOUR DESIRED PRICE" IN THE PROSPECTUS.
</TABLE>
S1-13
<PAGE>
CAPITALIZED TERMS USED IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS ARE
DEFINED IN THE GLOSSARY OF TERMS ON PAGE S1-45 AND THE GLOSSARY OF TERMS ON PAGE
97 IN THE PROSPECTUS.
THE TRUST
LIMITED PURPOSE AND LIMITED ASSETS
Pooled Auto Securities Shelf LLC 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 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".
S1-14
<PAGE>
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.
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 Contract Rate that equals or exceeds % per annum, is not
secured by
S1-15
<PAGE>
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 .
The composition of the receivables as of the Cutoff Date 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 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>
S1-16
<PAGE>
DISTRIBUTION OF THE RECEIVABLES BY REMAINING TERM TO MATURITY
AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE OF AGGREGATE AGGREGATE
NUMBER OF AGGREGATE NUMBER RECEIVABLES RECEIVABLES
REMAINING TERM IN MONTHS RECEIVABLES OF RECEIVABLES PRINCIPAL BALANCE PRINCIPAL BALANCE
------------------------------------ ----------- ---------------- ----------------- -----------------
<S> <C> <C> <C> <C>
% $ %
Total............................. % $ %
===== ======= =========== =======
</TABLE>
DISTRIBUTION OF THE RECEIVABLES BY REMAINING PRINCIPAL BALANCE
AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE OF AGGREGATE AGGREGATE
NUMBER OF AGGREGATE NUMBER RECEIVABLES RECEIVABLES
REMAINING PRINCIPAL BALANCE RECEIVABLES OF RECEIVABLES PRINCIPAL BALANCE PRINCIPAL BALANCE
-------------------------------- ----------- ---------------- ----------------- -----------------
<S> <C> <C> <C> <C>
% $ %
Total......................... % $ %
===== ====== ========== ======
</TABLE>
S1-17
<PAGE>
The geographical distribution and distribution by Contract Rate of the
receivables pool as of the Cutoff Date are set forth in the following tables
based on the location of the obligors on the receivables at the time each
receivable was originated.
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES POOL AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
PERCENTAGE
OF
CUTOFF
NUMBER OF PRINCIPAL DATE POOL
STATE RECEIVABLES BALANCE BALANCE
----- ----------- ----------- ----------
<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 RECEIVABLES BALANCE BALANCE
----- ----------- ----------- ----------
<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>
S1-18
<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
------------- ----------- ----------------- -------------
<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>
S1-19
<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, 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 ABS Table 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.
S1-20
<PAGE>
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 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
S1-21
<PAGE>
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.
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>
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
<CAPTION>
CLASS A-3 NOTES
-------------------
PAYMENT DATE % %
------------ -------- --------
<S> <C> <C>
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
</TABLE>
S1-22
<PAGE>
<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>
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
<CAPTION>
CLASS A-3 NOTES
-------------------
PAYMENT DATE % %
------------ -------- --------
<S> <C> <C>
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
</TABLE>
S1-23
<PAGE>
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.
PERCENT OF INITIAL CERTIFICATE BALANCE AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
CLASS B CERTIFICATES
-----------------------------------------
PAYMENT DATE % % % %
------------ -------- -------- -------- --------
<S> <C> <C> <C> <C>
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
....................................................
</TABLE>
S1-24
<PAGE>
<TABLE>
<CAPTION>
CLASS B CERTIFICATES
-----------------------------------------
PAYMENT DATE % % % %
------------ -------- -------- -------- --------
<S> <C> <C> <C> <C>
....................................................
....................................................
....................................................
....................................................
....................................................
</TABLE>
S1-25
<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. The amounts and
percentages set forth are based on the gross amount scheduled to be paid on each
contract, including unearned finance and other charges. Percentages have been
annualized for the months ended , 200 and 200 and are not
necessarily indicative of the experience for the year. [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.] Liquidations
represent a reduction in the outstanding balances of the contracts as a result
of monthly cash payments and charge-offs. 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>
S1-26
<PAGE>
THE SELLER IS A [ ] CORPORATION
CREDIT LOSS/REPOSSESSION EXPERIENCE
<TABLE>
<CAPTION>
ENDED, YEAR ENDED DECEMBER 31,
------------------- ----------------------------------------------------
200 200 199 199 199 199 199
-------- -------- -------- -------- -------- -------- --------
<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............................ % % % % % % %
</TABLE>
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.
[Discussion and analysis of trends and reasons for changes in the tables,
trends that Seller's management is aware of that are expected to impact the
future performance of the portfolio and an explanation of any anomalies.
Further, add any material information known by management relating to trends in
the industry, generally, and in the legal, social and economic situation in
those states where receivables are billed that could likely have an adverse
effect on the trust portfolio.]
THE SELLER
GENERAL
[ is a corporation with principal executive offices
at . The seller provides funding that allows franchised and
independent automobile dealers to finance their customers' purchases of new and
used automobiles, light duty trucks and vans. For the twelve months ending
, , the seller funded the origination of approximately $ , ,
principal amount of motor vehicle loans. The seller services the motor vehicle
loans that it funds.
The seller purchases motor vehicle retail installment sales contracts from
and originates motor vehicle installment loan contracts through motor vehicle
dealers. Each contract is secured by the financed vehicle that is the subject of
the contract.
S1-27
<PAGE>
Dealers generally originate contracts for the seller and/or sell contracts to
the seller under dealer agreements between the dealers and the seller.
The seller enters into dealer agreements primarily with dealers that are
franchised to sell new motor vehicles and also with independent dealers that
sell used motor vehicles, in each case based upon a financial review of the
dealer and the dealer's reputation in the market. In addition to financing
contracts from dealers, the seller also sometimes extends loans and lines of
credit to dealers for, among other things, inventory financing and other
commercial purposes. The seller only extends loans or lines of credit to dealers
based upon a financial review, and formalized credit review procedures.
UNDERWRITING
Each application is generated by a dealer and underwritten by the seller in
accordance with the seller's established underwriting policies. These
underwriting policies are intended to assess the applicant's ability and
willingness to repay the amounts due on the contract and to establish the
adequacy of the financed vehicle as collateral.
The seller requires each applicant to complete an application form providing
various items of general demographic information, financial information and
employment history. In addition, specific information on the motor vehicle to be
financed is required as part of the application process. Once obtained by the
seller, the application is reviewed for completeness and a credit bureau report
is obtained. The seller's underwriting process takes into account such factors
as FICO score, credit bureau report, a custom credit score, past vehicle
borrowing experience, employment stability, residence stability, income level,
total debt-to-income ratio, and the proposed payment-to-income ratio. The seller
may conduct additional investigation such as verifying information in the
application or obtaining a second credit bureau report.
The seller then analyzes each application in the context of its underwriting
policies. Each application is reviewed by an employee with underwriting
responsibilities, and a decision is made with respect to each application based
on these policies. With respect to those applications that are approved, the
amount and terms of the financing to be offered are determined. The available
term for a contract is a function of the age of the motor vehicle and the
applicable FICO score. Acceptable terms generally range from 24 to 72 months in
length.
The seller's underwriting policies are intended to provide a consistent
basis for lending decisions, but do not completely supersede all judgmental
aspects of the credit granting process. Accordingly, certain contracts may not
comply with all of these policies. Exceptions to the seller's underwriting
policies are made at the discretion of the credit underwriters with appropriate
approval authority. Higher levels of authority are required for certain
exceptions to established policies.
S1-28
<PAGE>
DEALER AGREEMENTS
Each dealer that originates contracts for the seller has made
representations and warranties with respect to the contracts and the security
interests in the motor vehicles either in a separate dealer agreement or as part
of an assignment of a contract from the dealer to the seller. These
representations and warranties do not relate to the creditworthiness of the
obligors or the collectability of the contracts. Upon breach of any
representation or warranty made by a dealer with respect to a contract, the
seller would have a right of recourse against the dealer to require it to
purchase the contract. Dealer agreements and assignments do not provide for
recourse against the dealer in the event of a default by the obligor.]
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.
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.
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<PAGE>
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
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.
S1-30
<PAGE>
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 ,
200 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 the
material terms of the notes below and under the headings "Certain Information
Regarding the Securities" and "The Indenture" in the prospectus. 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 supplements the
description of the general terms and provisions of the notes of any trust and
the related indenture set forth under those sections of 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
S1-31
<PAGE>
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; and
- 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).
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 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.
S1-32
<PAGE>
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 the
material terms of the Class B Certificates and the trust agreement below and
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. 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 provisions. The following is a
supplement to the description of the general terms and provisions of the
certificates of any given trust and the related trust agreement provided under
those sections of the prospectus. 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.
S1-33
<PAGE>
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
- 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.
S1-34
<PAGE>
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:
(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 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;
(4) 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:
(5) on the Class A-1 Notes until they are paid in full;
(6) on the Class A-2 Notes until they are paid in full;
S1-35
<PAGE>
(7) on the Class A-3 Notes until they are paid in full;
(8) on the Class B Certificates until they are paid in full;
however, if the notes are accelerated after an event of default,
principal payments will be applied PRO RATA on all classes of the notes;
(9) 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;
(10) 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
(11) 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 and in the prospectus under "Description of the
Receivables Transfer and Servicing Agreements" the material terms of the sale
and servicing agreement. We will file a copy of the sale and servicing agreement
with the SEC after the trust issues 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.
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
S1-36
<PAGE>
- 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.
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
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<PAGE>
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.
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;
- 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.
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.
S1-38
<PAGE>
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 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.
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. Therefore, the
trust will not be subject to an entity level tax for federal income tax
purposes. See "Material Federal Income Tax Consequences" in the Prospectus.
S1-39
<PAGE>
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 Internal Revenue 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 Internal Revenue 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 Internal Revenue 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 Internal Revenue
Code, and, at that time, if no exemption or exception applies to the
continued holding of the Class B
S1-40
<PAGE>
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 Internal Revenue 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 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
S1-41
<PAGE>
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 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 notes or
Class B Certificates 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
S1-42
<PAGE>
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
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.
S1-43
<PAGE>
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.
This prospectus supplement and the related prospectus will not be available
in electronic format.
LEGAL OPINIONS
Certain legal matters relating to the securities, including certain federal
income tax matters, have been passed upon for the depositor by Brown & Wood LLP.
Certain legal matters relating to the trust have been passed upon for the
depositor by Richards, Layton & Finger. Certain legal matters relating to the
securities have been passed upon for the underwriters by Brown & Wood LLP.
S1-44
<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; and
- 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;
- 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;
S1-45
<PAGE>
- 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.
"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.
"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.
"Clearstream" means Clearstream Banking, a societe anonyme and a
professional depository under the laws of Luxembourg.
"Closing Date" means .
"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.
"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.
"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.
"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
S1-46
<PAGE>
repossession, on a defaulted receivable net of any payments required by law to
be remitted to the Obligor.
"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 Fund Excess Amount" means 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.
"Reserve Initial Deposit" means the $ initially deposited into the
reserve fund.
"SEC" means the Securities and Exchange Commission.
"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
S1-47
<PAGE>
Collection Period, plus any interest earned during the Collection Period on
amounts on deposit in the Collection Account during the Collection Period.
"Total Required Payment" means on any Payment Date, is the sum of--
(1) the Servicing Fee and all unpaid Servicing Fees from prior Collection
Periods;
(2) all interest payable on the notes, including any accrued interest and
interest on accrued interest (to the extent lawful);
(3) all interest payable on the Class B Certificates, including any
accrued interest and interest on accrued interest (to the extent
lawful);
(4) 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
(5) 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 (4).
However, following the acceleration of the notes after the occurrence of an
event of default, the Total Required Payment will be the sum of--
(1) the Servicing Fee and all unpaid Servicing Fees from prior Collection
Periods;
(2) all interest payable on the notes, including any accrued interest
thereon; and
(3) the amount necessary to reduce the outstanding principal amount of
all the notes to zero.
S1-48
<PAGE>
ANNEX I
THIS ANNEX I FORMS AN INTEGRAL PART OF THE PROSPECTUS
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
S1-I-1
<PAGE>
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 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.
S1-I-2
<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 DECEMBER 11, 2000
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS, DATED , 2000)
$
TRUST 200 -
POOLED AUTO SECURITIES SHELF LLC
DEPOSITOR
--------------------------
SELLER AND SERVICER
The trust will issue the following securities
$ Class A % Asset Backed Certificates
$ Class B % Asset Backed Certificates
The primary assets of the trust are a pool of loans made to finance the retail
purchase of new or used automobiles, minivans, sport utility vehicles, light
duty trucks, motorcycles or commercial vehicles.
The terms of the offering are as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B
CERTIFI- CERTIFI-
CATES CATES
------------ ------------
<S> <C> <C>
Initial Public Offering Price............... % %
Underwriting Discount....................... % %
Proceeds to Depositor....................... $ $
</TABLE>
The price of the certificates listed in the table include accrued interest, if
any, from .
The proceeds to depositor listed in the table are before deducting expenses
payable by the depositor estimated to be $ .
BEFORE YOU PURCHASE ANY OF THESE SECURITIES, BE SURE YOU READ THIS PROSPECTUS
SUPPLEMENT AND THE ATTACHED PROSPECTUS, ESPECIALLY THE RISK FACTORS BEGINNING ON
PAGE S-9 OF THIS PROSPECTUS SUPPLEMENT AND ON PAGE 11 OF THE PROSPECTUS.
These securities are issued by the trust. The securities are not obligations of
Pooled Auto Securities Shelf LLC or any of its affiliates.
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.................. S2-9
The Trust..................... S2-11
The Receivables Pool.......... S2-12
Criteria Applicable to
Selection of
Receivables............... S2-12
Weighted Average Life of the
Certificates.............. S2-17
Delinquency, Credit Loss and
Recovery Information...... S2-19
The Seller.................... S2-22
General..................... S2-22
Underwriting Procedures S2-22
The Depositor................. S2-22
The Servicer.................. S2-23
General..................... S2-23
Collection and Repossession
Procedures................ S2-23
Insurance................... S2-23
Extensions.................. S2-23
Methods of Vehicle
Disposal.................. S2-23
Computing Your Portion of the
Amount Outstanding on the
Certificates................ S2-23
</TABLE>
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Maturity and Prepayment
Considerations.............. S2-23
Description of the
Certificates................ S2-24
Book-Entry Securities;
Record Date;
Denomination.............. S2-24
Distributions on
Certificates.............. S2-24
Statements to
Certificateholders........ S2-27
Subordination of Class B
Certificates.............. S2-27
Optional Redemption......... S2-28
Servicing Compensation and
Expenses.................. S2-28
Rights Upon Event of
Servicing Termination..... S2-28
Waiver of Past Events of
Servicing Termination..... S2-28
Reserve Fund................ S2-28
Material Federal Income Tax
Consequences................ S2-29
ERISA Considerations.......... S2-30
Class A Certificates........ S2-30
Class B Certificates........ S2-30
Underwriting.................. S2-32
Legal Opinions................ S2-34
Glossary of Terms............. S2-35
</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.
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.
INVESTMENT IN THE CERTIFICATES
There are material risks associated with an investment in the certificates.
FOR A DISCUSSION OF THE RISK FACTORS WHICH SHOULD BE CONSIDERED IN DECIDING
WHETHER TO PURCHASE ANY OF THE CERTIFICATES, SEE "RISK FACTORS".
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
S2-4
<PAGE>
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;
(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.
S2-5
<PAGE>
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);
- 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> <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>
S2-6
<PAGE>
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.
NO LISTING ON AN EXCHANGE
The certificates will not be listed on an exchange or quoted on an automated
quotation system of a registered securities association.
FOR A DISCUSSION OF THE RISKS ASSOCIATED WITH THESE CERTIFICATES, see "Risk
Factors".
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% 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.
S2-7
<PAGE>
TAX STATUS
OPINIONS OF COUNSEL
In the opinion of Brown & Wood LLP, 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. Therefore, the trust will
not be subject to an entity level tax for federal income tax purposes.
Each 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
certificates and will be considered the owner of a pro rata undivided interest
in each of the receivables in the trust.
Each certificateholder will be required to report on its federal income tax
return, in accordance with the certificateholder's method of accounting, its pro
rata share of the entire income from the receivables in the trust represented by
the certificates, including interest, original interest discount, if any,
prepayment fees, assumption fees, any gain recognized upon an assumption and
late payment charges received by the servicer.
ERISA CONSIDERATIONS
<TABLE>
<S> <C>
CLASS A
CERTIFICATES....... The Class A
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
CERTIFICATES....... The Class B
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.
S2-8
<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
certificates. The risk factors stated here and in the prospectus describe the
principal risk factors of an investment in these certificates.
<TABLE>
<S> <C>
SUBORDINATION OF THE CLASS Distributions of interest and principal on the
B CERTIFICATES TO THE class B certificates will be subordinated in
CLASS A CERTIFICATES priority of payment to interest and principal
INCREASES THE RISK OF THE due on the class A certificates. Consequently,
CLASS B CERTIFICATES NOT the class B certificateholders will not receive
RECEIVING FULL any distributions with respect to a collection
DISTRIBUTION OF INTEREST period until the full amount of interest on and
AND PRINCIPAL principal of 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 As of , 200 , the servicer's records
MAY RESULT IN MORE RISK TO indicate that the locations of the obligors of
YOU 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.
</TABLE>
S2-9
<PAGE>
<TABLE>
<S> <C>
[VALUE OF INTEREST ONLY [The yield to investors in the Class
CERTIFICATES WILL Certificates will be interest only certificates
GENERALLY DECREASE IF THE and will be sensitive to the rate of principal
RATE OF PREPAYMENTS payments (including prepayments) of the
INCREASE] receivables (particularly those with high
interest rates), which generally 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
CERTIFICATES WILL only" certificates and will not bear interest.
GENERALLY DECREASE IF THE Lower than anticipated rate of principal
RATE OF PREPAYMENTS payments (including prepayments) on the
DECREASE] receivables will have a negative effect on the
yield to invesstors in the Class
Certificates.]
THE CERTIFICATES WILL NOT The trust will not apply to list the
BE LISTED ON AN EXCHANGE certificates on an exchange or quote them in the
AND THIS MAY MAKE THE automated quotation system of a registered
CERTIFICATES DIFFICULT TO securities association. The liquidity of
SELL OR TO OBTAIN YOUR certificates will therefore likely be less than
DESIRED PRICE what it would be in the event that they were so
listed or quoted, and there may be no secondary
market for the certificates. As a result, you
may not be able to sell your certificates when
you want to do so, or you may not be able to
obtain the price that you wish to receive. SEE
"RISK FACTORS--YOU MAY HAVE DIFFICULTY SELLING
YOUR SECURITIES OR OBTAINING YOUR DESIRED PRICE"
IN THE PROSPECTUS.
</TABLE>
S2-10
<PAGE>
THE TRUST
Pooled Auto Securities Shelf LLC will establish the Trust 200 -
by assigning the receivables to the trust in exchange for the % Automobile
Loan Pass-Through Certificates, Class A and the % Automobile Loan Pass-Through
Certificates, Class B.
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.
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 these 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;
S2-11
<PAGE>
- 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.
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 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;
S2-12
<PAGE>
- 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 .
The composition of the receivables as of the Cutoff Date is as follows:
<TABLE>
<CAPTION>
<C> <S> <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>
S2-13
<PAGE>
The geographical distribution and distribution by Contract Rate of the
receivables pool as of the Cutoff Date are set forth in the following tables
based on the location of the obligors on the receivables at the time each
receivable was orignated.
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES POOL AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
PERCENTAGE OF
CUTOFF DATE
NUMBER OF PRINCIPAL POOL
STATE RECEIVABLES BALANCE BALANCE
----- ----------- --------- -------------
<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 DATE
NUMBER OF PRINCIPAL POOL
STATE RECEIVABLES BALANCE BALANCE
----- ----------- --------- -------------
<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>
S2-14
<PAGE>
DISTRIBUTION OF THE RECEIVABLES BY REMAINING TERM TO MATURITY
AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
AGGREGATE PERCENTAGE OF
PERCENTAGE OF RECEIVABLES AGGREGATE
NUMBER OF AGGREGATE NUMBER PRINCIPAL RECEIVABLES
REMAINING TERM IN MONTHS RECEIVABLES OF RECEIVABLES BALANCE PRINCIPAL BALANCE
------------------------ ----------- ---------------- ------------ -----------------
<S> <C> <C> <C> <C>
% $ %
--- ------ ------------ -----
Total................. % $ %
=== ====== ============ =====
</TABLE>
DISTRIBUTION OF THE CONTRACTS BY REMAINING PRINCIPAL BALANCE
AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
AGGREGATE PERCENTAGE OF
PERCENTAGE OF RECEIVABLES AGGREGATE
NUMBER OF AGGREGATE NUMBER PRINCIPAL RECEIVABLES
REMAINING PRINCIPAL BALANCE RECEIVABLES OF RECEIVABLES BALANCE PRINCIPAL BALANCE
--------------------------- ----------- ---------------- ------------ -----------------
<S> <C> <C> <C> <C>
% $ %
--- ------ ------------ -----
Total..................... % $ %
=== ====== ============ =====
</TABLE>
S2-15
<PAGE>
DISTRIBUTION BY CONTRACT RATE OF THE RECEIVABLES AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
PERCENTAGE OF
CUTOFF DATE
NUMBER OF PRINCIPAL POOL
CONTRACT RATE RECEIVABLES BALANCE BALANCE
------------- ----------- --------- -------------
<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>
S2-16
<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
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 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.
S2-17
<PAGE>
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) 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>
REMAINING
CONTRACT ORIGINAL TERM TERM TO
AGGREGATE RATE OF TO MATURITY 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.
S2-18
<PAGE>
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.
PERCENT OF INITIAL CERTIFICATE BALANCE AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
CLASS A CERTIFICATES CLASS B CERTIFICATES
----------------------------------------- -----------------------------------------
PAYMENT DATE % % % % % % % %
------------ -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
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. Percentages have been
annualized for the months ended , 2000 and 2000 and are not
necessarily indicative of the experience for the year. [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
S2-19
<PAGE>
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.] Liquidations represent a reduction in the outstanding balances of
the contracts as a result of monthly cash payments and charge-offs. All amounts
and percentages are based on the gross amount scheduled to be paid on each
contract, including unearned finance and other charges. 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,
------------------------------------------- -------------------------------------------
, 2000 , 2001 , 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>
S2-20
<PAGE>
CREDIT LOSS/REPOSSESSION EXPERIENCE
<TABLE>
<CAPTION>
ENDED YEAR ENDED DECEMBER 31,
------------------- ----------------------------------------------------
200- 200- 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......... % % % % % % %
Net Losses as a Percent of Average Amount
Outstanding................................... % % % % % % %
</TABLE>
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.
[Discussion and analysis of trends and reasons for changes in the tables,
trends that seller's management is aware of that are expected to impact the
future performance of the portfolio and an explanation of any anomalies.
Further, add any material information known by management relating to trends in
the industry, generally, and in the legal, social and economic situation in
those states where receivables are billed that would have an adverse effect on
the trust portfolio.]
S2-21
<PAGE>
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 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.
S2-22
<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
S2-23
<PAGE>
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
- 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 the material terms of the
certificates below and under the headings "Certain Information Regarding the
Securities" and "Description of the Receivables Transfer and Servicing
Agreements" in the prospectus. 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 is a supplement to the description
of the material terms and provisions of the certificates of any series and the
related pooling and servicing agreement provided under those sections of 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
S2-24
<PAGE>
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;
(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
S2-25
<PAGE>
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 applied in that order of
priority) remaining
S2-26
<PAGE>
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.
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.
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.
S2-27
<PAGE>
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 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.
S2-28
<PAGE>
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. Therefore, the trust will not be subject
to an entity level tax for federal income tax purposes.
S2-29
<PAGE>
Each 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
certificates and will be considered the owner of a pro rata undivided interest
in each of the receivables in the trust.
Each certificateholder will be required to report on its federal income tax
return, in accordance with the certificateholder's method of accounting, its pro
rata share of the entire income from the receivables in the trust represented by
the certificates, including interest, original interest discount, if any,
prepayment fees, assumption fees, any gain recognized upon an assumption and
late payment charges received by the servicer. 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. Fed. Reg. 14827 (April 3, 1996)) from
some of the prohibited transaction rules of ERISA and the related excise tax
provisions of Section 4975 of the Internal Revenue 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.
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.
S2-30
<PAGE>
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) and that the purchase and
holding of the certificates are covered under Sections I and III of
Prohibited Transaction Class Exemption 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.
S2-31
<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
S2-32
<PAGE>
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 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.
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<PAGE>
The propsectus supplement and related prospectus will not be available in
electronic format.
LEGAL OPINIONS
Certain legal matters relating to the Certificates, including certain
federal income tax matters, have been 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.
S2-34
<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.
S2-35
<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 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.
"Certificates" means, collectively, the Class A Certificates and the
Class B Certificates.
"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, 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.
"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, 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.
"Closing Date" means .
"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.
S2-36
<PAGE>
"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.
"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 .
"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.
"Exemption" means the exemption granted to First Union Securities, Inc. by
Prohibited Transaction Exemption 99-22,61 Fed. Reg. 14827 (April 3, 1996).
"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.
S2-37
<PAGE>
"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" 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.
"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 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.
"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" equals 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.
"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.
S2-38
<PAGE>
ANNEX I
THIS ANNEX I FORMS AN INTEGRAL PART OF THE PROSPECTUS
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
S2-I-1
<PAGE>
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 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.
S2-I-2
<PAGE>
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............................. $ 396,000
Legal fees and expenses.......................... 200,000
Accounting fees and expenses..................... 140,000
Blue sky fees and expenses....................... 30,000
Rating Agency fees............................... 150,000
Trustee's fees and expenses...................... 20,000
Indenture trustee's fees and expenses............ 50,000
Printing......................................... 50,000
Miscellaneous.................................... 25,000
----------
Total...................................... $1,061,000
==========
</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. Under section 7(b) of each of the proposed forms of
Underwriting Agreement for the Owner Trust and the Grantor Trust, the
Underwriters have undertaken in certain circumstances to indemnify certain
controlling persons of the Registrant, including the officers and directors,
against liabilities incurred under the Securities Act of 1933, as amended.
II-1
<PAGE>
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
5.2 Opinion of Richards, Layton & Finger 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 Richards, Layton & Finger (included in
Exhibit 5.2)
23.3 Consent of Brown & Wood LLP (included in Exhibit 8.1)
24.1 Power of Attorney (included on page II-6)
</TABLE>
---------------------
* Incorporated by reference from the Registrant's Registration Statement
No. 333-36692.
** 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
II-2
<PAGE>
(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 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.
II-3
<PAGE>
(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-4
<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. 2 to Form S-3 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 December 8, 2000.
<TABLE>
<S> <C> <C>
POOLED AUTO SECURITIES SHELF LLC
By: /s/ BENNETT S. COLE
-----------------------------------
Bennett S. Cole
SENIOR VICE PRESIDENT
</TABLE>
Pursuant to the requirements of the Securities Act, this Amendment No. 2 to
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
--------- ----- ----
<C> <S> <C>
* Director and
--------------------------------------- Senior Vice December 8, 2000
Bennett S. Cole President
* Director and
--------------------------------------- Senior Vice December 8, 2000
Joseph G. Parish President
Director,
* President and
--------------------------------------- Principal December 8, 2000
Brian E. Simpson Executive
Officer
*
--------------------------------------- Director December 8, 2000
Kevin Burns
*
--------------------------------------- Director December 8, 2000
Andrew Stidd
Principal
* Financial
--------------------------------------- Officer and December 8, 2000
James H. Hatch Controller
</TABLE>
<TABLE>
<S> <C> <C> <C>
*By: /s/ BENNETT S. COLE
----------------------------------
Bennett S. Cole
Attorney-in-Fact
</TABLE>
II-5
<PAGE>
POWER OF ATTORNEY
Know All Men By These Presents, that each person whose signature appears
below constitutes and appoints Bennett S. Cole as his true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities to sign any
or all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
foregoing, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or any of them, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
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
--------- ----- ----
<C> <S> <C>
/s/ BENNETT S. COLE
--------------------------------------- Director and Senior September 8, 2000
Bennett S. Cole Vice President
/s/ JOSEPH G. PARISH
--------------------------------------- Director and Senior September 8, 2000
Joseph G. Parish Vice President
/s/ BRIAN E. SIMPSON Director, President
--------------------------------------- and Principal September 8, 2000
Brian E. Simpson Executive Officer
/s/ KEVIN BURNS
--------------------------------------- Director September 8, 2000
Kevin Burns
/s/ ANDREW STIDD
--------------------------------------- Director September 8, 2000
Andrew Stidd
/s/ JAMES H. HATCH Principal Financial
--------------------------------------- Officer and September 11, 2000
James H. Hatch Controller
</TABLE>
II-6
